Uganda’s trade deficit narrows to sh1.224 trillion

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Uganda’s balance of payments is gradually stabilising, a sign that the manufacturing sector is blossoming, exporting more, especially to the region.

The balance of payments summarises the economic transactions of an economy with the rest of the world and includes exports and imports of goods, services and financial assets, along with transfer payments (like foreign aid).

According to Ramathan Ggoobi, the finance ministry permanent secretary, as of August 2024, Uganda’s merchandise trade deficit narrowed to $314.1m (about sh1.224 trillion) from $342.8m (about sh1.337 trillion) in August 2023.

“This was driven by an increase in export receipts, which more than offset the increase in the import bill,” he said at the press conference where he announced the Q2 finance releases.

He stated that total exports in August 2024 reached $789.58 million (approximately sh3.076 trillion), indicating a 17.9% increase from the $669.69 million (about 2.609 trillion) reported in the same month last year. 

Ggoobi noted that coffee remains one of Uganda’s major exports, increasing by 82.2% from $121.64m (about sh473.85b) in August 2023 to $221.63m (about sh863.52b) in August 2024 respectively.

The composite index of economic activity (CIEA) indicates that Uganda’s economy has grown

“The CIEA grew to 166.63 in August 2024 from 166.03 in July 2024. Similarly, both the Purchasing Managers Index (PMI) and the Business Tendency Index (BTI) were recorded at 54.2 and 57.8 respectively in September 2024. This is above the threshold of 50, implying that the business health and sentiments in the private sector are positive,” said Ggoobi.

He mentioned that with the government's ongoing investment in agro-industrialization, tourism development, mineral-based industrialization (including oil and gas), and science, technology, and innovation (ATMS), along with other strategic interventions, the economy is expected to grow between 6% and 6.5% this financial year.

“In the subsequent years, economic growth is projected to be higher, driven by interventions we are implementing under the ten-fold growth strategy,” he pointed out.

Private sector blossoms

Ggoobi said the high-frequency indicators of economic activity show improvements in the level of economic activity and positive sentiments by the private sector about doing business in the economy going forward.

“The private sector continues to give a vote of confidence in the economy of Uganda. The business executives have reported positively about the opportunities we have now in the economy. These are shown in a number of surveys which are carried out,” he said.

He said local firms are increasingly exporting to the regional market, with many household essential products going to South Sudan and DR Congo.

According to Bank of Uganda, exports in Uganda increased to $789.60m (about sh 3.076 trillion) in August from $785m (about sh3.059 trillion) in July of 2024. Exports in Uganda averaged $187.73m (about sh731.047 billion) from 1993 until 2024, reaching an all-time high of $940.93m (about sh3.664 trillion) in May of 2024.

The country’s most important export is coffee (22% of total exports) followed by tea, cotton, copper, oil and fish. Uganda’s main export partners are Sudan (15%), Kenya (10%), DR Congo, Netherlands, Germany, South Africa and UAE.