How Uganda’s strategy to expand market of 7 key products will stimulate economic recovery

It was a sigh of relief on January 24 when Uganda’s economy was fully reopened, ending the two-year Covid-19 induced lockdown. During this period, many sectors were badly hit, industries collapsed, thousands of people lost jobs, and exports of some products slumped following travel restrictions across the globe.

Therefore, the government’s biggest task now is to rejuvenate the economy as fast as possible, and as President Yoweri Museveni last month projected, Uganda could attain middle income status next year.   

One of the strategies that government has undertaken is to expand and increase the market and export base of specific agricultural and industrial products.

Initially, it had identified 10 major areas, including coffee, grains, fish, beef, dairy, tourism, cement, steel and fruits and vegetables to drive the agenda. Consequently, a week ago, a meeting of more than 40 key exporters and several top government officials from the Ministry of Agriculture, and that of Trade and Industry met to harmonize the details.

Officials from Roofings, Steel and Tube, Mukwano, Macheda Catfish farmers, Sino Modern Agriculture Development Company and a team from the Republic of Lithuania led by Nerijus Makselis of Lared Company, attended.

According to Mr Odrek Rwabwogo, the senior presidential adviser, the exporters of agricultural and industrial products agreed on a unified approach with that of government to seven key products namely, fish, coffee, steel, cement, beef, dairy, and fruits. 

This initiative is timely, especially at a time when the market of some targeted products such as fish fell. For instance, statistics from Bank of Uganda indicate that between June 2020 and July 2021, at least 15,149 tonnes of fish worth $118.6m were exported compared to 23,141 tonnes worth $146m that were exported in the same period during the previous year.

However, others such as coffee increased their export earnings. Farmers exported 6.49 million 60 kg bags of coffee for the 2020/2021 season compared to 5.36 million 60 kg bags in the 2019/2020 season, according to the Uganda Coffee Development Authority.

Here, the export strategy presents an opportunity for the government to galvanize the coffee industry. Diversifying the export base will hence boost the country’s revenue since more products and markets are reached. Uganda Bureau of Statistics states that about 70% of Uganda’s working population is employed in agriculture, so many more jobs will be created under this initiative.      

Commenting on the promotion of market for dairy products such as milk, Mr Rwabwogo estimates that if the country increases production by another 50,000 litres a day, “we create an extra 150 jobs and 3,000 indirectly for our youth.” 

One of the advantages that Uganda can tap into to maximize this export strategy is with its neighbours, especially following the recent border reopening in Rwanda and the massive road infrastructure undertaking in Democratic Republic of Congo.

Government partnered with the DR Congo government to construct roads to improve trade with its neighbour. Products such as cement and coffee can boost Uganda’s revenue if exported there in larger volumes.

DR Congo has a huge market that Uganda has not been fully exploiting due to insurgency in eastern DR Congo and poor roads. Thankfully, the two challenges are being addressed. 

Both governments in December last year launched joint operations to flush out the Allied Democratic Forces rebels from eastern DRC. The joint forces have registered positive results, as many rebels have surrendered, others killed, or escaped, and several of their key camps captured.    

Then the reopening of the Katuna/Gatuna border after three years of closure is a relief for traders because the $250 million Kigali market will be reopened. 

Vice President Jessica Alupo, who met some of the key officials during the meeting, commended the export companies and their strategy, saying it will refocus the country’s export strategies, especially, on agricultural and industrial products.

 “We have big potential to grow our exports and increase our revenue,” Ms Alupo said. According to the International Trade Administration, in fiscal year 2020/2021, agriculture accounted for about 23.7% of GDP, and 31% of export earnings. 

One of the strategies that the exporters are planning is to digitalize trade. Lared company offered to help digitize Uganda’s export records to create transparent processes and data to help Ugandan products in Europe.

Considering that the Covid-19 pandemic transformed communication, digitalization is critical as many manufacturers and their market have diversified their trading channels. Products such as coffee and fruits can tap into this digital space. 

For instance, the new coffee law supports the creation of a traceability system that ensures even small holder farmers with microlots can earn premiums from well managed gardens. Microlots are special lots of coffee, selected for their high quality and unique flavour profiles, which Ugandan coffee is known for. These can also be marketed digitally. 

According to the Uganda Coffee Development Authority, “Coffee buyers and consumers want to know where the coffee they consume comes from, who produces it and what farming practices they employ.” 

However, there are still concerns about the high Internet costs, with stakeholders urging the government to reduce the tariffs. It has already scrapped the social media tax, but the price of data remains relatively high compared to its neighbours Kenya, Rwanda, and Tanzania.

The government should also take note of the recommendations proposed by experts during the    IGC (International Growth Centre) Economic Growth Forum in Kampala, which was conducted jointly with the Uganda National Budget Conference FY 2019/20, if the strategy is to be successfully implemented. 

They proposed that the government should support manufacturers, ensure that foster inter-firm linkages through peer-to-peer learning and partnerships for SMEs, anchor firm supplier programs, and help local suppliers meet standards to benefit from the Buy Uganda Build Uganda (BUBU) policy.

Other experts call for a conducive environment and complementary policy measures such as skills training for youth, de-risking/incentive funding support and ensuring that integrated industry-trade-fiscal policies are put in place to facilitate trade and investment. They also call for Public-Private partnerships.