By Prossy Nandudu
The Presidential Advisory Committee on Exports and Industrial Development (PACEID) has embarked on the search for cheaper credit that will be advanced to exporters so as to resolve issues around border points.
This will supplement the frontier fund from the government that has already been allocated to the coffee sector.
Once the money for fruits and vegetables are available, they will be accessed by different companies through the Export finance docket but with clear and strict guidelines.
The initiative was revealed on Thursday (Yesterday) to members of the Horticulture Platform by Brenda Katarikawe, the in-charge Export Development & Communication at PACEID.
The meeting was organized by the Uganda Agribusiness Alliance (UAA). The proposed fund will be a revolving fund that can be borrowed, used and then returned for other members to use.
“We want to address risks surrounding the exports by finding cheaper money that exporters can borrow, fix their issues in their export business and also at border points then return for other members to borrow,” Katarikawe explained.
The idea of the fund is to get exporters access the money to quickly respond to buyers concerns of needs like meeting client orders in time, and observing phytosanitary conditions at entry points, among others.
“People get good orders but because they lack capital, they don’t supply, which has tarnished the image of Ugandan companies. We are trying to see how best to see exporters get financing to help them from production till delivery,” She stated.
To benefit from the fund, exporters will have to register with the team that will be handling the fund, record the type of horticulture products being exported, destination among others so as to access the money.
Other initiatives include verifying and registering exporters on the catalogue to be marketed by the trade representatives in markets in the United States of America, S. Africa, DRC Congo, Serbia among others.
In addition to creating a fund, she also revealed that plans are under way to establish permanent distribution centers in the newly acquired markets that will act as information centers of various products and information about Uganda.
The initiatives are aimed at streamlining the Horticulture business faced with various challenges that if not addressed could fail the team’s target of increasing horticulture export earnings to $6b by 2027.
Uganda currently exports 5.8m tons of fresh fruits and vegetables worth $35m annually according to Hortifresh, a membership-based organization of fruit and vegetable exporters.
Challenges
According to the Uganda Export Promotions Board, Horticulture exporters are faced with challenges such as stringent market-entry requirements to especially the European Union, of which compliance increases the cost of doing business.
For examples, Small and Medium Enterprises, that make up the larger percentage of export firms particularly in the horticulture sector, tend to withdraw from the business in the event that they cannot manage the costs
Uganda Export Promotion Board ED Elly Twineyo said, “This has resulted in a high number of border and in-market interception of Uganda’s fresh produce consignments in the EU.”
He noted that the non-compliance related to health, safety and phytosanitary requirements such as the Minimum Residue Levels (MRLs) for pesticides, presence of harmful organisms amongst others, has forced buyers to turn to other countries and caused continuous reduction in Uganda’s market share of especially the EU market.
The other challenge is the cost of freight which remains a key inhibitor to competitiveness of Uganda’s products in the EU market.
“Freight rates for export consignments originating from Entebbe (Uganda) to any destination in Europe are on average more than 25 percent compared to exports originating from competing supplying markets such as Kenya,” Twineyo explained.
