Ugandans might soon experience a shortage and increase in prices of building materials because traders are currently unable to import the items from China due to the outbreak of the coronavirus.
Downtown Kampala traders say they have been unable to send money for goods or fly to China as most factories supplying them are currently closed over coronavirus which has claimed more than 1,483 lives as of February 14 and infected over 64,600 others in and outside China with 14,800 new cases recorded on Thursday.
This will likely have an impact on the prices of most of the goods, including building materials, clothes, iron sheets among others.
According to William Kaggwa, the secretary-general of the Nakasero Hardware Traders’ Association most of the kitchenware and sanitary ware including soap dishes, handwash basin, mirrors, taps, glasses, tiles, transparent sheets are imported from China. He says because of lack of new supplies this will potentially put pressure on the fewer goods remaining in the shops around the city.
At Kidde Enterprises in Kampala, one of the biggest importers of construction materials, officials said they were waiting up to the end of March to see if the disease is controlled for them to place their orders.
“The fear is that you may send money and you find the person is actually in the area where it is quarantined,” one official said.
Some traders who received goods in December or early January are hoarding their goods to create artificial shortages so that they can sell at higher prices. Chinese businesses in Kampala have already had a hit. For instance, some Chinese hotels have told local staff that they will not be working as normal as many of their customers – who are Chinese – have either been quarantined or are stuck in China because they can’t fly back to Uganda.
The Bank of Uganda has said the situation is serious. Dr Adam Mugume, the director of research at the central bank, said the impact was likely huge if the disease is not controlled fast.
He revealed Uganda imports 25 per cent of its goods from China and 70 per cent of these are raw materials used to make other things in Uganda. This will see not just an increase in the prices of imported goods but also push up prices of locally made goods whose raw materials are sourced from China.
Richard Walker, the World Bank Uganda economist, said it was still uncertain to see how the desert locusts in north-eastern Uganda and coronavirus in China will affect the economy this year. He said they expected Uganda not to grow below 6 per cent even with these happenings. He agreed the locusts will have an impact on agriculture.
This thought is in line with other economists. Dr Enock Nyorekwa, an infrastructure economist, said the impact will largely depend upon quarantine measures and sentiment, and whether there is more clarity around these.
For Uganda, fewer imports mean less government tax revenues at the time when the Uganda Revenue Authority is failing to reach its targets. Doris Akol, the URA commissioner general, told reporters at the start of this month that in the six months to December 2019, traders imported fewer products cutting government expected revenues. Coronavirus in China will likely extend this agony.
Yet the government needs more money to divert from core activities to cater for Ugandans stuck in China and fight the desert locusts.