Uganda WT/TPR/S/93
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I. ECONOMIC ENVIRONMENT
(1) INTRODUCTION
1. The Republic of Uganda is located in East Africa.  It is a landlocked country, bounded to the
east by Kenya, to the south by Tanzania and Rwanda, to the west by the Democratic Republic of the
Congo, and to the north by Sudan.  The total area of Uganda is 241,000 sq. km. (Table I.1).  The
climate is mostly tropical, with a semi-arid region in the northeast.  Kampala, Uganda's capital, is alsoits largest city.
Table I.1
Social and economic indicators
Area 236,040 sq. km. Infant mortality (1986) 188 per 1000
Population (2000 estimate) 22 million (1996) 88 per 1000
Population density (1995) GNP per capita (1999) US$320
Overall
Rural96 per sq. km.
331.5 per sq. m
Urban population (1999) 13.9%
Exchange rate (as of 16 January 2001) US$1 = U Sh 1,850
Life expectancy (1998) 41.8 Inflation (2000 estimate) 3.4%
Adult illiteracy (1999)
Male 23.2%
Female 44.5%
Source : World Bank (2000a), UNDP (2000);  and EIU (2001).
2. The population of Uganda was 22 million in 20001;  the average annual growth rate has been
just under 3% since 1995.  The urban population rose from 1.1 million, or 9% of the total population,
in 1980, to 2.7 million, or 13.9%, in 1997.  The labour force in Uganda is estimated to be around
8 million people and is growing at 3.5% per year.  To maintain employment at current levels, 280,000new jobs would have to be created each year;  only about 100,000 are created annually in the formal
sector.
2  The population of Uganda comprises several ethnic groups, of which Bantu, Nilotics, Nilo-
Hamites are the largest.  Uganda's official language is English;  other languages used include Luganda
and Swahili.
3. The currency unit is the Uganda Shilling (U Sh ), which replaced the East African shilling
in 1966.  Uganda's official exchange rate is determined on the basis of the rate established in the
interbank market for foreign exchange;  it is ma rket determined.  However, the Bank of Uganda
occasionally intervenes, based on its policy of main taining relative stability in the foreign exchange
market.3  Uganda accepted the obligations of Article VIII, Sections 2, 3, and 4 of the Agreement of
the International Monetary Fund (IMF) on 5 April 1994.4  Its capital account was liberalized in 1997.
Subsequently, the Bank of Uganda has established a Private Sector Capital Flows Monitoring and
Recording Section in its Trade and External Debt Department to monitor capital movements.
4. Uganda's per capita GNP in 1999 was US$3205;  It is a least developed country.  Uganda
ranks 141st of 162 countries in terms of the human development index (HDI).6  It is one of the largest
                                                     
1 EIU estimate.
2 United Nations (2000).
3 Bank of Uganda.
4 See IMF (2000a) for details on the foreign exchange regime.
5 World Bank (2000a).
6 UNDP (2001).WT/TPR/S/93 Trade Policy Review
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beneficiaries under the IMF/World Bank's Heavily  Indebted Poor Countries (HIPC) initiatives.
Public expenditure on health amounted to 1.9% of GDP in 1997;  expenditure on education increased
from 1.2% of GNP in 1980 to 2.6% in 1996.
5. Uganda's economy is based primarily on agriculture (around 42% of real GDP and 80% of
employment), with coffee its main export.  The country's dependence on the world market, and its
high degree of concentration on a few export commodities have driven the desire for economicdiversification, including into speciality crops such as floriculture, fruit, and vegetables.  As a result,
the share of the industrial sector (including manufacturing, mining and quarrying, public utilities, and
construction) in real GDP has increased, from about 17% in 1996 to around 20% in 2000.  Industrial
production consists mostly of agri-processing.  The sector accounts for 5% of employment.  The share
of services in real GDP has remained relatively stable (around 38%) since 1996.  The sector
contributes some 13% to employment.  Tourism is the most significant branch, although Uganda has
suffered from regional political instability.  The country also has a tradition of high quality social
services, primarily education, which it is working to improve.  The Government is undertaking
initiatives to expand resources in the area of information technology.
6. Uganda faces significant economic challenges.  Although it has undertaken a number of
structural reforms, further liberalization is recognized as being necessary to continue on its path of
economic progress.  A fundamental weakness in th e Ugandan economy has been the lack of export
growth.  This is attributable to insufficient infrastructure, which continues to impair Uganda's
economic progress, particularly given its landlocked situation.  As a result, the Government is placing
some emphasis on further improving roads, railways, and other transportation needs.
7. High production costs in Uganda which are evident across all economic sectors, are the result
of poor delivery of utility services, poor transportation, weaknesses and corruption in taxadministration and commercial justice, the high cost s of accessing capital, lack of skilled labour, and
low labour productivity.  Non-tariff barriers, mainly technical requirements (e.g. sanitary and
phytosanitary measures) in developed countries and in emerging markets, have also partly impeded
the expansion of Ugandan exports.  Recently, agricultural production in Uganda has suffered from
drought;  and coffee wilt disease has affected coffee production and exports.  Uganda's economy hasalso demonstrated vulnerability to security problems in the region, and war and civil conflict on its
borders.
