Uganda exports to hit sh31 trillion by 2017

By Umaru Kashaka

THE Uganda Export Promotion Board is reviewing the 2008-2012 National Export Strategy (NES) to set new targets on export earnings, export per capita levels and export to gross domestic product with the aim of doubling Uganda’s exports to about $12b (sh31 trillion) by 2017, the deputy executive director has said.

In an exclusive interview with New Vision recently, William Babigumira, said the realised figure ($4.2b), which includes goods, services and informal crossborder trade) of 2012 is not far off from the ambitious set targets $5b (sh29 trillion) for 2008-2012.

“We are currently reviewing the NES of 2008-2012 and will be rallying on the private sector and the relevant government agencies to produce the new strategy of doubling the exports to about $12b for 2013–2017. However, we can conservatively say that Uganda will aim at tackling fewer sectors than in the previous NES where we had 12 priority sectors,” he explained.

Recorded gains

He said 2012 recorded substantial gains with manufactured products, especially mineral water, sugar and sugar confectionaries. 

“More than 100% growth was also recorded for maize and rice products majorly destined for the East African Community (EAC) and the Common Market for Eastern and Southern Africa (COMESA) partner states.”

He noted that Uganda’s performance with COMESA, formerly constrained by non-signatory status to the Free Trade Area (FTA) agreement, is projected to grow even faster, now that Uganda has signed on the FTA.

“COMESA exports as a share of total exports are growing faster than the national average, while informal as a share of total exports are on the decline,” he noted.

More imports than exports

Babigumira said exports continue to be outpaced by imports, which for a fourth successive year continued to grow, setting record trade deficit levels of $3.6b in 2012.

“Imports in 2012 reached $6b. The top three major import markets remain India, Kenya and China. In 2011, the top import destination was China, followed by India. However, in 2012, India was the top importer for Uganda,” he explained. 

Ugandan traders, he observed, spent $1.2b importing from India in 2012.

“Most of our imports include electronic equipment, vehicles, machinery, iron and steel products, pharmaceutical products, animal vegetable fats, plastics, cereals and sugar,” Babigumira noted.

He said what is notable is that most of the imports could be substituted by domestic sources, if industrialisation took off and if efforts to grow a production base are sustained.

“A good example is rice. After growing a production base, Uganda now exports considerable amounts of rice and also meets some of her domestic needs.” 

Babigumira, however, added that some of what Ugandans import is saddening, citing chicken from Brazil, Irish potatoes from Belgium, toothpicks from China, garlic from China, which can all be produced domestically.

“This trend can only be reversed if policy makers boldly consider balancing export promotion strategies with import substitution strategies,” he noted.

Shifting export destinations

Babigumira said Uganda’s market destinations have significantly shifted from the European Union towards the south, which is a welcome trend because at Uganda’s level of competitiveness, it can focus on its comparative advantages to survive and even thrive in these markets if the country works harder and smarter.

He said from previous observations, it is clear that formal merchandise exports and services continue to grow, yet cross-border exports are declining.

“This may be explained by a growing trend of trade formalisation, but also relative insecurity in preferred export destinations such as eastern Congo and South Sudan. 

Stiff competition and non-tariff barriers continue to challenge informal cross-border trade,” he added.

Growing exports

Babigumira explained that Uganda’s formal merchandise exports have been growing at an average of 8% per annum over the last five years.

“This growth rate is higher than the national output rate of about between 4-5%. If you read the most recent Diagnostic Trade Integration Study (DITS) by the World Bank, in spite of the recent widening of current-account deficits, Uganda’s underlying export performance remains strong. Exports of goods and services now represent over 20% of GDP, against only 10% a decade ago,” he explained.

“What is continuing to push up our good performance is south-to-south trade. The gradual shift from reliance on the EU markets to regional trade, significantly COMESA, which contributes 46% of our exports, is a timely one. There are also signs that dividends from signing the COMESA FTA are beginning to accrue. In 2012, exports of maize and rice to COMESA more than doubled.”

More needs to be done

Babigumira said although a lot has been done, especially at the policy and planning level, the new competitiveness and investment climate strategy emphasises a cluster approach to build sustainable export supply capabilities and to make Uganda’s firms more competitive.

“President Yoweri Museveni’s recent message of bringing down the cost of doing business through major investments in energy and transport infrastructure is commendable since the sectors provide a foundation for building a national export infrastructure,” he observed.

The board’s executive director, Florence Kata, said there is a need for a comprehensive strategy for quality and standards management.

“At the micro level, major investments need to be made towards building firm capacities to seize emerging export opportunities, especially boosting production and output, improving quality compliance, innovating and diversifying their product range,” she said.

“These are critical for sustaining market presence and growing export earnings. While at the macro level, planners need to aim at policy convergence and to synergise existing policies, making them more dynamic and conducive for competitiveness and diversification.”

Kata said trade finance remains critical for national export growth and that given the fact that the export strategy performance significantly relies on agriculture performance, the limited access to credit for promising agribusiness enterprises severely constrains take off.

“Similarly, credit at household level is one of the factors hindering increase in agricultural production and value addition, which are critical for increased exports,” she said.