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Ugandan exports to Rwanda sink to 13-year low as diplomatic row rages on

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Ugandan exports to Rwanda in the first 3 months of 2019 have reduced by 34.31% amidst a diplomatic row that has seen tempers flare, culminating in border closures by Rwanda.

According to statistics from Uganda Revenue Authority (URA) and Bank of Uganda (BoU), Uganda in Q1 2019 exported USD34.12m worth of goods, compared to USD51.94m in Q4 2018 and USD60.66m in Q3 2018.

There is no clear end in sight for the recurrent Uganda-Rwanda feud considered by many as sibling rivalry. Rwanda has been Uganda’s No.3 biggest source of export earnings after Kenya (USD580.29m) and South Sudan (USD355.91m). In 2018, Uganda earned UGX212.14 m in exports to Rwanda.

USD34.12m is the lowest quarterly earnings in 9 years, since Q1, 2010 when Uganda earned USD32.82m.

Rwanda accuses Uganda of supporting her political enemies, an accusation that Uganda has flatly denied.

Rwanda closed all its common border posts with Uganda including; Katuna, Kagitumba, Mirama Hills and Cyanika towards the end of February accusing Uganda of harbouring Rwandan dissidents.

The government of Rwanda is also said to have ordered its citizens not to travel to Uganda and is also said to have ordered its nationals doing business on especially the Ugandan side of the boarder to pack up and go home.

Mirama Hills One Stop Border Post (OSBP) at the border with Rwanda and Uganda built by TradeMark East Africa to ease trade between the two countries. The OSBP had, before the impasse eased treading between the two countries by reducing turn-around time from 3 days in FY 2015/16 to just 2 hours in FY 2017/18.

2019 had started well with Uganda exporting USD16.96m in January and USD14.51m in February. But in March 2019, there was an 81.79% decline as exports fell to a mere USD2.64m.

This is the lowest monthly export earnings in 13 years, since July 2006, when export earnings stood at USD2.5m!

Uganda mainly exports food items, cement, steel, personal care products, beverages and animal products.

In April, Rwanda blocked a consignment of Hima Cement, over allegedly breaching standards, but those in the know say, this is part of the economic blockade that Rwanda is serving to Uganda.

However Ugandan imports from Rwanda appear unimpeded. In fact Uganda imported goods worth USD3.9m from Rwanda in Q1 2019- which is 42.99% more than the USD2.73m in Q4 2018.

Uganda enjoys a trade surplus over Rwanda.

Trucks stuck at the Ugandan Rwanda border. Ugandan export earnings from trade with Rwanda, declined by USD11.9 million

Rwanda has been Uganda’s No.3 biggest source of export earnings in Africa, after Kenya (USD580.29m) and South Sudan (USD355.91m). In 2018, Uganda earned USD212.14 m in exports to Rwanda.

Finance

Gov’t ready to shake down BoU- Finance Minister

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COSASE and the Presidential Tripartite Committee have recommended a shakedown of BoU and the legal regime setting it up

After a long wait, the Minister of Finance, Planning and Economic Development (MoFPED) Hon. Matia Kasaija, has said that Government is ready to take action on the recommendations of Parliament on Bank of Uganda.

Mr. Kasaija was today quoted by Daily Monitor, Uganda’s leading independent daily saying that after the Parliamentary Public Accounts Committee on Statutory Authorities and State Enterprises (PAC-COSASE) made their recommendations, following a lengthy probe, and parliament had discussed and adopted the report, he had tasked the central bank to examine the findings and recommendations of the COSASE report and make a report to him, showing what actions they would take internally.

“We are moving, but I cannot give you the whole detail. We have received a report from Bank of Uganda showing the actions they have taken. But I cannot give you details on these actions too. The report was sent to me about three days ago,” Mr Kasaija is quoted, as having told Daily Monitor in a telephone interview.

The Hon Abdu Katuntu COSASE which faulted Bank of Uganda for mismanaging the takeover and sale of seven defunct banks, had among others recommended an amendment of critical clauses in the BoU Act as well as holding several BoU officials criminally liable.

Kasaija’s comments come on the back of another recently leaked Confidential Report of the Presidential Tripartite Committee to the President that also recommended an “urgent and comprehensive review” of what it believes is an archaic “legal regime governing the Bank of Uganda.”

“The Bank of Uganda Act Cap 51 was last amended in 1993, two years before the promulgation of the 1995 Constitution of Uganda. In the case of the Bank of Uganda by-laws established under Statutory Instrument 51-1, the situation is even worse as they were passed in 1968 and continue to be applied despite being inconsistent with the Constitution in some important respects such as the authority of the Governor versus the authority of the Board,” reads part of a leaked Confidential Report of the Presidential Tripartite Committee to the President.

The committee recommended a “splitting or separation of the functions of the Governor and the Chairperson of the Board especially with regard to administrative matters”, noting that “most of the problems caused as a result of the Governor’s decision could have been avoided if the two roles were separate with no opportunity for the Governor to function as both Board and Chief Executive Officer.”

