East Africa: Uganda's Trade Deficit Narrows By Over 70 Percent As Export Earnings Surge

5 January 2026
Nile Post (Kampala)
By Pedson Mumbere

Uganda's merchandise trade position improved markedly in October 2025, with the trade deficit narrowing significantly on the back of a strong rebound in export earnings, according to the performance of the economy monthly report for November 2025.

Compared to October 2024, Uganda's merchandise trade deficit with the rest of the world declined by 70.4 percent, narrowing from USD 251.56 million (about Shs 930.8 billion) to USD 74.46 million (about Shs 275.5 billion) in October 2025. This improvement was largely driven by a substantial increase in export receipts amounting to USD 726.84 million (about Shs 2.69 trillion), which more than offset a USD 549.74 million (about Shs 2.03 trillion) rise in imports over the same period.

On a month-on-month basis, Uganda's external trade position strengthened further. The trade deficit narrowed by 85.1 percent between September and October 2025, reflecting a sharp USD 536.56 million (about Shs 1.99 trillion) increase in export earnings, compared to a relatively modest USD 110.72 million (about Shs 409.7 billion) rise in the import bill. This trend highlights the growing contribution of exports to Uganda's external sector performance.

A year-on-year analysis shows exceptionally strong growth in merchandise exports. Uganda's export earnings nearly doubled, rising by 94.4 percent from USD 769.62 million (about Shs 2.85 trillion) in October 2024 to USD 1,496.45 million (about Shs 5.54 trillion) in October 2025.

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The growth was mainly driven by higher earnings from coffee, gold, crude oil products derived from oilseeds such as simsim, palm oil and sunflower, as well as industrial products, cocoa beans and flowers.

Coffee Remains a Key Export Driver

Coffee exports continued to play a pivotal role in driving export growth. Earnings from coffee increased by USD 46.06 million (about Shs 170.4 billion), representing a 33.1 percent rise, from USD 139.05 million (about Shs 514.5 billion) in October 2024 to USD 185.10 million (about Shs 684.9 billion) in October 2025.

This increase was largely attributed to higher export volumes despite declining global coffee prices. Export volumes grew by 37.7 percent, rising to 680,000 sixty-kilogramme bags from 500,000 bags a year earlier, supported by improved harvests in the Central and Eastern regions.

However, on a month-on-month basis, coffee export earnings declined due to reduced export volumes between September and October 2025.

This decline outweighed a marginal increase in coffee unit prices during the same period. Italy and Germany remained the leading destinations for Uganda's coffee exports in October 2025.

Overall export earnings rose by 55.9 percent, from USD 959.89 million (about Shs 3.55 trillion) in September 2025 to USD 1,496.45 million (about Shs 5.54 trillion) in October 2025.

The increase was mainly driven by higher earnings from gold, cocoa beans, crude oil products from oilseeds, tobacco and coffee.

Notably, gold and coffee together accounted for 76.8 percent of Uganda's total exports, underscoring their importance to the economy while also highlighting the need to diversify the export base to reduce exposure to commodity price shocks.

Beyond trade, the report indicates that overall economic activity continued to improve, as reflected in key high-frequency indicators.

The Purchasing Managers' Index (PMI) rose to 53.8 in November 2025 from 53.4 in October, signalling improved business conditions driven by higher new orders and output.

Similarly, the Composite Index of Economic Activity (CIEA) increased to 183.50 in October 2025 from 182.40 in September, confirming a positive trend in economic performance.

Business sentiment also remained strong, with the Business Tendency Index (BTI) standing at 57.20 in November 2025, well above the 50-point threshold.

Optimism was strongest in the manufacturing, wholesale trade and services sectors, reflecting sustained confidence in Uganda's economic outlook.

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