Trade Imbalance

The Ugandan economy is dominated by three main sectors: Services, Agriculture and Industry. Agriculture is the back bone of the Ugandan economy and the main employer. This sector remains significant in the country's efforts to achieve a competitive upper middle-income, inclusive growth, employment and sustainable wealth creation as stipulated in the National Development Plan III and Uganda Vision 2040

The Agricultural sector contributed immensely to Uganda's total employment with an average of 72% in 2019. It is for these reasons that the sector has been given priority in the NDPIII. The Agricultural sector is structured along the following lines; a) Traditional Cash Crops: include coffee, cotton, tea, cocoa, tobacco, sugarcane, b) Non-traditional Cash Crops: include; Maize, Rice, Beans, Soya Beans, palms, and Horticultural produce, c)Livestock sub-sector: The Livestock Census (Uganda Bureau of Statistics 2008) indicated that the national cattle herd is estimated at 11.4 million,12.5 million goats, 3.4 million sheep, 3.2 million pigs and 37.4 million poultry birds, d) Fishing: The fishing subsector contributes 12 percent of agricultural GDP of Uganda.. 20% of Uganda's surface area is covered by water. The country has enormous potential for fresh water fisheries and aquaculture production. Uganda's fisheries resources are diverse in aquatic ecosystems and in fish species bio-diversity

In terms of contribution to Gross Domestic Product (GDP), the share of services declined from 58% to 46% of GDP, while agriculture rose from 22% to 24% of GDP in 2019. By October of the same year, Uganda's economic structure significantly changed following a rebasing of the national accounts, resulting into a significant change in the structure of the economy. The revision of the base year from FY09/10 to FY16/17 and inclusion of activities that were previously missing, meant the economy was 21% larger during the last 10 years and by FY18/19, with a share of industry in gross domestic product (GDP) of 30%, much larger than the previous estimate of 20%. This increase was largely driven by manufacturing, for which the share doubled from about 8% to over 16% of GDP.

Imports have been growing faster than exports, resulting into a wider trade imbalance.  In 2018 Uganda was the number 103 out of 196 economy in the world in terms of GDP (current US$), the number 117 in total exports, the number 118 in total imports, and the number 86 most complex economy. In 2018, Uganda exported $4.16B and imported $6.29B, resulting in a negative trade balance of -$2.14B. In 2018, Uganda's exports per capita were $97.3 and its imports per capita were $147.

The top exports of Uganda are Gold ($1.65B), Coffee($487M), Dried Legumes ($104M), Fish Fillets ($99.7M), and Corn($92.6M). The top imports of Uganda are Refined Petroleum($1.1B), Gold ($335M), Packaged Medicaments ($247M), Palm Oil($225M), and Delivery Trucks ($219M).

Uganda exports mostly to United Arab Emirates($1.68B), Kenya ($507M), South Sudan ($301M), Democratic Republic of the Congo ($202M), and Rwanda ($197M), and imports mostly from China ($986M), United   Arab Emirates ($742M), India($679M), Kenya ($643M), and Saudi Arabia ($539M).

The higher increase in imports would be desirable and sustainable if most of the imports were used as inputs for production. However, most of the imports are consumables rather than industrial/production inputs which has made the country to focus on industrialisation as stipulated in the NDPIII

The country maintains an open and liberal economy. Trade liberalization reforms have been undertaken over the last couple of years, especially through reduction in tariffs rationalization of tariff bands, substantial reduction in Non-Tariff Barriers, and pursuit of regionalism and multilateralism. Export diversification has been a key component of the trade policy reforms, and efforts are yielding positive results. Non-traditional exports account for the bulk of the country's merchandise export earnings, with the main ones being fish and fish products, flowers, maize, cocoa beans, gold and gold compounds, and beans and other legumes. By value in 2018-2019, from the more granular four-digit Harmonized Tariff System code level, coffee represents Uganda's most valuable exported product at 29.9% of the country's total. In second place was non-concentrated and unsweetened milk or cream (7.5%) trailed by fish fillets or pieces (6.1%), cocoa beans (5.3%), unmanufactured tobacco including tobacco waste (4.1%), oil seeds (3%), sugar (2.9%), miscellaneous live plants (2.8%), concentrated or sweetened milk and cream (2.5%) then vanilla (2.3%) and uncombed cotton (also 2.3%)

The latest data from 2018 shows that by continental perspective, 51.8% of Uganda's exports by value were delivered to fellow African countries while 28.1% were sold to Asian importers. Uganda shipped another 18.2% worth of goods to Europe. Smaller percentages went to North American (1.8%), Oceania (0.1%) led by Australia, then Latin America (also 0.1%) excluding Mexico but including the Caribbean.

The country's merchandise exports are still dominated by primary products. This is an issue of major policy concern given the price volatility of primary products at international level, low and unstable production levels at national level, and some inefficiency in the existing marketing framework. Thus more efforts/policies are being undertaken by the government to promote exports and shoulder producers to process most of the row products so as to trigger competitiveness on the world market. Uganda needs investors in processing of primary products for export, which will create markets and jobs.