Uganda Trade

Subchapters:

  • Business Relationships
  • Foreign direct investment
  • FTAs ​​and Treaties
  • Development Cooperation
  • Prospective fields of study (MOP)

Business relations

Trade relations with the EU

Currently, the EU’s relations with Uganda focus mainly on development cooperation in the areas of rural development, energy and governance, and regular political dialogue on issues of internal affairs, human rights and regional cooperation. To a much lesser extent, attention is paid to trade and investment issues, which is evidenced by the fact that the Economic Partnership Agreement (EPA) negotiated between the EU and the East African Community (EAC: Burundi, Kenya, Rwanda, Tanzania and Uganda) has still not been ratified in 2014. Nevertheless, the EU is Uganda’s main import partner, especially for industrial products, data processing equipment, medical technology, etc.

2017 2018 2019 2020 2021
Exports from the EU (million EUR) 452.4 470.1 473.7 631.1 736.9
Imports into the EU (million EUR) 497.7 458.7 417.9 443.3 535.2
Balance with the EU (million EUR) 45.3 -11.4 -55.8 -187.7 -201.7

Source: European Commission

Trade relations with the Czech Republic

The Czech Republic provides Uganda with preferential access to the market. The preferences are non-reciprocal and take the form of duty exemption. Ugandan exports to the Czech Republic are mainly agricultural commodities. The preference helps Uganda, especially in the areas of agricultural products such as tea, coffee. Nevertheless, Uganda’s trade balance with the Czech Republic is in favor of the Czech Republic, thanks to the export of the Czech defense industry.

2017 2018 2019 2020 2021
Exports from the Czech Republic (billion CZK) 0.1 0.3 0.3 0.7 ON
Imports to the Czech Republic (billion CZK) 0.2 0 0 0 ON
Balance with the Czech Republic (billion CZK) 0.2 -0.3 -0.3 -0.6 ON

Source: businesscarriers.com

Trade relations with countries outside the EU

2017 2018 2019 2020 2021
Exports from countries outside the EU (million EUR) 2,480.0 2,620.7 3007.6 3,161.0 3 102.1
Imports to countries outside the EU (million EUR) 4,265.7 5,279.0 6 148.4 6,615.6 6,099.1
Balance with non-EU countries (million EUR) -1,785.7 -2,658.3 -3 140.8 -3,454.6 -2,997.0

Source: EIU, Eurostat

Foreign direct investment

In the coming years, Uganda should start producing oil. The main company in the Ugandan oil industry is France’s TotalEnergies, and billion barrels of oil have been discovered in Uganda so far, of which “only” billion are recoverable. Uganda is also a major exporter of coffee and tea.

Uganda Revenue Authority, the tax collector for Uganda failed to meet monthly targets in 2021 as well and the newly introduced taxes will affect profits in certain sectors. This includes, for example, gold mining, which was significantly successful in 2021 (gold exports in 2021 were worth $billion, compared to $million 9 years earlier). This growth was mainly due to the construction of gold refineries, of which there are now five in the country. Uganda introduced a new export tax of 5% on refined gold and 10% on unprocessed gold in July 2021. The effect was immediate – exporters protested the tax and not a gram of gold has been exported from the country since July. Negotiations continue in 2022. A new mining law is also being negotiated, which would allow the establishment of national mining companies in which the state will hold up to 15%.

FTAs and treaties

Treaties with the EU

Negotiations on an Economic Partnership Agreement (EPA) with the East African Community (EAC) were completed in October 2014. The EPA includes provisions on trade, customs, sanitary and phytosanitary measures, sustainable development of agriculture and fisheries. The agreement should increase the EU’s share of total EAC imports from 10.6% to 12.6%. The EAC-EU EPA provides immediate duty-free and quota-free access to the EU market for all EAC exports and a partial and gradual opening of the EAC market to EU imports. Safeguards allow each party to reimpose tariffs if imports from the other threaten to disrupt its economy. The EPA contains detailed provisions on sustainable agriculture and food security and sustainable use of fisheries resources. A chapter on economic and development cooperation is included. The parties undertake to conclude negotiations on the environment and sustainable development, services, investment and private sector development within five years of the entry into force of the agreement. Several articles refer to institutional arrangements and dispute settlement mechanisms. The EPA falls under the Cotonou Agreement: a breach of one of its “fundamental elements” involving human rights, democratic principles and the rule of law could result in the suspension of the EPA’s trade preference for the country concerned. The signing of the EPA has been suspended due to discussions within the EAC and currently renegotiations within the EU.

