Higher exports of gold in January compared to December were the highlight of a period in which the country’s export earnings declined.
According to the performance of the economy report released by the finance ministry, export earnings dropped from $329.3m in November 2019 to $326.8m in December.
The decline in the value of Uganda’s exports was mainly on account of a drop in earnings from coffee, electricity, tea, tobacco, and fish. There was, however, good news as earnings from cotton, tobacco and beans exports recorded an improvement following an increase in their volumes.
Gold continued to be Uganda’s leading foreign exchange earner, having generated $99m (sh366.3b) in December, followed by coffee at $32m and fish at $13.1m. In November, the country earned $42m from coffee exports and $84.8m (sh313.7b) from gold exports. According to the report, over the last 11 months, the value of gold exports has been much higher than that of coffee.
This implies that gold has now overtaken coffee as Uganda’s leading export earner. Compared to December 2018, export earnings increased by 8.0% from $302.5m to sh326.8m in December 2019. The Government operations in January resulted in an overall fiscal deficit (shortfall in a government’s income compared with its spending) of sh1.4 trillion, which was higher than the planned deficit of sh898b.
The huge fiscal deficit was due to higher than planned expenditures as well as the shortfall in revenues and grants. Whereas in the previous months Uganda had been enjoying a trade surplus over East African countries, the latest report shows that Uganda registered a deficit in the month of December.
In December 2019, Uganda exported merchandise worth $86.94m to the East African Community and imported merchandise worth sh106.71m, resulting in a deficit of $19.77m. China accounted for 51% of the total imports from Asia, while Kenya and Tanzania accounted for 96% of total imports from EAC. Uganda traded at a deficit with all regions, except the rest of Europe, the Middle East, and America.
Uganda registered some progress in keeping inflation low after it decreased to 3.4% in January 2020, from 3.6% the previous month. The decline in inflation is attributed to a drop in fuel and food prices, which have a big bearing on the prices of other commodities in Uganda’s economy.
There was a significant decline in the prices of fruits and bananas. Who is mining the gold? Marvin Byakatonda, a mining expert, said residents are not benefitting from Uganda’s current top exchange earner.
“Uganda has a lot of gold deposits, but the gold mining activities have been hijacked by some individuals, who have the protection of the Minerals’ Police. Those who have legal licenses have been blocked from operating. Parliament and other state agencies should investigate what is going on in the minerals sector. They will be shocked. The mafias have taken over the sector.”
Bukuya County MP Dr. Michael Bukenya said his people in Mubende last benefited from gold mines between 2012 and 2017 before the Government security forces evicted locals from the gold mines.
“In the previous arrangement, where local artisanal miners were operating, thousands of youth had been employed in the mines. Our local economy had been greatly boosted. The area which the Government gave to local artisanal miners does not have gold. We do not know the people mining the gold. Residents are not benefiting at all,” Dr Bukenya said.