Uganda's gold earnings have dropped, partially due to the Covid-19 pandemic- according to Central Bank. PHOTO/FILE.
Uganda’s gold exports dropped for the first time in over three years, indicating slowed demand in international commodity trade as a result of Covid-19.
The drop, according to Bank of Uganda, impacted the country’s exports to key markets, among them the Middle East and the Common Market for East and Southern Africa (Comesa) and the general performance of the export market during October.
Data from Bank of Uganda indicates that gold receipts, which have dominated Uganda’s export earnings since 2017, declined for the first time after years of an annual surge.
For instance, earning from the commodity fell from $221m (Shs817b) in September to $165m (Shs610b) in October, which substantially affected export earnings from the Middle East.
Exports to the Middle East generally dropped to $169m (Shs625b) down from $224m (Shs828b) in September.
In
the region, Uganda exports much of its goods to the United Arab
Emirates with gold being the dominant commodity. Gold makes up an
average of $200m of Uganda’s exports to the Middle East, according to
data from Bank of Uganda.
Much of the exported gold is re-exports from DR Congo.
Dr
Fred Muhumuza, an economist and a lecturer at Makerere University
School of Economics, said at the weekend it was difficult to project the
sustainability of Uganda’s gold exports since it is difficult to locate
its source.
Exports to Comesa dropped to $107m (Shs395b) down from $113m (Shs418b) on the back of reducing volumes to DR Congo, Burundi, Sudan and South Sudan.
General performance
The
decline in performance in the two regions subsequently affected Uganda’s
export market, which according to Bank of Uganda registered a 14 per
cent drop in October from $417.9m (Shs1.5 trillion) in September to
$363.8m (Shs1.3 trillion) in October, indicating a loss of close to
Shs200b.
However, Dr Muhumuza noted the decline could have been a result of reduced volumes in seasonal goods, especially in agriculture.
“This is not yet a harvest period until end of December and January. This could be the reason for the drop in exports to Comesa since many of our neighbors buy food from us,” he said, noting that re-exports could have reduced in the period, which ultimately affected the general performance.
However, he warned, the reduced earnings are likely to put the shillings on pressure, which has maintained a stable stance as a result inflows from exports.
This also comes at a time when there is sustained growth in imports since the lockdown was lifted in June.
Increased
However,
exports to Asia slightly increased to $23.6m up from $20m in September
with earnings from Malaysia and Pakistan increasing slightly. China,
Japan and India returned stable receipts in October.
Exports to the Rest of Europe increase from $2.5m in September to $3.5m October with Turkey taking the lead in the region.
editorial@ug.nationmedia.com
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