Joseph Isangura
Tanzania and the Democratic Republic of Congo (DRC) are rapidly surpassing Kenya as the primary consumers of Ugandan goods, a shift poised to impact trade dynamics within the East African Community (EAC).
According to data from the Private Sector Foundation of Uganda (PSFU), Uganda’s exports to Tanzania and DRC have steadily risen, with Kenya and Rwanda facing economic pressures that may limit their purchasing power. This development, observed during a recent meeting between Ugandan and EAC business leaders, signals a potential realignment in the EAC’s trading patterns.
PSFU Chairman Humphrey Nzeyi highlighted that high inflation rates in Kenya and Rwanda are significant factors in Uganda’s shifting trade partnerships. In recent months, Uganda’s largest import source has been Tanzania, accounting for a significant 72.3 percent of all imports, while the DRC has solidified its position as the largest export destination. “This trend reflects Uganda’s growing reliance on Tanzania and the DRC, as Kenyan and Rwandan markets are constrained by inflation,” said Mr. Nzeyi.
Kenya’s inflation rate dropped to 3.6 percent in September, while Rwanda’s rate fell to 0.8 percent. This was driven largely by lower prices in food, non-alcoholic beverages, kerosene, and electricity. By contrast, Tanzania’s inflation remained stable, allowing it to maintain consistent purchasing power, bolstering imports from Uganda. According to the Uganda Bureau of Statistics, as of June 2024, Kenya was still Uganda’s primary export market within the EAC, generating revenues of $74.5 million and representing 10.4 percent of Uganda’s total exports. However, DRC followed closely behind, accounting for 8.6 percent of Uganda’s exports.
October 2024 marked a significant shift as Tanzania ramped up imports from Uganda, threatening to overtake Kenya as Uganda’s top trading partner in the EAC. This trend, experts believe, could reshape the traditional trade interactions between Uganda, Kenya, and the broader EAC region, potentially reducing the trade friction that has occasionally strained these partnerships.
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With Tanzania and the DRC emerging as major consumers of Ugandan products, Uganda’s trade portfolio is diversifying, allowing it to mitigate some economic risks associated with over-reliance on any one partner. The shift also reinforces Tanzania’s strategic role as a key trading partner, benefitting from stable inflation rates that keep its markets resilient and attractive for trade.
For Uganda, this realignment highlights the growing importance of building and sustaining trade relationships with emerging markets within the EAC. Moreover, as the regional economies continue to adapt to inflationary pressures, the positioning of Tanzania and the DRC as strong markets for Ugandan goods marks a notable pivot in East African trade dynamics, positioning Uganda as a flexible player capable of adjusting to economic changes in the region.