8. Malaria and AIDS are the major causes of death in Uganda.  Indeed, Uganda was one of the
first countries in sub-Saharan Africa to acknowledge the devastating impact of HIV/AIDS, which has
caused immense human suffering over at least the past decade:  it has set back development andreduced life expectancy (from about 48 years in 1991 to around 42 years in 1998).  An estimated
800,000 people have died of the disease and over 1.8 million children have been orphaned since the
epidemic began.  While the rate of new infections continues to increase in most countries in sub-
Saharan Africa, Uganda has succeeded in lowering its very high infection rates.  Still, some 7% of the
population is believed to be infected with HIV.  With international donors providing approximately70% of Uganda's health care budget, government expenditures have been modest, but recent concerns
that the incidence of AIDS might once again increase have made Ugandan officials aware that health
care expenditures will have to rise substantially to meet the ongoing challenge.
(2) R
ECENT ECONOMIC DEVELOPMENTS
9. Uganda's process of economic reform dates back to 1987 when the Government first
undertook an Economic Recovery Programme (ERP).  This was  intended to address deficiencies inUganda WT/TPR/S/93
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Uganda's export competitiveness, introduce market reforms into its agriculture policy, attract more
foreign investment, and improve the effectiveness of fiscal and monetary policies.
10. Since its last Trade Policy Review (TPR) in 1995, Uganda has continued to work closely with
the community of international organizations and international donors, and has consistently
demonstrated its commitment to economic growth and poverty reduction.
11. Much of Uganda's economic success has been due to policies that promoted macroeconomic
stability.  Reforms carried out in the financial sector, marketing, taxation, restructuring of government
ministries and parastatals, privatization, decentralization, rehabilitation of infrastructure, and
re-establishment of security of persons and property, and the rule of law, have also played a
significant role.  The Uganda Poverty Eradication Action Plan of 2000 (PEAP) also provides a
framework for formulating socio economic policy.  Under the plan, security, roads, agricultural
research and extension, primary education and health care, and water and sanitation are the highest
priorities for medium-term expenditures.
12. Over the past six years, the average growth rate of real GDP has been around 6% per annum.
The rate of growth for the Ugandan economy in the fiscal year 1999/2000 was 5.1%, lower than the
medium-term target of 7% (but nevertheless higher than the 1999 growth rate of 2.3% for the Africancontinent).  This lower rate of GDP growth has b een primarily attributed to drought conditions in
1999/2000, which affected all agricultural production, including cash and food crops, with spillover
effects on agri-processing industries.  The effect on coffee was worsened by coffee wilt disease.
Furthermore, increases in world prices of oil, and falls in commodity prices, particularly coffee, have
negatively affected Uganda's economy since 1999.  Coffee exports have fallen by over
US$100 million because of a 17% decline in output as well as a 25% reduction in world market coffee
prices.  As a result of reduced agricultural pr oduction brought about by drought conditions, food
prices rose sharply.  Their inflationary pressures were contained by the Government's monetary and
fiscal disciplines.  Non-agricultural sectors performed better, with the utilities, manufacturing,
construction, and transport and communications all registering 8% or higher growth rates in the last
fiscal year.
13. Fiscal deficit (including grants) has been contained below 3% of GDP and inflation
(measured by changes in consumer prices) has dropped from 32% in 1990/91 to below 8% since
1994/95 (Table I.2), substantially influenced by discipline in monetary and fiscal policies.  Indeed, the
Government has continued improving budgetary ma nagement.  A commitment control system was
introduced and has helped to contain deviation from budgetary projections.  Tax administration is
being restructured, albeit with some delay.  Following the adoption of the PEAP, public expenditureshave been redirected toward poverty reduction and infrastructure.  Discretionary exemptions are being
abolished.  To combat smuggling, the Uganda Revenue Authority has strengthened its auditing
programme of fuel stations, warehouses, and retail outlets, and plans to establish transit parking yards
along the main transit corridor;  penalties for smuggling, misdeclaration, and false entries in
documentation have been increased.WT/TPR/S/93 Trade Policy Review
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Table I.2
Uganda at a glance, 1995-2000
1995 1996 1997 1998 1999 2000a
Population (million) 19.3 19.9 20.4 21.0 21.6 22.2
GDP at factor cost ( U Sh, billion) 5,482 5,957 6,566 7,413 8,350 7,535
Real GDP (calendar year;  per cent change) 8.4 4.7 5.3 7.5 5.0 ..
