Uganda tipped on how to fully graduate from the LDCs group

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The Ugandan government should invest in resilient trade regimes in order to maintain the country’s status of graduating from the United Nations LDCs category for the first time.

This is based on the fact that trade is a catalyst for Uganda’s development, contributing to job creation, income generation, poverty reduction, and integration into regional and global value chains.

The call was made by the UN Resident Coordinator in Uganda, Leonard Zulu, while officiating at the Trade and Resilience Workshop for Uganda, organised by the Ministry of Trade and Industry on Thursday at Four Points by Sheraton Hotel in Kampala.

“As Uganda met the criteria for Graduation from the United Nations LDCs category for the first time, resilient trade will be a crucial contributor and factor to maintaining this development trajectory and enabling a smooth transition for Uganda,” Zulu said.

Zulu explained that Uganda is faced with many trade-related shocks, which include global supply chain disruptions, climate change effects such as droughts that affect agricultural exports, limited access to finance, and high transport logistics, among others.

This was manifested during the COVID-19 pandemic, when global supply chains were cut off, leading to high costs of agricultural chemicals like fertilisers, which were coming from Russia, China, and Germany.

This was further affected by the onset of the Russia-Ukraine war, which also disrupted the movement of most products. Due to failure to import fertilisers, prices rose from sh130,000 for a 50kg bag of fertiliser to between sh200,000 to sh250,000.

The same effect of global disruptions, high transport and logistical costs was witnessed through increased prices of household necessities such as soap, cooking oil, simply because it wasn’t possible for Uganda to import crude palm oil (CPO), the primary input for laundry soap and cooking oil production from Countries like Malaysia.

For the confectionery industry, this too was affected because it wasn’t possible to transport wheat from Ukraine and other countries that produce wheat massively, among others, partly due to COVID-19, but also the Russia-Ukraine war.

Zulu further added that to ensure that Uganda's trade is sustained, there will be a need for diversification of export markets, but also the products traded, strengthening regional integration, especially through the African Continental Free Trade Area (AfCFTA) and investing in trade-related infrastructure like roads, cold chain storage facilities, among others.

Officiating at the workshop, the Minister of Trade, Industry and Cooperatives, Francis Mwebesa, assured stakeholders that although the country is approaching full graduation, challenges such as in maintaining and building on these gains.

“Trade resilience is crucial in ensuring that Uganda not only meets the criteria but thrives post-graduation. This means having robust supply chains, diversified exports, strong infrastructure and innovative industries,” he said.

Adding that the government is determined to scale up efforts by strengthening the export base to withstand global economic shocks, diversifying the product base and enhancing the competitiveness of our industries.

Mwebesa explained further that Uganda’s exports have in the past been dominated by reliance on primary commodities and over dependence on Coffee, tea, fish, cotton and gold, which still dominate Uganda’s export basket, accounting for over 75% of export value.

He is, however, optimistic that through Uganda's tenfold growth strategy, which is geared towards harnessing the potential for value chains beyond the traditional exports, resilience in trade will be built. Value chains that will be instrumental on this journey include dairy, beef, fish, coffee, cassava, maize, oil palm, cotton, and tea.

Uganda's journey to graduation

The United Nations General Assembly established the Least Developed Country (LDC) category in 1971 in acknowledgement by the international community that special support measures were needed to assist the least developed among the developing countries.

This category comprises the most disadvantaged of the developing countries, defined by the UN as those that have low levels of income and face severe structural impediments to sustainable development.

Countries categorised as LDCs are identified based on specific criteria and procedures. The designation of countries is based on three sets of criteria, which include per capita income level, a human assets index, and an economic and environmental vulnerability index.

To graduate from the LDC category, a country must meet the established graduation thresholds for two of the three criteria at two successive triennial reviews.

To easily distinguish between countries classified as LDCs and the remaining developing countries, the UN assigns in many of its documents each country a corresponding status.

Side Bar

On March 11, 2024, the Chair of the CDP formally communicated that the Republic of Uganda had fulfilled the criteria for graduation from the LDC category for the first time.

This implies that the CDP will consider Uganda for eligibility and a possible recommendation for graduation from the LDC category at the 2027 triennial review.

A minimum preparatory period of 5 years (or longer) is expected to be taken before actual graduation from the category.

This implies that the earliest Uganda can graduate will be 2032, if recommended in 2027, according to a briefing note on Uganda’s journey to graduating from the United Nations Least Developed countries category from the United Nations office in Uganda.