Concern as Uganda’s trade deficit widens by 44% in one year

A new report indicates that Uganda’s trade deficit with the rest of the world rose from $279.90 million in March 2023 to $403.41 million in March 2024.

According to the Performance of the Economy Report for April 2024, issued by the Ministry of Finance, Planning and Economic Development, this deficit represents 44.1%.

In March 2024, Uganda’s trade deficit with the rest of the world increased by 45.9% to USD 403.41 million from USD 276.54 million the previous month.

The report attributes the increase in trade deficits, both monthly and annually to a rise in the import bill, which surpassed the gains in export receipts

Nevertheless, during March 2024, Uganda’s merchandise exports increased from USD 633.0 million in February to USD 634.43 million, representing a 0.2% growth rate. This increase was mainly due to a rise in export receipts from tobacco, simsim, hides and skins and gold.

However, receipts from coffee exports declined by 21.6% from USD 82.56 million in February 2024 to USD 64.74 million in March 2024, despite the average coffee export price increase during the period.

This performance was mainly attributed to a smaller harvest in the Elgon region, coupled with delays in the onset of the harvest season and a shortage of shipping containers.

 Italy maintained the highest market share of Uganda’s coffee exports, accounting for 38.1% of the total coffee exports. It was followed by India, Germany, and Sudan accounting for 12.3%, 10.5%, and 5.0% of the total coffee exports, respectively.

However, on a year-on-year basis, Uganda’s merchandise exports saw a decline of 6.6%, from USD 679.36 million in March 2023 to USD 634.43 million in March 2024. This decline was primarily due to a decline in export receipts from maize, coffee, tea, among others.

In March 2024, the Middle East was the largest destination of Uganda’s exports, accounting for 41.8% of the total exports. At the country-specific level, the United Arab Emirates received 98.2% of the exports to the region, predominantly consisting of gold exports.

Other notable destinations for Uganda’s exports during the month were EAC, the European Union, and Asia accounting for 29.6%, 14.3%, and 9.7% of the total exports, respectively. Within the EAC, the Democratic Republic of Congo emerged as the largest importer of Uganda’s merchandise, taking up 31.1% of the total exports. This was closely followed by Kenya at 26.8% and South Sudan at 25.1%.

During March 2024, Uganda’s merchandise imports increased by 14.1% to USD 1,037.84 million from USD 909.54 million in February 2024. This was mainly attributed to an increase in private sector imports particularly vegetable products, beverages, fats and oil; mineral products (excluding petroleum products); and plastics, rubber and related products.

Similarly, a year-on-year comparison shows that the import bill grew by 13.1% from USD 917.60 million in March 2023 to USD 1,037.84 million in March 2024. This growth was on account of increased import volumes for vegetable products, beverages, fats & oil; base metals & their products; machinery equipment, vehicles & accessories, among others.

The EAC emerged as the largest source of Uganda’s imports, constituting 36.8% of the total imports in March 2024. Within the EAC, Tanzania stood out as the biggest source, accounting for 80.2% of the imports from the region, with the main commodities being gold and rice.

Other notable sources of imports in March 2024 included Asia, the Middle East and Rest of Africa accounting for 30.5%, 11.7% and 11.2% of the total imports, respectively.