Why Uganda’s export earnings have dropped

Recent reports show that there is a decline in the country’s export performance. What explains this drop?
UEPB will give an account of export performance for 2019 after the year has ended. Otherwise, 2018 saw steady growth in merchandise exports.

Any changes in export performance can be attributed to global influences due to trade wars between the USA and China – which resulted in a slowdown in global economic growth and demand. USA and China are the two biggest economies in the world and any negative effects on their economic performance will usually affect other economies including Uganda.

From 2010 to 2018, exports grew by 32 per cent from $2.163.94 billion (Shs8 trillion) to $3.22b (Shs11.8 trillion) respectively.

What measures have you put in place to increase exports?
Since 2016, the government through the Ministry of Trade, prepared the National Exports Development Strategy (NEDS), and a draft of NEDS and National Development Plan Two were used to prepare the Export Action Plan. In these plans, the government has focused on target markets of East African Community (EAC)/ Common Market for Eastern and Southern Africa (COMESA), European Union (EU), United Arab Emirates (UAE), China, India, and the USA among others.

The interventions, in a nutshell, include; product and market focusing. Here, Uganda has selected products based on agriculture, manufacturing and value addition, minerals beneficiation; and services (tourism, ITC, education, and professional services among others).

We are also looking at increasing production and productivity both for domestic goods and exports. We need to expand manufactured exports from 15 per cent to beyond 25 per cent to boost industrialisation and exports.

We can also have industries without smokestacks (industries that do not necessary manufacture but contribute to GDP) such as horticulture include fruits and vegetables and flowers. Such industries without smokestacks include tradable services such as IT, tourism and transport.

Increasing value addition, quality assurance and product competitiveness is another area we are working on. To boost exports and increase export receipts, we have to add value to what we produce while ensuring quality.

There is a need for affordable financing for export development. It is good that the government is continuing to re-capitalise Uganda Development Bank (UDB) to offer development finance for processing, value addition and exports.

Related to affordable finance is the need for export enterprise development and incentives for export development. Government’s strategy is to support SMEs to produce quality products and services for domestic consumption and exports.

This is why the government is supporting the ‘Buy Uganda Build Uganda’ policy to boost domestic demand, improve quality and enhance exports.

Mindset change is very important. We need to produce and sell in the market. Households that produce and consume their own produce deny the economy proper accounting for GDP.

Since exports matter for GDP growth and economic prosperity, developing institutions for export development and promotion is paramount. This has been proven by the UN’s International Trade Centre (ITC) which, after research analysis globally, has concluded that supporting Export Promotion Agencies generates revenue for economies. ITC (2016) study – “Investing in Trade Promotion Generates Revenue” found out the following:

Every dollar spent on export promotion generates $87 (Shs321,000) of additional exports, One dollar spent on export promotion generates a $384 increase (Shs1.4m) in GDP. Trade Promotion Officers (TPOs) contribute between 5 per cent and 6 percent rise in GDP per capita and a 7 per cent to 8 per cent rise in exports.

Increasingly, trends have shown exporters exploring the Middle East as an export market destination. Why?
Growing demand for Uganda products due to the increasing middle class and purchasing power in this region partly explains this development.

Uganda’s promotional efforts and strategic focus in the National Export Strategy has attracted many exporters to venture into this market.

Which are the other markets that exporters can look out for?
There are a number of potential markets for growth and expansion for Uganda’s products and services: EAC/COMESA; Middle East including UAE; EU; UK after the Brexit, China, and India.

Besides the traditional export products, is there a demand for new products that the market want from Uganda and what are they?

Every year, UEPB, identifies products and services with export potential. Beyond current exports, the target markets are looking for shea products; cocoa value-added products (not just cocoa beans), cow horn products; and value-added food products; among others.

What challenges is UEPB experiencing in promoting Uganda’s exports?
UEPB challenges are not entirely unique to UEPB but to most MDAs. Since Uganda is a developing country, the national resource envelope is not enough to cater for critical activities of market research, capacity building of government and the private sector in export management disciplines; and aggressive but targeted export promotions.

How has UEPB helped the youth, women and SMEs to start exporting?
UEPB is supporting all export efforts which are engaged mainly by SMEs. Most Ugandan exporters and producers of exports (goods and services) youth, women, another disadvantage; and men are engaged.

We are undertaking a national exports awareness campaign during the Export Week in January 2020. We are sensitising the country about export markets, products and services required in these markets, export producers and other market entry requirements. We are scouting for potential exporters.