Positioned at the heart of East Africa, Uganda shares borders with five countries—DRC, Tanzania, Kenya, Rwanda, and South Sudan. Its geographical location and central positioning make it a natural hub for manufacturing and commerce. With each visit to Uganda and extended travels through the country, I am consistently impressed by its visible strides in commercial and industrial development.
Growing Industrial Hubs
During a recent business trip to Uganda, I spent considerable time in areas beyond Kampala, the capital. The industrial growth in towns like Jinja and Mbale, located near the Kenyan border, stood out. These cities’ proximity to Kenya, Uganda’s primary trading partner, fosters strong trade links between the two countries. Annually, trade between Kenya and Uganda amounts to approximately $1 billion, with Kenya exporting $700 million worth of goods to Uganda and Uganda exporting $300 million to Kenya.
In addition to Kenya, Uganda enjoys robust trade relationships with other neighboring countries, supported by its strategic location and its membership in the East African Community (EAC).
The Role of the East African Community
The East African Community has been instrumental in fostering regional integration among its member states, which include Uganda, Kenya, Rwanda, DRC, Burundi, Somalia, South Sudan, and Tanzania. This integration is designed to encourage collaboration across economic, social, and political dimensions, presenting numerous growth opportunities. Uganda has leveraged its central location within the EAC to maximise these benefits, solidifying its role as a regional trade hub.
Financial growth and trade expansion
EAC integration has eliminated many trade barriers, making it easier for member states to exchange goods and services. This expanded access to a larger consumer base creates significant opportunities for businesses to thrive in an environment that prioritises regional economic collaboration. A unified market attracts foreign investment and enhances global competitiveness.
Infrastructure development
Regional integration encourages joint efforts to develop critical infrastructure, including transportation networks, energy grids, and communication technologies. Enhanced infrastructure not only facilitates the movement of goods but also fosters stronger connections among member states, promoting tourism and cultural exchange. These improvements create a seamless trade environment that supports sustained economic progress.
Workforce development
A unified East Africa creates a larger labor market with more employment opportunities for the region’s growing population. Collaborative education and skills development programs ensure that workers are prepared to meet the demands of a dynamic global economy. The region’s shared use of Swahili also aids cross-border cooperation, further strengthening economic ties.
Uganda’s trade relationships
Uganda’s political stability and economic reliability have enabled it to become a dominant trading partner in the region. For instance, Uganda plays a significant role in South Sudan’s economy, with annual trade between the two countries estimated at $500 million, 95 percent of which represents Ugandan exports. Interestingly, Eritrean entrepreneurs in Uganda manage a large share of this trade.
After Kenya, Tanzania is Uganda’s second-largest trading partner, with annual trade valued at approximately $400 million. About 30 percent of this trade involves Ugandan exports to Tanzania, especially in the northern regions. During a business trip to Mwanza, Tanzania, I noticed a significant presence of Ugandan products in the local market.
The Democratic Republic of Congo (DRC) is another key partner, despite current trade figures being modest. Uganda exports a wide range of goods to cities in northeastern DRC, including Beni, Butembo, Bukavu, and Kisangani. Given the escalating tensions between Rwanda and the DRC, Uganda is well-positioned to deepen its trade ties with the DRC.
A promising future
Uganda’s strategic location, growing industrial capacity, and active participation in the East African Community position it as a potential trade center for the region. While challenges remain, the country’s ability to adapt to regional opportunities and forge strong trade relationships suggests a promising trajectory toward becoming a key economic player in East Africa.
