Uganda’s trade deficit hits four-month low in May

Gold was Uganda's most valuable export for two straight months in April and May, surpassing coffee which has held the position for decades

Uganda’s merchandise trade deficit eased to its lowest in four months in May following a fall in government project imports and a bump in outward shipments.

The deficit on trade in goods narrowed to $131 million, from $215.8m in April. Exports rose 21.5% to $321.6m, while imports fell $27.9m to $452.6m, the lowest value since January, according to data from the Bank of Uganda.

The decline in imports was due to a decrease in government project imports – capital goods for public projects – to $9.8m from $50.8m in April. Private sector imports, however, rose 3% to $442.8m, with formal private sector imports increasing by 2.6% to $406.4m while estimated private sector imports were $36.4m, 9% higher than in April.

Oil imports increased by 3% from the previous month to $89.7m while non-oil imports came in at 316.7m, 2.4% higher than in April.

Exports of goods rose to a four-month high due to an increase in bean and maize shipments. Receipts from both commodities rose to their highest value since January; bean exports increased by $14.5m from April to $15.2m, while maize exports rose 12.5m to come in at $15.5m.

For the second consecutive month, gold exports exceeded proceeds from coffee shipments; gold brought in $39.5m, 11.9% higher than in April, while coffee exports increased by 4.3% month-on-month to $34m.

Uganda produces little gold from local mines, and the surge in gold exports in recent years has been attributed to gold from the Democratic Republic of Congo passing through the country to the Middle East, according to ENACT. Most of this gold is smuggled or exported illegally from the DRC, the ENACT report said.

Non-coffee formal exports increased by $58.5m from April to $238m. Informal cross-border trade exports, on the other hand, fell 5.6% to $49.3m, driven by declines in industrial products and beans.

The trade deficit increased by 2.3% compared to May 2017 when it was $128m – a much lower rise than April, when the year-on-year growth rate was 62%. Annual export growth was 3.8% while imports rose 3.4%.

Related: Uganda goods trade deficit rises to highest in seven months