This reporting project was supported by the Pulitzer Center.
In Uganda, the hunt for fish maw is driving depletion of the country’s Nile perch population. In the first part of this series, we narrated how Chinese demand for the highly priced swim bladder first provided economic opportunity to a group of Ugandan maw traders starting from the late 1980s, but soon contributed to a general trend of overfishing, which saw the president send the army to control fishing numbers and methods. An eight percent levy on maw exports, established in 2021, has increased Uganda’s earnings from maw, but also spurred many exporters to redirect operations to sister companies in Kenya and Tanzania, which also share the transboundary Lake Victoria: the world’s second largest freshwater lake.
In this second part of our ‘Gutted Trade’ investigation, we detail this shift in cross-border trade routes – both legal and illegal. We also explore discrepancies in officially reported export data, which could point to further illegal, unreported, or under-reported trade in the maw business.
Divisioned by three countries, Lake Victoria has a long history of cross-border trade and conflicts among fishing industry players vying to control the same hunting grounds and export passages.
A prime example is the Migingo Island territorial dispute between Kenya and Uganda, because of its strategic location for exporting goods, said Willis Okumu, a senior researcher in organized crime at the Nairobi-based think tank the Institute for Security Studies.
The difficulty to define and enforce clear water boundaries for fishermen creates conditions for rampant illegal cross-border trade, which is being exploited by traders in fish maw.
Okumu, who conducted research in 2023 on the maw trade from Lake Victoria, said ISS discovered a lawless zone that operates like a “market” on the lake where up to 30-40 boats from all three countries congregate, catch and trade Nile perch and maw, and frequently engage in other crimes such as arms trafficking, often with impunity.
Before Uganda’s new levy, most fish maw acquired from Tanzanian and Kenyan waters was transported – both legally and illegally – into Uganda for value adding and shipment.
Although Tanzania controls the largest share of the lake, Uganda maintained the most developed maw processing and export industry, according to Okumu. Also, regulation was always less stringent in Uganda, allowing companies to reap more profits.
At the time, Uganda fostered a “disorganized” law environment where actors from Tanzania and Kenya would bribe Ugandan officials to smuggle fish maws into Uganda, said a researcher who attempted to conduct a study into the fish maw trade in recent years.
“People from Kenya and Tanzania working for companies there would pay the marines and later the Fisheries Protection Unit to move into Uganda with bulk items,” this source said. “After that were the Indian and Chinese factories, processing plants and exporters. After 2021, other well-connected Ugandans also established processing and exporting companies.”
They are “not checked” and only receive standardizations for “formality, because of the nature of actors involved,” he added.
This researcher, who requested anonymity due to the sensitivity of the information he provided, said he was not able to complete his study because he could not acquire official evidence to confirm testimonies about the elite circle that was allegedly controlling the trade.
Trucks parked at Kasensero landing site near the Uganda-Tanzania border. The trucks, mostly owned by Chinese companies, had parked for days to weeks waiting to fill their loads.
According to Dr. Edward Rukuunya of the Lake Victoria Fisheries Organization, “the supply chain is distorted, with the maw traders smuggling the product to where the taxes are favorable.”
“This, of course, impacts on the supply chain, because smuggling is done across the porous borders and the water – the lake almost having no physical boundaries,” said Rukuunya, who represents the executive secretariat of this regional body.
Uganda and Tanzania trade data on UN Comtrade, which is aggregated from official sources such as customs departments, national statistics offices and ministries, reveals major discrepancies, often creating more questions than answers. Imports and exports are standardized by Harmonized System (HS) codes, an international classification system of names and numbers to represent various products. But under UN Comtrade, the codes used for maws (30572 and 30299) are noticeably vague, lumping the swim bladder together with fish fins, offals, tails and heads.
From 2012-2021, Uganda reported importing 25 million kilograms of products classified under these HS codes from Tanzania, while it reported total exports of only 8 million kilograms. This is a recorded influx from just one country of more than three times the total amount the country said it sent out, despite the fact that few maws are consumed locally.
The inconsistencies can partially be explained by the broad scope of the HS codes – fish heads are consumed by some local communities and these fish parts also re-exported to regional markets such as the DRC, a large amount informally and unreported. But the variances could also hint to illegal, unreported, or under-reported trade in the maw business.
Simone Louw, a researcher at international anti-trafficking organization TRAFFIC, referenced a case in South Africa where TRAFFIC investigators found tons of shark meat being imported to the country, but there was no record of it leaving. Customs told TRAFFIC that it had either left the country but hadn’t been recorded, or was sitting in bonded warehouses due to administrative issues.
Hong Kong imports data on UN Comtrade and the Hong Kong Census and Statistics Department also shows major variances.
On the UN database, from 2012 to 2022, Hong Kong reported importing 12.1 million kilograms of fish maws from Uganda, with large spikes of almost 3 million and 5 million kilograms in 2016 and 2018. But the Hong Kong database shows only about 500,000 kilograms imported during each of those years, closer to what Uganda reported exporting on UN Comtrade.
The spikes for Hong Kong import reports on the UN Database are listed “estimated,” unlike other records, which could imply errors. However, it could also point to a larger actual import of fish maws than are officially recorded.
UN Comtrade estimates quantity when data has not been provided or when provided data does not conform with requirements. “Only estimated quantity that reaches certain level of reliability will be shown,” the organization wrote in an email in January last year when asked about this discrepancy, noting that it would reprocess the nonaligned years with the Hong Kong statistics department. However, by May, the system’s data had not yet changed.
