Trade deficit narrows in February on weak import growth

Uganda’s international trade deficit narrowed in February compared to a month earlier on weak import growth, but rose 34.9% year on year.

Total imports of goods exceeded total exports by $108.6 million compared to $118.0m in January, Bank of Uganda data showed on Wednesday. The trade gap was $80.5m in February 2016.

Imports of goods grew 15% year on year to $352.3m in February, but contracted 3.8% compared to January 2017.

Exports came in at $243.6m in February, increasing by 8% year on year. They however declined by 1.9% compared to January, when total export earnings were $248.4m.

Coffee exports were responsible for most of the year on year growth, rising 93% in value to bring in $48.5m. They were responsible for 19.9% of total export earnings, the largest share of any single commodity.

Electricity also charged upward, increasing by 487% year on year to $7.8m versus $1.3m last February. Other gainers were cotton which rose 209% year-on-year to $6.5m. Electricity accounted for 3.2% of total export earnings, while cotton’s share was 2.6%.

Gold, the second most valuable export commodity with a share of 8.8%, fell 17.5% year on year to $21.56m. It also declined 25.8% from its January value of $29m.

The commodity seemingly came out of nowhere to become the second most valuable export after coffee. Last year receipts from gold exports were 11.6% of the total value of exports, compared to 1.34% in 2015 and 0.01% in 2014.

However, looking at export data over the years, gold’s share of total exports last year is not that unusual. It’s value as a proportion of total exports has fluctuated since 1994, the earliest year for which data is available.

In 1996, for instance, gold exports were 10% of the total value of exports. They rose to their highest proportion ever, 13.6%, the next year.

Details on the origin of the gold are scanty. Although gold is mined in Uganda, most of it is kept off the books and smuggled out of the country. This has led to speculation that the increased gold exports are re-exports of gold originating from Congo and other neighbouring countries.

Most of Uganda’s exports – 33.5%, or $81.7m – were to countries in the Common Market for Eastern and Southern Africa, followed by the European Union with an 18.8% share, the Middle East with 14.2%, and Asia with 9.2%.

The United Arab Emirates with a share of 13.6% and South Sudan with 12.5% were Uganda’s biggest trade partners.