Risk management system to grow horticultural exports
Outsized benefits anticipated for MSMEs, women-owned businesses
The Alliance is supporting the Government of Uganda in streamlining and automating processes for clearing horticulture exports, saving time and money for businesses—particularly micro, small, and medium-sized enterprises (MSMEs)—and increasing the country’s trade competitiveness.
Horticulture products are among the country’s top export revenue earners, boasting a 13% annual growth rate. However, only about 20% of horticultural production is exported, suggesting high potential growth in export revenue and employment if existing inspection processes are made simpler, faster, and more cost-effective.
MSMEs, which are an engine of Uganda’s economic growth, dominate the country’s horticulture sector. They are also a significant employer of women, who make up 70% percent of the sector’s workforce and own 30% of its businesses.
However, MSMEs have struggled with the time and costs associated with sanitary and phytosanitary (SPS) inspections while the authorities themselves have had to cope with shortages of inspectors and trained staff at pack house facilities and the country’s main airport at Entebbe. The lack of a risk management system has meant that agencies insist on checking and physically inspecting every shipment, adding additional delays.
What we are doing
The project, called Re-engineering Uganda’s Sanitary and Phytosanitary Inspection for Horticultural Exports (RUSH), is implementing a process review and re-engineering of the manual SPS inspection process at Ministry of Agriculture, Animal Industry, and Fisheries (MAAIF) facilities to reduce waiting times. The Alliance and the MAAIF are working with the Ministry of Trade, Industry, and Cooperatives (MTIC) to introduce an electronic, risk-based SPS inspection system. This system will use an open-source database that accumulates and consolidates inspection data and assigns risk levels to exporters and performance levels to each inspector to promote accountability.
Finally, public and private sector stakeholders, including Entebbe Airport, Champ Cargosystems, DHL, and Turkish Cargo, are working together to support improved trade information flow on horticulture exports through Uganda’s trade information portal. This change will improve capacity and willingness to build and deliver further trade reforms. It will also increase MSME involvement in public-private dialogues and improve interagency coordination between the National Trade Facilitation Committee and the National Task Force on Horticulture Exports.
In addition to MAAIF and MTIC, the project is supported by the Private Sector Foundation Uganda and the Uganda Women Entrepreneurs Association. Alliance private sector partners CHAMP Cargosystems, the International Air Transport Association, and DHL are providing their expertise and best practices.
Besides saving time and money for MSMEs and increasing Uganda’s trade competitiveness, the project is expected to:
- Reduce the total time spent on SPS inspections at the pack house and Entebbe Airport by an estimated 44%, from nine hours to five
- Reduce annual compliance costs per truck associated with the export clearing process by up to 44%
- Ensure higher volumes and values of horticulture exports pass SPS inspections
- Minimize horticulture waste due to rejections or spoilage during SPS inspections at the pack house and Entebbe Airport
- Ensure up-to-date trade information on horticulture exports is available to business organizations and translated into two local languages
- Foster greater interagency cooperation between the public and private sector and the Government of Uganda
We will focus on determining the time and direct and indirect cost savings yielded through the project by adopting the Total Transport and Logistics Cost (TTLC) methodology. The TTLC combines direct costs with estimates of indirect costs to more accurately assess the total cost of transport and logistics in cross-border trade. We will use the TTLC to evaluate the project’s contributions to reducing direct costs like transportation, pack house handling, and SPS inspection times as well as indirect costs such as damages and spoilage, i.e., penalties and fees for rejected shipments, lost production, and orders.
The project is expected to take 21 months, from June 2021.
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