AFRICAN CONTINENTAL FREE TRADE AREA (AFCFTA)

The AfCFTA provides immense opportunities for Uganda to achieve its export-oriented growth strategy. The potential benefits of the AfCFTA for Uganda derive from the Agreement provisions and measures that seek to expand the continental market, as well as FDI flows, among others. (Echandi et al., 2022). The more immense market opportunities will trigger more trade and investment and allow greater value addition, export diversification, and productivity growth, leading to better quality jobs and greater social inclusion[1].

Uganda has been unable to fully tap the external market opportunities that are available to it. It exports low-value commodities, primarily unprocessed agricultural goods, that lack sophistication and are vulnerable to global price fluctuations, which make volumes and value highly volatile. The limited product range narrows Uganda's export profile, with the Middle East and Africa, particularly the EAC trade bloc, being the primary markets. Uganda exported an average of US$4.272 billion to the rest of the world in 2022 of which US$2.707 billion went to Africa. Within Africa, Uganda’s share of intra trade is still small accounting for only 2 percent of intra-African export trade. Uganda is actively engaged in multiple RECs, including the AfCFTA, which provides vast opportunities for the country to increase exports and accelerate industrialization via trade and investments[2]. These regions accounted for 72.8% (US$10,351.3 million) of total exports between FY2020/21 and FY2022/23[3].

Under the AfCFTA, logistics and transport infrastructure, such as ports, railways, waterways, and logistics services, for instance, warehouses, distribution centres, customs, etc., play a significant role in determining the level of exports. Africa’s inadequate infrastructure accounts for about half the transport cost in intra-Africa trade. Air transport is expensive, with flights within Africa being 45 percent more expensive than flights across the world, according to the African Airlines Association report (2021). The cost of exporting goods in Sub-Saharan Africa is US$603, above the global average of US$400. Population increase and GDP growth significantly influence Uganda’s exports. While longer distance between Uganda and her trading partners in Africa reduce trade flows. Developing the logistics industry nationally and continentally is imperative to boost intra-African trade[4].

In the Fourth National Development Plan (2025-2030), Government is working to diversify its export markets and strengthen trade relations through agreements such as the African Continental Free Trade Area (AfCFTA). Leverage economic and commercial diplomacy to negotiate targeted markets for the country’s exports, prioritizing EAC, COMESA, and AfCFTA. This will lead to increased value of exports from US$7.9 billion in FY2023/24 to US$10.3 billion by 2030.