Uganda to Export Tax Free Goods to China

China is cementing its foot print in the country by allowing the export of Ugandan goods into its markets without duties and tariffs, the country's envoy to Uganda has said.

Amb. Zhao Yali said the country is revelling in the delight that comes with Uganda's 50th Independence Day celebrations because the Golden Jubilee also marks the establishment of diplomatic relations between China and Uganda.

Addressing the media on Feb. 23, 2012 Amb. Yali said starting July 1, 2012, Ugandan traders have something to smile about because "95 per cent of Uganda's goods could enter Chinese market without any duties and tariffs."

The revelation suggests Uganda's export volumes are bound to shoot up, a development that officials from the Ministry of Finance are pleased about.

But Uganda's Export Promotions Board, an entity at the heart of opening new markets for Ugandan produce, received the information with a pinch of salt.

Chief Executive Florence Kata said she would have been pleased to hear a removal of restrictions including quotas on Ugandan produce to China.

"They need not only increase the market access of Ugandan goods but they need to remove all non-tariff barriers," she said.

"They are unnecessarily strict, putting conditions like standards, processes and things like hygiene."

Reacting to her comments on Feb. 26, 2012, Amb. Yali told this newspaper that China, a member of the World Trade Organisation, is a free market economy.

At the end of 2011, Ugandan exports to China totalled $40 million (Shs84 billion), while China's exports to Uganda amounted to $359 million (Shs861 billion).

Uganda exports mainly commodities to China, including coffee, hides and skins, arts and crafts, among other products.

Mr Keith Muhakanizi, the deputy secretary to the Treasury, said the development is a positive move by China.

"China is a big power. It is the one with money and our exporters can now look forward to earning more dollars."

Mr Muhakaniza said, however, that "sometimes" traders may not respond "sharply" to tax barriers being lifted but admitted: "Certainly after oil production, the numbers (in trade volumes) should move up sharply."

Amb. Yali said his country would continue to offer financial assistance to Uganda, investing in infrastructure development, health, education and other key sectors.

Already, the Chinese have put in bids to construct the Karuma hydropower dam, and are looking forward to building the planned highway between Entebbe International Airport and Kampala "which will cost $350 million (Shs840 billion)." Construction work is expected to start this year.

The Chinese have also entered the Ugandan oil market, becoming the third biggest player in the industry, after British explorer Tullow Oil which, signed a multibillion farm-down agreement with China National Offshore Oil Company (CNOOC) selling part of its stakes for the exploration of oil to the Chinese entity.

Dependence

Increased Chinese donations and investments on the African continent have come under sharp criticism recently, with calls for African countries to focus on working towards economic independence.

Rwandan leader Paul Kagame recently said that China's donation to Africa -the new $200 million Africa Union headquarters in Ethiopia - was a reflection of Africa's inability to handle its development agenda.

Utility: 'It is very difficult to take food items to China. They need to help us strengthen partnerships so that our products can find space on the shelves in Chinese markets.'