A recent report, the Africa Trade Barometer, has shed light on the significant challenges posed by high transport and logistics costs in Uganda. The study, which measures trade performance in ten African countries, including Uganda, underscores that the cost of transportation and logistics accounts for a substantial portion of production expenses in the country, ranging between 35 to 42 percent. This places Uganda at a disadvantage when it comes to producing competitive goods compared to many Asian countries, where the transportation and logistics component typically constitutes a mere 8 percent of production costs.
Transport and Logistics Costs in Uganda vs. Asian Countries
| Country | Transport & Logistics as % of Production Costs |
|---|---|
| Uganda | 35% – 42% |
| Asian Countries (Average) | 8% |
The report emphasizes that this burden of high transportation and logistics costs hampers the competitiveness of Ugandan exports and significantly inflates the expenses associated with importing goods. The solution, as suggested in the report, lies in improving Uganda’s transport and logistics infrastructure, potentially enabling Ugandan businesses to reap the benefits of increased intra-African trade.
Uganda’s Infrastructure Challenge
One of the primary contributors to the high cost of transport in Uganda is the state of its road network. According to data from the Uganda National Roads Authority, the country boasts a national road network extending over 21,000 kilometers, of which approximately 8,588 kilometers are paved. The limited and deteriorating road infrastructure plays a pivotal role in elevating transportation expenses, and the lack of alternative modes such as water and railways exacerbates the situation.
Growing Awareness of AfCFTA
The report also highlights a positive trend in Uganda’s business community regarding the awareness of the African Continental Free Trade Agreement (AfCFTA). The percentage of respondents who are cognizant of AfCFTA has seen a significant increase, rising to 33 percent. This signifies a growing interest among Ugandan businesses in the opportunities offered by the continental trade area.
Key Points on AfCFTA Awareness
- Awareness among Ugandan businesses has risen to 33%.
- AfCFTA aims to enhance intra-African trade by creating a single market for goods and services and reducing trade barriers.
- Member countries have committed to eliminating tariffs on most traded goods and services within the continent.
About the Africa Trade Barometer
The Africa Trade Barometer, introduced in 2022, seeks to address the lack of comprehensive information on African trade data. It plays a crucial role in supporting and facilitating the growth of intra-African trade.
Expert Insights
Mr. Guvi Kudzai, a senior researcher at the Standard Bank Group, noted during the report’s release that the increase in AfCFTA awareness among Ugandan businesses, rising from 23 percent in September 2022 to 33 percent, is a statistically significant change. This surge in awareness is possibly driven by initiatives such as the Private Sector Foundation Uganda.