Trade

Trade plays a major role in the economic transformation of an economy. Uganda’s trade has been growing, especially to the regional markets such as EAC and COMESA.  Under the 2030 Agenda for Sustainable Development, Least Developed countries including Uganda are expected to double the share of exports in the global market by 2020 as emphasized by SDG: 17. Uganda’ progression from a low income country to a middle income county by 2020 and subsequently to an upper income status by 2040 rests among others on successful trade in regional and global markets which in turn promotes development. Trade aids in generating foreign currency which helps the nation’s balance of payment position. Trade stimulates healthy market competition which promotes development.

Uganda’s total trade soared by 14.2% amounting to US$10.4B in 2018 up from US$9.2B in 2017. Export earnings increased to US$3.6B in 2018, a 5% increase from 2017, of which formal exports were valued at US$3.1B and informal exports at US$546.6M. 2018 saw an increase in the formal exports by 6.4% and a decrease in informal exports by US$2.4M which was a recovery from a slump in 2017. The total imports saw a 19.6% increase from 2017 amounting to US$6.8B. A decrease of US $20M in informal imports in 2018 from 2017 solicited an increase in revenue collected with formal imports at US$6.7B in 2018 up from US$5.6B in 2017. Basing on formalization being an indicator of development, the decrease in informal trade and an increase in formal trade is a boost noted. Since Uganda embarked on its vision 2040 through the National Development Plans, our Terms of Trade index (TOT) through NDP I averaged at 8.02 while the TOT index through NDP II averaged at 23.40 hence a 65.7% increase. The national trade deficit widened to US$ 3.2 billion in 2018 from US$ 2.2 billion registered in 2017 but with an overall 14.2% increase in the total trade volumes. (Source: UBOS)

Uganda’s total trade amounted to US$9.2 billion in 2017 up from US$7.8 billion in 2016. The total imports bill in 2017 was US$5.7 billion up from US$4.9 billion in 2016, of which formal imports accounted for US$5.6 billion, while informal imports were estimated at US$80.9 million. Export earnings increased by 18.9% to US$3.5 billion in 2017, of which, formal exports were US$2.9 billion, while informal exports amounted to US$ 549.0 million. Formal exports increased by 16.9 percent to US$ 2.9 billion in 2017, from US$ 2.5 billion in 2016. On the other hand, informal exports significantly increased by 31.0% to US$549.0 million in 2017, from US$ 419.2 million in 2016. The increase in informal trading was attributed to resumption of trading with South Sudan during the year as well as increased export of agricultural produce to Kenya especially maize and bananas. Overall, the trade deficit widened to US$ 2.2 billion in 2017, from US$ 2.0 billion registered in 2016. (Source: MTIC)

COMESA currently constitutes the largest export destination for Ugandan products valued at US$1.2B, closely followed by the Middle East and the European Union. However as per end of 2019, a 16.2% reduction in the volume of COMESA exports from 2018 was reported. This was on account of less trade with Kenya and Rwanda, which were two of our biggest trade partners, due to protection of local firms against competition and closure of borders respectively. With contentions in relations between countries, development is hindered. On a lighter note, Uganda has grown significant market in the Middle East from US$501.1M in 2018 to US$1.2B in 2019 attributed to an increase in gold and food exports. On the same note, gold toppled coffee as Uganda’s key export at a value of US$1.3B compared to US$438.5M. Below are tables illustrating Uganda’s top five export commodities for C.Y 2019.

The EAC currently constitutes the largest export destination for Ugandan products compared to the rest of the World.  Over the last five years, the average formal exports to EAC countries constituted 38.5% of Uganda’s total formal exports. In FY 2016/17, exports to EAC countries were 39.1% of the total formal exports (BoU, FY 2016/17).  Similarly, the country’s total formal exports stood at US$ 2,680 million in FY 2016/17, having increased by 16.6 percent from US$ 2,298 million in FY 2015/16.  On the other hand, the exports stood at US$ 4,718.43million in FY 2016/17 from US$ 4,574.47million in FY 2016/17, representing a 3 percent.  Uganda exports about 2,440 products and imports about 3,783 products, while the country exports to 130 countries and imports from 153 countries.[1]

Government of Uganda in collaboration with regional Partner States has undertaken several measures to enhance regional trade, more especially those that relate to the implementation of the EAC regional integration process pillars.  They include, trade facilitation initiatives under the EAC Customs Union, which have been done through the completion of the One-Stop Border Post (OSBT) at the country’s EAC border posts, the Cargo tracking system and reduction of Non-Tariff Barriers among others. Uganda’s top five exports and imports to the global market are indicated in Table 1 below.

Table 1: Top five exports and imports in (US$ Thousands)

Exports

Amount

 

IMPORTS

 

Coffee, not roasted ...

401,204.00

 

Petroleum oils, etc, ...

979,882.97

Petroleum oils, etc,

131,136.46

 

Other medicaments

285,645.92

Portland cement (exc ...

78,628.66

 

Crude palm oil

149,390.63

Maize seed

60,992.90

 

Automobiles with rec ...

144,778.16

Cocoa beans, whole o ...

56,684.29

 

Spelt, common wheat

122,802.

Source: WITS

Table 1: Export values based on commodity.

 

Years

Commodity (value in US$ million)

2016

2017

2018

2019

Gold

339.54

417.92

514.89

1,257.82

Coffee

371.65

555.44

436.36

438.54

Fish & related products

121.80

137.07

171.53

176.51

Oil re-exports

119.86

129.37

132.48

132.13

Base metals & products

99.83

98.77

128.25

103.09

 

 

[1] World Integrated Trade Solution(WITS) accessed at http://wits.worldbank.org/countrysnapshot/en/UGA