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«Malaba Mutukula Lwakhakha May 2007 FOREWORD The Informal Cross Border Trade (ICBT) Survey is an economic survey covering unrecorded trade ...»

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3.1 Background Uganda is a landlocked country, covering an area of about 241,551 sq km laying astride the Equator in East Africa. It has common borders with Sudan in the North, Kenya to the East, Tanzania and Rwanda in the South and the Democratic Republic of the Congo to the West. Uganda has traditional trade ties with neighbouring countries since pre-colonial era. With the exception of Sudan and DRC, the other countries are members of the East African Customs Union, which was implemented in 2005. There are several gazatted customs posts along the territorial boundaries that serve as entry points in and out of Uganda. However, the survey could only cover fourteen customs post whose names are underlined in the above map.

Figure 1: Map of Uganda showing Cross-Border Monitoring Customs stations (underlined)

3.2 Border Posts along the Uganda/Kenya Border There are a number of gazetted customs stations and ungazetted crossing points between Kenya and Uganda. The main ones include Busia, Malaba, Lwakhakha and Suam River. The busiest stations among these are Busia and Malaba, which have well developed infrastructural facilities like roads, railway transport, telecommunications, electric power lines and supporting government institutions (e.g. immigration, police and revenue authority) on both sides of the border. Along the boundary line, there are many unofficial routes, which traders use to ferry goods inside or outside the country without 11 being detected. In some cases, local area officials on both Uganda and Kenya borders control the unofficial routes by charging a fee on traded goods that enter and leave country. Most of the communities along the borders speak similar languages and share a lot in common both culturally and socially. The communities on either sides practice subsistence agriculture, which is the predominant activity as well as retail trade and unrecorded cross border trade in agricultural produce.

The major currencies used in trade transactions along the Uganda/Kenya border are the shillings of the respective countries. The two currencies are easily convertible by the moneychangers or the shop attendants along the borders. The brisk trade along the borders is conducted throughout the day and night; and attains its peak on the market days.

Women and school going children are hired to ferry merchandise across the borders at a minimal fee. Besides women, men are also engaged in transporting merchandise on bicycles, wheel chairs and push carts.

The flow of trade is sometimes interrupted by the adhoc presence of Uganda Revenue Authority Protection Services along the borders or very heavy rains. Although exports are not subject to any form of duty, even before the establishment of the East Africa Customs Union in 2005, the likelihood of formalizing the unrecorded trade is unforeseeable. In addition, the endless bureaucratic delays in clearing goods at the borders coupled with varying taxes and prices in each country, slow movement of goods, and special packing requirements make the informal trade lucrative for those who indulge in it.

3.2.1 Busia

Busia is located in Eastern Uganda in Busia District along the border of Kenya. It is 195 Km from Kampala and 25 Km from Tororo town. The Topography of the neighborhood of the border is generally flat with few slopes making it suitable for all means of transport.

The informal traders are engaged in agricultural produce on the Uganda side, hire several cyclists to transport the produce across the border to avoid delays and cumbersome documentation at customs. The road connecting Uganda and Kenya is tarmac with an official crossing point gazetted by the Uganda and Kenya Revenue Authorities on either side respectively. Although Busia border is a formal crossing point, there are also unofficial” crossing points or “panyas” established by informal traders.

These include; Sofia, Marachi, Red carpet, Bulumba, Alupe, Mawelo, Jambura and Kalitunsi among others. Of these, only the Main gate, Sofia, and Marachi were monitored under the Informal Cross Border Trade (ICBT) Survey.

Maize being packaged and ferried into Kenya on Bicycles at Busia border Post

12 Trade along Busia is supported by financial institutions and informal money markets that facilitate currency conversion. The main exports here are agricultural produce where Uganda has a comparative advantage, whereas imports from Kenya are mainly manufactured products where Kenya has a competitive advantage. Busia handles the highest volume of informal and formal trade along the Kenya-Uganda border.

