The case for Uganda’s exports

It has almost become a norm that for every State of the Nation address, President Yoweri Museveni has to lament about the fact that Uganda imports far much more than it exports. This year’s address was no different. He lamented how Uganda had become a ‘supermarket’ economy, importing all sorts of items including textiles, leather, fruits, second hand cars and carpets. Should a country where 80% of the population depend on agriculture import agricultural products?

In his quest to make Uganda a middle income nation, Museveni is looking at growing Uganda’s exports tenfold.

The President decried the fact that Uganda incurs a combined total of $5.5 billion on these imports from countries like China, India, US, SouthAfrica and the European Union. He attributes this to insufficient electricity supply, lack of cheap means of transport.

His solution is in facilitating investors and compelling government agencies to buy locally-made products. Although some experts would disagree with him on his overly ambitious projections, Museveni thinks that if Uganda used all locally-made textiles, the country would save close to $900 million annually.

Elly Twineyo Kamugisha, the executive director of the Uganda Exports Promotion Board (UEPB), would readily agree with Museveni on concentrating efforts on the regional bloc. He told a gathering for media and the exports body recently that from the East African Community (EAC), Ugandan rakes in over $1billion from exports. He says in the next five years, they will be focussing on the region since it has this potential.

But Kamugisha is no dreamer. He argues that for Uganda to have a vibrant export sector, there should be a lot of dynamism to keep exports steadily moving. He agrees with the President saying that Uganda would have already reached middle income status if “we had decidedly handed the issue of exports.”

One of his major plans for the sector is to partner with the National Agricultural Advisory Services (NAADS), Operation Wealth Creation, Ministry of Agriculture, Animal Industry and Fisheries as well as agro-based industries to increase production.

Plans are also underway to formalise regional offices for UEPB in Mbale, Mbarara and other key upcountry towns. The point is to enable the awarding of certificates of origin for the traders to export merchandise. Currently, he says, traders are being weighed down by the burden of travelling to the head office in Kampala for the document.

For a country that mainly exports agricultural produce – coffee, cotton, maize – over the years, there have been heightened calls for Uganda to diversify and compete favourably even outside the East African region. At a time when the East African Community is being fast-tracked to make smaller countries like Uganda, Rwanda and Burundi accrue benefits handsomely in the context of a regional bloc, the time to bolster Uganda’s export potential could not have been more apt. With the recent entry of South Sudan, the group now has a common market of 162 million people.

In his address, Museveni also hinted on the possibility of assembling car parts as opposed to importing everything as a way of cutting costs.

“When a car is imported in knockdown state and is assembled here, it is about 25% cheaper because it is cheaper to transport car parts on ships and trains than importing assembled cars.”

Although this may most likely not happen in the near future, a number of experts believe that Uganda can use other ways to improve its quality of exports or change some of its methods to be more competitive on the international scene.

Kamugisha believes Uganda’s exports need more aggressive marketing since those who buy the country’s goods are within reach. In 2015, for instance, Uganda collected $2.3 billion from exports although it imported almost thrice the amount it exported. Despite the deficit, Uganda can make a remarkable improvement in its exports with its assortment of vegetable oils, foods, steel and iron products that neighbouring nations clamour for.

According to Kamugisha, remittances from abroad are something Uganda can tap into to increase revenue. “In 2015, they brought in at least $1.075 billion, we can promote them by working with service exporters and Ministry of Gender, Labor and Social Development,” he says.

Although he has lofty plans, Kamugisha may have to contend with the fact that Uganda does not trade many manufactured goods, which may not spur export revenue radically. The political uncertainty surrounding most regional markets also remains a problem. The dust in Burundi is yet to settle down and so is South Sudan, which is just recovering from a deadly civil war. And yet the region is Uganda’s biggest hope for the market.

Nonetheless there is even more hope from DR Congo, a perennially unstable neighbour, for our informal sector. In 2015, Uganda sold exports to DRC in the informal sector at a profit of $187 million. These included fish, beans, and sugar. The country also sends a lot to Kenya and Rwanda in the informal trade.

Kenya remains Uganda’s biggest formal trading partner through export of items like tea, tobacco and dairy products. With $448m, Kenya is closely followed by South Sudan ($253m) and Rwanda at $253m. Kamugisha says we only need to do marketing because markets are within reach.