Damali Ssali
The development
of Uganda’s trade and economy requires efficient, reliable and competitive
transport and logistics.
Unfortunately,
water transport, which is the cheapest and most inclusive mode of transport, is
underdeveloped and underutilized.
As a result,
95% of cargo and people movement is through road transport. This over-reliance
on road transport is unsustainable; with different studies indicate that it has
led to the rapid deterioration of the road assets. The annual road maintenance
cost is estimated at USD 21m.
In addition,
road transport is not the safest mode of transport. The World Health
Organisation (2015) estimates the economies such as Uganda lose almost 3% of
their GDP to road crashes. That is about USD 800m.
Whilst Uganda
has serviceable national road network that covers both the Northern and Central
corridor, the limitation of rail and water transport pushes goods transport
onto roads creating congestion and raising the unit cost of transport over
longer distances.
The current
average transport cost per kilometre stands at USD 2 in Uganda. This is twice
as high as that of comparative middle-income economies which stands at USD 1
per kilometre.
Furthermore,
the World Bank 2016 Logistics Performance Indicator ranked Uganda 58 (out of
180 economies). This ranking must be improved as poor logistics leads to a 0.4%
contraction in the GDP of an economy.
This problem is
going to be further compounded with upcoming Oil and Gas economy. Conservative
estimates report that, during this sector’s peak period of development, an
additional 1.2million tonnes of containerised cargo and over 13,000 jobs and
passenger traffic is going to be added to the current road load.
The existing
road infrastructure is already optimised above capacity and cannot operate with
these new capacities without significant deterioration.
Therefore, the
development of efficient water transport and related logistics services is the
catalyst required to strengthen the autonomy and independence of the Ugandan
economy.
An improvement
of inland waterways will have a very significant impact on the other transport
modes, especially railways and roads, by pulling cargo and passenger traffic to
new logistics supply chains. This will allow for sustainable utilization of
existing transport capacities.
Uganda’s
natural comparative advantage for water transport is evident, as over 30% of
the territory is covered by water. This provides navigable channels through
rivers and lakes.
However, lake
transport is under-utilised. Available data indicates that only 1 million tonnes
(about 8%) of total freight cargo, to and through Uganda, uses this mode of
transport. This demonstrates the
opportunity available, which if tapped into has the potential to lead to an
exponential growth in Uganda’s domestic and cross border trade.
Water transport
can be developed to facilitate trade and tourism. This will not only trigger
economic growth in Uganda but also the East African Community and the
Democratic Republic of Congo. A comprehensive view should be taken on lake
transport development to cater for large scale international traffic.
The development
must include multimodal ship-road-rail-port and logistics services.
Simultaneously the ship building and rehabilitation industry must be catalysed.
Water transport is important in shipping passengers, raw materials,
manufactured products among domestic and international points of trade.
Generally, the capacity of water vessels far exceeds the capacity of rail
wagons, and trucks. Therefore, ports intermodal facilities that have
warehousing, and physical infrastructure for freight transfer from water
vessels to railways and trucks, and vice versa should be prioritised.
Furthermore,
inland water transport is the second least labour intensive compared to other
modes, with pipelines in the lead. It is characterised by low fixed costs
though it has high variable costs related to insurance. The efficiency of a
transport mode can be judged in terms of travel time, safety, frequency,
cheapness, employment generation, trade transactions, environmental pollution,
automation and computerization. Based on
this criteria water transport outperforms road and air transport.
Although Lake
Victoria is strategically located at the convergence of the Northern Corridor
and the Central Corridor, its potential for marine transport has not been fully
exploited. Freight traffic on Lake Victoria is modest. This is mainly due to
poor infrastructure of port handling facilities and few vessels.
However,
despite these limitations, the Lake Victoria basin alone services the economic
activities of several countries. Uganda, Tanzania, Uganda and Kenya directly
share this trans-boundary water resource, while Rwanda and Burundi also benefit
indirectly. The population of this basin stands at 40million, representing
approximately 30% of the entire population of the EAC member countries and a
GDP USD30 billion, about 40% of the total EAC economy. Therefore, the potential
of the Lake Victoria economy is immense if water transport infrastructure is
developed.
The main
categories of cargo transported by water is 70% agricultural (food and live
animals), 20% Ugandan manufactured products and the rest at 10%. Most of the users of water transport are in
the informal sector, using small motorized and non-motorized boats, to
transport goods and services between the islands and across international
borders. As such, development must focus on local passenger transport to nearby
islands and shorelines, small scale local cargo transport, pedestrian cars and
small trucks. The additional advantage of water transport development is that
it will not only catalyse the informal fishing industry but also commercial
fish farming.
It is important
to note that the development of water transport must be in tandem with
addressing environmental degradation issues. The reduction in water levels, due
to extensive deforestation around the various lake basins, if unchecked, will
greatly curtail the navigability of the lakes and rivers.
Uganda can, and
should, exploit its natural comparative advantage and develop water transport,
through efficient infrastructure and logistics services. This will facilitate
domestic and international trade, tourism, employment and economic output.
Damali Ssali is a Trade Development Expert.
New Vision: https://www.newvision.co.ug/new_vision/news/1504889/water-transport-leveraged-facilitate-trade-development
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