Consumer prices (per cent change, calendar year) 7.3 7.1 8.0 0.6 5.8 3.4
Consumer prices (per cent change, fiscal year) 6.8 7.5 7.7 5.5 0.2 5.8
Monetary sector (per cent change)
Narrow money (M1) 15.4 10.3 13.7 19.5 12.6 16.8
Aggregate monetary resources (M2) 13.9 19.3 19.4 22.9 13.6 18.1
Discount rates (end of period) 13.3 15.9 14.1 9.1 15.8 18.9
Real effective exchange ratesb1.3 -0.8 -6.9 12.7 4.7 3.6
Share of real GDP (fiscal year ending June) Per cent
Agriculture .. 45.7 44.2 42.7 42.5 41.7
Industry .. 16.8 17.9 18.9 19.2 19.9
Services .. 37.5 37.9 38.4 38.3 38.5
Per cent of GDP
Government finance (fiscal year ending June)
Total revenues and grants 15.8 16.3 17.5 16.8 17.0 18.2
Revenues 10.4 11.4 12.2 11.3 11.9 11.7
Total expenditure 18.7 17.7 18.5 17.3 18.3 20.13
Current expenditure 10.7 10.6 11.4 10.3 10.8 11.0
Development expenditure 7.8 7.0 7.1 7.0 7.4 9.1
Overall balance (excluding grants) -8.2 -6.3 -6.3 -6.1 -6.4 -8.5
Overall balance -2.9 -1.4 -1.1 -0.5 -1.2 -1.9
Foreign trade indicators
Export of goods and non-factor services 11.7 13.8 12.5 11.5 11.9 ..
Goods 9.9 11.2 9.8 8.5 8.7 ..
Non-factor services 1.8 2.5 2.7 2.9 3.2 ..
Import of goods and non-factor services 26.3 29.2 28.2 31.7 32.1 ..
Goods 16.4 17.3 17.2 19.5 19.1 ..
Non-factor services 9.9 11.8 11.0 12.2 13.0 ..
Trade in goods and non-factor services 38.1 42.9 40.7 43.2 44.0 ..
Terms of trade (1995=100) 100.0 85.0 92.7 86.5 76.6 ..
Unit value of exports (1995=100) 100.0 79.5 86.5 86.2 70.8 ..
Unit value of imports (1995=100) 100.0 93.5 93.3 99.6 92.4 ..
.. Not available.
a Preliminary estimates.
b Period averages;  a minus sign indicates an appreciation.
Source: IMF, International Financial Statistics  [Online].  Available at:  http://www.ubos.org/;  Nominal GDP at factor cost, government
finance and CPI, Bank of Uganda, Quarterly Economic Reports and Annual Reports  [Online].  Available at:
http://www.bou.or.ug/.
14. Coupled with the background of heightened economic liberalization efforts, the Bank of
Uganda (BOU) has continued to formulate and im plement tight monetary policy since 1995 through
its Reserve Money Programme (RMP), which provides a framework for assessing liquidity
conditions.  However, flexibility within the RM P framework also entailed that monetary policy
decisions could not be made simply by observing base money developments, but had to take intoUganda WT/TPR/S/93
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consideration other important macroeconomic and financial indicators.7  The primary objective of
monetary policy has been price stability and low inflation.  Other objectives have included exchange
rate and financial structure stability, as well as external reserve stock equivalent to about five months
cover of prospective imports.  The BOU has adjusted the stance of monetary policy accordingly.  The
Treasury Bill continues to be a major instrument  of monetary policy and of management of the
financial sector.  It was supplemented by the Bank of Uganda Bill until 1998.  The two instrumentsare aimed at ensuring that liquidity levels are sufficient to sustain economic growth.  The Bank halted
use of the Bank of Uganda Bill in financial year 1998/99.  The Bank then introduced Repurchase
Agreements (REPOs) as an additional instrument of monetary policy.
8  The BOU also strengthened its
supervisory and surveillance role in the financial sector.
15. Uganda's gross international reserves increased to cover about five months of prospective
merchandise imports.  Uganda's economic performance has made it eligible for the HIPC initiative.
However, because of the poor performance of exports and the delays in the realization of savings from
the Enhanced IMF/World Bank's HIPC initiative, the debt ratios worsened in 1999/2000.  The ratio of
debt service to domestic revenue increased from 17% in 1998/99 to 18.6% in 1999/2000.  The stock
of Uganda's external debt is estimated at US$3.68 billion as of June 2000.  In May 1997, the WorldBank approved a Country Assistance Strategy (CAS) for the subsequent three years, which included
an increase in financial assistance based on good economic policy.
(3) D
EVELOPMENT IN TRADE
16. Uganda has traditionally run a current account deficit resulting from deficits on trade and
services accounts (Table I.3).  Deterioration in the external terms of trade over the last few years has
contributed to a decline in export earnings, from 11.2% of GDP in 1994/95 to 7.9% in 1999/2000.
Imports, on the other hand, have been increasing in most years, resulting in the widening of the tradebalance.
