Uganda has substantial natural resources, including fertile soils, regular rainfall, small deposits of copper, gold, and other minerals, and recently discovered oil. Agriculture is the most important sector of the economy, employing over two-thirds of the workforce. Coffee accounts for the bulk of export revenues.
Since 1986, the government – with the support of foreign countries and international agencies – has acted to rehabilitate and stabilize the economy by undertaking currency reform, raising producer prices on export crops, increasing prices of petroleum products, and improving civil service wages. The policy changes are especially aimed at dampening inflation and boosting production and export earnings. Since 1990 economic reforms ushered in an era of solid economic growth based on continued investment in infrastructure, improved incentives for production and exports, lower inflation, better domestic security, and the return of exiled Indian-Ugandan entrepreneurs.
The global economic downturn in 2008 hurt Uganda’s exports; however, Uganda’s GDP growth has largely recovered due to past reforms and sound management of the downturn. Oil revenues and taxes will become a larger source of government funding as oil comes on line in the next few years, although lower oil prices since 2014 and protracted negotiations and legal disputes between the Ugandan government and oil companies may prove a stumbling block to further exploration and development.
Uganda faces many challenges. Instability in South Sudan is a risk for the Ugandan economy because Uganda is a key destination for Sudanese refugees and South Sudan is Uganda’s main export partner. Unreliable power, high energy costs, inadequate transportation infrastructure, and corruption inhibit economic development and investor confidence. During 2014 to 2015, the Uganda shilling depreciated against the dollar, and this, coupled with increased public debt, has severely impeded production, especially since Uganda imports most of its capital goods.
Uganda was designated as AGOA Eligible Country on October 2nd 2000. Uganda has been declared eligible for Apparel Provision on October 23rd 2001 and benefits the Lesser Developed Country Special Rule for Apparel (3rd country fabric) and Lesser Developed Country Rule for Certain Textile Articles (Category 0). Regarding the Category 9 Textile Products, Uganda is not yet eligible to export Handloomed / Handmade, nor the folklore annex and ethnic printed fabrics.