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Uganda: 8th Annual Joint Trade, Industry and Cooperatives Sector Review


Uganda: 8th Annual Joint Trade, Industry and Cooperatives Sector Review

Uganda: 8th Annual Joint Trade, Industry and Cooperatives Sector Review
Photo credit: MTIC

The Trade sector is one of the key sectors that contribute to the economic development of the country.

Every year sector stakeholders meet at a conference to review the performance of the Sector and also establish feasible interventions and strategies to boost the Sector. This year’s Sector Review is organized under the theme “Promoting value addition and competitiveness in export growth”.

The theme emphasizes the contribution of Value addition and competitiveness towards reducing the balance of payment deficit in the Country. It also stresses the need towards realization of the objectives of the Sector Development Plan, the NRM Manifesto, the National Development Plan II and the Vision 2040; all aimed at ensuring sustainable socio-economic transformation of Uganda.

Sector Priorities: During the last Financial Year 2016/2017, great strides were made in the development and implementation of sector policies and programmes. In line with the Ministry’s mandate and in accordance with NDPII, the sector prioritizes; improving the Private Sector competitiveness and increase the market access for Uganda’s products and services in regional and international markets; improving the stock and quality of trade infrastructure; increasing the share of manufactured goods and services in total exports; and promoting the formation and growth of cooperative enterprises.

Trade development

The sector notes the persistent trade deficit through the period (2012-2016) with the highest trade deficit of US$3.462 Million registered in 2014/15. The situation is mainly arising out of the low value of exports which are mainly unprocessed agricultural commodities while exchanging them for high value manufactured products.

Exports: In 2016 the trade deficit reduced to US$1.993 Billion from US$2.926 Billion in 2015 which is attributed to the overall increase in export earnings by 8.8% in 2016. Total export earnings were US$2.901 Billion of which US$ 2.482 Billion were formal exports. The formal exports increased by 9.5 percent from US$ 2.267 Billion in 2015 to US$ 2.482 Billion in 2016 while informal exports increased by 5 percent from US$ 399.1 million to US$ 419.2 million over the same period.

Overall, coffee remained the main merchandise foreign exchange earner of the country for the above period. However, its share to total formal exports reduced from 17.91% in 2015 to 16.50% in 2016.

Imports: The total imports bill in 2016 stood at US$ 4.89 Billion, of which, formal imports accounted for US$ 4.82 Billion, while informal imports were estimated at US$ 64.9 million. The total imports expenditure declined by 12.5 percent in 2016 after a decrease of 8.9 percent in 2015.

Uganda continues to pay high bills for imports of Machinery Equipments, Vehicles & Accessories goods amounting to US$ 947.11 million (23.99%) in 2016/17; followed by Petroleum Products of US$ 693.80 million (17.57%); Vegetable Products, Animal, Beverages, Fats & Oil of US$ 454.66 million (11.52%); Chemical & Related Products of US$ 430.61 million (10.91%) and others in that order.

Interventions to address the deficit

The Sector is employing several strategies to ensure increased volume of exports while reducing import volumes. These include:

The National Export Development Strategy (NEDS)

The Strategy was approved by Cabinet on 25/08/2017. It envisions a focused and dynamic export sector fully responsive to available export opportunities, especially in preferential markets. The overriding objective of NEDS is to increase the value of Uganda’s exports of the specified products and services to the targeted markets over the next five years. It intends to narrow the trade deficit as a percentage of total exports from the current annual average of negative 96% to at most negative 35% over the next five years.

Priority Products under NEDS are categorized as follows:

  • High priority: coffee, iron/steel products, fish, cement, tobacco, sugar, flowers and tea.

  • Medium priority: Hides & skins, cocoa, sim sim, maize, plastics, rice, cotton, fruits & vegetables.

  • Low priority: beans.

Promotion of trade in services

A National Policy on Services Trade was approved by Cabinet on 19/07/2017 which is aimed at boosting trade in services and cause a reduction in the trade deficit. Successful implementation of the policy is expected to contribute significantly to achieving the targeted USD 5 Billion value in exports by 2020, incrementally growing by US$ 500 annually over the next five years.

Priority sectors include: tourism, transport/distribution, education, business services, construction and related engineering services, insurance, among others.

Market Expansion through Regional and International Trade Agreements

The COMESA trading bloc is the main destination for Uganda’s exports for the period of 2005/06 to 2016/17, with the share in total export earnings increasing on average throughout the years (from US$ 223.15 million [26.58%] in 2005/06 to US$ 1,243.29 [46.39%] in 2016/17).

The EU market ranked the second highest destination for Uganda’s products, although the share in total export earnings has been reducing to 18.92% [US$ 506.94 million] in 2016/17. Middle East bloc followed accounting for 18.85% [US$ 505.26 million] of the total market share in the same period. Asia, Rest of Africa, Rest of Europe, America followed in that respective order.