The Committee also recommended that a new additional position of Deputy Governor be created to unburden the governor, who they said was “too overloaded in terms of responsibilities” some of which risked “exposing the position of Governor to unnecessary controversies.”

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The Presidency

Presidential Committee recommends urgent and comprehensive sweeping Central Bank reforms

A committee appointed by President Yoweri Museveni to study several complaints made to the Inspectorate of Government and Parliament about Bank of Uganda, has recommended “urgent and comprehensive review” of what it believes is an archaic “legal regime governing the Bank of Uganda.” “The Bank of Uganda Act Cap 51 was last amended in 1993, […]

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A committee appointed by President Yoweri Museveni to study several complaints made to the Inspectorate of Government and Parliament about Bank of Uganda, has recommended “urgent and comprehensive review” of what it believes is an archaic “legal regime governing the Bank of Uganda.” “The Bank of Uganda Act Cap 51 was last amended in 1993, […]

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Finance

Oberthur Fiduciaire the French money printer speaks out; denies any wrongdoing, blames money plane operator and offers to compensate BoU

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BoU Governor, Emmanuel Tumusiime Mutebile called in government to investigate the anomalies identified in currency note logistics. French money printer, Oberthyr Fiduciaire has denied any wrong doing and strongly rejected any suggestions that extra illegitimate money was printed and carried on the plane

Oberthur Fiduciaire, the French currency printer contracted by BoU to print and deliver an unspecified amount of Uganda Shilling banknotes to Uganda, has denied any wrong in the ongoing scandal in which unauthorised cargo found its way on what should have been a top-security exclusive flight.

Allen & Overy LLP, who are Oberthur Fiduciaire’s lawyers, in an email to CEO East Africa Magazine blamed the operator of the plane, chartered by them, who carried unauthorised cargo and didn’t bother to notify them beforehand.

Oberthur Fiduciare strongly rejected any claims and allegations that there was any extra and or unauthorised money on-board and or printed by them, saying: “Oberthur Fiduciaire confirms that the exact number of banknotes ordered by the BoU has been printed and delivered.”

The French firm also clarified that they are not associated with Oberthur Technologies SA, which is facing a 2.5 years ban from World Bank and partner agencies over a corruption scandal in Bangladesh.   

CEO East Africa Magazine understands that Kuehne + Nagel International AG, a global transport and logistics company based in Schindellegi, Switzerland is the transporter hired by Oberthur Fiduciaire to transport the money to Uganda.

“Oberthur Fiduciaire further denies having committed any wrongdoing in relation to its business relationship with the BoU and the provision of banknotes,” wrote Allen & Overy LLP.

“For the sake of clarity, the MD-11 (The McDonnell Douglas MD-11) aircraft that was initially supposed to be used to ship banknotes to the BoU had been grounded in Kampala for technical reasons and replaced by a larger B747 (Boeing 747). The operator of the B747 has, without notifying Oberthur Fiduciaire, used the same flight to ship one pallet of replacement parts for the MD-11 and four pallets of regular cargo,” the law firm further clarified on behalf of Oberthur Fiduciare.

“Oberthur Fiduciaire eventually offered financial compensation to BoU in the form of a rebate on future transport costs as this was contrary to the contractual arrangements between BoU and Oberthur Fiduciaire,” concluded Allen & Overy LLP.

CEO East Africa Magazine has written to Uganda’s Civil Aviation Authority who manages Entebbe International Airport to corroborate this and will update this story in due course.

On June 14th Matooke Republic, a Kampala based news site reported that The official amount printed was a “70 million pieces of UGX5,000 notes” to totalling to UGX350 billion. The money was supposed to be flown in a privately chartered MD-11F aboard a M/s Kuenel + Nagel flight no. AJK4042/LGG-EBB on 26th April 2019.

However, there was a change of plan to another plane B747-400BCF at the last minute.

Kuenel + Nagel was reportedly paid USD196,931 as freight and insurance fees. 

Matooke Republic also reported that Oberthur the company contracted to print the money went ahead to offer a remedy of $15,000 (about Shs57m) or a 10% discount on the next consignment.

An unconvinced BoU Governor, Prof Emmanuel Tumusiime Mutebile, then called in State House’s Anti-Corruption Unit to investigate the matter.

A statement by Uganda Revenue Authority has since said that the 5 extra cargo pallets contained other cargo which belonged to various individuals / companies / organizations.

“As per normal customs clearance procedure, this cargo was offloaded into the licensed bonds at the airport and subsequently the owners made customs declarations, paid applicable taxes and Customs physically verified each consignment to ascertain accuracy and consistency with the declaration and released the goods to the owners,” read a statement by Dickson Kateshumbwa, the URA Customs Commissioner.

Some of the organisations/entities said to have had cargo on the said plane, include businessman Charles Mbiire and Omar Mandela’s Mandela Millers Ltd. A number of UN agencies as well as USAID, Ministry of Health and other private businesses have also been named by authorities as having had cargo on the said plane. 

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