Uganda’s trade deficit narrows further in March as exports revenue drop 11.4 percent

By George Mangula

Uganda’s trade deficit narrowed further in March 2020 to US$ 177 million from US$ 192 million in February 2020, as imports fell faster than exports, according to April 2020 Performance of the Economy Report issued on Monday by the Ministry of Finance.

According to the report, the reduction in imports and exports followed trade disruptions both on the domestic and global scene due to the coronavirus pandemic and measures associated with curbing its spread.

However, in comparison to March 2019, the trade deficit widened by 23 percent, from US$ 144 million to US$ 177 million due to a bigger fall in export receipts which offset the drop in the import bill.

Exports receipts decline 11.4 percent

Uganda’s Merchandise exports receipts in March 2020 amounted to US$ 315.5 million, which was a reduction by 11.4 percent from the value recorded in February 2020. The report says most of the major export commodities such as; cotton, flowers, maize, tea and simsim; registered declines in the month arising from reduction in their respective export volumes; while coffee’s decline was due to reduction in its unit price. The reduction in export volumes arose from trade disruptions amid the coronavirus pandemic outbreak. Similarly, compared to March 2019, export receipts in March 2020 dropped by 47.8 percent, the report says.

EAC leads as destination of Uganda’s exports

According to the report, in March 2020, the East African Community (EAC) was still the leading destination of Uganda’s exports – accounting for 29 percent; followed by the Rest of Africa at 22% and the Middle East at 21 percent.

The value of Uganda’s exports to all the other trade blocs increased in March 2020 compared to March 2019, save for the Middle East and Rest of Europe. Exports to Rest of Europe and Middle East greatly reduced to US$ 3.7 million and US$ 65.8 million from US$ 116.7 million and US$ 262.7 million, respectively in March 2019.

Uganda’s imports

The value of merchandise imports declined by 10 percent to US$ 492.2 million in March 2020 from US$ 548.2 million in February 2020, majorly due to a decline in private sector imports. Private sector imports reduced by 13 percent in the month, with reductions registered for commodities like; machinery equipment, vehicles and accessories; base metals; textile products; petroleum products and; mineral products due to supply chain disruptions during the COVID 19 pandemic.

On a year-to-year basis, merchandise imports dropped by 34 percent to US$ 492.2 million in March 2020 from US$ 747.6 million in March 2019. This was because of a drop in the value of both government and private sector imports by 26 percent and 35 percent respectively. The reduction in private sector imports was due to reduced imports for mineral products, animal & animal products and petroleum products.

Origin of Uganda’s imports

The percentage shares of Uganda’s imports from Asia, EAC, and Rest of Africa increased in March 2020 compared to March 2019; while a decline was registered for the European Union over the same period. Despite the reduction in value of Uganda’s imports from Asia in March 2020 compared to February 2020, most of the imports in the month were sourced from Asia, accounting for 50 percent of total imports.

The EAC was the second biggest source of Uganda’s imports accounting for 16 percent of total imports, followed by Rest of Africa and Middle East both at 11 percent. The percentage shares of Uganda’s imports from EAC and the European Union also declined in March 2020 compared to February 2020.

Uganda’s trade balance by region

In March 2020, Uganda recorded a merchandise trade surplus with the Rest of Africa, EAC, Middle East and the European Union while deficits were registered with the other trading blocs. In comparison to February 2020, Uganda’s trade deficit with Asia reduced from US$220.9 million to US$ 207.9 million due to an increase in export receipts by 38 percent, which offset the reduction in imports by 1 percent from the region.