Trade Sector Review Part 1
By Samuel Sanya
The Government has unveiled a new National Trade Policy that envisages implementation through two key instruments: The National Trade Sector Development Plan and the National Export Development Strategy.
Both strategies will boost export earnings to sh57 trillion by 2020. According to Amelia Kyambadde, the trade and industry minister, the two instruments are in line with the National Development Plan II, which highlights export oriented growth as one of the strategic approaches for ensuring macroeconomic stability and ensuring economic and social transformation of Uganda.
"The country is registering undesirable macroeconomic indicators, notably exchange rate volatility and rising inflation on account of inter alia, imported inflation. Increasing the country's foreign exchange earnings through increased exports of both goods and services is one sure way of propping up these key macroeconomic indicators, and of fostering economic and social transformation," Kyambadde says.
Between 2006 and 2015, total exports (both merchandise and services) grew from $1.51b to $4.46b, registering average annual growth rate of 13.8%. On the other hand, total imports (merchandise and services) increased from $3.327b in 2006 to $8.275b in 2015, registering an average annual growth rate of 11.5%.
This resulted into an annual deficit of $3.8b. Over the 2006-2015 period, the country's trade deficit has been widening at an annual average of 9.98%.
According to Kyambadde, the deficit is driven by low levels of production and productivity, low levels of value addition in the exported goods and fast rising demand for imports. Kyambadde points out that the National Export Development Strategy envisions a focused and dynamic export sector fully responsive to available export opportunities.
The strategy has given highest priority for export purposes to coffee, base metals, fish, cement, tobacco, sugar, flowers and tea. Medium priority has been given to the export of hides and skins, cocoa, sim-sim, maize, plastics, rice, cotton, fruits vegetables and beans. With respect to market focusing, the following markets have been prioritised: the European Union, the UK, Germany, Italy, Spain, the Netherlands and France; Common Markets for Eastern and Southern Africa — Sudan and DR Congo; East African Community member states — Kenya, Rwanda, Tanzania and Burundi; Middle East and Asia — China, India, Hong Kong and Singapore. CLICK HERE FOR MORE ON THIS STORY