Page last updated at 06:14 GMT, Tuesday, 14 November 2006

Uganda's booming border town

Truck carrying goods and people
Transport to carry people and goods is in high demand in Arua

BBC News is investigating the changing face of business in Africa, a continent once regarded as a high risk location for investors but now increasingly a place to do business.

Sarah Grainger reports from Arua, a town in northern Uganda which is benefiting from peace efforts across the border.

"I'm from here in Arua, but I travel to Juba in southern Sudan to sell food - there's been a lot of hunger there," says Palma, a petty trader from north-western Uganda.

She is taking advantage of the peace in southern Sudan to get a good price for her goods.

Palma takes food such as potatoes, tomatoes and pineapples and sells them for a much higher price than she would get in Uganda.

Arua is a town in the far north west of Uganda, close to the borders with the Democratic Republic of Congo and Sudan.

Cut off from the Ugandan capital Kampala by distance and the war between the Lord's Resistance Army rebels and the Ugandan government, there were previously few money-making opportunities here.

But since Sudan's comprehensive peace agreement was implemented in 2005 and democratic elections in DR Congo, trade with these two neighbours has brought new opportunities to Arua.

Peace agreement

In southern Sudan there is little transport infrastructure and more than 20 years of war has destroyed the area's agricultural sector, so demand for food and drinks outstrips supply.

Before we would see things like lentils and cooking oil, essentials that were being taken in aid convoys - now there's a much wider range of goods
James Abodi, Ugandan Customs Department.

Security has improved since the Sudanese government and the rebel Sudan People's Liberation Movement implemented a comprehensive peace agreement in 2005, making southern Sudan a viable and lucrative market for Ugandan traders.

While Palma may be selling in small quantities, there is nothing small scale about the increase in cross-border trade since the Sudanese peace agreement was signed.

Uganda's Revenue Authority says that in September this year taxable goods amounting to 3.5bn Ugandan shillings ($1.9m; £1.1m) crossed from Uganda to southern Sudan.

That is more than three times the amount that was being transported on the same route 18 months earlier.

Profit incentive

The range of goods from Arua has changed dramatically

Ugandan authorities say the nature of goods going across its borders has also changed.

"Before we would see things like lentils and cooking oil, essentials that were being taken in aid convoys," says James Abodi, of the Ugandan Customs Department.

"Now there's a much wider range of goods, things like building materials and more luxurious consumables like beer and sugar."

Southern Sudan is big business for north-western Uganda. Local journalist Frank Mugabi uses the example of papyrus matting to explain just how big.

"You can buy mats here in Arua for 1,000 Ugandan shillings (50 US cents) and they sell in Juba for 15 times that much," he says.

"So if you take a truck loaded with 150 mats, that's a profit of 2.1m Ugandan shillings, minus your transport costs of course."

Transport demand

Trade between Arua and eastern DR Congo is also lucrative, but for different reasons.

Lower taxes on the Congolese side of the border mean that electronic goods such as TV sets and radios are a popular import into Uganda.

But some things are cheaper in Arua than they are just eight kilometres away in eastern DR Congo. The pick-up trucks that come to Uganda full of TV's return with crates of beer.

Transport companies have also responded to an increased demand in travel to southern Sudan and eastern DR Congo.

The Gateway bus company began a daily bus service from Arua to southern Sudan in February, after many petty traders asked them to establish routes to the southern Sudanese towns of Juba and Yei.

Food shortage

Although improvements in security have helped increase cross-border commerce, traders and transporters alike complain of the state of the roads into southern Sudan.

During the rainy season they become almost impassable, and the roads are so narrow that if one vehicle gets stuck, so do all the others following behind it.

But the boom in food exports from Arua has also brought with it disadvantages.

"You can see a shortage of food in the local markets here," says Ugandan local government representative Richard Andama Ferua

"Some families lack food because they're selling all their reserve. They are subsistence farmers and they have no strategic plan for farming."

Arua's local government wants to see agriculture developed and roads planned to properly take advantage of the town's growing strategic position.

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