Uganda’s export earnings drop by Shs400b – report

Monday June 22 2020

Fishmongers wait for customers recently. Fish

Fishmongers wait for customers recently. Fish is among the export commodities that suffered a decline, according to the BoU report. FILE PHOTO 

By Dorothy Nakaweesi

In Just 30 days between March and April, Uganda’s exports receipts dropped by Shs400b as the effects of the Covid-19 continue to bite economies.

According to the latest recurrent report by Bank of Uganda released this month, capturing statistics for April, the country’s receipts were $207.1m (Shs766b) down from March’s $315m (Shs1.1trillion).

These records show that the country’s total export receipts suffered a 52 per cent decline in that period alone.
“The April earnings was a further decline from February’s $356m (Shs1.3 trillion) recorded when Covid-19 hit the World and was declared a pandemic,” the report reads in apart.

Comesa remains the lead export destination but its export earnings in the period in review declined to $80m (Shs296b) up from $107m (Shs396b) indicating a 33.7 per cent decline in 30 days.

Uganda’s exports earnings from Asia suffered a 123 per cent decline in the period in review. In April, Uganda’s export earnings dropped to $16m (Shs60b) up from $36m (Shs123b) earned in the month of March.

The country’s exports earnings to the promising Middle East also went down to $61m (Shs228b) from $65m (Shs243b). Uganda’s export earnings to the Middle East in a period in review suffered a 6.5 per cent drop.
The report shows that Uganda’s exports earnings from the traditional European Union market suffered a 30 per cent decline in the period in review.

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“Uganda’s export earnings in this period went down to $32.6m (Shs120bn) down from $42.7m (Shs158bn) recorded in the month of March,” the report reads in apart.
What is most significant in this period in review informal trade recorded a mere $970,000 (Shs3.5b) down from the usual range of $51m (Shs188b).

In this period, gold although still leading the chart, its export receipts suffered a slight drop from $60.9m (Shs225b) registered in March to $60.4 (Shs223.4bn) earned in April the period in review.
Coffee the country’s leading agricultural export commodity in the period in review saw its earnings declined to $36.9m (Shs136b) down from $45.8m (169bn) earned in the month of March.

This means that coffee export earnings suffered a 24 per cent decline in the period in review.
Fish as an export commodity also suffered a decline in earnings in the period in review. Mostly exported in European Union, Fish export receipts dropped to $6.7m (Shs24.7bn) down from $11.5m (Shs42.5bn).
Soap, tea, flowers, and cement surprisingly recorded a slight increase in their export earnings in the period in review.

The report shows that the country earned $2.7m from soap exports up from $1.4m earned the previous month. Tea exports which mainly go through Mombasa auction also recorded an increase to $6.14m up from $5.1m earned in March.

Admitted
While reading the Budget speech on June 11, the Finance minister Matia Kasaija admitted that the economy had been affected by the pandemic.
“Economic activity has drastically declined, with reduced demand for agricultural produce, the disruption of input supplies to manufacturers, as well as a disruption of Micro, Small and Medium Enterprises activities,” he said.

Economist Fred Muhumuza said this is not a good sign, especially now that we are seeing a lot of exits of dollars that are increasing.”
He said if dollars go out of the country and they are not brought back then the country will have to borrow.

“Borrowing is very bad for an economy like Uganda. In general, it should be a concern but not a surprise, given the global recession wbecause the demand for many things has gone down,” Muhumuza said.
He said that as a country we may also need to check on cases where the decline in value is due to lower prices, lower volumes, or both.

“Effect will be a reduction in BoU reserves if we don’t reduce our imports. There will be pressure on the shilling as dollar-cost goes up,” Muhumuza added.
He added that BoU should be able to prevent a rapid depreciation given its planned injection from the IMF.
“We might get new dollars coming in from WB loans,” He cautioned.

These were the same fears expressed by the governor BoU, Prof. Emmanuel Mutebile while appearing before the Parliament’s National Economy Committee.
Mutebile cautioned that the rate at which public debt is rising is worrisome especially with the recent COVID-19 pandemic loan the government acquired may shove up the ratio.
Uganda’s debt currently stands at Shs53.9tn as of April the period in review.

“Acquired more loans because of the COVID-19 pandemic might push the ratio up. This is happening especially due to the weaker fundamentals including slow growth, exchange rate depreciation, and weaker exports,” Mutebile said.

Government promise
While reading the Budget speech on June 11, the Finance minister Matia Kasaija admitted that the economy had been affected by the pandemic.

“Economic activity has drastically declined, with reduced demand for agricultural produce, the disruption of input supplies to manufacturers, as well as a disruption of Micro, Small and Medium Enterprises (MSMEs) activities.”
He added that the Inflows of Foreign Direct Investment and remittances of Ugandans in the diaspora have also declined sharply.

However Kasaija said government through an economic stimulus and growth strategy sectors like that of exports will be promoted.
“Export promotion strategy for a range of goods including medicines and other health products; and the products of agro-industrialization and light manufactures will be developed,” Kasaija shared.

BORROW
Bad. Economist Fred Muhumuza said if dollars go out of the country and they are not brought back then the country will have to borrow.

dnakaweesi@ug.nationmedia.com

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