Among the COMESA member Countries that contributed significantly to export earnings were Kenya, South Sudan, Rwanda, D.R. Congo, accounting for US$ 422.99 million, US$ 239.25 million, US$ 193.98 million and US$ 177.66 million in 2016/17 respectively (90.60% composition of Uganda-COMESA trade).

Other Regional Trade Arrangements

Uganda is a signatory to a number of trade and traderelated agreements through which market opportunities have been achieved;

  • East African Community Customs Union

  • The African, Caribbean and Pacific- European Union (ACP/EU) Partnership Agreement (Cotonou Agreement)

  • World Trade Organization (WTO), and

  • African Union (AU)

Uganda is also a beneficiary of non-reciprocal unilateral trade preferences such as Everything-But-Arms (EBA) by the European Union.

  • EAC-SADC-COMESA Tripartite Agreement

  • The African Growth and Opportunity Act (AGOA) of the United States and offers by Canada, Japan and China under the Generalized System of Preferences (GSP).

  • Other on-going engagements include the Continental Free Trade Area (CFTA) negotiation and the EAC-EU Economic Partnership (EPA) negotiations among others.

One Stop Border Posts (OSBPs)

With Support from the Department for International Development (DFID), through TradeMark East Africa, construction of three OSBPs was completed; these include Mutukula OSBP with Tanzania, Busia OSBP with Kenya, and Mirama Hills OSBP and Mirama Hills Road with Rwanda. All the border posts are operating under one stop control which means that a transporter or traveller clears only once, on one side of the border.

  • Construction of Elegu border post with South Sudan is underway.

  • Elimination of Non-Tariff Barriers: With surport from TMEA the ministry is implement a web based Non-Tariff Barrier Reporting System that has helped in easing and enabling the reporting and resolution of NTBs among trade facilitating institutions. This, in turn has reduced on the delays and costs of moving goods in and outside of Uganda across trading member states.

  • 86% resolution of all NTBs reported through the system by using the user dials USSD Code *201#

Industrial development

The growth rate of the industrial sector stands at 3.4 percent and the sector contributes 19.6 percent of GDP. Manufacturing contributes 9% to GDP with a growth rate of 2.5%. Major industries: sugar, tea, Beverage, cement, steel production, cotton textiles Potential industries: Oil and gas, Iron & Steel, gold refining, fertilizer, leather etc.

Government initiatives to develop the sector

The Ministry is undertaking the following initiatives to ensure growth of industrialization so as to increase the exportation of processed products for increased export earnings.

1. Legal and Regulatory Framework for industry

The Ministry is in the process of developing new laws to regulate the sector. These include; Industrial Development Bill, Legal metrology bill, Accreditation bill, Industrial and scientific metrology bill, Sugar Bill, Alcohol Bill. The Ministry is also developing sector policies like the iron and steel policy, packaged water policy among others

2. Rural Industrial Development Project (RIDP)

The Ministry is promoting value addition through the RIDP. A total of 53 projects have been supported across the country and out of these projects, 45 enterprises (85%) have been supported with value addition equipment and 8 enterprises were supported with capacity building in the areas of business management and value addition skills, product quality and standards requirements principles of cooperative movement.

3. Government Trustees

Three (3) institutions including the Textile development Agency, Uganda Leather Training and common Facility Centre, Uganda Cleaner Production Centre. The three have been made Government trustees for purposes of inclusion in Government planning, proper supervision of programs and activities, accountability and enhancing implementation of Government Policies.

4. Support to Micro, Small Medium Enterprises (MSME)

The Directorate of MSMEs that was established in June 2016 is fully functional. the directorate is responsible for implementing the MSE policy which provides a regulatory and institutional framework for MSME Development activities with a theme “Sustainable MSMEs for wealth creation and socio economic transformation” as aligned with the objectives of the National Development Plan II (2015/2020).

The MSE Directorate signed an MOU with financial sector Deeping Uganda (FSDU) to promote the development of MSMEs. The directorate has so far profiled and evaluated 1500 MSMEs in the selected districts of Gulu, Hoima and Kiryandongo.

Key planned activities for FY2018/19

The budget for the Financial Year 2018/19 stands at shillings UGX 103.66 billion and the Sector plans to undertake the following activities for the Financial Year 2018/19:

  1. Enhance value addition and industrialization to support job creation;

  2. To revitalize the Cooperative Movement by mobilizing collective resources through cooperatives;

  3. Continue to improve the Regulatory Framework for creating an enabling environment for Trade that enhances wealth creation;

  4. Continue to address Non-Tariff Barriers to Trade in the Country;

  5. Ensure implementation of the National Development Export Strategy (NEDS) and;

  6. Continue undertaking Technical Guidance, Inspections & Compliance monitoring Field Visits aimed at enhancing implementation of Industrial Development Initiatives.


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