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Uganda, classified as both a Least Developed Country (LDC) and a Landlocked Developing Country (LLDC), faces unique structural challenges in its path toward economic transformation. With graduation from the LDC status on the horizon, the need to reassess and reinforce its trade foundations has never been more urgent.

Uganda has achieved commendable socio-economic progress over the past two decades, including poverty reduction, sustained GDP growth, and improvements in infrastructure and human development. However, trade remains heavily dependent on a narrow range of primary commodities, particularly gold, coffee, fish, and maize. Participation in regional and global value chains remains limited. The Government has therefore embarked on a rehabilitation agenda aimed at improving the country’s earning through export promotion, which will improve the country’s economic performance.

Diversification through the promotion of value-added exports and structural transformation has been earmarked as critical for Uganda to reduce vulnerability to external shocks, enhance resilience, and foster sustainable growth. As a key pathway toward diversified, competitive, valueadded, export-oriented product lines, it is critical that Uganda leverages industrial parks and free zones to nurture value chains linked to regional value chains, which provide opportunities for SMEs to plug into. This is particularly important for Uganda in its efforts to expand its export baskets.

Over the past two decades, trade has played an increasingly significant role in Uganda’s economy, with its share in GDP growing from 14% in 2001 to 21% in 2022. During this period, exports grew more than tenfold, accompanied by an increase in both the variety of distinct products exported and the number of markets reached. Uganda’s exports have changed from traditional exports e.g. coffee, tea, tobacco, cotton, hides and skins to nontraditional exports. However, exports have remained concentrated in a limited range of products, with minimal processing, and directed to a few key markets. This trend has been driven by a surge in gold exports, particularly to the Middle East, and the continued prominence of coffee, unprocessed vegetal products, and horticulture exports to Europe and Asia. In contrast, exports to neighbouring countries in Eastern and Central Africa have shown greater diversification and a higher proportion of processed goods. These regional exports grew to account for over a third of Uganda’s exports between 2018 and 2022 and stand out for their diversification and higher share of processed goods. This shift highlights the growing significance of intra-regional trade as a vital avenue to foster structural transformation through value-added exports.

The Doha Programme of Action for the Least Developed Countries (DPoA) (2022-2031) highlights structural transformation and integration into international markets to empower LDCs to transition from resource-dependent economies to diversified, value-added, and competitive participants in global trade. Similarly, the Awaza Programme of Action for Landlocked Developing Countries (APoA) (2024–2034) complements these efforts by focusing on fostering economic diversification and enhancing trade through industrialization, innovation, and technology adoption. This program of action prioritizes regional integration to overcome geographic challenges and unlock new trade opportunities for LLDCs.

As both an LDC and an LLDC, Uganda faces unique challenges related to its geography and structural development that underscore the urgency of diversification. Uganda should seize this crucial moment to intensify its diversification efforts. The renewed support reflected both in the DPoA and the APoA provides a strong foundation in this regard. Furthermore, the ongoing implementation of the African Continental Free Trade Area (AfCFTA) offers a timely opportunity for Uganda to integrate into a larger market and regional value chains, boosting its competitiveness and potentially expanding its export base. Additionally, having met the criteria for graduation1 from the LDC category the first time in March 2024, Uganda’s progress towards LDC graduation highlights the importance of developing diversified exports that can navigate potential changes in trade preferences and maintain economic momentum.

This study, “Building Competitive and Resilient Trade in Uganda”, provides a comprehensive assessment of Uganda’s trade landscape, including an analysis of trade vulnerabilities, sectoral risks, market access and tariff issues, infrastructure bottlenecks, Uganda’s participation in the AfCFTA and intra-African trade, regional integration dynamics, potential preference erosion and transition risks linked to LDC graduation, as well as opportunities for enhancing trade resilience and unlocking untapped potential. The study aims to provide critical pathways for building competitive and resilient trade for Uganda.

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