The Uganda merchandise trade deficit narrowed for the second consecutive month in December as gold imports and exports recorded steep declines.
The merchandise trade deficit decreased to $271.6m (Shs954.6bn) in the last month of 2021, from $455.5m a year ago, according to Bank of Uganda data.
Goods imports fell 24 per cent in December to $597.2m as purchases of mineral products, excluding petroleum products, declined — from $208.9m a year ago to $18.5m. Goods exports declined by 28.5 per cent to $325.6m. That was largely due to a collapse in gold exports from $211.4m in December 2020 to nothing.
The declines in both gold imports and exports resulted from a freeze in outbound gold shipments by exporters protesting recently instituted taxes. The taxes include a five per cent export levy on the value of a kilogram of processed gold and a ten per cent levy on the value of unprocessed minerals exported out of Uganda.
Before the taxes came into effect at the start of the current government financial year, gold was Uganda’s most valuable export commodity. However, very little of that gold is mined in Uganda; most is from neighbouring countries, particularly the Democratic Republic of Congo — a good amount is smuggled into the country — before it is processed and exported, mainly to the Middle East. The government wanted in on the lucrative trade, hence the export levies.
Coffee exports increased by $37.5m to $75.3m, while informal cross border trade exports rose 19.7 per cent, helped in large part by industrial products.