Labeling issues are permitting maw exporters in East Africa to conceal or underreport their consignments, Dr. Rukuunya of the Lake Victoria Fisheries Organization said.
Sources consulted who have knowledge of this supply chain estimated that between 50 to 80 percent of Uganda’s total export of maws go out through illegal methods, though specific evidence to confirm these claims was unavailable.
The Uganda Office of the Auditor General annual report to Parliament for the 2023 financial year reported that “the Customs Department still grapples with the problems of persistence in traditional illicit trade, smuggling, under-declaration of goods, under valuation and misdescription (false document) despite huge budget allocations to curb the vice.”
Ugandan authorities recovered more than $USD 68 million from taxes evaded in money laundering cases between fiscal years 2016/2017 and 2019/2020, with the largest amount from misdeclaration and under valuation of goods, according to the May 2023 money laundering and terrorism financing national risk assessment by the Uganda Financial Intelligence Authority.
Price and tax changes redraw routes of regional maw trade
At Kananansi landing site on Buvuma Island, Ugandans representing Tanzanian companies used to come and sell maws originating from Tanzanian waters to local traders, said a longtime Nile perch trader. But all this reversed in the last three years.
In Kalangala, one local maw trader was illegally buying and transporting small quantities of maws to the Kisenyi bus park in Kampala. Recently, when the price of the product in Uganda went very low, buses would transport maws to Tanzania, this trader said.
The major reason behind the switch is the new eight percent export levy on maws in Uganda, said Matovu, the head of the Uganda Fish Maw Traders Association. In Tanzania, maws are taxed at about USD $0.2 per kilogram, and Kenya does not have an export levy, according to Matovu.
The change in informal trade routes also reflects the difference in price of the whole Nile perch between Uganda and Tanzania. In Tanzania, the smallest Nile perch sells at about USD $4 a kilogram, whereas the same size starts from about $2.9 in Uganda, according to fishers. Ugandan fishers also said smaller sizes of Nile perch, from 15 inches, are sold illegally in Tanzania, although the East African community agreed the minimum size of Nile perch should be 20 inches (50 centimeters).
Fishermen in Kasensero, a landing site near the Uganda-Tanzania border, weigh their recent catch of Nile perch.
Fishermen in Lambu, a landing site near Masaka – another lakeside town located about three hours drive west from Kampala, said fishermen going to deeper waters frequently sell at least part of their catch to Tanzanian boats that are stationed to catch Nile perch. The Fisheries Protection Unit recently arrested about 40 tonnes of salted Nile perch in Kalungu district that was intended for Tanzania, said a local source who requested anonymity for security purposes.
Official data on Tanzania exports of fish maw to Uganda shows a sustained decrease from a high in 2019, with a steep drop in 2022 following the introduction of the export levy, according to UN Comtrade. Tanzania exports to Kenya, though still small in comparison, have increased in the last two years.
As the Ugandan maw industry has faced hiccups, the industry in Kenya has been growing, though not without its own controversies. The Armed Conflict Location and Event Data Project tracked a case in October 2020 when more than 4,000 fish maw traders protested against two new Chinese maw firms in Homa Bay and Mbita towns, Nyanza region, claiming the companies would bring unfair competition and render them jobless.
Matovu of the Uganda maw traders association said “all” of the fish maw companies in Uganda are now doing business “outdoors” through their sister companies, mainly in Tanzania. Since they still have permanent structures in Uganda, and the lakeside Entebbe airport is closer than capital airports in Kenya and Tanzania, the packaged maws are then carted back as ‘goods in transit’ to Hong Kong through Entebbe, where they are waived from paying Uganda export levies.
“We used to get the majority from Tanzania. We used to bring from Tanzania, add value from here and export… Now, the exporters in Uganda cross to those countries… Now, you process it from Tanzania and bring it straight to Entebbe,” Matovu said.
Imports data shows that Uganda’s imports of fish maw from Tanzania have dropped about 80 percent from 2020 levels. And while the listed destination country used to be Uganda, where maws would be processed, now, shipments’ destination is overwhelmingly Hong Kong.
There is also some evidence of regional business linkages. In 2020, Tanzanian company Supreme Perch used to export to Uganda-based company Fresh Perch Limited Wakiso, before it switched to export directly to Hong Kong-based companies such as Wing Fung Hong in 2021. Both Indian-owned companies, Supreme Perch and Fresh Perch have also employed some of the same individuals, according to information published by some employees on LinkedIn.
Lake Treasure Limited, a factory based in Kisumu, Kenya, also made several major shipments to its parent company, the Kampala-based Lake Bounty Limited in 2020, which ended in 2021.
But the drop in tax revenue from regional maw imports is still small compared to the tens of billions of shillings the country is now making from Ugandan businesses exporting fish maw under the new levy.
Revenue checkpoint at the Kalangala-Masaka ferry on Bugala Island.
Independent tax consultant Robert Ssuuna, a former analyst with the Uganda Revenue Authority, said it is too early to assess the longer-term impact of the new tax.
“The overall idea is you have a chicken and you want to pluck as many feathers without it feeling the pain. I don’t think we have killed the business,” he said.
The Ugandan environment is not comparable to Kenya and Tanzania because they have coastlines with marine fisheries, so they earn much more from the fisheries sector even with lower taxes, he said.
Ssuuna also said Uganda’s tax might cause a ripple effect in the lake region, inspiring the other governments to install similar levies. In that case, companies shifting their operations might be short-lived.
The new regulations also force the actors involved in Uganda’s fish maw business to expose themselves and formally register with the government – a strategy that fights cartels and illegality, according to this expert.
Click HERE for PART ONE and HERE for PART THREE of the story
