CONTENTS | ANB-BIA HOMEPAGE | WEEKLY NEWS
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Uganda |
ECONOMY
Uganda has presently a $1 billion trade deficit.
This needs to be reduced if the country is to improve its trade prospectsProfessor Edward Rugumayo is Uganda’s Minister of Trade. He says that current strategy is to continue trading with the West —utilizing arrangements such as the Africa Growth and Opportunity Act (AGOA) with the United States, but at the same time, focusing on other markets such as the Common Market for Eastern and Southern Africa (COMESA), the East African Community and other major developing nations.
Relations with some developing countries are not always of the easiest. Uganda’s President Yoweri Museveni used this year’s World Trade Organisation (WTO) talks, to attack India which has failed to grant any debt relief to Uganda and has shut down its market for Ug-andan products. Uganda, on the other hand, is constantly increasing its imports from India.
Also, Uganda has been engaging in lengthy negotiations with China, which still imposes a substantial tax on Ugandan coffee and on other agricultural products. However, China has increased investments in Uganda and has established a joint venture with the Ugandan government — some coffee shops in China are now selling Ugandan coffee.
Uganda’s trade policy
Ugandan officials say that while in principle they support African access to developed markets in the West, they want to improve trade relations with developing nations elsewhere, but this means developing nations must reduce taxes levied on imports from Ug-anda.
In its trade relations with other countries, Uganda does sometimes give the impression of adopting a pro-western stance, which is rather strange, as its official foreign policy is to seek alliances with developing nations.
By way of explanation, Ugandan officials argue that though Uganda does benefit from AGOA, there is fear that the Africa Growth and Opportunity Act undermines agriculture, the very sector which should allow Uganda to develop it economic capacity. The cotton used by Ugandan firms to export cloth to the United States comes from America! Uganda is also worried about the tariff escalation policy used by the European Union (EU) when it comes to Valued Added Tax in EU countries.
Uganda is anxious to expand its trade so as to overcome its ever-growing trade deficit — a matter of great concern to a government worried that the country’s present trade situation is doing little to encourage investment.
According to a restricted Ministry of Finance and Economic Planning report, poor trade has prevented Uganda from benefiting from the Highly Indebted Poor Countries (HIPC) initiative. Uganda’s debt is rising to an unsustainable level, due to slow export growth, and the HIPC doesn’t like that!
Less foreign trade results in a shortage of foreign exchange and this has forced the Ugandan government to suspend its debt-servicing to non-Paris Club members. Any further shortages of this kind may result in some policy reversals such as the re-introduction of foreign exchange control, because money will be needed for debt-servicing.
- Crespo Sebunya, Uganda, September 2003 — © Reproduction authorised, with usual acknowledgment