C-News Bureau Chief
KAMPALA –In January 2024, Uganda’s export landscape revealed the East African Community (EAC) as its dominant market, claiming a substantial 38.2 percent share, according to the country’s macroeconomic policy department’s February 2024 report. Kenya stood out within the EAC, receiving 30.4 percent of Uganda’s total exports to the region, underscoring its pivotal role in regional trade. Following closely were the Middle East and the European Union, capturing 26.4 percent and 17.5 percent of Uganda’s export markets, respectively, with the United Arab Emirates notably absorbing 97.1 percent of the nation’s exports to the Middle East.
On the import front, Uganda experienced a 15.0 percent decline in merchandise imports from December 2023 to January 2024, dropping from USD 886.24 million to USD 753.54 million. This reduction primarily stemmed from decreased private sector imports in various sectors, including mineral products and textiles. However, excluding gold, there was an uptick in imports by 6.9 percent and a significant year-on-year growth of 17. percent compared to January 2023.
“This increase was mainly driven by increased import volumes for mineral products (excluding petroleum products), vegetable products, animals, beverages, fats and oils, machinery equipment, vehicles and accessories, petroleum products, chemical, and related products, among others,” the report partly reads.
Asia continued to be Uganda’s largest import source, according to the report, contributing 48.4 percent to the total imports in January 2024. China and India were the major contributors within this region. Additionally, the EAC, the rest of Africa, and the Middle East also formed notable import sources, with Tanzania and Kenya being major importers within the EAC (https://www.finance.go.ug/sites/default/files/reports/POE-2024-02-FEB.pdf).
Regarding trade balances, Uganda recorded surpluses with the EAC, the Middle East, and the European Union, but faced deficits with Asia, the Rest of Africa, and the Rest of Europe. This trade pattern indicates a nuanced relationship with different global regions.
The Business Tendency Index (BTI) in February indicated a positive business sentiment in Uganda, although there was a decrease in optimism due to rising fuel and material costs. This sentiment varied across sectors, with construction, manufacturing, and other services maintaining optimism, while the agricultural and wholesale sectors recorded pessimism.
In fiscal terms, Uganda’s government operations in February 2024 resulted in a larger-than-planned fiscal deficit of Shs 615.71 billion, driven by revenue shortfalls and higher expenditures. The domestic revenue collection faced a shortfall of Shs. 148.12 billion against the target, with both tax and non-tax revenues underperforming. This underperformance was attributed to lower-than-expected collections in taxes on international trade and indirect domestic taxes.
Government expenditure exceeded planned levels due to increases in recurrent expenditure and higher-than-anticipated interest payments. This scenario was exacerbated by exchange rate depreciation and higher interest rates on treasury instruments. Development expenditure, however, was lower than planned, primarily due to the slow disbursement of funds from development partners for externally financed projects.