How coffee boom is helping Uganda’s trade balance

Uganda Exports

🟡Feb 2024        2025 Feb
Coffee
$82.56m              $167m
Cocoa
$25.98m              $68.7m
Tobacco
$2.89m               $17.05m
Minerals
$268.88m          $318.71

NEWS ANALYSIS | NEBERT RUGADYA | Uganda’s trade deficit with the world dropped by 83.7% in February 2025 from the same month of the previous year, according to official data.

At $44.26 million, the deficit was much lower than the $271.10 million posted in February 2024 due to a major increase in export earnings coupled with a decline in the import bill over this period.

According to the figures at the Ministry of Finance, Planning and Economic Development, export earnings from merchandise rose by 32.3% to $843.05 million in February 2025 from $637.16 million in the same month of the previous year.

On the other hand, the total import value reduced by a slight 2.3 percent from $908.25 million in February 2024 to $887.31 million in February 2024.

The deficit for the month was even narrower than that recorded in January 2025, by $77.3 mainly on account of a decline in imports of 15.8 %. This decline absorbed the slight reduction in exports in that month to post an overall deficit reduction.

The growth in exports was mainly been attributed to increased earnings from crop exports led by coffee, cocoa, and tobacco, with coffee alone accounting for $167 million, which was more than double the $82.56 million of the same month of the previous year.

The rise in coffee earnings was mainly because of the general increase in the international coffee prices as well as a rise in the volume the country exported.

During the month, the average unit value for coffee was $5.03 per kilogram, up from $4.74 posted in January, while in February last year, a kilo went for an average of $3.17.

According to the Department of Coffee at the Ministry of Agriculture, Animal Industry and Fisheries, the number of 60-kilogram bags of coffee exported rose to 555,756 in February 2025 from 434,582 in February 2024.

In January this year, coffee export earnings amounted to $156.5 million .

“Uganda continues to harness the benefits of strategic Government interventions in the coffee subsector that have led to an increase in coffee farming as well as better handling, resulting in improved output,” says the Ministry of Finance.

The coffee price boom is mainly attributed to extreme weather conditions in major producing countries, mainly Brazil and Vietnam, where the crop has been greatly affected.

This has come amidst increasing global demand, especially in the Middle East and Asia. Analysts predict that the global coffee exports are expected to be further disrupted when the European Union Deforestation Regulations come into force in December this year. These regulations aim to block from the EU coffee that was produced on lands that were recently deforested land.

The difficulty in complying, especially by the poorer and smallholder growers, could see a decline in global exports.

Improved performance was also registered in the exports of cocoa beans, 164.4% to $68.7 million in February 2025 from $25.98 million in February 2024.

Also, earnings from tobacco exports increased five times from $2.89 million in February 2024 to $17.05 million in February 2025.

Other notable commodities that contributed to the growth registered for export earnings in February 2025 compared to the same period a year before included mineral products, fish and their products, and sim sim, among others.

Mineral products earned the country $318.71 million in February 2025, compared to $263.88 million in February 2024, but this was a slight reduction from the $323.84 million in January this year, while maize exports fell by 49.9%.

Sugar exports dropped by 45.6% , and fish and their products declined by 12.4%.

Middle East Factor

The Middle East remains the biggest market for Uganda’s exports in February 2025, accounting for a third of the total merchandise exported during the month.

Almost all the exports to the Middle East, about 97.5 percent were destined for the United Arab Emirates.

The East African Community (EAC) followed, taking in 25 percent of Uganda’s exports during the month.

Other notable markets for Uganda included the European Union and Asia, which accounted for 19.5 percent and 13.3 percent of the exports, respectively.

Imports

During February 2025, the value of merchandise imports registered a decline both on a month-by-month basis and on a year-on-year basis.

The value of imports amounted to $887.31 million in February 2025, which is a 2.3% decline when compared to $908.25 million recorded in the same month of the previous year.

And compared to January 2025, when import values totalled $1,054.19 million, the decline in imports was even bigger at 15.8% to the February figures, mainly driven by formal private sector oil and non-oil imports.

Vegetable products, animal products, beverages, fats and oil imports declined by 48.6% between January 2025 and February 2025.

On an annual basis, there was a 5.3% decline between February 2024 and February 2025.

Similarly, chemical products declined by 40.2% and 27.1% during those respective periods.

Other merchandise that recorded significant declines in the value earned from their importation during February 2025 included base metals and their products, wood and wood products, and petroleum products.

Uganda’s main source of imports was Asia, with 35.8%, with China accounting for more than half (52.6%) of the imports from that region, followed by India.

The EAC followed with 25.7%, mostly dominated by Tanzania. Uganda’s negative trade balance mainly came from trade with Asia, where a $205.28 million deficit was recorded.

Uganda exported to Asia  $112 million worth of goods, but imports from there were worth $318 million.

Uganda traded at a deficit with the EAC of $16.92 million and $92.1 million with the rest of Africa.

On the other hand, there were trade surpluses with the Middle East of $182 million, the European Union $64.54 million, and the Rest of Europe, $12.43 million and others.

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URN