Uganda suffers Shs3 trillion trade decline

Uganda’s trade surplus has suffered a Shs3.4 trillion decline due to worsening trade relations with the neighbouring countries.

According to the external trade performance report for the year 2018/2019, Uganda’s trade surplus with neighbours fell from $932m (Shs3.4t)in 2017/2018 to only $11 million (Shs340b) in the year ended June 30. The report is contained in the 2020/2021 Budget Framework Paper to Parliament.

The report indicates that in 2018/2019, Uganda only exported goods worth $1.16b to her neighbours compared to $1.55b in 2017/2018.

On the other hand, Uganda’s imports rose to $1.15m in 2018 from $623m in 2017.

Finance Minister Matia Kasaija, who forwarded the BFP to Parliament and other officials in Bank of Uganda, however, blames non-tariff barriers in some partner states particularly in Tanzania and Rwanda.

“The trade surplus with EAC slowed down in the FY 2018/2019 compared to FY 201720/18 mainly on account of existence of non-tariff barriers in some of the partner states – most especially in Tanzania, the temporary closure of Uganda-Rwanda border, and the decline in agricultural exports such as beans and maize to the region,” the BFP reads in part.

In Kenya, the government blames the decline on Kenya’s decision to boost production of similar products in Uganda.

Uganda-Kenya relations

As a result, the trade balance between Uganda and Kenya suffered a $207m (about Shs758b) negative trend after importing goods worth $694m compared to exports valued at only $487m.

Uganda largely exports cereal and sugar to Kenya, the same products heavily grown in Kenya.

Just like Kenya, Uganda imported more goods ($433m)from Tanzania compared to exports ($77m) registering another negative trend of $356m.

Whereas trade with Rwanda registered a positive balance, there was a sharp decline.

For instance, Uganda’s exports to Rwanda fell from $253m (about Shs926b)in 2017/2018 to only $167 million (Shs611b) in 2018/2019.

Also Uganda’s imports from Rwanda in 2018/2019 declined by $5m from $20 million registered in the year before.

Uganda continues to nurse a diplomatic fall out with Rwanda.

Several mediation meetings have collapsed due to unresolved tensions.

Authorities in Rwanda accuse Uganda of harbouring political dissidents and conspiring against the Kigali establishment under President Paul Kagame, which Uganda denies.

In Uganda, Kampala continues to cite trade sabotage by Rwanda.

Meanwhile, Uganda continues to stage poor performance even at the global market, as imports far outweigh her exports.

In comparison with FY 2017/2018, the value of imports increased by 22.2 per cent to $9.60b, while exports earnings improved by 9.7 per cent to $5.89b during the year ended June 30, 2019.

According to ministry officials, this resulted into the widening of the trade deficit by $1.22b (49.2 per cent) to $3.70b in 2018/19 from $2.48b registered in 2017/2018.

Personal transfers from abroad (remittances) are reported to have remained largely unchanged in FY 2018/2019, and only registering a small decline of 0.1 per cent to $1.24b from $1.245b in FY 2017/2018.

On the positive side, however, Foreign Direct Investment (FDI) inflows increased by 80.6 per cent $972m in 2017/2018 to $1.75b in FY 2018/2019.

The growth resulted from increased investment in equity and investment fund shares by non-residents.

-Daily Monitor