Govt imports drop to lowest level in years

Thursday November 19 2020
mark001 pix

Both private sector and government imports dropped during September. PHOTO | FILE

By Dorothy Nakaweesi

Government imports declined to an all-time low for the first time in over three years, according to details contained in the Bank of Uganda report for the month ended September. 
According the report, government imports fell to $4m (Shs15b), which was a drop from the monthly average of $56m (Shs210b).  
However, during September government only spent on imports procured for project works.

The drop could have had a serious impact on the import bill, which fell from $693m (Shs2.6 trillion) to $615.5m (Shs2.3 trillion). 
During the month, formal private sector imports formed the largest part of the bill with mineral products (excluding petroleum products), which stood at $176.4m (Shs661b) taking the biggest share, while $115m (Shs431b) was spent on importation of vehicles and accessories.

Other products mostly imported during the period, according to Bank of Uganda, were petroleum products, chemicals and related products, vegetable products, animal, beverages, fats and oil.
Dr Fred Muhumuza, an economist and lecturer at Makerere University said government had curtailed consumptive expenditure apart from drugs.
 
This, he said, could be behind the drastic decline and is likely to continue given the current manifestations of cash flow problems. 
The cash flow problem has forced government to limit its expenditure on a handful of votes, among which include, State House, Ministry of Defence; wages, salaries, pension and gratuity; statutory obligations and Electoral Commission. 

This has largely been caused by Covid-19, which has continued to ravage the global economy and Uganda in particular. 
The Covid-19 induced lockdown, particularly in April and June, affected the economy with cross-cutting sectoral capacity reduced to below 30 per cent. 
In April, when Uganda announced a nationwide lockdown, the import bill dropped to $334m (Shs1.2 trillion) but quickly regained in the subsequent months of May, June, July and August. 

Mr Everest Kayondo, the Kampala City Traders Association chairman, said the drop could be due to restrictions imposed on source markets. 
“Most countries we trade with are still closed. People are just importing small and essential imports,” he said, noting the restrictions have stalled importation of big orders, especially from China. 

Import Source market   
During September, imports from Kenya declined the most compared to other source markets.
Uganda imported goods worth $60m (Shs225b) from Kenya down from $88m (Shs330b), which represented a decline of 50 per cent decline or $117m (Shs438.7b).
Imports from Comesa declined to $121m (Shs453b) from $175m (Shs641bn), while those from European Union also declined to $44.7m (Shs167b) from $76m (Shs285b). 
However, imports from Asia, which include India, China, Japan and Malaysia, rose marginally to $237m from $236m in August. 

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