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Uganda Foreign Trade
Agricultural products have dominated Uganda's exports
throughout its history. Coffee became the most important
export
after 1950, but cotton, tea, tobacco, and some
manufactured goods
were also important. During the 1970s, all exports except
coffee
declined as a result of low producer prices, marketing
problems,
declining exchange rates, and general economic disruption.
Coffee
production declined only slightly during these years of
political
turmoil, but the value of sales was vulnerable to shifts
in world
market prices.
From 1981 to 1984, general exports steadily increased,
but
only in 1984 and 1985 were they sufficient to produce a
trade
surplus. In 1986 a trend of declining exports and
increasing
imports developed and continued to the end of the decade
(see
table 7, Appendix). Uganda sent most of its exports to the
United
States, Britain, the Netherlands, and France. Exports to
regional
trading partners were less important but increased
slightly in
the late 1980s.
During the early 1980s, the value of imports remained
fairly
steady, constrained mainly by the shortage of foreign
exchange.
However, in the late 1980s, imports rose dramatically,
causing a
large deficit in the trade balance. The government
normally
allocated foreign exchange for the purchase of essential
goods
such as fuel, vehicles, machinery, medical supplies, and
military
equipment. Principal imports--mainly construction
materials,
machinery, and spare parts--came from Kenya, Britain,
Malaysia,
and Italy.
In November 1988, the government announced a new
program to
support the expansion of nontraditional exports in an
effort to
diversify exports and increase foreign exchange earnings.
Under
this plan, private companies with export licenses granted
by the
Ministry of Commerce were permitted to retain foreign
exchange
earned for nontraditional exports, especially including a
variety
of fruits and vegetables that could be cultivated and
transported
fairly readily. Under the plan, international traders
would be
permitted to sell all or part of the foreign exchange
received
for these exports to the Central Bank. They could then
apply for
import licenses valued at the equivalent of their foreign
exchange earnings in order to finance imports within 180
days.
At the same time, the government established a United
States
Agency for International Development (AID) export trade
promotion
credit amounting to US$12.5 million to assist the private
sector
in expanding production, marketing, and trade in these and
other
nontraditional exports. Items eligible to be financed
under the
trade promotion credit included improved seeds, high
analysis
fertilizers, raw jute for manufacturing gunny sacks, tin
for
local manufacture of farm tools, and packaging materials.
An important development in Ugandan trade in the late
1980s
was the growth of countertrade, or barter, agreements at
both
government and company levels. Faced with serious foreign
exchange shortages, the Ugandan government used this
approach to
secure essential goods and services, such as petroleum
products
and technical advice. Between 1986 and 1990, the
government
transacted more than seventy barter deals valued at an
estimated
US$534 million. By mid-1989 the turnover from barter trade
arrangements was approximately US$60 million a year, or 10
to 15
percent of the value of conventional trade. The Ugandan
input was
almost always coffee or cotton. These barter deals
included some
imaginative and innovative schemes, notably hotel and road
building projects and plans for technology transfer. They
also
provided a wider range of imports than would have been
possible
under conventional trading, especially in view of the
continuing
shortage of foreign exchange.
Under separate barter agreements in 1988, Uganda
received two
consignments of petroleum products from Algeria and Libya.
The
consignment from Libya was part of a US$60 million deal to
exchange Libyan oil, cement, and trucks for Ugandan
coffee,
tobacco, and tea. A similar agreement worth more than
US$24
million over three years was signed with Algeria in
January 1988.
Uganda declared a temporary moratorium on new barter
deals in
1988 because it had insufficient agricultural produce to
fulfill
existing agreements. Cuba had received only 3,000 tons of
the
10,000 tons of beans promised under a 1986 agreement, and
other
countertrade partners awaited deliveries of agricultural
products. Farmers blamed an inadequate round of producer
price
increases in January 1988 for continuing shortfalls in
several
crops. Problems were particularly acute surrounding trade
in
corn. The government promised approximately 10,000 tons of
corn
to Algeria, Cuba, Egypt, and Libya, plus 12,000 tons to
North
Korea and 5,000 tons to Yugoslavia. By late 1989, none of
these
shipments had been delivered, although Uganda had received
consignments of industrial goods as part of these barter
agreements.
Despite problems in the supply of local products, the
government signed two protocol agreements in early 1988
with
Rwanda and North Korea. The Rwanda agreement was worth
US$10
million over a one-year period; in exchange for exports
such as
corn, salt, tobacco, wood, and bananas, Uganda was to
receive
Rwandan goods such as blankets or paint. In June 1988,
Uganda and
North Korea signed a protocol on barter trade for 1988 and
1989,
including Korean cement, machinery, tools, and electrical
goods,
in return for Ugandan cotton lint, meat, and other
agricultural
products. The protocol extended over a period of eighteen
to
twenty-four months and was worth US$14 million to each
country.
Of this amount, US$8 million was for cement. By late 1990,
however, many barter deals were still under suspension and
at
least some were being renegotiated because of continued
shortfalls in Uganda's agricultural production.
In 1988 and 1989, to bring the balance of trade and
payments
under control, the government imposed new import and
export
licensing procedures. Imports designated as "foreign
exchange
required," which included most commercial imports, were
processed
through a bank. Importers presented their license
applications to
a bank, together with supporting documentation and a
foreign
exchange application form. If Ministry of Trade officials
approved the application, they issued an import license
entitling
the bank to open a letter of credit. For imports
designated "no
foreign exchange required," where the importer already had
the
foreign exchange or the goods were financed by foreign
sources,
an import license was required. Imports from other members
of the
Preferential Trade Area (PTA) for East and Southern Africa
enjoyed increasingly favored treatment, while imports from
Israel
and South Africa were prohibited. The Société Générale de
Surveillance of Geneva operated an import contract
administration
program to ensure contract provisions regarding quantity
and
quality were met. Each export deal required a Ministry of
Trade
license stating the agreed price in foreign currency and
declaring receipts to the Central Bank. Licenses for
nonperishable goods were subject to advance payment to the
Central Bank. Some goods could only be exported through
official
agencies such as the Produce Marketing Board and the
Coffee
Marketing Board.
Data as of December 1990
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