By Badru D. Mulumba
Oct 30, 2003- Monitor
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KAMPALA - Uganda may not be able to export garments to the United States if it did not start using local materials come September 30, 2004. Under the African Growth and Opportunity Act (Agoa), Uganda and other beneficiary countries with per capita income of less than $1,500 can export garments assembled from within using imported fabric until November 30, 2004. With revelations that government injected Shs 5.4 billion in subsidies to the Apparels Tri-Star, the Sri-Lankan firm that is exporting textiles to the US, it now appears likely that the firm's exports will not cover the subsidy. Apparels Tri-Star imports cloth from China to be sewed into different items at former Coffee Marketing Board warehouse in Bugolibi, Kampala. This will not be possible by September 30, 2004. Uganda exports raw cotton following the collapse of the country's textile industry in 1970s. But Mr Geofrey Onegi-Obel, the presidential advisor on Agoa, told Businessweek that a new deal could be negotiated. "You must understand that such limitations are a political contingency which are placed within the Act for politicians, after their expiry, to return to their constituencies in order to consult before they can be extend," he said. There is growing concern that Apparels Tri-Star, which set up with subsidy from government, had not moved a single step to create linkages in the economy because they import all inputs. Onegi-Obel also said that as far as Uganda is concerned the focus should remain on creating capacity to produce items that are competitive in the global market. The Monitor on Monday reported that government pays 71.5 percent of the taxes on railway transport charges for each container of raw materials or finished product, in addition to the six acres of land at Bugolobi, which the government gave to the factory. But figures of US imports from Uganda under Agoa that Businessweek has seen indicate that Uganda has exported $802,000 (Shs 1.6 billion) worth of goods under Agoa from August 2002 to 2003. Uganda's highest exports of textiles to the US were in April this year when 88,000 shirts, dresses and pants -- about 30 times the total for the 1990s were shipped, according to figures from the US Department of Commerce. Uganda's loss could be more painful. First, government chased away maize exporters from the former Bugolobi coffee plant to give it to the textile firm. At the time, Uganda Grain Traders Limited had just exported 30,000 tonnes of maize to Zambia. The premise was given to Tri-Star under the April 24, 2001 agreement that The Monitor revealed on Monday. Secondly, Onegi-Obel reportedly signed on behalf of government, and Dr C.A Balasuriya signed for the textile firm. But at the time, Balasuriya was also chief of party of Compete - a government project to promote Uganda's export competitiveness funded by a grant from the US Agency for International Development. The project ended last year. This could raise questions of a conflict of interest that could dent the image of the programme. Donors say that government has spent Shs 100 billion subsidising exports in the last two years in an apparently non-transparent manner. In their May report on the Medium Term Expenditure Framework, donors say: "In this regard, we would like government to provide a full and transparent accounting for all the funds provided through the budget or through Uganda Development Bank to private companies such as those in the textile and clothing sector." Additional reporting by Izama Angelo |
� 2003 The Monitor Publications
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