Table I.3
Balance of payments, 1994-99
(US$ million)
1994 1995 1996 1997 1998 1999
Current account -207.5 -338.9 -252.3 -366.8 -502.6 -550.8
Balance on goods -251.2 -366.5 -347.6 -449.9 -656.1 -596.4
exports f.o.b. 463.0 560.3 639.3 592.6 510.2 500.1
imports f.o.b. 714.2 926.8 986.9 1,042.6 1,166.3 1,096.5
Balance on services -372.2 -458.7 -529.9 -504.3 -551.8 -563.0
credit 64.1 104.0 144.7 164.6 176.3 182.3
Transportation 16.8 18.6 19.8 21.8 23.6 24.4
Travel 40.2 78.1 117.4 135.0 144.4 149.5
Other services 7.1 7.3 7.5 7.9 8.2 8.5
debit 436.3 562.7 674.6 668.9 728.1 745.3
Transportation 165.8 215.1 239.2 241.9 270.6 254.4
Travel 77.6 80.2 135.3 112.9 94.5 140.6
Other services 192.9 267.4 300.1 314.1 363.0 350.3
Balance on income -57.2 -95.6 -49.5 -15.2 -9.2 -21.8
Table I.3 (cont'd)
                                                     
7 The BOU defines macroeconomic objectives (economic growth, inflation, and balance of payments)
and projects the broad money growth needed.  The growth of money base is then projected to match the broadermonetary aggregate and inflation.  The annual growth rates are converted into monthly and daily targets.
8 A reverse REPO was conducted only once.WT/TPR/S/93 Trade Policy Review
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1994 1995 1996 1997 1998 1999
credit 13.8 17.7 29.7 40.5 50.7 40.5
debit -71.0 -113.3 -79.2 -55.7 -59.9 -62.3
Current transfers 473.1 581.9 674.7 602.6 714.6 630.3
Capital account 36.1 48.3 61.4 31.9 49.5 26.3
Financial account 76.8 210.7 140.5 298.8 372.8 368.9
Direct investment abroad - - - - - -
Direct investment in Uganda 88.2 121.2 121.0 175.0 210.0 222.1
Portfolio investment - - - - - -
Other investment assets -40.3 -9.9 -37.2 -14.0 5.3 26.6
General government - - - - - -
Bank -53.0 12.7 -10.1 -18.2 -29.4 -9.6
Other sectors 12.7 -22.6 -27.1 4.2 34.7 36.2
Other investment liabilities 28.9 99.4 56.7 137.9 157.5 120.3
Monetary authorities 0.9 1.7 1.1 0.2 - -
General government 50.8 111.7 114.4 158.2 178.2 174.3
B a n k ----- -
Other sectors -22.8 -14.0 -58.8 -20.5 -20.7 -54.0
Net errors and omissions 32.5 28.8 41.3 -4.8 39.7 49.7
Overall balance -62.1 -51.2 -9.1 -40.9 -40.6 -105.9
Reserves and related items
Reserve assets -166.9 -140.7 -68.9 -105.2 -91.7 -37.8
Use of fund credit and loans 27.1 27.5 13.3 2.5 -12.2 -16.0
Exceptional financing 201.9 164.3 64.8 143.6 144.4 159.6
- Negotiable.
Source: IMF (2000), Balance of payments Statistics Yearbook – 2000.
17. Traditional exports from Uganda include coffee (the dominant export item), cotton, tea, and
tobacco.  As a result of export diversification efforts, the contribution of coffee to earnings from
merchandise exports dropped from some 76% in 1994 to around 57% (including roasted coffee) in1999 (Table I.4).  Diversification has contributed to  an upward trend in the share of non-traditional
exports such as floricultural products, fruit, vegetables, fish, and fish products.  Overall, agriculture
still accounts for the bulk (about 90%) of Uganda's exports, with an increasing share of non-coffee
exports.
18. Uganda's main imports include machinery and tr ansport equipment, food products, fuels, and
chemicals (Table I.5).  The upward trend in the share of fuels in total imports reflects the increases in
world prices of these products in recent years, while the trend in the share of chemicals results partlyfrom increased imports of medicaments.
