Kakaire A. Kirunda
5 November 2008
Although tariff related barriers to trade have reduced significantly, Uganda's exports are still faced with inadequate capacity to reduce transaction costs relating to storage facilities, post-harvest losses, transport and ensuring health and food safety concerns.
This is according to a paper "Costs of Overcoming Market Entry Constraints to Uganda's Export-Led Growth Strategy" published by the Makerere University based Economic Policy Research Centre.
The paper authors note that while Uganda's export sector has experienced tremendous growth over the last two decades, it has been faced with a number of market access and supply-side constraints in producing sufficient quantities of acceptable quality and timely delivered export products.
"The benefits of investment in upgrading the capacity of addressing some market entry constraints far exceed the costs of such investments, hence suggesting a joint public-private sector efforts in overcoming supply side constraints like compliance with quality requirements," the authors wrote.
Citing the example of fish, the authors said improving quality through the chain right from when and where fish is caught (e.g. using insulated facilities supplied with ice) through the entire distribution chain, for example, would potentially increase the fish shelf life from the current nine days up to 14 days.
Furthermore, they wrote, it would reduce the post-harvest losses and pressure on fish resource depletion. While standards have improved in this sector, the researchers called for further action to particularly improve the fish handling infrastructure at landing sites and increase awareness of the need for quality management for export products through the training of the fishing community down the chain, for example, at remote landing sites.
Uganda mainly exports unprocessed products with traditional exports comprising of tobacco, coffee, tea and cotton. The non traditional exports comprise agricultural products such as fish, flowers, cereals, cocoa, beans and maize, fruits and vegetables, livestock among others.
The manufacturing products such as soap, metal products, alcoholic drinks, plastics, paper and printed materials, beauty products, textile, clothing and garments, confectionaries to name a few.
Worth noting however, is that the non-traditional exports have taken over traditional exports as the main source of foreign exchange. For example basing on a 2006 report from the Uganda Bureau of Statistics, the paper authors noted, the share of export earnings contributed by non-traditional exports rose from just 14 per cent in 1991 to about 68 per cent in 2006. The continued low export earnings in Uganda have often been attributed to constraints such as the poor terms of trade and poor or limited market access.
But as noted earlier, even these products that have turned into the country's main source of foreign exchange are facing limitations. The researchers noted that trade liberalisation, globalisation, changing consumer demands, greater emphasis on quality and safety requirements, as well as changes in production, distribution and marketing systems all have critical implications for the flexibility, efficient and timely delivery of exports.
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