Despite exports posting good earnings, revenues from coffee dropped.
Uganda earned more money from its exports during the quarter of October to December 2014 compared to the quarter July to September 2014, according to the central bank.
Bank of Uganda figures show that the country earned $662.94m in the three months to December, up from the $622.13 earned in the three months to September, a six per cent increment. The better performance can be attributed to growth in earnings of tea, fish and its products, tobacco, hides and skins, and oil re-exports.
Tobacco had the biggest jump. Tobacco exports shot up to $36.6m from October to December, up from $5.6m the previous three months, posting an increase of more than 500 per cent. Fish exports increased by 38 per cent in the same period. The report does not state the reason behind this performance.
Meanwhile, the central bank figures show that coffee, which is one of the country’s biggest exports, performed poorly. Coffee earnings dropped by seven per cent to $89.94m earned in three months to December 2014, down from $97m earned between July and September 2014. Also, earnings from flowers fell by a massive 21 per cent in the same period.
“Recent data remain consistent with a decline in exports, in line with weak external demand and low commodity prices…,” said BOU in its monetary policy report for February 2015.
The slight increase in earnings, however, could have partly been supported by the weakening shilling. A weak local currency supports exports as the products are sold in dollars. The Uganda shilling has depreciated against the dollar faster than the other regional currencies such as the Rwanda franc.
Last year alone, the shilling lost 14 per cent of its value against the dollar. The local currency has already traded above Shs 3,000 to the dollar, its weakest point in years.
In a statement recently, BOU said although exports had improved in the three months ending December 2014, problems in regional markets had widened the current account deficit.
One of Uganda’s biggest export markets remains South Sudan, but the skirmishes that hit the country for the most part of 2014 led to a dip in exports. South Sudan, however, remains one of Uganda’s main export market, bringing in $69m between October and December last year, up from $52m during the same period in 2013.
Corti Paul Lakuma, a research fellow at the Makerere University-based Economic Policy Research Centre (EPRC), says Uganda could have taken advantage of the depreciation of the shilling to boost industrial and agricultural exports.
“The value addition and quality question of our exports must be answered lest the weak shilling can only do so much,” Lakuma says.
“About 20 per cent of our exports go to South Sudan. It had surpassed Kenya, but the civil strife there has made us lose our market,” Lakuma said.
Kenya still leads the pack as Uganda’s main export market. Rwanda and DR Congo follow closely. DR Congo tops as the destination for Uganda’s informal exports, the report noted.
Full Article: https://www.observer.ug/business/38-business/37044-export-earnings-growth-at-six-per-cent-bou