How M23 war has disrupted East Africa trade with Congo?
The M23 rebel group's offensive in eastern Democratic Republic of Congo may be causing one of the region's worst humanitarian crises.
But businesses are also feeling the effects of the war, with closed banks, diverted goods and confusing customs decisions.
Since January, more than 3,000 people have died and another 600,000 uprooted from their homes, fleeing the violence that broke out between M23 and the Congolese army.
In cities M23 controls, the economies have been severely disrupted and the banking system has ground to a halt.
In Goma, North Kivu Province, the provincial branch of the Congolese central bank and all lenders shut doors due to insecurity and the state authority has relocated services to a safer town.
Business leaders in the DRC are now complain of serious liquidity crisis, especially since Kinshasa controls banking operations, while the flow of goods from Kenya, Rwanda, Uganda, Burundi into Congo has slowed or been diverted.'Here in Bukavu and Goma, there is almost no business going on. Banks have closed as well as Goma airport affecting the importation of goods from Uganda, Kenya, Rwanda Tanzania and other places,' said Mapendo Bienv, DRC's member of the East African Business Council, who is based in Bukavu, the capital of South Kivu Province.
And the general situation in North Kivu is currently that of bedlam. M23 has set up a parallel administration in Goma, installing a governor, two vice governors, a mayor and a number of burgomasters (mayors).
But the parts of the province still in the hands of the Congolese army also have a governor, Major General Evariste Somo Kakule. He has vowed to reorganise the province, in anticipation of a possible assault to recover the territories lost to M23.'They [the M23] are targeting minerals in addition to government posts, the army, police, and state enterprises,' says Amadee Fikirini, Life Peace's Country Director for Congo, based in Bukavu.
Rubaya produces 1,000 tonnes of coltan annually—half the DRC's output. Other areas of M23 control are rich in cobalt and lithium, which are critical to electric vehicle batteries.
The region is also rich in gold, which is reportedly the key source of revenue for the M23.
Customs clearanceThe M23 control of the territory around Goma has also affected the intra-EAC trade.
In Goma, the governor installed by the M23 imposed a new trade policy, including loosening of restrictions on closing hours of the border with Rwanda, allowing more time for business.
Previously, Congolese traded with Rwandans only during the day at their common land border after Kinshasa authorities ordered, in 2022, that the border with Rwanda should close at 3pm. The new M23 administration extended the business hours to 10pm.
The effect, however, is beyond Congo's borders. This week, Uganda said it was closing operations at several border crossings into eastern DRC to zones now controlled by M23 rebels, potentially locking out not only its exports but those from Kenya and South Sudan, whose exports transit through Uganda.
On Tuesday, Uganda stopped clearing goods destined for Bukavu via its Katuna border and those destined for Goma via Cyanika, a move that has seen cargo destined for DR Congo pile up at the borders and remain in several warehouses in Uganda.
Since 2022, Uganda had, in fact, taken precautions in areas controlled by the rebel outfit. Other closed borders this week include Ishasha River, Busanza, Kyeshero and Bunagana. These points cannot clear goods destined for eastern DR Congo.
Trade routesThe closures affect not only Uganda but most of the East African Community (EAC) member states whose goods have been transiting via Uganda. These countries can now only export via Rwanda, where the goods can then be re-exported to Goma and Bukavu, but this is a longer distance.
Kenneth Ayebare, chairman of the Uganda Cargo Consolidators Association, said trucks going to Gisenyi in Rwanda near Goma, now have to go through Kigali, which is a longer and more expensive route. But it is the only option.'The Cyanika border is nearer to Goma,' said Mr Ayebare explaining that since 2022, the Uganda side of the border has been active, but the DR Congo side has been closed since M23 captured the Bunagana post.
It is about 92 kilometres from Cyanika to Goma. The distance from Katuna to Goma via Kigali is about 240 kilometres.
Asadu Kigozi Kisitu, the Uganda Revenue Authority (URA) the acting Commissioner for Customs, told The EastAfrican on March 3, 2024 that it's now internationally recognised that Goma, a final destination to the Cyanika border, and Bukavu, a final destination of Katuna, are no longer under the control of the DR Congo central government.'There is no recognised government in areas controlled by the M23 rebels. We deal with governments. As a result, DR Congo Customs informed us that the lack of control has led to significant revenue losses of goods destined for Goma and Bukavu,' he said.
Exports to DRCEastern DRC is a lucrative market for nearly all EAC member states, including Rwanda even though it has existing tensions with the Congolese government. Uganda trades more with DRC than any other neighbour, with two-way businesses reaching $2 billion in 2024.
