Uganda has always been a hub for transit business destined for Rwanda, the Democratic Republic of Congo and South Sudan due to its favourable location and Customs policy.

Since the neighbouring DRC and South Sudan are landlocked and have also been unstable, businesses have generally opted to buy cargo through bonded warehouses in Kampala, thereby reducing the risk of storing large quantities in their own countries.

However, this has changed with Uganda Customs bringing in new policies to discourage the re-export of cargo to neighbouring countries.

Customs has recently introduced a new regulation that says cargo can no longer be automatically warehoused in Uganda and importers are to seek permission from Customs prior to warehousing; that permission will only be given at the discretion of the Assistant Commissioner Of Field Services.

In the past, and in accordance with the EAC Act Rev 2012 (Section 57), all importers were granted a six-month warehousing period and a further extension of three months to find a market for the goods in the neighbouring countries.

However, Uganda Customs is currently only giving 30 days and at times just seven days to warehouse and re-export the cargo. This time is not sufficient due to the regular political problems in the neighbouring countries.

No prior notice was given to importers that the Uganda Revenue Authority was planning to amend the period of warehousing.

Furthermore, under the single EAC tariff system, cargo going to Uganda could be directly warehoused on the strength of a single entry form filled out in Mombasa. Again, URA has brought in new regulations, whereby trucks cannot offload cargo directly on arrival but have to process another entry on arrival. This is duplication of documentation, which delays the offloading unnecessarily.

These new policies will affect the economy in the following ways:

1. Trade with the neighbouring countries will automatically go down.

2. The bonded warehouse business in Kampala, which is heavily dependent on the transit business, will die and most bonded warehouse will remain empty. Investments in bonded warehousing and equipment by businessmen will remain idle, rendering employees redundant.

3. Ugandan transporters will lose as the country has been receiving over 400 containers a month that are meant for re-export and pass through Uganda bonded warehouses.

4. Since Uganda is also landlocked, the cargo held in bonded warehouses for re-export has at times helped Uganda alleviate its own shortages. For example, in 2010, when Uganda ran out of sugar and the price of sugar almost doubled, it was the sugar in the bonded warehouses that helped in alleviating the shortage.

The indirect effects will be even more devastating for the economy. It is difficult to understand how such policies are implemented without looking at the long term impact on the country’s economy

Yusuf Alibhai is involved in the transport, clearing and forwarding businesses in Uganda