Size and Structure
The trade sector comprises of manufacturing, wholesale & retail trade, Hotels & Restaurants, other business services, exports and imports.
Economic Activity in the Sector
Manufacturing sub sector:The sector is still small but diverse in terms of its composition. Food processing makes up 40% of all manufacturing; drinks and tobacco 20%; Chemicals, paint, soap and foam products 9.7%.
Wholesale and Retail Trade: Uganda has a buoyant and growing wholesale and retail sector. It is still highly fragmented.
Hotels & Restaurants: This subsector has enjoyed sustained growth fuelled by a growing economy and increasing tourist numbers.
In 2011, the total imports bill stood at US $ 5,684.8 million, of which, formal imports accounted for US $5,630.9 million. Informal imports were estimated at US $ 53.9 million. The overall imports expenditure rose by 20.2 % in 2011 compared to an increase of 9.0 % in 2010. Although the formal imports bill increased over two consecutive years (2010 and 2011) informal imports maintained a stable decline of 18.9 % in the same period.
In 2011, Petroleum and petroleum products still took the highest import bill of US$ 1,288.4 million accounting for 22.9 % of the expenditure on imports. This was followed by Road Vehicles with US $499.7 million (8.9 %), then Telecommunication instruments with US$ 343.4 million (6.1 %) and Iron and steel valued at US $ 271.0 million (4.8 %).
Direction of Trade
The Common Market for Eastern and Southern Africa (COMESA) regional bloc is the main destination for Uganda’s exports. The EU bloc ranks the second, followed by the Asian continent, and then the Middle East.
The main trading partners within the Asian continent were India, China and Japan whose market shares stood at 16.3%, 9.2% and 5.7% in 2011 respectively. The African continent ranks second, with an import expenditure of US $ 1,148.3 million in 2011 and accounting for 20.2% of the total imports.
Current Structure Of Players In The Sector
Manufacturing: The manufacturing sub-sector is characterized by Small and Medium Enterprises (SMEs) which account for over 90% of the sub-sector. 39% of these are agro-based industries. Large industries include: Madhivani and Mehta sugar factories; Uganda Breweries; Nile Breweries; Hima Cement and British American Tobacco plant.
1. Foreign Exchange Liberalization
The foreign exchange regime is fully liberalized and exporters are entitled to retain 100% of their foreign exchange earnings accruing from their export transactions. - Contact Bank of Uganda or any commercial bank for details
2. Duty and VAT exemptions
There are no taxes charged on exports (zero rated). This is meant to reduce costs for the exporters and to make exports from Uganda more competitive - Refer to Uganda Revenue Authority
3. Market Access
The Government of Uganda strongly supports global economic integration as it increases volume of trade as well as offers other economic opportunities. Because of our membership, Uganda’s exports qualify for preferential tariff rates in COMESA, EAC. In addition Ugandan products enter the European Union and USA markets duty and quota free under the Cotonou Agreement (ACP – EU) and the African Growth and Opportunity Act (AGOA) initiatives respectively. - For details refer to Trade Agreements Page
4. Value Added Tax (VAT) on Exports
All exports of goods and services are zero rated for VAT. However, exporters are required to be VAT registered. This enables them to re-claim VAT expended on all inputs used in the process of producing and processing exports. - Contact Uganda Revenue Authority
5. Duty Drawback
The rationale for duty drawback is to enable manufacturers and other exporters to compete in foreign markets without the handicap of including costs of imported inputs in the final export price, the duty paid on imported inputs. This allows exports to draw back up to 100% duties paid on materials inputs imported to produce for export. - Contact Uganda Revenue Authority
6. Manufacturing under Bond
This scheme allows manufacturers to seek custom license to hold and use imported raw materials intended for manufacture for export in secured places without payment of taxes. It makes available working capital, which would have been tied up through paying duties immediately after importation. - Contact Uganda Revenue Authority
Other incentives are available under the Investment Code as administered under the Income Tax Act 1997, by Uganda Revenue Authority for export oriented investment projects. - Contact Uganda Revenue Authority
Source:Uganda Export Promotions Council
Demand Drivers And Resource Base Factors
Overall imports have been increasing faster than exports resulting into a wider trade imbalance.
Uganda pursues a strategy of value addition to her agricultural products. With the regional harmonization, Uganda products can access regional markets without facing stiff tariffs. The country has also secured market access for a number of her products through bilateral trade preference schemes and double trade treaties.
Sector Specific License Requirements
Investment and Business Opportunities
There exist investment trade and business opportunities in:
Value addition (Agro-processing)
Transport and logistics
Bulk-breaking and assembly
Clearing and forwarding services
Support professional services; marketing, branding, marketing, distribution and insurance.
Useful Web links and Contacts