Ugandan traders, who previously used road transport, are saving billions of shillings in reduced costs of transport due to the reopening of Mwanza-Port Bell route on Lake Victoria this year.
Charles Kateba, the managing director Uganda Railways Corporation, said one company saved a staggering $240,000 in transport of cargo from Uganda to Tanzania in a period of two months.
“In just six week of operations of Port Bell-Mwanza route one customer who shipped 6,800 tons saved USD 240,000 in transport costs,” said Mr Kateba.
Mr Kateba made the remarks on Wednesday during the Uganda-Tanzania Business forum.
The event was held on sidelines of senior officials meeting of the second session of the joint permanent commission between the two countries in Munyonyo.
Mr Kateba said more than 3,400 tons of iron sheets have been transported from Kampala via Lake Victoria to Tanzania.
“At one point we had 22 wagons of iron sheets headed to Mwanza and 22 wagons returned to Uganda with grain for the World Food Programme,” he observed.
The development comes against the backdrop of increased bilateral trade and deepening of diplomatic ties between Uganda and Tanzania.
Uganda currently exports iron sheets, agricultural produce, sugar, soap, oils, milk products, herbal skin care products; and fishnets among other items.
On the other hand, Uganda imports from Tanzania cotton seed cake, grain and hopes to bring in textiles in the near future.
The Port Bell –Mwanza route was inactive since 2007. With Roofings Limited and WFP using the route for transport, many players are expected to be enticed.
Compared to the Nairobi Port, the Portbell-Mwanza route cuts the transit time by more than 50 percent and remains attractive to neighbouring countries such as DRC, Rwanda, Burundi and South Sudan.
Uganda’s Ambassador to Tanzania, Mr Richard Kabonero called for more water vessels to “further bring down the cost of transport via Lake Victoria.”
Both MV Kawa MV Pamba are said to be in dire need of “engine overhaul” to allow them ply the Portbell-Mwaza route.
However, it costs $5m to service one vessel and $25m to procure a new one.
With budget limitations, Mr Kabonero says Uganda and Tanzania are better off jointly raising funds for new vessels.
The rehabilitation of MV Pamba are expected soon as government solicits funding to replace MV Kabalega which sunk into Lake Victoria after colliding with its sister ship MV Kawa in May, 2005.
Speaking at the function, Trade Ministry Permanent Secretary Amb Julius Onen said Uganda and its partners are developing a new policy of Buy East Africa, Build East Africa to increase trade with regional countries.
“If there is something you require and the price is competitive, you give the opportunity to an East African,” said Mr Onen.
He said government also is strategizing to export 20 high value products to 20 countries in the region under the African Continental Free Trade Area arrangement.
“We want these products to reach customers directly in supermarkets,” said Amb Onen, adding, “Ugandan businesses will have to engage distributors in neighbouring countries to distribute their products.”
The said a new law would soon be tabled to “restrict manufacturers to manufacturing” thus allowing other players to manage distribution of products.
“Can we create an environment to allow trade to grow? For Tanzania and Uganda, it will be a win-win situation,” he emphasised.
An official from Roofings urged authorities to remove non-tariff barriers that hinder smooth flow of trade in the region.
The official gave an example of Roofings products being subjected to fresh inspection on arrival in Tanzania.
“We need to harmonise issues of standards with the Tanzania standards bureau. Once Uganda National Bureau of Standards has approved a product, why should it be subjected to fresh inspection in Tanzania?” the official wondered.
Lack of harmonious rules, officials said, reduces the trade volumes s and causes unnecessary delays in clearance of goods.
In response, Mr Onen said government is partnering with the private sector to harmonise standards of goods.
“If we can’t resolve a non-tariff barrier issue in 48 hours then trade will collapse,” he cautioned, adding, “to be competitive in trade, we must deliver high quality goods on time.”
He, however, expressed hope that continuous engagement with the Tanzanian counterparts would lead to complete elimination of non-tarriff barriers.
ChimpReports understands Roofings currently exports goods worth $3.5m to Tanzania per month.
The Port Bell-Kampala railway line has since been repaired.
The Maritime Services Company is expected to continue to operate and maintain the Rail Freight on the Central Corridor between Kampala and Mwanza.
Regarding Tanzania’s recent blocking of Ugandan sugar exports, it was agreed with Tanzanian officials to give preference to Uganda whenever there is a deficit.
If there is any doubt about the origin of the sugar, then verification can be carried out.