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Foreign produce traders irk Ugandan industrialists

Peter 19th Mar, 2025 Agriculture Pedson Mumbere
Foreign produce traders irk Ugandan industrialists

A flourishing maize plantation. Ugandan manufacturers are concerned that some foreigners buy the grain directly from farmers before it is even harvested. FILE PHOTO


The Uganda Manufacturers Association (UMA) has expressed concern about the growing trend of foreign traders purchasing raw materials directly from Ugandan farmers.

In an engagement with Uganda Revenue Authority (URA) officials, UMA called on the government to regulate this practice, particularly by traders from neighboring countries like Kenya and South Sudan, who are increasingly buying grains cheaply from farmers in Northern Uganda, a region that produces some of the country’s highest yields of maize, millet, and sorghum.

Northern Uganda, known for its significant contribution to the country’s grain production, has seen a rise in foreign traders buying agricultural produce directly from farmers. This practice, UMA argues, undermines the domestic manufacturing industry and leaves local farmers at a disadvantage.

  • Maize, one of the region’s most widely grown crops, is often sold directly on the farms to traders from Kenya, who then export the grain for processing into fine flour in Kenya. This flour is subsequently imported back to Uganda, where it competes with locally-produced flour.

Manufacturers have expressed concerns that this trend deprives Ugandan businesses of the opportunity to process raw materials locally. Emmanuel Odongo, General Manager of Jubico Industries Limited, criticized the practice as “unfair” for Ugandan producers.

“It is unjust for a Ugandan, who must obtain an export permit to buy raw materials, to be forced to pay the same price as foreigners who bypass the necessary regulations,” he said. Odongo emphasized that this direct purchase of raw materials by foreign traders not only exploits local farmers but also erodes the potential profits that Ugandan manufacturers could earn from processing the goods domestically.

  • The situation has prompted a broader debate on trade regulations within the East African Community (EAC), particularly regarding the movement of goods between member states. A maize miller, who wished to remain anonymous, pointed out a stark contrast in how neighboring countries regulate their agricultural sectors.

“In Kenya, you cannot just walk up to a farmer and buy their produce without restrictions. The government controls such transactions, whereas here in Uganda, foreign traders can operate freely without any oversight,” the miller explained. She added that Kenyan authorities have previously blocked Ugandan traders from selling processed milk in Kenya, illustrating the stricter controls in place across the border.

“In Kenya, you cannot just walk up to a farmer and buy their produce without restrictions. The government controls such transactions, whereas here in Uganda, foreign traders can operate freely without any oversight,” the miller explained. She added that Kenyan authorities have previously blocked Ugandan traders from selling processed milk in Kenya, illustrating the stricter controls in place across the border.

Uganda's imports from Kenya totaled about UGX 5.5 trillion (around $1.5 billion) in 2023, making Kenya Uganda’s largest source of imports. These imports include petroleum products, machinery, chemicals, and processed food products like wheat flour, which competes directly with Uganda’s own food processing industry. The UGX 5.5 trillion figure is substantially higher than the UGX 4.9 trillion worth of exports Uganda sends to Kenya, showcasing a trade deficit with its largest trading partner.

Uganda's imports from South Sudan were valued at approximately UGX 370 billion (about $100 million) in 2023, consisting mostly of petroleum products and construction materials. Although South Sudan is a smaller trade partner, the disparity in trade values contributes to the overall imbalance Uganda faces in its regional trade relations.

  • This imbalance underscores the difficulty Uganda faces in competing with foreign traders who are able to buy raw materials cheaply and process them outside the country. As Uganda continues to export large quantities of raw materials like maize to its neighbors, it also struggles to retain value-added products and manufacturing within its borders.
  • Yasin Luwaga, the URA Regional Supervisor for Customs Services East Nile, responded to the concerns raised by UMA and manufacturers, clarifying the role of URA in regulating such transactions. He noted that foreign traders may be circumventing the usual channels for cross-border trade.

“As URA, we might not have much to do about that because they may not be going through gazetted places, which are monitored by our customs services,” Luwaga said. “For anyone exporting maize, there is a requirement to have an export permit, which we enforce at customs. Without it, the product cannot cross.”

Luwaga was quick to point out that the movement of goods within the East African Community (EAC) should not be restricted, as the region benefits from the EAC’s common market. However, he emphasized that compliance with tax and trade regulations is crucial for smooth trade operations. “We encourage traders and manufacturers to always comply with regulations and pay taxes. Non-compliance could lead to penalties,” he added.

For manufacturers like Jubico Industries Limited, the need for a more structured and regulated approach to raw material procurement is critical for the country’s long-term industrial development.

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