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How Uganda Milk & Sugar Control Kenya’s Economy

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Kenyans have never believed that Uganda can produce anything worth in surplus to sell to the neighbouring markets.

It should be remembered that since the late 1960’s, Uganda slid into lengthy intermittent civil wars and this gave a chance to Kenya that embarked on growing its economy and turning into a leading producer of all forms of products that the region needed.

However, Uganda has been steadily working around its internal economics for example in western region, farmers started investing heavily in dairy farming and changed from keeping local longhorn Ankole cattle to rearing modern breeds.

People from western Uganda started settling down after the wars in Uganda, hence abandoning nomadism. The revolution in dairy farming has resulted in high production of milk against the low domestic and fragile foreign markets.

According to statistics, Uganda today produces 2.6 billion litres of milk per annum. However, domestic demand stands at only 800 million litres, creating a huge surplus.

Uganda started exploring neighbouring markets like Kenya and found a huge gap and noticed that it would easily penetrate Kenya by selling at lower price compared to Kenyan milk.

The attractiveness of Ugandan milk is helped by a lower production cost that stands at about Sh17 when compared with Kenya’s Sh26 on average per litre.

In the past few years, Ugandan Milk flooded Kenya and swiftly became the best choice and much sought after milk.

It is said that Ugandan milk was retailing at about KSh40 for a half litre while the Kenyan local brands traded at Sh45 on average, leaving processors with unmoving stocks as price sensitive consumers preferred the cheaper imported product.

Kenya government was so devastated by the manner in which Uganda which they despised for decades would incidentally disrupt the market.

People of western Uganda started settling down after the wars in Uganda, hence abandoning nomadism after the lengthy civil wars

The chairperson of the Kenya Dairy Farmers Federation (KDFF) Stanley Ng’ombe, said Ugandan milk has had a negative impact on Kenyan farmers, driving down the volumes that they can afford to produce because of the low prices.

Kenya government has been wondering whether Uganda has the capacity to produce this entire surplus, with allegations that much of it comes from third party countries as powder milk then reconstituted in the neighbouring country before finding its way to Kenya.

Kenya government claims that most of the milk coming from Uganda is imported into that country as powder from Europe.

“We know that Uganda has no capacity to produce all this milk and there is likelihood that most of it comes from Europe before finding its way to Kenya,” said Stanley Ng’ombe who heads 26 dairy cooperatives scattered across Kenya.

After several complaints by Kenyan farmers over the influx of Ugandan milk, which had seen a litre touch the historic low of KSh17, the government reacted by confiscating thousands of tonnes of milk from Uganda and consequently stopping imports.

As if that was not enough, Kenya slapped the Mbarara based Lato Milk with an import ban early in the year, the effects have been devastating for farmers in Uganda. Hundreds of workers in Pearl Dairies, the makers of Lato Milk sent on leave with production at the firm cut to bare minimum.

Kenya Dairy Board says that milk imports from Uganda have been regulated at the moment and that there is no more dumping of the produce in the country.

Margret Kibogy Kenya Dairy Board Managing Director says, “We have tightened the surveillance and no longer have firms from Uganda dumping milk here as all the commodity coming in is well regulated.”

However, under the EAC Common Market Protocol, products from member states are allowed to move freely from one country to another.

The measure put in place by the regulator saw the price of milk increase to KSh36 before going up again to KSh40 a litre, but this time on account of low production.

Kenya and Uganda set up a joint verification team to assess the status of Ugandan sugar.

Uganda Sugar Diplomacy In Kenya

After several years of back and forth arguments and disagreements on whether Uganda had the capacity to produce excess sugar to flood Kenya, the battle was won by Uganda.

Since 2015, Uganda and Kenya nearly severed ties because Kenya did not believe that its neighbour had the capacity to export sugar.

With this state of contention, the two countries decided to assemble a verification team to independently investigate Uganda’s sugar production capacity.

The team visited 11 sugar factories in Uganda. According to the findings, Uganda’s Surplus Sugar for the year 2014/15 was 36,000MT on average.

Kenya later admitted that Uganda, its aggressive neighbour has the muscle to export large volumes of sugar to countries in the region.

Uganda Wins Sugar Dispute Against Kenya

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Business

Most Expensive Home in America To Be Auctioned

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The One mansion of the largest private homes ever built, with a colossal 105,00sq ft of living space will go to the highest bidder tonight during a public auction.

Once valued at $500 million, The One mansion in Bel-Air is being sold for $295 million and will be on the open market until it is auctioned off by Concierge Auctions, an online auction marketplace, from February 28 to March 3.

The home will be sold without reserve, meaning it will sell to the highest bidder. Even if it sells close to the price it’s listed at, it will surely break records.

Currently, billionaire and hedge fund tycoon Ken Griffin’s $238 million New York penthouse in 2019 holds the record as the most expensive U.S. home ever sold.

