From: barnhart@gagme.chi.il.us (Mr Aaron Barnhart)
Subject: IPS: UGANDA: TRADE LIBERALISATION BEARING FRUIT, BUT TROUBLE
Originator: barnhart@gagme
Organization: Evanston, Illinois
Date: Wed, 7 Oct 1992 22:41:35 GMT


Copyright Inter Press Service 1992, all rights reserved.  Permission to re-
print within 7 days of original date only with permission from 'newsdesk'.

Area: Opecna Morning Transmission
Title: UGANDA: TRADE LIBERALISATION BEARING FRUIT, BUT TROUBLE LOOMING


an inter press service feature

by richard tebere

kampala, sep 30 (ips) -- uganda's experiment with trade
liberalisation is starting to bear fruits, three years after the
policy was adopted.

shop shelves in the major towns are bursting with relatively
cheap goods, a sign of rapid economic recovery, government
officials say.

however, not everybody is smiling about this glitter. ever
since the government adopted liberalisation in 1989, cheap
imports have flooded the domestic market, seriously hurting
local production.

trade liberalisatin and privatisation are two facets of a
structural adjustment programme (sap), worked out by the world
bank and the international monetary fund (imf), for the
government of president yoweri museveni as a panacea of its
economic ills.

the first phase involved a currency conversion and a 30
percent devaluation of the shilling, the nataional currency, in
july 1987.

in the 1992/93 budget, announced in july, the government
lifted the ban on several imports, including beer, soft drinks
and cars which are more than five years old.

also eased were trade restrictions as part of a wider
strategy to ''timulate border trade and eliminate smuggling''.

results were not long in coming. in under two months the east
african nation was flooded mainly with beer, soft drinks,
cement, plastic sand and foam matresses from kenya.

smuggling across lake victoria increased and corruption at
customs posts was the order of the day.

hampered by high taxes and production costs and poor quality,
uganda's industries fared poorly against imports. a ugadan hoe,
for example, costs 30 percent more than a similar imported one.

two major industries -- swisa industries, manufacturers of
tissue paper and ugationers which makes statinery -- have since
folded up.

production at lake victoria bottling company, which holds
the franchise for pepsi cola, dropped from 200,000 crates to
140,000 crates a month. (more/ips)


uganda: trade (2)

bank of uganda figures show an 18.3 percent decline in the
soft drinks sector in the first quarter of 1992 -- from more
than one million crates to 824,276.

uganda grain miling company, the largest dealer in wheat
products, has experienced a drop in monthly turnover from
780,000 dollars to 324,000 dollars.

''officials of uganda revenue authority are responsible for
the laxity at border posts which is a cause of concern for all
of us'', ashe mukasa, general manager of uganda grain millers,
told ips.

by easing border trade restriction, the government had
calculated on raking in more revenue from import duty. but
smuggling and under-declaration of goods and corruption have put
paid to these hopes.

weekly collections from cement has fallen from 26,000 dollars
to 9,000 dollars. losses from smuggled wheat are estimated at
210,000 dollars in the last two months.

in the face of dwindling revenue, the government was early
this month forced to reinstate the ban on imported beer and soft
drinks.

taxes on beer constitute a major contribution to the national
coffers but were affected because consumption of local beer had
dropped by 50 percent.

in a meeting called last week to review their worsening
predicament, members of the uganda national chamber of commerce
and industries (uncci) accused the government of pursuing
policies that deliberately choke local industries.

they appealed to the government to approach ''trade
liberalisation with caution'', especially where local industries
producing similar products are concerned.

critics of the policy say by opening up to unfair trade, the
government is shooting itself in the foot, as it undermines the
country's industrial base.

at stake also are the jobs of hundreds of workers who may be
forced to join the 6,000 civil servants recently laid off.

officials from the the ministry of finance, planning and
economic planning and the uganda revenue authority spent most of
last week brainstorming in an apparent attempt to wriggle out of
the deadlock.

how far they will go to reverse the damage so far caused time
alone will tell. but with the expected retrenchment of more than
100,000 civil servants and soldiers, the makings of an explosive
political situation are already clear. (end/ips/rt/apc/92)
Newsgroups: soc.culture.african