Export diversification reflects the degree to which a country’s exports are spread across a large number of products and/or trading partners. Diversification is achieved through increasingly changing the basket of commodities being exported, or improving the existing exports by adding value, or enhancing them through technology and innovation.
Uganda has consistently experienced a trade deficit over the past decades, which is associated with increased vulnerability to external shocks as exchange rate volatilities, low job creation and depletion of national reserves, among others. Uganda also mainly exports agricultural commodities and mineral ores associated with fluctuations in process, which increases the risk of shocks in terms of trade and sustained export growth.
As Uganda develops its next National Export Development Strategy, there is evidence that it has higher comparative advantage for export diversification in light manufacturing and agricultural product on average. The brief sheds more light on which products and policy recommendations Uganda should leverage for export diversification.