Last updated: May 27, 2019
Topic: AutomotiveTrucks
Sample donated:

Since the early 1990s, Ugandan economic system has been sing a steady and changeless growing. In 1990 the GDP of Uganda at current US dollar was about $ 4.3 billion. This figure has grown to over $ 14.3 billion by the terminal of 2008, averaging an one-year growing of 7.3 % between 1990 and 2008[ 1 ]. This growing has been peculiarly strong since 2005[ 2 ].

During this same period, there has been important alterations in the sectoral composing of the Ugandan Economy. In 1990, agricultural sector was the dominant sector with a portion of 41 % of the entire GDP, followed by Service sector ( 38 % ) and the Industrial Sector ( 12.5 % ) . By the terminal of 2009, the portion of the agricultural sector fell to 24 % . In contrast, the growing of service sector and the industrial sector was impressive, with a portion of 51 % and 25 % severally[ 3 ].

The large growing in the dynamic service and industrial sector are seen as the chief drive factor behind Uganda ‘s impressive GDP growing. The agribusiness sector is still of import in Uganda and approximately 80 % of the labour force is employed in this sector, although this figure is falling. Because agribusiness is still an of import sector of the Ugandan economic system, weather status and alterations in the international monetary value of java, its chief export, has led to some fluctuations in the GDP[ 4 ].

We Will Write a Custom Essay Specifically
For You For Only $13.90/page!


order now

With rigorous financial subject in the last few old ages, Uganda has managed to cut down control public debt from 70 % of GDP in 2004 to less than 29 % by 2008. During this period ( 2004-2008 ) authorities shortage averaged about 1.5 % of GDP[ 5 ]. The debt alleviation strategy by IMF, World Bank, and the African Development Bank besides helped Uganda to significantly cut down its external debt from 49 % in 2005 to 12 % of GDP in 2006. With a disciplined financial policy and a tight control of the money supply contained the one-year rising prices rate to about 4.7 % ( between 200-2007 )[ 6 ].

Even with considerable stable macroeconomic conditions, Uganda economic system has been sing constrictions to growing because of hapless transit and energy substructure. The National Development Plan, which started in 2010 and supposed to last until 2015, is designed to turn to these issues with a big addition in substructure disbursement. The Ugandan authorities seeks to do greater usage of public-private partnership to finance these undertakings and is numbering on the success of the Ugandan oil production sector which is set to get down production at a medium graduated table in 2011[ 7 ].

Inefficient and traditional methods of agriculture is another bottle cervix in Ugandan growing. About 80 % of the people are employed in the agricultural sector and most of the end product comes from little scale household husbandmans utilizing simple engineering and on less than 2 hour angle of land each ( EIU ) . Modernization of agribusiness has been in authorities docket for sometime but the consequences are non yet important.

Current Tendencies

The fiscal crisis of 2008/2009 created mayhem world-wide. Uganda, even with its strong macroeconomic stableness, did non get away the crisis unscratched although its good public finance and debt state of affairs, did assist to buffer the full impact of the crisis. The Ugandan economic system really grew by a healthy 7 % although the crisis did curtail its growing by about 2 per centum points than the expected growing before the crisis.

The Ugandan fiscal system, for the most portion, was unaffected by the crisis as the Ugandan Banks had small exposure to the toxic assets and had non invested in derived functions that caused the crisis[ 8 ]. BOU reported that the banking sector in Uganda did non enter any escape of financess in the financial twelvemonth 2008/2009. However, the net influx in portfolio investing declined from $ 80 million in first half of 2008 to a negative $ 109 in the first half of 2009. This is believed to be the chief factor behind the strong depreciation of the Ugandan shilling. This has led to higher monetary values for imported goods, particularly nutrient, while the nominal rewards have remained changeless. Hence, overall there has been a dip in existent rewards with hapless enduring the hardest.

The crisis has besides had an impact on Uganda ‘s export sector. With the remainder of the universe in crisis, Uganda witnessed a bead in demand for its merchandise. Entire export in the first half of 2009 slumped to the export degree of 2007. Uganda ‘s chief export, java, suffered a bead from $ 210 million in first half of 2008 to $ 152 million in the first half of 2009[ 9 ]. This crisp bead in export value was due to drop in both export volume and universe monetary value. Other merchandises such as baccy and chocolate witnessed a similar diminution in value while other exports such as tea and maize really benefited from higher universe market monetary values.

Although ab initio feared, the crisis has shown no marks in decrease of foreign assistance to the authorities. On the contrary, the National Development Plan expects an one-year rise of foreign assistance by 9 % in the following 5 old ages. Similarly, the crisis has non shown any negative impact on the FDI influx[ 10 ].