19. The European Union (EU) is Uganda's main trading partner;  it is the destination for around
37% of total exports from Uganda, and accounts for about one fourth of total imports to Uganda.  The
sources of imports are more diversified than the destinations for exports (Tables I.6 and I.7).  As a
result of regional integration, Uganda's trade with the other countries in sub-Saharan Africa hasincreased, and the share of the EU in Uganda's external trade (mainly total imports to Uganda) has
declined.  Kenya is the largest single supplier, accounting for nearly one fourth of total merchandise
imports to Uganda, followed by the United Kingdom (around 10%).Uganda WT/TPR/S/93
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Table I.4
Commodity exports, 1994-99a
(US$ million and per cent)
Description 1994 1995 1996 1998 1999
Total exports 449.1 575.3 714.7 509.9 505.7
(Per cent)
Total primary products 97.6 91.1 84.1 93.6 90.2
Agriculture 97.3 90.4 83.9 89.4 89.3
Food 93.2 86.0 75.0 85.4 72.8
0711 Coffee, not roasted 76.4 66.6 55.5 52.3 52.8
0741 Tea 0.0 1.5 0.2 5.5 4.2
0712 Coffee, roasted 0.0 0.0 0.0 2.3 4.1
0344 Fish fillets, frozen 0.9 2.5 3.8 3.2 3.0
1211 Tobacco, not stripped, etc 1.1 1.3 0.4 2.9 1.7
0345 Fish fillets, fresh, chilled 2.1 2.7 2.1 9.2 1.6
1212 Tobacco, stemmed, stripped 0.4 0.3 0.1 1.5 1.1
0542 Legumes, dried, shelled 2.5 2.5 1.7 0.5 0.7
0449 Maize, other unmilled 4.0 3.3 2.2 1.5 0.5
4222 Palm oil, fractions 0.0 0.1 3.0 0.9 0.3
2225 Sesame (sesamum) seeds 0.3 1.0 1.3 0.0 0.3
Agricultural raw material 4.0 4.4 8.9 4.1 16.5
2919 Other animal materials nes 0.2 0.0 0.1 0.7 8.0
2633 Cotton waste 0.0 0.0 0.4 0.2 3.4
2631 Cotton, not carded, combed 0.7 1.7 2.1 0.4 2.4
2927 Cut flowers and foliage 0.1 0.4 0.2 0.9 1.3
2111 Bovine, equine hides, skin 0.2 0.5 0.8 1.1 0.6
2690 Worn clothing, textiles, rags 0.1 0.2 1.0 0.1 0.3
Mining 0.3 0.7 0.1 4.1 0.9
Ores and other minerals 0.3 0.3 0.1 1.8 0.7
2891 Precious metals, ores, concentrates. 0.0 0.0 0.0 1.7 0.5
Non-ferrous metals 0.0 0.3 0.0 0.0 0.0
Fuels 0.0 0.1 0.0 2.3 0.2
Manufactures 2.4 4.2 12.5 5.0 3.1
Iron and steel 0.0 0.4 2.0 0.1 0.2
Chemicals 0.6 1.0 6.5 1.7 0.6
5541 Soap 0.4 0.5 0.3 0.3 0.4
Other semi-manufactures 0.5 0.7 1.4 1.0 0.3
Machinery and transport equipment 0.6 1.2 1.7 1.5 1.5
Power generating machines 0.0 0.0 0.0 0.0 0.0
Other non-electrical machinery 0.1 0.1 1.0 0.6 0.5
Agricultural machinery and tractors 0.0 0.0 0.0 0.1 0.1
Office machines & telecommunication equipment 0.2 0.1 0.0 0.1 0.2
Other electrical machines 0.0 0.1 0.1 0.1 0.1
Automotive products 0.2 0.7 0.6 0.6 0.6
Other transport equipment 0.1 0.2 0.1 0.1 0.1
Textiles 0.1 0.4 0.4 0.3 0.3
Clothing 0.0 0.1 0.0 0.0 0.0
Other consumer goods 0.5 0.4 0.4 0.3 0.3
Other 0.0 4.7 3.4 1.5 6.6
Gold 0.0 4.7 3.4 1.5 6.6
9710 Gold, non-monetary excluding ores 0.0 4.7 3.4 1.5 6.6
a Data are not available for 1997.
Source: UNSD, Comtrade database (SITC Rev.3).WT/TPR/S/93 Trade Policy Review
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Table I.5
Commodity imports, 1994-99a
(US$ million and per cent)
Description 1994 1995 1996 1998 1999
Total imports 681.0 1,037.7 952.8 1,105.5 1,015.2
(Per cent)
Total primary products 24.5 22.2 31.2 32.6 30.7
Agriculture 19.1 18.4 17.2 19.7 16.5
Food 15.9 15.8 14.4 17.4 14.0
