Uganda’s trade deficit narrows by 32.2pc

Uganda’s finance ministry has said the country’s trade deficit with the rest of the world has narrowed both on a monthly and annual basis, owing to an increase in export receipts that more than offset the rise in the import bill.

The finance ministry’s monthly economy performance report for July 2023, indicates that “between May and June 2023, the merchandise trade deficit narrowed by 12.3 percent from $82.08 million to $247.43 million.”

“Year-on-year, the merchandise trade deficit narrowed by 32.2 percent from $365.11 million in June 2022 to $247.43 million in June 2023,” the report shows.

The Ministry’s Head of Communications Apollo Munghinda told Monitor that in June 2023, Uganda exported merchandise worth $650.57 million.

“This represented an 11.1 percent increase when compared to $585.81 million exported during May 2023. This increase was mainly on account of higher export earnings from beans, simsim, cotton and gold registered during the month,” he noted.

Munghinda further said during the same period, coffee export receipts during the month amounted to $90.56 million, a 23.6 percent increase from $73.26 million in May 2023. This growth was mainly attributed to the rising international price of Robusta coffee, which prompted exporters to off-load coffee from their warehouses for sale.

“In comparison to the same month the previous year, merchandise exports grew by 78.2 percent from $365.13 million in June 2022 to $650.57 million in June 2023. This was largely attributed to increased export earnings from maize, simsim, gold and hides and skins,” he observed on August 29.

Meanwhile, the July monthly economy performance report further shows that in June 2023, the East African Community (EAC) remained the top destination of Uganda’s exports, accounting for 33.9 percent of the total market share.

Within the EAC region, the top three destinations for Uganda’s exports were Kenya, South Sudan, and Democratic Republic of Congo, taking up 31.4 per cent, 25.7 percent and 24.7 percent of the total exports respectively.

The report reveals that Asia and the Middle East emerged as the second and third top destinations for Uganda’s exports, accounting for 32.8 percent and 13.8 percent respectively.

“It is worth noting that Uganda’s export earnings from Asia significantly increased from $28.12 million in June 2022 to $213.53 million in June 2023, owing to the increase in gold exports to the region,” the ministry of finance report reads.

The value of merchandise imports increased by 3.5 percent from $867.89 million in May 2023 to $898 million in June 2023, which has been attributed to higher private sector imports, particularly animals and animal products, petroleum products, vegetable products, beverages, fats and oils, as well as textiles and textile products.

Comparison with the same month last year (2022) shows that merchandise imports grew by 23.0 per cent from $730.24million in June 2022 to $898.0million in June 2023.

This increase was mainly driven by increased import volumes for mineral products (excluding petroleum products), vegetable products, animals, beverages, fats and oils, among others.

Origin of Imports

The ministry of finance notes that Asia remained Uganda’s largest source of imports, accounting for 36.9 percent of the total imports, per the June 2023 data. Within Asia, China and India were the major contributors, accounting for a combined 74.4 percent of the imports from the region.

Other notable regions included the EAC, the Middle East, and the Rest of Africa, which accounted for 26.9 percent, 15.3 percent and 10.5 percent of the total imports respectively. Within the EAC region, Tanzania and Kenya emerged as the lead sources of Uganda’s merchandise imports, accounting for 62.5 percent and 33.5 percent of the total imports, respectively.

Going by trade Balance by region, the report shows that in June 2023, Uganda traded at deficits with Asia, Rest of Africa, the Middle East, the EAC and Rest of Europe at $117.72 million, $69.59 million and $48.28 million, $21.03 million and $1.74 million respectively.