Trade Structure

Uganda ‘s trade with remainder of the universe has been systematically been turning, with an addition in both export and import. Entire exports have risen from $ 653 million in 2004 to $ 1.7 billion in 2008, while entire imports have increased from $ 1.72 billion in 2004 to over $ 4.5 billion by the terminal of 2008. Entire export has grown by an one-year norm of about 27.6 % during this period while entire import has risen by 27.9 % yearly. Larger import and higher growing for imports have led Uganda to enter a systematically negative trade balance. Trade balance has seen a close treble addition from – $ 1 billion to – $ 2.8 ( around 6 % of GDP ) during this period.[ 11 ]

Exports

The chief markets for Ugandan exports are its neighbors in Africa: Sudan, Kenya and Rwanda. This inter-regional trade has increased significantly in the last few old ages due to increased security and stableness in these states. This tendency is set to go on with the launch of East Africa Community ( EAC ) in 2010. The states of West Europe are besides some of the biggest purchasers of Ugandan exports.

Coffee is by far the biggest export of Uganda, with over $ 454 million worth of java being exported in 2008. This sector averaged an one-year growing of 27 % between 2004 and 2008. This addition in exported value of java is besides in portion due to the increasing universe monetary value for java.

Fish and other sea nutrient merchandises are another of import export of Uganda, with over $ 119 million worth of it being exported. This sector has nevertheless contracted somewhat since stretch is peak in 2006, when over $ 140 million was exported.

Import

Kenya has been the chief beginning of import for Uganda with around tierce of entire imports coming from Kenya. Uganda relies on Kenya for most of its manufactured goods import. Since 2008 United Arab Emirates ( UAE ) has dislodged Kenya as the chief exported to Uganda, selling over $ 515 million worth of good compared to Kenya ‘s $ 511 million. India, China, and South Africa are other major providers to Uganda.

Oil and gas is the chief import of Uganda with approximately 20 % portion ( $ 866 million ) of entire imports in 2008. Imports for oil has been steadily lifting at an one-year rate of 40 % since 2004. Around 37 % of oil and gas import come from UAE, followed by Kenya ( 10.6 % ) and India ( 10.3 % ) . Electrical equipments, machineries, and vehicles are other major import of Uganda.

Trade Relation

Uganda has been a member of WTO since 1 January 1995. Bing a member of WTO Uganda is obliged to use the same MFN duties to all the member states. Uganda is besides a member of the East African Community ( EAC ) , together with Burundi, Kenya, Rwanda and the United Republic of Tanzania, whose ultimate end is to make free mobility of goods, services, and people in the part. In add-on, it is besides a member of the Common Market for Eastern and Southern Africa ( COMESA ) , the Economic Partnership Agreement ( APA ) , and the African Union ( AU ) .

Uganda benefits from European Union ‘s non-reciprocal trade penchant under Everything But Arms ( EBA ) enterprise which allows least developed states to export to EU responsibility free and quota free, for all merchandises except armaments. Similarly, Uganda besides benefits from the US ‘s Africa Growth and Opportunity Act ( AGOA ) which besides permits certain African states to export certain merchandises, like fabric and dress, to the US with no responsibility or quota limitations. In add-on Uganda besides qualifies for the Generalized System of Preferences ( GSP ) strategies of Canada and Japan and enjoys from Particular Preferential Treatment with China and Morocco.

Trade Paths

Bing a landlocked state, Uganda has to trust on its neighbors, Kenya and Tanzania, for its trade. For its trade outside Africa, Uganda relies on the port in Mombasa, Kenya. To make Mombasa, cargos have to take a 800km route trip from the boundary line across Kenya. An alternate path to the Indian ocean is through the port in Dar-e- Salaam in Tanzania. The cargo have to be shipped across Lake Victoria followed by a route trip across Tanzania to the port. However, the port at Lake Victoria does non yet have the capacity for big graduated table transportation.

Road transit via Trucks is the preferable manner of goods transit for trade with other African states. The chief route web extends from the Kenyan boundary line at Busia to Kampala so westwards to Rwanda and the Democratic Republic of Congo. A big proportion of the roads are in bad status which is taking to extra cost and longer transit clip. A big investing is required to better the route substructure to ease trade.

While rail cargo is seen as a cheaper and more dependable option to route cargo, the railroads substructure has non yet been sufficiently developed. The lone serviceable rail nexus is between Kamala and Mombasa, with rail cargos steadily worsening over the old ages.