4222 Palm oil, fractions 2.6 2.0 2.1 3.1 1.7
0423 Rice, milled, semi-milled 0.5 0.3 0.5 1.4 1.3
0412 Oth. wheat, meslin, unmlled 0.1 0.1 0.1 1.1 1.3
4313 Fatty acid. etc. from wax 0.4 0.9 1.3 1.2 1.2
0612 Other beet, cane sugar 0.5 0.4 0.3 0.9 1.2
0449 Maize, other unmilled 0.2 0.4 0.8 0.8 1.0
0482 Malt, including malt flour 0.4 0.5 0.8 1.2 0.9
Agricultural raw material 3.2 2.6 2.8 2.3 2.5
2690 Worn clothing, textiles, rags 2.7 2.4 2.6 1.9 2.1
Mining 5.4 3.7 14.0 12.9 14.2
Ores and other minerals 1.0 1.1 1.4 1.7 1.2
Non-ferrous metals 0.8 0.8 1.3 0.8 0.7
Fuels 3.7 1.8 11.3 10.4 12.3
Manufactures 75.5 77.7 68.7 67.4 69.2
Iron and steel 6.6 5.5 5.0 4.2 4.2
6734 Flat, cold-rolled, prod. iron 0.0 0.4 1.1 1.5 1.5
Chemicals 9.9 10.7 12.3 12.5 14.6
5429 Medicaments, nes. 2.7 2.7 2.6 2.9 5.2
5421 Medicaments, antibiotics 0.6 0.4 0.5 0.9 0.9
Other semi-manufactures 12.5 12.8 11.7 11.1 11.1
6612 Portland cement, etc. 3.6 3.4 3.0 2.4 2.4
6251 Tyres, pneumatic, new, car 0.8 0.7 0.7 0.6 0.9
Machinery and transport equipment 32.3 34.8 28.4 29.2 27.4
Power generating machines 0.7 0.8 0.8 2.1 0.9
Other non-electrical machinery 7.0 9.4 7.1 6.8 6.4
Agricultural machinery and tractors 0.6 1.0 0.6 0.7 0.5
Office machines & telecommunication equipment 4.9 4.4 3.3 4.8 4.7
7641 Line telephone etc. equipment 0.3 0.7 0.3 1.1 0.8
Other electrical machines 4.1 4.0 3.7 4.1 4.7
7781 Batteries, accumulators 1.0 1.2 1.1 1.5 1.7
Automotive products 11.4 12.6 11.3 9.8 7.9
7821 Goods vehicles 3.8 5.0 4.8 3.8 3.3
7812 Passenger transport vehicles 3.5 4.1 3.6 1.9 2.8
7831 Public transport passenger vehicles 2.2 2.1 1.9 1.4 1.0
Other transport equipment 4.2 3.6 2.2 1.6 2.7
Textiles 4.2 4.1 3.0 2.1 2.3
Clothing 2.3 1.6 1.5 1.6 1.7
Other consumer goods 7.6 8.3 6.9 6.8 8.0
8921 Printed books, globes, etc. 0.5 1.0 1.0 0.6 1.5
8722 Other medical instruments 0.4 0.4 0.5 0.5 0.9
Other 0.0 0.1 0.1 0.0 0.0
Gold 0.0 0.0 0.0 0.0 0.0
a Data are not available for 1997.
Source: UNSD, Comtrade database (SITC Rev.3).Uganda WT/TPR/S/93
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Table I.6
Imports by origin, 1995-99a
(US$ million and per cent)
Description 1995 1996 1998 1999
Total imports 1,037.7 952.8 1,105.5 1,015.2
(Per cent)
America 5.8 4.5 5.3 8.0
United States 3.0 2.6 3.1 5.6
Canada 1.2 1.2 1.0 0.9
Other America 1.6 0.7 1.1 1.5
Europe 33.0 31.5 29.5 25.3
EU(15) 32.0 29.6 27.7 23.8
United Kingdom 12.2 12.6 11.9 10.2
Germany 3.7 3.7 2.6 2.8
Italy 4.5 3.6 4.1 2.1
Belgium 0.0 0.0 0.0 2.0
Netherlands 1.9 1.3 1.3 2.0
France 2.5 2.5 2.0 1.9
Sweden 0.5 0.4 1.6 1.0
EFTA 0.8 1.7 1.5 1.3
Switzerland 0.7 1.1 0.7 0.9
Eastern Europe 0.2 0.1 0.3 0.1
Former USSR 0.0 0.0 0.1 0.0
Other Europe 0.1 0.0 0.1 0.0
Asia 34.5 31.8 30.8 34.2
Middle East 6.5 5.7 6.1 6.8
United Arab Emirates 5.9 5.2 5.2 5.5
Saudi Arabia 0.3 0.3 0.5 0.8
East Asia 20.7 19.9 17.6 19.0
Japan 9.6 7.9 6.2 8.1
Hong Kong, China 2.9 2.6 2.0 2.2
China 1.9 1.4 1.4 2.2
Malaysia 1.6 2.5 1.2 2.1
Singapore 1.7 3.8 5.1 1.8
South Asia 7.3 6.3 7.1 8.4
India 5.9 5.5 6.0 6.4
Pakistan 0.7 0.7 1.0 1.8
Oceania 0.6 0.2 0.3 1.0
Africa 26.1 31.9 34.1 31.6
Sub-Saharan Africa 22.9 28.9 27.1 25.5
Kenya 20.6 26.3 24.0 23.8
United Republic of Tanzania 1.1 1.2 2.1 1.1
Other Africa 3.2 3.0 7.1 6.1
South Africa 3.0 2.9 6.8 5.6
Other 0.0 0.0 0.0 0.0
a Data are not available for 1997.
