75324 v3 UGANDA ECONOMIC UPDATE BRIDGES ACROSS BORDERS Unleashing Uganda’s Regional Trade Potential Fact Sheet Overview of Economic Update The Uganda Economic Update (UEU) is a regular topical publication of The World Bank that takes stock of the country’s economy by identifying challenges and proposing solutions to facilitate inclusive and healthy growth. The UEU will be published every six months on select macroeconomic issues. The first update was launched in February 2013. Importance of Economic Updates Focus on Regional Trade Economic updates review the state of the The first edition of the UEU focuses on regional trade. It economy and analyze current developments highlights how building economic bridges across borders and growth trends. They therefore provide can unleash Uganda’s regional trade potential and rebuild a platform to discuss with, and guide, policy resilience in its growth process. Uganda has been growing makers in taking informed action on topical below its potential over the past 5 years. Increased issues affecting the economy, thereby regional trade can help Uganda achieve accelerated stimulating growth and development. transformation and move closer to its target of becoming a middle income country in a decade. UGANDA ECONOMIC UPDATE BRIDGES ACROSS BORDERS Unleashing Uganda’s Regional Trade Potential Key Findings of the Analysis Exporting services in tourism, education, Uganda can grow by developing deeper links between transport & logistics and professional its domestic producers and external markets. The report services by removing trade constraints finds that Uganda has greatly benefitted from being at the and improving labor mobility. These can forefront of regional integration through growth in export be supported by building high quality trade, diversification of exports, and attracting foreign transport networks, while lowering direct investments. However, Uganda is still trading far less taxation and vehicle operation costs. than optimal with its regional neighbors due to removable barriers. Though faced with many challenges related to (iii) Prioritize the regional trade agenda within geography, regional security, high transport costs and the country’s development agenda. non-tariff barriers, Uganda can make use of the existing Uganda has to work with its neighbors to opportunities. In order to maximize its regional trade build the bridges that tap deeper regional potential, Uganda must: trade. But it should address the issues in its control, like raising productivity (i) Think beyond EAC to the larger Great Lakes Region. in key strategic sectors and getting While the first opportunity is to exploit the dynamic products to the market at competitive market within EAC, Uganda must position itself as prices. A waiting game will be a losing the land bridge to link other landlocked countries to game - Uganda can still do a lot on its the coastal economies. own to enhance regional trade. (ii) Grow and diversify exports beyond food commodities. Key Recommendations of the Report Uganda has potential to feed the region through more food exports, but it must also emphasize 1. Uganda needs to reduce transport costs trade in manufactured goods and services. Strategic in order to raise productivity and increase interventions should be planned along: connectivity. More efficient modes of road, rail and water transport, and better Increasing agricultural exports to meeting growing transport logistics will make the country demand for food. This will be achieved by getting a better land-linked partner. farms to produce in sufficient quantities and quality 2. Uganda should work at eliminating non- at competitive prices, and ensuring easy access of tariff trade barriers to reduce the cost of products to markets. doing business. 3. To unleash the potential of service Climbing the value ladder of exports by expanding exports, Uganda should eliminate trade in manufactured goods such as steel and restrictions in the strategic sectors of plastics, including toys or other consumer products. tourism, transport and logistics, and A conducive environment that allows businesses to education and professional services. prosper is necessary, but not sufficient to support regional trade. In this regard, Uganda has to choose its 4. Uganda must deepen regional integration industries strategically in order to compete favorably in order to unlock greater trade and should, in tandem, improve connectivity and opportunities. The country must think remove non-tariff barriers hindering trade with beyond its borders and invest in regional neighbors. public goods and promote policies that support free flow of products, capital and labor.