Doing Business in Uganda

Uganda’s major trading partners are Kenya, Democratic Republic of Congo (DRC), Southern Sudan, the European Union, the United Arab Emirates, South Africa, India and China. Uganda exports to its largest trading partner, Kenya, increased to USD 88 million in 2006 from USD 59 million in 2001. Exports to eastern DRC increased nearly six- fold from USD 9 million in 2001 to USD 60 million in 2006.

Markets in Southern Sudan more than doubled since the signing of the peace agreement between Khartoum and the Sudan Peoples' Liberation Army in southern Sudan in January 2005. Ugandan trade within the Common Market of East and Southern Africa (COMESA) increased from USD 122 million in 2001 to USD 284 million in 2006, although Uganda remains one of the six COMESA countries that have not joined the COMESA Free Trade Agreement (FTA). Asian FDI from China, India, and Malaysia also is increasing. China has stepped up direct investment/aid in

the construction and telecommunication sectors and has an interest in natural resource exploration. Aid related construction projects include the new Foreign Affairs building, the proposed National Resistance Movement (NRM – dominant political party) headquarters, and the recently completed expansion of the Parliament building.

Uganda continues to make progress to liberalize the economy and keep inflation low as it presses forward with sound macroeconomic policies. Uganda's GDP grew to about 7 percent in 2007, up from 5.4 percent in 2006. Healthy rains, a resurging export sector, and domestic investment in the Commonwealth Heads of Government meeting (CHOGM) in Kampala contributed to growth. GDP growth is projected to increase to 7.5 percent in 2008, fueled by infrastructure improvements and private

investment growth.

The Ugandan economy, heavily dependent on Kenya for trade routes, slumped following the election-related violence late December 2007. import/export activity dropped to an estimated 40 percent in January, bringing Ugandan manufacturers, traders, and exporters of coffee, tea, and fish to a temporary standstill. Ensuing fuel shortages further impeded economic activity, but the private sector kept the economy moving on their stocks.

In mid-February 2008, the Government of Uganda successfully increased the use of trade routes through Tanzania and military escorts through Kenya to the main port in Mombasa.