Uganda breaks regional export jinx in 2018

Wednesday January 2 2019

2018 could possibly have been the worst year

2018 could possibly have been the worst year for maize dealers and farmers. FILE PHOTO 


Before government, through Uganda Development Cooperation bought a 32 per cent stake, an equivalent of Shs62b, in Atiak Sugar last year, the company had sought for different options including bail outs.
Atiak had planned to start production in the first quarter of this year but suspected arsonists have put that plan on hold.
It is suspected that arsonists attacked the company on three occasions burning more than 600 acres of cane to ashes.
The company is already two years behind schedule and a further hold is expected. Although this came at the close of the year, this was one of the events that shaped 2018, especially in the trade sector.
This, and many other events are some of the major factors we shall review today.

The 2018 maize mess
After a successful year of maize harvest, farmers were treated to the worst experience in the market selling a kilogramme of corn as low as Shs150.
Government made a Shs100b intervention to lift the prices that had fallen terribly.
However, the grand intervention has done so little to make any difference with a kilogramme of maize closing the year at less than Shs500.
Before this, a kilogramme had been going for as high as Shs1,000 with demand coming in from Kenya, DR Congo and South Sudan.
Uganda, currently, produces at least five million tonnes of maize annually with half of this consumed locally.

Industrial development
By close of the year, industrial growth, according to the government data from Ministry of Trade, stood at 6.2 per cent compared to 3.4 per cent in the 2016/17 financial year.
The sector contribution to the value of the economy generated nearly 20 per cent, a slight increase from 19.6 per cent registered in the 2016/17 financial year. Most contribution came from the sugar, tea and beverage sectors with more contribution coming in from cement, steel, cotton and textiles.
Manufacturing contributed 8.2 per cent to GDP with a growth rate of 4.4 per cent by close of 2018 as opposed to 2.2 per cent registered by close of the previous year. The improved performance was on account of good performance in chemical and pharmaceutical products, drinks, sugar, cement, tobacco and iron & steel. However, 2018 also saw a decline in the manufacture of leather and foot wear, textile and garments.

Sector budget
Trade continues to be a low priority sector and indeed 2018 was not any better.
The sector was in the 2018/19 financial year allocated Shs77.3b notwithstanding its contribution to economic growth.
This is so little when compared with what is needed to be done to uplift the economy.

Africa trade area
On March 21, 2018, during the 10th Extraordinary Session of the Assembly of Africa Continental Free Trade Area in Kigali, Rwanda, Uganda signed an agreement to strart the African Continental Free Trade Area.
The block is composed of 55 member states and is considered to be the world’s largest free-trade area.
It establishes a single market of 1.2 billion people, with a combined Gross Domestic Product of $3.4 trillion.
It provides for an expansion of markets for growing economic operations as well as attract cross-border investment, creates employment opportunities for young people domestically through expansion in production of goods and services that will be demanded by the expanded markets.

Foreign earner
Overall, coffee remained the main foreign exchange earner. However, its share to exports slightly reduced from 18 per cent in the 2016/17 financial year to 17 per cent in 2017/18.
It was followed by gold and gold compounds whose earnings highly increased. Fish and its products also fetched in incredible figures.

Buy Uganda Build Uganda

Unless there is a policy reversal, the Buy Uganda Build Uganda (BUBU) policy is likely to be carried on into the New Year.
The policy seek to build local capacity through market support for local manufacturers.
Already the Standard Gauge Railway (SGR) project has allocated $750m for local producers and manufacturers.
Sinohydro Corporation, which is undertaking the construction of Karuma Hydro Power project procures all cement and iron bars from local producers.

Record breaking exports
The year 2018 could also go down as one of the most remarkable for the trade sector, given that Uganda exported more to Kenya in more than three decades.
By close of 2018, Uganda had a surplus trade balance of $122.78m compared to Kenya. Exports stood at $628.47m compared to $505.70m of imports.
Uganda also registered the highest trade balance in the EAC of $413.86m with exports to the region standing at $1.22b compared to imports of $806m.

Trade information portal
The year 2018 also saw government commission a trade information portal for export, import and transit information. The portal, is an online platform where information regarding export, import and transit of goods is shared.
Whereas the Electronic Single Window allows traders to clear their goods online, the Trade Information Portal provides traders with necessary information to undertake transactions on Electronic Single Window. The two platforms are therefore complementary.

One Stop Border Post
In 2018, construction of three one stop border posts including Mutukula, which connects Uganda to Tanzania, Busia, which links Uganda to Kenya, and Mirama, which connects Uganda to Rwanda, were completed.
All these are now operational under the one stop control, which means that goods are now cleared once on one side of the board.
Importantly, construction of one stop border posts coupled with other trade facilitation programmes such as customs modernisation has reduced the clearance time from eight days in 2010 to two hours in 2018.

Cross border earnings
Informal cross-border export earnings in the 2017/18 financial year were estimated at $595m, representing 17.08 per cent of Uganda’s exports.
The main informal commodities included beans, maize, sugar, grains, bananas and fish, among others.
DR Congo was the main informal partner with total informal export trade of $291.48m in 2017/18.
It was followed by Kenya at $149.94m while Rwanda contributed $54.41m. South Sudan contributed $54.17m with Tanzania contributing $45.52m.

Global trade
The Comesa trading bloc remained the main destination for Uganda’s formal exports with a share of total export earnings of 51 per cent ($ 1.483b) in the 2017/18 financial year. This indicates a 17 per cent increase from $1.262b in the 2016/17 financial year.
Kenya and South Sudan constituted 63 per cent ($939.81m) of Uganda-Comesa export earnings. The EU contributed 19 per cent ($568.96m) of total formal exports in the 2017/18 financial year, posting a 12 per cent increase from the $506.8m in 2016/17.

The Middle East followed, accounting for 14 per cent (S$414m) of the total market share in the 2017/18 financial year compared to 18.7 per cent ($504.71m). United Arab Emirates contributed 92 per cent ($382.46m) of the Uganda-Middle East exports in 2017/2018.