Over the past three years from 2022, the Bank of Uganda data shows that Kampala's export earnings to DR Congo have been steadily growing, from $176.63 million in 2022, reaching $180.78 million in 2023, before settling at an all-time high of $197.29 million in the 12 months to December 24, 2024.
Kenya's export earnings in trade with DR Congo, in the past 33 months to September 2024, reached $459.1 million in September 2024, with Nairobi being one of the key sources of petroleum products for eastern DRC.'Eighty percent of the trucks on the Goli-Bunia route are fuel truckers,' said Joseph Omwasa, a Kenyan truck driver, who had spent over a week at Goli. He told The EastAfrican that he feared attacks by armed militia.
Uganda had, since June 2022, when M23 rebels took control of the Congolese side of the Bunagana border, slowed clearing goods destined for DR Congo via the crossing.
It's estimated that Uganda used to collect over Ush500 million ($136,000) in revenue from the Bunagana border annually.
The rebel takeover of Bunagana has also affected business at the Ishasha border post in Kanungu district of western Uganda.'DR Congo is a huge market not only for Uganda and the whole East African Community,' says Julius Byaruhanga, Director of Policy and Business Development Private Sector Foundation Uganda, a Kampala-based business lobby.
Rwanda's export earnings to DR Congo hit $489.3 million from January 2022 to September 2024, National Institute of Statistics Rwanda trade data shows, despite the political tension between the two countries.
Agencies' confusionFor the Congolese government, the confusion emanating from its agencies has not helped the uncertainty. On Wednesday, it backtracked on a move to impose import duty on goods from regions controlled by M23, the result of an overnight public outcry.
The Congolese General Directorate of Customs and Excise (DGDA) of North Kivu said on Wednesday that it had reversed the decision that would have considered all goods coming from Goma, Bunagana and Ishasha, areas occupied by the M23 rebels, as new imports subject to tax.
Jean-Louis Bauna, Deputy Director General of the Customs Department, described the letter from his department in northwest Kivu as 'a forgery.'He argued the 'customs legislation applies in full throughout the national territory.'Read: DRC rescinds tax directive on M23 zones after backlashThe backtracking, however, came after intense social media commentary concerning the move, which had been communicated to neighbouring countries of Uganda and Tanzania. Some critics argued the country risked getting divided into two if the directive is implemented.
Congolese authorities under Kinshasa, administering North Kivu Province, have been based in Beni since the capital Goma was taken over by the M23, backed by the Rwandan army. The M23 have operated the Congo River Alliance (AFC) led by Corneille Nangaa, a former President of the Independent National Electoral Commission. Nangaa is calling for the overthrow of the government of President Felix Tshisekedi, unless he agrees to dialogue about their grievances.
Paul Kayembe, director of the North Kivu DGDA, denied the decision had even been contemplated to tax the M23 zone. Instead, he blamed it on 'the work of ill-intentioned people trying to discredit him' and pointed a finger at 'Rwandan' manipulation.
What we learnt, however, was that the government, in attempting to rescue revenues lost to border points in M23 zone had tried to re-tax the goods. It backtracked following the controversy it generated.
A number of people including prominent Congolese personalities had protested against the decision to impose a customs duty inside the country's territory, thus creating a virtual border.
Sources within the DGDA confirmed to The EastAfrican that the new tax memo was indeed genuine. A DGDA technician explained on condition of anonymity that 'customs posts in rebel-occupied areas have already been suspended from the computerised customs system, which enables automated management of customs procedures.'Since the M23 took Goma, the Congolese government has been taking economic measures to corner the parallel administration set up by the rebels.'We have placed our main hope on the EAC-SADC mediation process; maybe it could help unlock the current impasse,' said Mr Bienv, DRC member of the East African Business Council, in an interview with The EastAfrican.'The EAC/SADC council of ministers is expected to meet in a fortnight and deliberate over the crisis in eastern Congo as per the directive of the joint Heads of state summit,' said Rebecca Kadaga, Uganda's Minister for East African Community Affairs.'The meeting is set to receive a report from chiefs of defence to discuss the agenda on ceasefire and re-opening of the Goma airport as arrived at by the heads of state.'The Dar es Salaam summit sought to bridge regional differences by bringing the two blocs together. It called for an immediate ceasefire and direct talks with the M23 and other non-state actors.
© Copyright 2022 Nation Media Group. All Rights Reserved. Provided by SyndiGate Media Inc. (Syndigate.info).
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