This is why the Serbia-Uganda trade deal makes perfect sense

It is not often that an African leader travels to Southeast Europe for a state visit.

Yet last week, Ugandan President Yoweri Museveni met with his Serbian counterpart Aleksandar Vučić, officially inaugurating Uganda’s new Belgrade-based trade hub and signing a number of agreements promoting trade between the two countries.

For Uganda, a country dominated by agriculture, aggressive growth in export revenues has been identified as essential to its economic recovery and the ultimate goal of further industrialization of the South African country. ‘East. Serbia has become an important, if at first glance surprising, partner of choice.

Generally, when it comes to trade, African countries tend to focus their efforts on countries like the UK or the EU, with whom many have long-standing ties. And it’s not that different at all.

Uganda’s “new” narrative towards Serbia is nothing of the sort. In fact, the two countries already have long-standing ties dating back to the creation of the Non-Aligned Movement (NAM), which Serbia – as part of the former Yugoslavia – helped found and whose Uganda would later take over the presidency. This year.

From non-aligned countries to the open Balkans

The movement has seen a revival in recent years, as many countries wish to remain neutral and away from the increasingly polarizing power struggles between East and West.

For these countries, the NAM provides both a refuge and a network that dates back to the Cold War era and today represents a ready-made club of shared connections.

Serbia also offers a unique gateway to markets long inaccessible to Africa. Boasting a unique position in terms of free trade agreements (FTAs) with the EU, Turkey and the UAE, this Balkan country offers a unique entry point for Ugandan products such as coffee , fresh produce and cocoa.

The regional “mini-Schengen” initiative, Open Balkan, to which Serbia is a part, only further expands the market potential.

Once a direct transport link between Belgrade and Uganda’s main transport hub, Entebbe, is established – something Air Serbia and Uganda Airlines intend to achieve through a codeshare agreement next year – there will be a new direct trade and freight route between Africa and Europe and beyond. to all regional partners of Serbia within the framework of an FTA.

There are also business opportunities for Serbia in the opposite direction.

Uganda has one of the fastest growing media markets in the world, fueled by a population with a median age of 17. Serbia’s media sector and film and television industry dominate the Balkan region but have little room to grow there.

There is a construction and infrastructure boom in Belgrade, just like in Uganda, where Serbian companies such as Energoprojekt, dating back to Yugoslav times, are already well established.

Additional savings and EU import tariffs

Additionally, Uganda is a complementary economy to Serbia, meaning that both countries produce things that the other does not and cannot produce.

Serbia’s climate does not allow you to grow a single pineapple, banana or coffee bean at any time of the year. In Uganda, these products can grow all year round.

This is why the two economies are not competitors in the global market, meaning they have a lot to offer each other.

But it is perhaps the value addition in the Ugandan coffee sector – the processing of coffee in Uganda before export – where Serbia can contribute the most and reap the greatest rewards.

It may come as a surprise to know that Germany is actually the world’s largest exporter of freeze-dried instant coffee.

This country, which also cannot grow a single bean, surpasses almost all of coffee-producing Africa in terms of income from the coffee trade.

Germany does not have any particular technology that others do not have. The simple reason they are number one in this industry is the EU’s punitive tariffs which have stopped the importation of anything other than raw coffee from Africa to Europe.

To put it simply, EU tariffs are so exceptionally high that it is actually cheaper to produce freeze-dried coffee in Germany, where wages are high, than to create a single job in the coffee processing industry in sub-Saharan Africa.

This is just the beginning

This means that the value-added sector has been hobbled for decades by trade policy crafted elsewhere in the name of free trade, but which is in fact outright protectionism.

But this is changing. The UK recently unveiled very generous and beneficial new trade tariffs for Africa, which will allow the importation of African-processed coffee into the world’s fifth largest economy.

Ultimately, this should lead to increasing pressure on the EU to change its own prohibitive trade policies.

And therein lies the opportunity for Serbia. The country’s coffee sector, itself vast, now intends to offer, through investments and joint ventures, one of the first opportunities for Uganda since independence to develop its own processing industry.

The opening of a new Ugandan trade hub in Belgrade is just the beginning.

Others will follow in other key locations including the UK, US and Dubai. But the deals signed in Serbia last week lay the foundation for everything else, while breathing new life into a little-known, but actually long-standing and increasingly successful partnership.

Odrek Rwabwogo is a Ugandan farmer and chairman of the Ugandan Presidential Advisory Committee on Exports and Industrial Development (PACEID), and Bratislav Stoiljković is a Serbian entrepreneur and Uganda’s trade representative in Southeast Europe.

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