Developed by Nile Niami, the massive estate took more than 10 years to build and created massive debt for Niami. His development company, Crestlloyd, filed for bankruptcy last year, forcing the home to careen towards auction as part of the bankruptcy proceedings.

However, the home still has about 12 more months of work. The buyer will have to put down nearly $340,000 as a deposit.

The Los Angeles home is one of the largest ever built, and is twice the size of the White House. It spans 105,000 square feet and the property sprawls over 3.8 acres.

Outdoor features include a moat of water on three sides of the home, five pools, a 10,000-square-foot deck and a 400-foot outdoor running track.

The home is more like a personal, private resort than a single-family home. There are a whopping 21 bedrooms, 42 full bathrooms and seven half bathrooms.

Despite its grandiose nature, there is a pared-down, neutral color palette throughout and calming water features.

Within the home, there are custom-curated artworks from artists Mike Fields, Stephen Wilson and glass artist Simoe Cenedese, to name a few. Soaring, 26-foot ceilings make the home feel even larger than it is (if that’s possible), and rooms are oversized and expansive.

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Business

Rwanda-Uganda Full Trading Resumes

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Full trading between Rwanda and Uganda is scheduled to resume on Monday January 31st following Kigali announcement that it had opened locks on its borders shut in March 2019.

“Rwanda has taken note that there is a process to solve issues raised by Rwanda, as well as commitments made by the government of Uganda to address remaining obstacles,” Kigali said in the statement.

Since the border closure Rwanda and Uganda recorded a significant reduction in trade flows and was further worsened by the covid-19 pandemic that struck a year after Rwanda had slammed its doors to the northern neighbour.

Before the border was closed in 2019, Uganda export revenues fetched from trading with Rwanda were valued over U$600million. During 2020 Uganda Exports to Rwanda was US$2.31 Million, according to the United Nations COMTRADE database on international trade.

President Paul Kagame said in his new year address that Rwanda prospered in the economic front.

“We are beginning the year 2020 after a successful 2019.Our country remained safe as a result of our efforts”.

The Africa Development Bank in its 2019 outlook on Rwanda, projected robust growth prospects even as the standoff with Uganda heightened.

For example, Rwanda and Tanzania signed the standard gauge railway (SGR) deal dubbed, sub-Saharan Africa’s first 570 Km bullet line with Tanzania worth US$2.5 billion.

Also Rwanda by December 2019 signed a U$1.3 billion deal on Bugesera Airport with Qatar.

One of the biggest blows that Uganda suffered in its standoff with Rwanda was the emergence of Tanzania as Rwanda’s new major trading partner.

Uganda exports to Rwanda include; mineral fuels, oils, distillation products ,plastics ,textiles ,cereals , electronics, vehicles, machinery, fish, edible fruits, soaps, cement, lubricants, waxes, candles and an assortment of manufactured articles.

With the border slated for opening on Monday, the gesture is expected to boost  the movement of goods, transport, persons and services and under strict observation of restrictions against covid-19 pandemic.

How Museveni Lost to Kagame in Race For Regional Dominance

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Business

Akabanga Tycoon Diversifies to Petroleum

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Sina Gerard famed for producing the hot oiled pepper ‘akabanga’ has diversified into petroleum products, Taarifa Business desk reports.

Under a new company registered as Sina Gerard Petroleum Ltd, the tycoon’s decision indicates that he is reading from a good business book on diversification strategy.

Diversification is a business development strategy in which a company develops new products and services, or enters new markets, beyond its existing ones.  Companies diversify to achieve greater profitability.

Diversification will never be an easy game, and managers must study their cards carefully. It takes smart players to know when it’s best to raise their bets and when it’s best to fold.

Havard Business review research suggests that if managers consider the following six questions, they can push their thinking still further to reduce the gamble of diversification. Answering the questions will not lead to an easy go-no-go decision, but the exercise can help managers assess the likelihood of success.

The issues the questions raise, and the discussion they provoke, are meant to be coupled with the detailed financial analysis typical of the diversification decision-making process.

Together, these tools can turn a complex and often pressured decision into a more structured and well-reasoned one.

Thus, when managers consider whether or not to diversify, they should ask themselves the following questions:

What can our company do better than any of its competitors in its current market?

Before diversifying, managers must think not about what their company does but about what it does better than its competitors.

What strategic assets do we need in order to succeed in the new market?

To diversify, a company must have all the necessary strategic assets, not just some of them.

Can we catch up to or leapfrog competitors at their own game?

Will diversification break up strategic assets that need to be kept together?

Managers need to ask whether their strategic assets are transportable to the industry they have targeted.

Will we be simply a player in the new market or will we emerge a winner?

What can our company learn by diversifying, and are we sufficiently organized to learn it?

Like good chess players, forward-thinking managers will think two or three moves ahead.

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