Six years since the inception of the African Growth and Opportunities Act, Uganda's performance has been least impressive in East Africa.

The United States-Sub-Saharan Africa Trade data authored by the US Trade Commission puts Uganda last after Kenya and Tanzania in last year's performance.

Uganda made total earnings from exports to the US worth $25.8m in 2005, down from $34.8m in 2003. Tanzania's earnings grew from $24m (2003) to $34m(2005) and Kenya from $249m to $348m respectively.

The US attributes the poor performance of Uganda and other countries like Botswana, Ethiopia and Mozambique to the overall decline in apparel exports.

The July 2005 AGOA Competitiveness report (download it from AGOA.info by clicking on this link) categorically states that although the country was trying to modernise her existing plants with continued availability of locally-grown high quality cotton and ample access to water, the current textile production is limited.

"Uganda's production in textiles and apparel is constrained by higher production costs, fewer economies of scale, and lower capacity utilisation as compared with other global suppliers," says the report.

Agoa Special Presidential Assistant on Productivity and Competitiveness, Dr Charles Kwesiga confirmed the reports to Daily Monitor on Saturday.

He explained that industrial infrastructure was the major cause of the problem. "The country's industrial infrastructure is still lacking. We have a very big gap compared to other countries. Our industries' capacity and set up was weakened by historical factors and a number of them are just trying to revamp their operations," Kwesiga said in a telephone interview.

He said the problem was being escalated by lack of resources to feed the growing industries.

He said the government has established the Uganda Industrial Research Institute to counter the scarcity of resources and deal with aspects of value addition, which is the major requirement of commodities entering the US market.

The US report also said capacity utilisation has been very low throughout the manufacturing sector, at less than 20 percent for most industries.

It says this is partly because many industries, such as plastics and paper, are dependent on imported inputs, which experience high mark-ups from tariffs and transportation costs.

The Agoa Fact Sheet released February 13, with various performances of 33 countries that exported to the US also highlights that Uganda is easily out-competed due to its inconsistent production levels.

"Purchasers in markets such as the United States want large volumes, but the local environment is not conducive to increasing volumes," the bulletin said.

It said the problem escalated due to poor government policies like lack of critical strategies to improve transport logistics and development of a cotton-spinning industry and as with most other sectors, without giving priority to rules of origin.

"Cotton Development Organisation, ginners, and producers are not taking advantage of Agoa rules of origin, which is designed to help her among other Agoa eligible countries become significant supplier of cotton lint and perhaps cloth, to textile manufacturers both in the Africa and America," reads the report in part.

However, Mr Nathan Nabeta Igeme, the State Minister for Trade, said the issue of rules of origin was not the question for Uganda.

He said Uganda being a land locked country had embarked on reducing transport costs in terms of shipment. Other significant impediments the report outlines include poor governance, which according to the 2005 Index of Economic Freedom score for Uganda, classifies the country as mostly unfree, with better scores for government intervention and monetary policy than for fiscal burden, property rights, or regulation.

The top five Agoa beneficiary countries in 2005 included Nigeria, Angola, Gabon, South Africa and Chad. Agoa was signed into law on May 18, 2000 as Title 1 of The Trade & Development Act of 2000.

The Act offers tangible incentives for African countries to continue their efforts to open their economies and build free markets.

Latest AGOA Trade Data currently available on AGOA.info


Click here to view a sector profile of Uganda’s bilateral trade with the United States, disaggregated by total exports and imports, AGOA exports and GSP exports.

Other regularly updated trade statistics on AGOA.info include: (click each link to view)