Contracts with the Czech Republic

Agreement between the Czechoslovak Socialist Republic and the Republic of Uganda on the confirmation of the validity of the Treaty between the Czechoslovak Republic and the Kingdom of Great Britain and Ireland on the mutual extradition of criminals (December 6, 1965). Barter Agreement between the government of the Czechoslovak Socialist Republic (represented by the Federal Ministry of Foreign Trade) and the government of the Republic of Uganda (September 1, 1988). Although the Czech Republic has neither a double taxation agreement nor an investment protection agreement with Uganda, this fact does not prevent the development of trade relations, as evidenced by the growing exports of the Czech Republic to Uganda and the positive balance of the trade balance.

Developmental cooperation

Uganda is a recipient of development aid and is still heavily dependent on it despite the government’s efforts. The Czech Republic occasionally provides funding within the program of small local projects. Small local projects (hereinafter referred to as “MLP”) are an instrument of bilateral development cooperation of the Czech Republic under the responsibility of the Ministry of Foreign Affairs of the Czech Republic. The aim of the MLP is to support the development activities of smaller scale local entities of the given countries. Activities of a smaller scale mean, for example, the supply of equipment or material or technology (also of Czech origin), training, support of development activities of local institutions and organizations, participation in partial parts of a larger, for example, international project. MLPs are implemented by local implementers directly in the developing country. The proposal for a foreign development cooperation project must be developed into the current version of the identification form, which applicants will receive after contacting the relevant Embassy of the Czech Republic. The duly completed form must then be sent back to the embassy. All topics are assessed in cooperation with the Ministry of Foreign Affairs of the Czech Republic.

More information about the possibilities of involvement in small local projects can be obtained at: https://www.mzv.cz/jnp/cz/zahranicni_vztahy/rozvojova_spoluprace/dvoustranna_zrs_cr/sektory_projekty/male_lokalni_projekty/

Prospective fields of study (MOP)

Healthcare and pharmaceutical industry

As part of the long-term health sector development plan, the Ugandan government is to spend 8.5% of its budget on health development every year. There is a high incidence of tuberculosis, malaria and related diseases in the country, especially neonatological care is insufficient. Since medical devices are imported into the country, government and non-government investment plans represent opportunities for Czech exporters.

Defense industry

The potential for defense industry supplies arises from the presence of Ugandan troops in South Sudan (assuming no embargo). Thanks to involvement in UN missions, the armed forces are not only dependent on income from the Ugandan state budget. Supplies for the Ugandan Armed Forces an opportunity for defense industry suppliers. Potential can be seen in the field of pilot training and repair and supply of aircraft technology, as well as in the field of radar and surveillance systems.

Agricultural and food industry

Agriculture is the basic sector of the economy, employing 80% of the workforce, but only one quarter of GDP. The government has therefore increased spending on agricultural support by 60% since 2018, with financial support for agricultural development remaining a government priority in the years to come. The development of agriculture thus represents export opportunities. In addition, the National Development Plan stipulated an increase in exports from USD billion in 2014 to USD 4 billion by 2022. This increase is to be achieved by increasing the share of domestic agricultural production processing, which will bring with it an increase in interest in the import of food technology and an increase in production for agricultural commodities. USD 600 million is to be spent on increasing production and it will not do without modern agricultural mechanization, which, however, is imported to Uganda.

Energy industry

Uganda is richly endowed with energy resources. These include hydropower, biomass, solar and geothermal energy, and fossil fuels. The country’s energy resource potential thus includes an estimated capacity of 2,000 MW of hydropower, 450 MW of geothermal energy, 1,650 MW of biomass cogeneration and kWh/m2 of solar energy. The problem is both on the side of insufficient production capacity and on the side of distribution networks. The existing distribution network of approximately 3,000 km must be doubled. To achieve change, the government opened up the energy sector to private investors. In addition to the supply of equipment, the development of the energy sector also offers investment opportunities for Czech companies.

Uganda Trade