The shift: Manufactured goods rewriting Uganda’s export story

With supply now available and outstripping local demand, manufacturers, in the late 2000s, shifted their focus to the export market, making significant inroads. 

Data from Bank of Uganda indicates that Uganda’s export earnings from locally manufactured goods have increased by 98.02 percent in the last 22 years. 

But what is more remarkable is that Uganda, according to data from Bank of Uganda, was not exporting any manufactured goods until 2003, with the country recording zero industrial products exports in 2002. 

But there has been a reversal 

Bank of Uganda indicates that in the last 22 years, industrial products exports have significantly risen from zero in 2002 to $391.6m (Shs1.4 trillion) as of December 2024.
 
The exports have largely been boosted by sugar, cement and plastic products, all of which, have risen from zero exports in the early 2000s to above $50m (Shs180b). 

For instance, Bank of Uganda data indicates that Uganda recorded its first sugar exports in 2007, which have grown by 94.5 percent in the period from just $8.86m (Shs31b) to $162.36m (Shs584b). 

This has largely been supported by an increase in sugar production, which by 2021 had grown to about 600,000 tonnes of brown and 60,000 tonnes of industrial sugar, before growing to about 822,000 tonnes. 

Uganda, according to data from the Uganda Manufacturers Association, has a local sugar consumption capacity of under 400,000 tonnes, which leaves a large surplus for the export market. 

Bank of Uganda data indicates that in the 12 months to December 2024, Uganda exported 243,627 tonnes of sugar, which has been an exponential growth from just 28,184 tonnes in 2007. 

Uganda formerly exports much of its sugar to Kenya, Tanzania, and Rwanda. 

Away from sugar, Uganda has also made significant gains in cement and plastic products exports, which have grown by 89.4 percent and 97.9 percent, respectively, in the last 22 years from zero in 2001. 

Uganda first recorded its plastic products exports in 2002 worth $1.23m (Shs4.4b), while cement exports were first recorded in 2007 ($9.01m (Shs32.2b). 

However, the earnings have since grown to $60.59m (Shs218b) for plastics and $85.08m (Shs304.5b) for cement as of December 2024, according to data from Bank of Uganda. 

Other industrial products exports include bottled water, whose earnings have grown from zero in 2006 to $40.49m (shs145b) - though it reduced from $48.71m (shs175b) in the 12 months to December 2023 - beer (from zero in 2006 to $26.18m (Shs94b), soap (from zero in 2001 to $27.33m (Shs92.3b) and baker’s ware (from zero in 2007 to $11.7m (Shs42b).
 
However, whereas there has been good progress for some manufactured goods, Bank of Uganda data indicates that the country has regressed in some areas, including textiles and cellular phones.  

For instance, data shows that cellular phone exports, which had risen from zero in 2006 to a peak of $147.84m (Shs532b) in 2012, have since fallen to just $2.06m (Shs7.4b) while textile exports, which recorded a modest earning of $0.38m (Shs1.3b) in 2007, have since fallen to zero. 

For at least 16 years since 2009, Bank of Uganda has not recorded any textile exports. 

Banks of Uganda does not offer an explanation for the gains and declines. 

However, in the last 30 years, Uganda has experienced an industrial boom, driven by the import substitution agenda, whose promotion was renewed with the heightened threats presented by Covid-19.
 
The boom started bearing fruit in the early 2000s and has since returned staggering benefits.  In 2002, Uganda's industrial products exports were virtually non-existent. 
Two decades later, the country is exporting manufactured goods worth $391.55m (Shs1.4 trillion). 

This has largely been due to the expansion into new markets such as South Sudan, DR Congo, Rwanda, and Burundi, in addition to traditional export markets such as Kenya.
 
Data indicates that Kenya remains Uganda’s largest export market in East Africa, but with a resurgence from new markets such as South Sudan and DR Congo.
 
For instance, in the 12 months to December 2024, Bank of Uganda data indicates that Uganda’s total exports to Kenya stood at $549.96m (Shs1.9trillion), which was relatively higher compared to South Sudan’s $449.97m (Shs1.6trillion) - a reduction from $606.91m - (Shs2.1trillion), DR Congo’s $446.94m (Shs1.6trillion), Rwanda’s $245.04m (Shs882b) and Tanzania’s $136.5m (Shs491b).  Exports to Burundi were the lowest at just $70.21m (Shs252b). 

The Uganda Free Zones and Export Promotions Agency export promotions executive, John Lwere, however, presents a differing picture, noting that whereas Uganda has for many years exported manufactured goods, it was not captured because they were either negligible or almost non-existent.

However, he notes Uganda's industrial sector has indeed undergone significant development since 2010, which has resulted in the emergence of various industrial sub-sectors, such as plastics, beverages, and cement.

“You will observe that after 2010, Uganda's industrial sector has developed significantly. We have seen the emergence of a number of industrial sub-sectors. The key drivers of this growth include infrastructure development, policy incentives, regional trade, and strategic partnerships," he says.

What is behind this growth?

The growth has been possible because of policy incentives such as tax holidays, free zones, and subsidies under Uganda's Industrialization Policy and National Development Plan.

But beyond this, Lwere says, has been improved access to regional markets, such as the East African Community and Common Market for Eastern and Southern Africa, which have provided a competitive advantage for Uganda's industrial exports.

Additionally, he says, Uganda has made many strategic partnerships with countries such as China, India, and Turkey, which have brought in industrial investments, especially in electronics.

The trend, Lwere notes, is likely to continue because of the heightened push for import substitution by government.

However, Fred Muhumuza, an economist, notes that Uganda's textile sector has weakened in the last 20 years, which has seen a large proliferation of used clothes, some of which are re-exported to other countries such as South Sudan and DR Congo.

But he also cautions that there is need to invest in local capacity further to exploit existing opportunities so that the country can be able to reduce re-exporting goods where it adds very little value.

Goods rewriting the export story  

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