Adam Mugume, the executive Director of Research Bank of Uganda says increasing the export of goods and services is Uganda’s sure remedy to the depreciating shilling.
Mugume says increased local production and exports would reduce imports hence making the country save the much needed foreign exchange.
Mugume’s prescription comes against the backdrop of a depreciating shilling now trading at close to 3,000 shillings against the dollar.
Uganda’s trade deficit now stands at 1.7 billion dollars or five trillion shillings with no signs of reducing as exports dwindle and the country increasingly relies on imports.
This has the potential of triggering inflationary pressures resulting into higher prices for basic goods and services.
According to Mugume, the central bank can implement the best monetary policy but if the country doesn’t develop strategies of increasing exports the shilling will continue to be volatile.
Mugume says a key strategy is for the government to reexamine the micro-structures of the local factories and business and devise ways of making them competitive both locally and externally.
He adds that Rwanda is already using that strategy to boosts its exports.
Speaking in an earlier interview, Stephen Kaboyo of Alpha Capital Partners, said for Uganda to clean up the mess, including rethinking its trade policies, if it is to reduce the trade deficit.
Responding to the concerns, Khadija Nakakande, the publicist in the ministry of trade, industry and cooperatives, says the government has been working on a number of trade protocols geared towards expanding markets for the country’s goods and services.
Nakakande cites the Economic Partnership Agreement with the European Union, an agreement with the World Trade Organisation and opening up of the East African Common Market as key strategies aimed at boosting exports.
According to the trade ministry, through the Quality Infrastructure and Standards Programme, has put a lot of emphasis on improvement of quality and standards of locally produced goods so that they are competitive as well as value addition of agricultural produce at village level.
She says if well implemented Uganda will soon be able to boost local production and exports which would in turn reduce the trade deficit.