Kampala — Uganda should aim to trade with other countries on the African continent beyond those in the East African region to bolster its position as an economic giant, a World Bank official advised.
Uganda should also deal with curbing trade barriers with neighbors, a thing that could also help the East African country stabilize the economy in the face of a slowdown in overall growth and reduced aid flows.
The World Bank also believes that Uganda can earn an additional $2.5 billion from non-traditional trading partners in the region and close the trade deficit in the next five years.
"Looking beyond the East African Community, Uganda must position herself as the land bridge to link other landlocked countries to the coastal economies," said Mr. Ahmadou Moustapha Ndiaye, World Bank Country Manager in a Press statement.
"Regional integration and trade is the best opportunity for a brighter economic outlook," adds Mr. Ndiaye.
Uganda's overall position in terms of its transactions with the rest of the world improved in 2012 on account of increased capital inflows. At the same time, the current account deficit worsened and the slight improvement in services did not compensate for deterioration in the trade balance of goods. Currently, the trade imbalance is estimated at $2.4 billion.
The Bank suggests Uganda will need to boost trade with African countries as it has with the rest of the world. In 2012, Official Development Assistance (ODA) to Uganda was approximately $882 million, almost same amount as average annual exports to Sudan and DRC.
This is an indication that if Uganda breaks the EAC boundaries and trades outside the bloc it can earn much higher foreign exchange.
The report also points out that Uganda should work at eliminating nontariff trade barriers to reduce the cost of doing business, reduce transport costs in order to raise productivity and increase connectivity, and improve transport logistics to make the country a better land-linked partner.
While Uganda's economy is poised to grow by 4.5 percent during the Financial Year ending June 30, 2013, up from 3.4 percent GDP growth in 2012, the World Bank cautioned authorities that it falls below potential and far lower than recent historic rates. The Minister of Finance, Planning & Economic development, Maria Kiwanuka, while officiating appraised that the economic updates that will coming twice a year are intended to take stock of economic progress in the country, identify challenges and propose solutions for sustainable growth.