Source: UNSD, Comtrade database (SITC Rev.3).WT/TPR/S/93 Trade Policy Review
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Table I.7
Exports by destination, 1995-99a
(US$ million and per cent)
Description 1995 1996 1998 1999
Total exports 575.3 714.7 509.9 505.7
(Per cent)
America 0.3 0.5 6.5 3.3
United States 0.1 0.3 5.2 1.8
Canada 0.0 0.0 0.2 0.2
Other America 0.2 0.2 1.1 1.4
Europe 73.2 66.9 53.1 46.1
EU(15) 38.9 37.4 39.0 35.2
United Kingdom 21.3 24.5 11.3 18.0
Netherlands 3.9 3.0 10.4 3.7
Germany 5.0 2.7 4.5 3.5
Spain 0.6 1.2 4.2 3.0
France 2.9 1.7 4.7 2.9
Italy 0.0 0.0 1.4 1.6
Austria 0.0 0.0 0.0 1.5
EFTA 31.7 28.8 10.3 6.6
Switzerland 31.7 28.7 9.4 4.8
Norway 0.0 0.0 0.9 1.7
Eastern Europe 1.9 0.0 3.8 4.2
Poland 1.9 0.0 0.9 2.8
Former USSR 0.0 0.0 2.0 0.0
Other Europe 0.6 0.7 0.0 0.0
Asia 1.9 6.2 11.0 17.3
Middle East 0.7 1.5 2.0 4.7
East Asia 1.0 4.3 7.4 12.3
Singapore 0.2 3.6 4.5 4.9
Japan 0.2 0.3 0.9 3.8
South Asia 0.2 0.4 1.6 0.3
Oceania 0.6 1.7 0.8 2.2
Australia 0.6 1.7 0.7 2.2
Africa 19.3 24.7 28.6 31.0
Sub-Saharan Africa 18.9 24.2 25.0 21.6
Kenya 2.8 7.3 9.6 6.4
Rwanda 4.3 7.2 4.2 3.3
Sudan 4.1 2.8 3.7 3.3
Ethiopia 0.0 0.0 0.7 3.0
Congo 0.0 0.0 1.4 1.8
Other Africa 0.4 0.5 3.6 9.5
South Africa 0.1 0.2 2.8 6.6
Egypt 0.3 0.3 0.2 1.5
Other 4.7 0.0 0.0 0.0
a Data are not available for 1997.
Source: UNSD, Comtrade database (SITC Rev.3).Uganda WT/TPR/S/93
Page 11
20. The United Kingdom is the largest single destination for Ugandan exports.  Switzerland's
share in total exports from Uganda declined substantially between 1995 and 1999, from some 32% to
less than 5%.  The decline resulted partly from falls in re-exports of goods originating from
neighbouring countries formerly at war.  Since 1995, there has been a significant increase of exports
to Asia and Africa.
21. Overall, Uganda remains a net importer of services (Table I.3).  Its earnings from exports of
services grew from US$64.1 million in 1994 to US$182.3 million in 1999;  they represent around one
third of total merchandise exports.  Tourism is the main source of earnings from services exports
(around four fifths).  High transportation costs (mainly due to Uganda's landlocked situation) largely
contribute to deficits on the services account;  payments for transportation represent one third of total
services imports.
(4) FOREIGN INVESTMENT
22. Uganda has attracted increasing amounts of foreign direct investment (FDI) since the
beginning of the 1990s.  Between 1987 and 1993, Uganda attracted an annual average of
US$9 million of FDI.  These flows have increased steadily since 1994 and peaked at
US$222.1 million in 1999 (Table I.8).  Uganda attracts more FDI than most other countries in theregion, although FDI is still low in relation to the economy's needs.
9  The implementation of the
privatization programme has played an important role:  sales of public enterprises yielded
U Sh 234.5 billion (approximately US$162 million) in foreign exchange between 1990 and
June 2000.
Table I.8
Net FDI inflows to Uganda, 1986-99
US$ million Per  US$1,000 GDP
1986-1990 (annual average) -0.6 -0.3
1991-1995 (annual average) 54.3 12.4
1996 12 21.6
1997 175 29.3
1998 210 34.7
1999 222.1 38.7
.. Not available.
Source: Based on UNCTAD FDI/TNC database;  and IMF (2000), Balance-of-payments Statistics Yearbook – 2000.
23. Foreigners have mainly invested in manufacturing (about 52% of total FDI over the period
1991-98).  Other areas of interest to foreign investors included transportation, communications andstorage;  real estate;  and agriculture, forestry and fishing (Table I.9).
24. The leading investor countries in Uganda are the United Kingdom, Canada, Kenya, the
United States, South Africa, and India.  These countries together account for more than half of
accumulated FDI flows to Uganda over the period 1991-99 (Table I.10).  There is still regional
investment interest from Kenyan companies as well as from other traditional sources.  Other countriesin Europe have also expressed greater interest in Uganda according to the Uganda Investment
Authority (UIA).
