By  Martin Luther Oketch

 

Uganda is currently earning about Shs54.2 billion from her exports to South Sudan down from about Shs271 billion the country used to earn from the trade on a monthly basis.

This indicates that Uganda’s trade with South Sudan has declined by 80 per cent in the last two months thus exerting pressure on the country’s foreign exchange earning from exports.

The decline also means that the shilling is likely to face depreciation shocks resulting from reduced dollar inflows.

 

South Sudan had become Uganda’s most active trading partner in the region, importing food stuffs and manufactured products in the recent past.

Thus the decline in trade volumes is likely to negatively impact Uganda’s balance of trade.

The executive director research at Bank of Uganda, Dr Adam Mugume, said the decline in Uganda’s exports to South Sudan is due to scarcity of dollars in the country [South Sudan].

Dr Lawrence Bategeka, a senior research fellow at the Economic Policy Research Centre, attributed the decline to issues of formalisation due to the fact that much of the trade was largely formal.

“The problem though linked to currency restriction in South Sudan, has a bearing to meeting required standards.

” Meanwhile, BoU’s state of the economy report indicates that Uganda’s exports increased by Shs35.2 billion to Shs650.4 billion in November 2012, despite a fall in coffee prices on account of higher coffee export volumes after the onset of the coffee season.

The import bill increased by Shs62.3 billion to Shs1.1 trillion in November 2012 from Shs1.1trillion in October 2012, due to an increase in government project and non-project imports during the period.

The Central Bank report shows that private sector imports for investments increased slightly accounting for 73 per cent of total private sector imports while private sector consumption imports declined further Shs290 billion from Shs295.4 billion in October 2012.