Kampala, Uganda | THE INDEPENDENT | Uganda has lost the trade deficit it had recorded against the European Union in July as imports of merchandises grew faster than the exports to the same region. Both exports and imports dropped sharply in April 2020, the first month of the lockdown that came amidst the closure of borders by almost all Uganda’s trade partners.
Export of fresh foods was the most affected as the aviation sector was closed down before a handful of cargo planes started operating at Entebbe and Jomo Kenyatta International Airports. However, dry commodities like coffee and gold continued thriving.
Since then however, trade with all regions has been growing as economies open up to trade. In June, Uganda recorded a commodity trade surplus against the European Union of USD 0.5 million and USD 124 million against the Middle East.
Now, the latest Economic Performance Report for August shows that the total merchandise trade deficit amounted to USD 185.44 million in July 2020 which was 17.6 percent lower than the USD 225.02 million recorded in July 2019.
The value of export receipts amounted to USD 419.60 million in July 2020, an increase from USD 322.05 million recorded in the same month last year. Over the same period, the value of imports increased by 10.1 percent to USD 605.04 million. The increase in both exports and imports is attributed to the increasing level of economic activities as shown by various surveys.
The Business Tendency Index which is based on the perceptions of executives on the economy indicate that sentiments about doing business in Uganda were less pessimistic in August compared to the previous month.
The Purchasing Managers Index also continued to rise above the 50-point mark which shows improvement in business operations. The July 2020 deficit is also higher than the USD 86 million that was recorded for the previous month. The report says that this time, Uganda recorded merchandise trade deficits against all regions except the Middle East where it had a surplus of 189 million dollars.
The Middle East continues to be Uganda’s biggest export destination accounting for 53.7 percent up from July last year when the region took a third of Uganda’s exports. Exports to the United Arab Emirates are mostly gold and a smaller amount of marine foods.
East Africa follows with 19.4 percent down from 23.4 percent while exports to the rest of Africa fell by half to just over 10 percent of the total export value. Trade with East Africa was affected by trade and political wrangles that saw sugar, poultry and dairy exports to Kenya and Tanzania blocked several times while trade with Rwanda came to a near halt since February last year.