3.2.2 Malaba

Malaba border post is located about seven (10) kilometers away from Tororo town. It is the second busiest along the Uganda/Kenya border for informal trade activities. Like Busia, it has both heavy human and vehicle traffic that is perpetually moving across the frontier of Malaba River. Malaba River acts as a natural barrier separating Uganda and Kenya. Generally, the surrounding is hilly with valleys and savannah plains. The road connecting Uganda to Kenya is tarmac and is about 250 kilometers from Kampala. Apart from the main gazetted crossing point, informal traders use other routes like Nairobi and Mella which are within the vicinity.

Bicycles and Push Carts ferry merchandise to Kenya at Malaba Border Post

The main commodities exported informally from Uganda comprise of agricultural produce like maize, sorghum, millet, peas, beans, bananas and fruits, while industrial products dominate the list of imported products from Kenya. The main imported goods through Malaba are polythene bags, sugar, bread, and wheat flour. The market days of Wednesdays and Saturdays register huge flow of goods from either side of the border.

The commonest means of transport for informal goods is hand/head and bicycle for most agricultural produce. Despite the well developed financial institutions around the border, the informal money changers do most of the currency conversion.

3.2.3 Lwakhakha

Lwakhakha border station is located in Manafwa district which was formally Mbale District. It is separated by Lwakhakha River which acts as a natural barrier, and is about 23 Kms away from Bubulo town council. Along this frontier, a number of crossing points exist within the vicinity like Sono, Chepkube and Kalayet. These routes are sometimes used by armed illegal traders to ferry goods making it risky for law enforcement officers.

Occasionally, the illegal traders, most of whom are young boys, are caught by law enforcers and either have to bribe their way through or forfeit the goods. The price difference across the borders and sometimes commodity scarcity are the main thrust for 13 unrecorded trade along Lwakhakha border. The police and revenue officials work in collaboration to reduce on the incidence of smuggling through unofficial routes. For ICBT survey only the crossing point at the main gate is monitored.

Push Carts and Head used to transport Bananas to Kenya at Lwakhakha Border Post The border has poor infrastructure connecting the two countries. For instance the road connecting Uganda to Kenya is Murrum and some cellular mobile networks on the Uganda side have sparse locations of accessibility. Whereas Kenya has a reliable mobile cello phone, that is Ken Cell. The station is not connected to the national electricity grid.

The bulk of Uganda’s exports through Lwakhakha are agricultural foodstuffs like maize, beans, bananas, and fruits. On the other hand, imports from Kenya comprise of manufactured goods like sugar, cooking oil, molasses. During the week, market days of Saturdays and Tuesdays registers substantial volume of informal trade.

There are no financial institutions to facilitate trade on both sides of the border, so moneychangers facilitate the conversion of the currencies of the two partner states.

3.2.4 Suam River Suam River customs post is located in Bukwo Distict (formerly Kapchorwa district) along the Uganda/Kenya border on the slopes of Mt. Elgon. Suam River is the natural barrier separating Uganda and Kenya. The area is hilly and mainly an agricultural area-receiving heavy rains during the year. The border is about 8 kilometers from Bukwo Town Council and about 390 Kms from Kampala. The road network from Kapchorwa to Suam River border is very poor and sometimes impassable during rainy season. Other infrastructural facilities like telecommunication and electricity are non-existent. The poor infrastructure has increased the cost of doing business in Suam, with most traders buying merchandise from Kitale, the nearest town (about 40 Km) in Kenya.

The insecurity occasioned by cattle rustlers of the Pokot and Karamojong ethnic communities, have impeded business activities as well agricultural production. The main economic activity within the area is subsistence farming and retail business.

There are no financial institutions on either side of the border. The government institutions like Immigration, Revenue Authorities and Police are fully operational on both sides. The main commodities transacted here under informal trade are agricultural produce which include; maize, wheat, and beans. While manufactured goods constitute the imports from Kenya. Generally the volume of trade is small with the exception of agricultural exports that cross in bulk on Lorries during market days (Sundays). This 14 information therefore serves as a vital input into unrecorded trade data. The other unique means of transport used is by donkey, which carry beans or maize up to 100 kilograms.

