Uganda had a $1.1 billion trade deficit with Tanzania at the end of 2020/21 financial year according to Bank of Uganda trade statistics. And it's the first time Uganda’s trade deficit and import bill with a neighboring country exceeded a billion dollar.
Uganda's Yoweri K Museveni and Tanzania's Samia Suluhu
had a $1.1 billion trade deficit with Tanzania at the end of 2020/21 financial
year, according to Bank of Uganda trade statistics. And it's the first time
Uganda’s trade deficit and import bill with a neighboring country exceeded a
imported goods worth $1.24 billion from Tanzania in the 2020/21 financial year
and exported goods worth $90.02 million equaling a $1.124 billion deficit
according to statistics.
This huge import bill is more than double of $450
million that Uganda had with Tanzania in the 2019/20 financial year. And the
import bill is 40 times what it was a decade ago when Uganda last had a trade
surplus with Tanzania. Uganda in the 2010/11 financial year exported $38
million and imported goods valued at $32 million.
Uganda imported goods worth $848 million from Kenya and exported products worth
$544 million in the 2020/21 financial year. It exported goods worth 303 million
to Democratic Republic of Congo and imported goods worth 24 million. Uganda
exported goods worth $25 million to Burundi and imported goods worth 64
million. Uganda had the lowest trade volume with Rwanda which closed borders
with Uganda at the end of 2019, exporting goods worth $2 million and importing
goods worth 3.8 million.
Uganda statistics don’t give details of commodities that are imported from
specific countries. Thus, there is no precise answer of what did Uganda import
from Tanzania last year.
Why a huge trade deficit?
illustrates the story of Uganda’s trade with Tanzania like the story of blocked
sugar exports. Uganda has often accused Tanzania of frustrating its trade’s
attempt to export sugar to its market. Tanzania often gives export licences to
Uganda traders for sugar exports after tedious negotiation. Such licences are
usually for a short spell. And when they expire, tedious negotiations restart.
instance, in February 2019, a month after lifting the sugar importation ban,
Tanzania authorities canceled permits they had issued to Tanzania companies
importing sugar from Uganda. Tanzania’s agriculture minister argued that
companies were importing a lot of sugar fast instead of focusing on expanding
production. And in 2017 Tanzania slapped a 200-shilling tax on each liter of
milk imported from Uganda. This made Uganda’s milk expensive and un-competitive
in the Tanzania market.
point to loopholes in the East African community treaty that countries such as
Tanzania and Kenya have been using to block commodities from Uganda, effects of
the pandemic and government officials who are not aggressive in vouching for
open market in the region for Uganda products.
Dr. Isaac Shinyekwa, the Head of Trade and Regional
Integration Department at the Economic Policy Research Centre, a think tank
says whereas Uganda removed tariffs, allowing market access to goods from East
African community member states, neighbouring countries haven’t done the same.
have always been complaints of countries blocking goods from member states,
Shinyekwa says. “East African countries should always allow us (Uganda) to
automatically access their markets. In the event that that does not happen,
there should be address mechanism in the EAC. I don’t see that in the EAC. I
don't see formal mechanisms that address these complaints,” he says.
biting East African community secretariat that can force countries to respect
the common markets protocol, Shinyekwa says, a country such as “Tanzania is
likely to keep protecting its market even when it's in the EAC.”
same argument that Julius Mganda Wandera, former State Minister for East Africa
Affairs raise: the East African community treaty is weak on conflict
resolution. “Conflict resolution mechanisms are there but the will is still
lacking because there are people who still fear that they will lose in terms of
trade,” he says.
also argues that dynamics in politics, economies and social development
have outgrown the anticipations of the treaty. “First of all, the treaty which
was signed in 1999 looked at only three countries; Uganda, Kenya and Tanzania.
We are now looking at seven countries. The bloc has grown and issues of
conflict resolution were not so anticipated when more partner states came on
board. The treaty needs to be amended.”
Shinyekwa says Ugandans have not been producing a lot to take advantage of the
available regional market. “Ugandans think that regional integration
automatically brings trade. No. They need to know what trading partners need so
that you produce and sell them,” he says.
says total lockdown that has affected Uganda for more than a year could have
impacted production in many sectors “yet a country like Tanzania which had no
lockdown proceeded with production.”