Overview:

The Ministry attributes the import surge to higher private-sector demand for mineral products (excluding petroleum), machinery and equipment, vehicles and accessories, petroleum products, and various agricultural and processed goods.

Uganda’s trade deficit widened significantly in September 2025 as the country’s import bill continued to grow faster than export earnings, according to the Performance of the Economy Report for October 2025 released by the Ministry of Finance.

The new data shows that despite strong export growth over the past year, rising demand for imported goods—especially machinery, petroleum, and industrial inputs—has placed mounting pressure on the country’s external sector.

Uganda’s merchandise imports surged by 43.6 percent year-on-year, rising from USD 1.015 billion in September 2024 to USD 1.458 billion in September 2025. This sharp increase far outpaced export earnings, which reached USD 947.33 million, up 35.8 percent over the same period. The imbalance signals a growing trade gap that could strain foreign exchange reserves and weaken the country’s external position if sustained.

The Ministry attributes the import surge to higher private-sector demand for mineral products (excluding petroleum), machinery and equipment, vehicles and accessories, petroleum products, and various agricultural and processed goods. The rise in imports is seen as partly reflecting increased economic activity, as businesses continue to recover and restock following earlier global disruptions.

But while imports expanded, Uganda’s export performance showed signs of slowing momentum. Export earnings fell by 10.32 percent between August and September 2025, dropping from USD 1.056 billion to USD 947.33 million. The decline was linked to lower receipts from major commodities, including gold, sugar, cocoa beans, oil re-exports, and base metals—traditionally some of the country’s most valuable export categories.

Uganda’s annual export performance remains strong, particularly in minerals and agriculture. Coffee exports rose by 51 percent compared to the previous year, while mineral exports—including gold—also posted significant gains. However, the month-to-month decline highlights the volatility of commodity markets and Uganda’s vulnerability to fluctuations in global demand and prices.

Some agricultural exports performed unevenly. While beans registered an 86 percent surge, other products such as flowers, cotton, cocoa, and tobacco experienced steep declines both monthly and annually. Exporters blame erratic weather, shifting global prices, and increased competition in regional markets.

The report also indicates growing activity in informal cross-border trade (ICBT), which rose 19.8 percent year-on-year, reaching USD 64.84 million. Though a positive sign for border communities, these gains were modest compared to the surge in formal imports.

Asia Dominates Uganda’s Import Sources

Asia continued to be Uganda’s biggest source of imports, supplying 30.9 percent of all merchandise imported in September 2025. The East African Community (EAC) followed closely at 24.1 percent, reflecting strong intra-regional trade ties and Uganda’s dependence on regional partners for processed foods, manufactured goods, and re-exported merchandise.

Other import sources included the Rest of Africa (22.7 percent), the Middle East (11.1 percent), and the European Union (7.4 percent).

Economists warn that the widening gap between imports and exports could amplify pressure on Uganda’s balance of payments, even as the Shilling continues to strengthen on the back of high remittances and investor inflows.

A persistently high import bill could:

  • Increase demand for foreign exchange, putting long-term pressure on the Shilling
  • Reduce the country’s resilience to global price shocks
  • Widen the current account deficit
  • Limit the accumulation of foreign reserves

While some of the imported goods—such as machinery and industrial inputs—support domestic production and future growth, analysts caution that without a corresponding rise in value-added exports, Uganda risks deepening its structural trade imbalance.

The Ministry of Finance emphasizes the need for diversified export growth, enhanced value addition, and continued support to the agricultural and mineral sectors. It also highlights the potential of regional markets, the Middle East, and Asia as areas where Uganda can deepen trade ties.

For now, Uganda remains in a familiar but increasingly tense position—exporting raw materials while importing high-value industrial goods at a much faster rate. The challenge for policymakers will be closing the widening gap without slowing economic momentum.