Kapnandi and Kululu are the other crossing routes. A lot of unrecorded trade reportedly goes on at Kapnandi especially during harvest season.. Local moneychangers facilitate trade and currency conversion..

3.3 Border Posts along the Democratic Republic of Congo 3.3.1 Mpondwe Mpondwe border post is situated in Kasese district. The road is tarmac and is approximately 430 Km from Kampala. The communities around speak both Swahili and Rukonjo, which are the predominant languages, used in Mpondwe.

There are established government institutions namely URA, Police and Immigration offices on the Ugandan side. However, the DRC side operates informal systems that are equivalent to a revenue body and immigration. The officials from these institutions assist in identifying concealed items, establishment of prices and estimation of quantities during the survey period.

There are no financial institutions to facilitate trade on both sides of the border. The currencies used here are the United States Dollar, Uganda Shilling and the Congolese Francs. The local moneychangers facilitate the conversion into the respective currencies as required.

Mpondwe border is busy throughout the week with the peak days being Tuesday and friday market days. There are a few insignificant crossing points used by informal traders.

The bulk of the items exported to DRC are mainly industrial products, while among the agricultural commodities, fish is the leading export. Imports include commodities like palm oil and cassava.

The border post has been experiencing insecurity occasionally due to clashes among the rival rebel groups in DRC and the government forces that could have impacted on the volume of trade transacted during the period under review.

3.3.2 Ishasha River Ishasha River border point is located in Kanungu District in the western part of Uganda, in Queen Elizabeth National Park. Ishasha River is the boundary mark separating DRC and Uganda. The road to Ishasha River through Kihihi township is sometimes impassable during the rain season. Apart from the main monitored route, there are other unmonitored footpaths of Mwanjari and Kilombe that are sometimes used but with insignificant trade flows.

Ishasha River border records high volumes of trade on Mondays and Saturdays, which are market days. The requisite government institutions are visible on the ground with well-established offices. The main exported products to DRC are mainly manufactured goods like Bread, Sodas, Sugar and cooking oil. There are no formal financial institutions operating in the area to facilitate trade, with the Ugandan currency being the main currency for settling business transactions. Fish is among the main exports through Ishasha River border point.

This station sometimes experiences insecurity caused by rebels.

–  –  –

Bunagana border post is located in southwestern Uganda in Kisoro district. It is about 10 Km from Kisoro town and is connected by murram road. The station has government institutions but without supporting economic infrastructure like, financial institutions and electricity, although with weak telecommunication network for most mobile operators.

The political instability in the Democratic Republic of Congo rendered the Goma route insecure, thus affecting informal trade activities at the customs post greatly. For instance, during the months of June to December 2006, most traders used Cyanika route to Congo via Rwanda. The route is considered to be safe but longer, hence increasing the business transaction costs. The other nearby crossing point along Bunagana is Kibaya accounting for minimal informal trade flows. The unmonitored crossing point on the Uganda/DRC border called Mupaka in Busanza sub-county is currently experiencing large informal trade flows.

Monday and Friday are market days when the border post records high volume of trade flows.

The main exports are cement, wheat flour and refined salt and imports includes beans, avocados, and bananas. There are minimal transactions at night due to insecurity across the border..

The main modes of transporting goods are wooden bicycles and head/hand because they are cheap and convenient.

The Uganda shilling, Congolese francs and the United States dollar are the commonest currencies used at the border post.

3.3.4 Vurra

Vurra is located 7 kilometers away from Arua town on the DRC border. The border is vast and porous with the road acting as a natural boundary separating the two countries.

Official trade through Vurra is picking up; and it is commonly used as a transit route to DRC. The main nearby town in the DRC is Aru, which is a regional hub with supplies originating from Uganda. The local residents on both sides of the borders speak Lugbara and Swahili languages. They engage in subsistence farming and informal trade as means of survival.

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