Iran Economy NewsIran sanctions curb credit transfer to Uganda-memo

Iran sanctions curb credit transfer to Uganda-memo

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Reuters: Uganda has been unable to obtain a $46 million credit offered by Iran because of complications in transferring the money due to U.N. sanctions, according to a government memo seen by Reuters on Wednesday.

By Elias Biryabarema

KAMPALA (Reuters) – Uganda has been unable to obtain a $46 million credit offered by Iran because of complications in transferring the money due to U.N. sanctions, according to a government memo seen by Reuters on Wednesday.

Over the past two years, Iran has been strengthening relations with the east African country, which is set to become an oil producer in 2011, and there have been reciprocal state visits by the nations’ leaders.

According to a Ugandan foreign ministry source, Iran offered a $10 million credit in 2008 to boost trade and investment with Uganda and that credit was increased to $46 million when President Mahmoud Ahmadinejad visited Kampala in April.

However, a memo prepared by the ministry for parliament’s public accounts committee, in response to an audit query, said sanctions had complicated the money transfer.

“The ministry has followed up the implementation of this line of credit. However, it has faced challenges, especially following the imposition of sanctions on Iran,” said the memo.

“In a bid to overcome the difficulty in transferring funds to and from Iran because of sanctions and to promote investment and trade, the two countries agreed on the establishment of a bank as a joint venture as the best way forward,” it said.

Led by Washington, new sanctions imposed on Iran in July target financial services and the energy sector, making international transactions harder and hitting Iran’s ability to import gasoline and secure foreign investment.

The measures are aimed at pressuring Tehran to curb nuclear activities which the West fears might be aimed at making a bomb.

The memo said Uganda had signed a memorandum of understanding with the Export Development Bank of Iran (EDBI) on the joint banking project but did not give details on when the institution was expected to be up and running.

During President Yoweri Museveni’s visit in May 2009, Iran offered to help Uganda develop its new petroleum sector, including building a refinery. Iran has also promised to invest in Uganda’s agro-processing and ICT sectors.

Uganda discovered oil on its western border with the Democratic Republic of Congo in 2006 and reserves are estimated at 2 billion barrels.

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