KAMPALA: Despite a concerning rise in business collapses due to heavy debt, Uganda’s private sector continued to borrow more in June 2024. Lending institutions extended Shs 1,360.87 billion to the private sector, marking an increase from Shs 1,331.47 billion in May 2024. This growth translated to a loan approval rate of 66.0% for the month, according to the latest Ministry of Finance’s economic performance report.
Key sectors dominated the distribution of these loans, with the trade sector receiving the largest share at 29.0%. Personal and household loans followed closely at 22.7%, while the building, mortgage, construction, and real estate sectors accounted for 15.2% of the total approved credit. This trend indicates that, despite rising debt burdens, businesses and households continue to seek financial resources, particularly in trade and real estate, which suggests optimism in these sectors or ongoing capital needs for sustainability.
Merchandise Trade Balance
Uganda’s merchandise trade balance worsened in June 2024, with the trade deficit increasing sharply to USD 247.93 million from USD 92.58 million in May 2024. This widening deficit was largely driven by a substantial decline in export receipts, which overshadowed a concurrent reduction in the import bill.
However, when viewed from a longer-term perspective, the trade deficit in June 2024 narrowed by 2.9% compared to the same month in 2023. In June 2023, the trade deficit stood at USD 255.38 million. The relative improvement was driven by a more robust increase in export earnings, which outpaced the growth in imports over the year.
Merchandise Exports
Export earnings fell sharply in June 2024, declining by 23.6% from USD 940.93 million in May to USD 718.60 million. This reduction was primarily due to lower earnings from mineral products, a key export category. However, when mineral products are excluded, the data tells a different story: non-mineral exports actually rose by 5.1%, increasing from USD 446.85 million in May to USD 469.72 million in June. This growth was largely driven by higher coffee receipts, demonstrating the resilience of Uganda’s agricultural exports amidst shifting global commodity trends.
Coffee export earnings surged by 27.5% in June 2024, reaching USD 162.36 million, up from USD 127.30 million in May. This growth was attributed to both higher export volumes and an increase in international coffee prices. The rise in coffee volumes came from improved Robusta yields in Uganda’s Greater Masaka and Southwestern regions, while global price increases were linked to reduced supply from major coffee producers like Vietnam and Indonesia, both of which faced poor harvests. Italy remained the largest market for Uganda’s coffee, accounting for 41.96% of total coffee exports in June 2024, followed by Germany, India, Sudan, and Spain.
Comparing June 2024 to the same period in the previous year, export earnings grew by 11.8%, rising from USD 642.90 million in June 2023 to USD 718.60 million. This increase was driven primarily by higher earnings from coffee and electricity exports, reinforcing the importance of Uganda’s agricultural and energy sectors to its overall export performance.