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Cablegate: Uganda: Regional Exports On the Rise

R 050504Z AUG 08
FM AMEMBASSY KAMPALA
TO SECSTATE WASHDC 0577
INFO IGAD COLLECTIVE
RWANDA COLLECTIVE
DEPT OF TREASURY WASHDC

UNCLAS KAMPALA 001084


TREASURY FOR DAN PETERS
KHARTOUM PLEASE PASS TO JUBA

E.O. 12958: N/A
TAGS: ETRD ECIN ECON PREL EFIN UG
SUBJECT: UGANDA: REGIONAL EXPORTS ON THE RISE

REF: (A) 07 KAMPALA 1757 (B) KAMPALA 670 (C) KAMPALA 560


1. SUMMARY: Ugandan exports increased by 40 percent to USD 1.34
billion in 2007 due to an improved regional trading environment and
high commodity prices. Exports to the Democratic Republic of Congo
(DRC) and southern Sudan rose to USD 100 million and USD 157
million, representing a 127 percent and 72 percent increase over
2006 export figures. Illegal raw material imports, such as timber
and gold, from the DRC, which are re-exported as Ugandan goods,
continued to contribute to Uganda's growing export figure (ref A).
END SUMMARY.

2. Ugandan Export Promotion Board Executive Director Florence Kata
stated that total Ugandan exports, including goods, services, and
remittances, reached USD 2.64 billion in 2007. Some exported goods,
such as coffee and fruits, rose in volume and even more in value,
while fish and flowers were two exports that saw little to no gain.
Since 2005, Uganda's exports have shifted from traditional markets
in the European Union (EU) to the Common Market for Eastern and
Southern Africa (COMESA) countries and other "southern" markets,
including the Middle East, Kata explained. Exports to COMESA
increased by 78 percent in 2007, and Kata stressed that the
"south-south" trade was on the rise, as African, and Middle Eastern,
demand grew. According to Kata, informal exports drive the figure
considerably higher. She estimated that trade with DRC alone would
grow by at least USD 300 million if informal exports could be
captured.

3. The United Arab Emirates (UAE), the final stop for some of the
high value items that originate in DRC, but are officially exported
from Uganda, was the leading destination for Ugandan exports in
value terms. With two flights a day from Uganda to UAE, Ugandan
exports have a new "unlimited" market in the Middle East. Kata
explained that the population is growing in the region, along with
the purchasing power and need for goods. Ugandan gold sales in the
EU declined after activists said that the Ugandan military plundered
it from DRC mines, but the gold found a thriving market in the UAE.
Also, Middle Eastern markets have fewer restrictions on food
products, making it a more attractive market for Ugandan
agricultural exports.

4. Exports to southern Sudan, which increased by 72 percent in
2007, include processed foods, beer, construction materials, and
livestock such as chicken and cattle. According to Minister of
State for Trade Nelson Gagawala, Uganda is the primary provider of
goods to southern Sudan. The southern Sudanese market operates
independently from Khartoum, and as it expands, so do opportunities
for Ugandan-based businesses and goods (refs B and C). The Ugandan
Export Promotion Board plans to open a trade center later this year
in Juba, southern Sudan, to promote exportation of Uganda products,
Kata said. She is working closely with her counterparts to
streamline and structure trade flows to Juba, and to design
corresponding trade regulations with southern Sudanese officials.

5. COMMENT: GOU officials and exporters complain about Uganda's
land-locked status, but its central location and fertile land has
benefited the country's regional exports. The potential for exports
to southern Sudan and DRC, as well as other regional markets, has
not reached its peak, and projections for 2008 export figures are
continuing on a steep upward climb. END COMMENT.


BROWNING

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