Trading with neighbours

Download the report, Trading with neighbours, here

International Alert’s new report, Trading with neighbours, examines the realities of trade relations between business communities in Uganda and South Sudan*.

The 2005 peace agreement between the government of Sudan and the Sudan People’s Liberation Movement/Army (SPLM/A) ushered in a wave of migration to Sudan – particularly to the south of the country, which was still reeling from the effects of the two-decade-long civil war and had enormous development needs. The influx included not only large numbers of returning refugees and internally displaced people, but also foreign development workers and traders from regional countries such as Eritrea, Ethiopia, Kenya and Uganda, among others.

The period from 2005 to 2010 thus marked a huge trade boom between Uganda and South Sudan. As our report reveals, however, this boom went hand-in-hand with trade conflicts between the business communities. In addition to disputes over issues such as contract breaches, Ugandan traders accused the authorities, in particular the police and army, of incidents of harassment, rape, torture, imprisonment, looting and confiscation of property/belongings. Ugandan traders later pushed for compensation from the government of South Sudan and in 2013, together with bus and truck drivers, blocked the Kampala–Juba road in a symbolic expression of their anger and frustration. The conflict took centre stage in the Ugandan media, which widely reported the traders’ grievances.

Yet, despite these conflicts, informal exports from Uganda to South Sudan grew enormously during this period, from USD 9.1 million in 2005 to USD 929.9 million in 2008. Formal exports also increased, but less dramatically, from USD 50.5 million in 2005 to USD 245.9 million in 2008. And between 2008 and 2010, Uganda and the government of South Sudan signed a bilateral agreement and a Memorandum of Understanding to safeguard their mutual interests.

But between 2011 and 2013, trade between the two took another turn. The increased market competition and fear of conflict following South Sudan’s independence reduced the trade volume and revenue. In November 2013 the Uganda Traders’ Association of South Sudan (UTASS) summoned five members of the East African Community (EAC) – namely, Burundi, Kenya, Rwanda, Tanzania and Uganda – before a regional court, seeking to block South Sudan’s application for entry into the EAC bloc. The traders argued that South Sudan did not meet the requirements expected of states applying to join the EAC. Media reports of the incident further fuelled tensions between the two countries.

Then in December 2013, a new military conflict erupted in the South Sudanese capital of Juba, which quickly spread to the country’s northern states. Disruption to trade was inevitable and direct losses of property and trading opportunities rapidly increased.

In this context, our study therefore set out to achieve the following:

  • Gain an understanding of South Sudan’s national investment and trade policies and programmes, investment opportunities and the potential for strategic partnerships between trade organisations (e.g. chambers of commerce and industry) in Uganda and South Sudan;
  • Gather and analyse findings on investment and trade-related conflicts involving Ugandans and other foreign investors;
  • Assess the immediate impact of the current South Sudan military conflicts on the Ugandan and South Sudanese cross-border business communities; and
  • Develop possible interventions to promote peaceful growth and development opportunities.

What we found is that the current South Sudan military conflict has had a definite negative impact on investment and trade relations between Uganda and South Sudan, especially in the northern Ugandan districts of Arua, Koboko and Nebbi, as well as Arua Park in Kampala City. The conflict has not only led to the loss of sales revenue and income, but also resulted in increased unemployment, loss of property and reduced market opportunities.

Our report provides targeted recommendations to business and traders associations, civil society, the governments of Uganda and South Sudan, financial institutions and the media aimed at remedying these adverse trade issues and practices, in an effort to create a more conducive trading atmosphere for cross-border business communities in the region.

To read our findings and recommendations in full, download the report here. You can find out more about our work in Uganda here.

* South Sudan became an independent state in 2011. From 2005–2011, it was an autonomous region within Sudan, with its own government.