25. Information on FDI outflows is not available.
                                                     
9 United Nations/International Chamber of Commerce (2001).WT/TPR/S/93 Trade Policy Review
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Table I.9
Foreign direct investment by sector, 1991-98
(US$ million and percentage)
Sector Approved Per cent Actual Per cent
Manufacturing 906.2 37.7 422.8 52.1
Real estate 343.3 14.3 56.7 7.0
Transportation, communications, and storage 291.2 12.1 70.3 8.7
Mining and quarrying 194.3 8.1 47.7 5.9
Tourism (hotels, casinos) 132.3 5.5 52.0 6.4
Agriculture, forestry and fishing 112.5 4.7 57.2 7.0
Other business services 99.1 4.1 13.6 1.7
Water and energy 74.2 3.1 0 0
Trade 69.9 30.1 .. 3.7
Financial services 67.4 2.8 31.2 3.8
Construction 55.4 2.3 18.1 2.2
Social services 51.9 2.2 12.1 1.5
Total 2,397.6 100 781.7 100
.. Not available.
Source: UNCTAD, based on information provided by the Uganda Investment Authority.
Table I.10
Country of origin of accumulated FDI flows to Uganda, 1991-99a
(US$ million)
Country Amount FDI Number of projects
United Kingdom 406.1 165
Canada 197.9 47
Kenya 176.8 117
United States 173.3 25
South Africa 144.9 8
India 109.3 62
Sweden 36.9 22
Korea, Republic of 16.4 12
Denmark 12.4 15
Tanzania, Republic of .. 14
Others 1,141.3 142
TOTAL 2,415.6 629
.. Not available.
a FDI figures in this table represent approved amounts, only some of which have been actually invested.
Source: UNCTAD, based on information supplied by the Uganda Investment Authority.
(5) OUTLOOK
26. The Government's medium- and long-term focus remains the eradication of mass poverty.
The recently revised Poverty Eradication Action Plan (PEAP) is aimed at transforming Uganda into a
modern economy by 2017.  While past iterations of the PEAP have focused less significantly on tradeas a component of poverty eradication, the current PEAP addresses more directly the need to integrate
export competitiveness and trade liberalization into a broad poverty-alleviation effort.Uganda WT/TPR/S/93
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27. Uganda has placed great emphasis on private sector development as a major engine for
economic growth.  The Medium-Term Competitive Strategy for the Private Sector, 2000-05, is
intended to target infrastructure development such as transportation and communications networks,
regulatory and legal reform, and fiscal policy re forms, with a view to creating an environment
conducive to, and supportive of, private investment.
28. Uganda's fiscal policy is expected to remain largely unchanged although there will be a
greater focus on expenditures to improve exports of agricultural products.  What the Government
specifically will do is currently under discussion.  Increased spending on education is expected to
focus on developing information technology skills.  In the area of revenue collection, the Government
has recognized the need to undertake major changes at the Uganda Revenue Authority to increase
revenues.  Until such reforms are implemented, the budget deficit is expected to improve onlygradually.
29. Uganda is scheduled to receive approximately US$2 billion in debt reduction over the coming
26 years.  In 2000, Uganda became the first country to benefit from the World Bank's new Poverty
Reduction Support Credit (PRSC) scheme, which is designed to help low-income countries (with
strong policy and institutional reform programmes) carry out their poverty-reduction strategies.
30. Despite the forthcoming debt relief assistance, Uganda is concerned that debt relief might be
insufficient given that debt relief calculations were made prior to the recent dramatic decreases in
coffee prices and the consequent worsening of Uganda's terms of trade.  Although the World Bank has
agreed to a credit of US$300 million for the next three years, Uganda fears that the sustainability of its
economic progress might be placed in jeopardy.
31. The Government of Uganda has expanded its efforts to decentralize government services.
These efforts have compounded challenges with respect to the strengthening of institutional capacityand developing Government's abilities to implement policies, particularly at the local government
level.  Capacity building initiatives are being undertaken in a variety of areas to improve fiscal policy,
particularly revenue collection, as well as budget management.
32. Uganda has continued to undertake measures intended to improve governance, transparency,
and accountability.  Nonetheless, there are still significant concerns about corruption that need to beaddressed in an ongoing fashion.  Because local governments are increasingly becoming providers of
social services under Uganda's decentralization initiatives, governance issues are becoming more
apparent in Uganda's regional administrations.  Rural areas lack sufficient human resources,
particularly in technical and professional areas.  The absence of such resources further fuels concerns
about decentralized Government's ability to practice good governance.
33. In the area of trade policy, the Government is committed to continuing its efforts to liberalize,
simplify, and streamline its trade regime.  Existing discriminatory practices on selected imports will
be phased out, consistent with the framework for trade liberalization to be undertaken in the context of
the East African Community (EAC).  The Government has expressed a desire for more technical
assistance from donors, which would facilitate the process of reaching decisions related to furthertrade liberalization.
34. On the basis of the policy measures mentioned above, the Ugandan economy is expected to
continue growing at about 7% per year in the medium term.
10  Official forecasts of other
                                                     
10 Independent forecasts suggest that the Ugandan economy will grow by 6.4% in 2001 and 6.8% in
2002.WT/TPR/S/93 Trade Policy Review
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macroeconomic indicators (e.g. inflation, public deficit, indebtedness, international reserves, current
and trade accounts) are not available.