By Daniel Karibwije
The regional and Middle East market remain key destinations for Uganda’s exports. According to preliminary figures from Bank of Uganda (BOU), the country’s total formal merchandise exports for last year stood at $4.1b (about sh14.5 trillion). This is a 16% increase from $3.5b (about sh12.4 trillion) exported in 2019.
However, for informal cross border trade, the figures declined by 42% from $532m (2019) to $305m (2020). This is linked to limited movement of small-scale traders due to the impact of the COVID-19 pandemic restrictions. This is unlike long-haul truck drivers who were guaranteed passage dependent on negative test results.
Uganda’s exports to the Middle East reached $1.9b last year compared to $1.27b for the Common Market for Eastern and Southern Africa (COMESA) region. A close study of exports to the Middle East reveals that 99% of exports head to the United Arab Emirates ($1,840m). These are predominantly gold exports from Uganda sourced from the Democratic Republic of Congo (DR Congo) by enterprising businessmen and routed through Entebbe International Airport. Other Middle East countries that contribute to the country’s export revenue include Israel ($11.7m), Saudi Arabia ($3.4m), Jordan ($1.5m) and a consolidation of other Middle East countries combined at $8.9m.
Last year, the country’s exports to COMESA clocked $1.2b. This figure is more evenly distributed across 14 countries and not dependent on a single product. This brings into play the question of market and product diversification because in case the tap of gold in the DR Congo closes, our exports to the Middle East would drop by 99%! COMESA is different.
Uganda’s major market destinations in the trade bloc are Kenya ($465m), South Sudan ($357m), DR Congo ($267m), Sudan ($95m), Burundi ($59m) and Ethiopia ($15m).
Unlike exports to the Middle East with 99% exports comprising one product gold and sent to one country — UAE, COMESA has strategic diversification. Uganda’s exports to the regional bloc comprise coffee, tea, maize, cement, milk, sugar, animal and vegetable fats & oil, rice, tobacco, beverages, iron and steel products, plastics, pharmaceutical products, products of the milling industry, tubes and pipes, among others. Simsim, beans and grains with long shelf life have always been on high demand. Key factors to consider are good post-harvest and storage techniques to ensure high-quality grains free of aflatoxins. The quality of grain determines the price and ultimately promotes a brand name for Uganda in regional markets.
In terms of diversification, the COMESA market is well spread out. Uganda does not put all its eggs in one basket. Market and product diversification is important for predictability of export revenue.
Since we have a competitive and comparative advantage as seen by the majority of our exports, we need to invest in market research and product development. Value addition from the agricultural sector fetches increased foreign exchange for the economy.
Fortunately, in the midst of COVID-19, industrial workers and the agricultural sector are essential workers. Their supply chain management system might have taken a hit, but exporters can work around the clock to ensure key farm elements are sourced to continue sustained production, good agricultural practices (GAP) and professional post-harvest handling to reduce loses.
Market and product diversification will open opportunities for Uganda’s farmers and industrial sector targeting value addition. Exporters targeting COMESA have a big potential for growth. The market is next door and export standards not as strict as international markets. This allows exporters to grow and with experience gained, target lucrative sophisticated high-value markets in the European Union and North America.
The Writer is an Export Trade Specialist
