Uganda’s Export Revenues Under Pressure as Border Smuggling Surges
Rising informal cross-border trade with Kenya is costing Uganda millions in lost revenue, prompting calls for stronger enforcement and regional coordination.
Economy | Trade | Regional
Tags: #Uganda #Trade #Economy #EastAfrica #Exports #BorderTrade
📉 Uganda’s Export Slump
Uganda’s export revenues have come under renewed pressure amid surging informal trade across its borders, particularly with Kenya. According to new data cited by The East African, formal export earnings have dipped over the past year, with up to 30 percent of goods traded outside official customs channels.
Key export commodities such as maize, sugar, coffee, and cooking oil are being sold informally through porous border points like Lwakhakha, Busia, and Malaba, often to evade taxes and trade documentation.
The Bank of Uganda’s mid-year report attributes part of the slowdown in export receipts to “high levels of unrecorded trade, under-invoicing, and smuggling,” especially along the Kenya–Uganda frontier.
🚧 The Scale of Informal Trade
At the bustling Lwakhakha border post in eastern Uganda, traders move goods daily across the Sironko River using makeshift footbridges and motorbikes. A single day’s flow can reach several tons of food and household items — none of which appear in official statistics.
Small-scale trader Sarah Nakayima, interviewed by local radio in Mbale, admitted the practice is widespread:
“We cross to sell maize and buy soap or clothes. The paperwork takes too long. We can’t afford delays, so we use the footpath.”
Economists say this growing informal trade undermines Uganda’s efforts to boost formal exports and expand tax revenue.
⚖ The Policy Challenge
The Ministry of Trade acknowledges the issue but faces difficulty enforcing regulations in remote border areas. Permanent Secretary Geraldine Ssali recently told reporters:
“We are losing millions of dollars each year to informal trade. However, we must balance enforcement with livelihoods because thousands depend on these small transactions.”
Uganda Revenue Authority (URA) data shows that informal exports may account for as much as 40 percent of trade activity in some districts. The agency has increased deployment of scanners and patrols but struggles with limited manpower and corruption at border points.
🌍 Regional Implications
The problem is not unique to Uganda. Kenya, Tanzania, and Rwanda face similar challenges, where informal trade fuels local economies but distorts national statistics and reduces customs revenue.
For Uganda, the issue is magnified because informal trade distorts foreign exchange earnings. Lower formal exports weaken the shilling and complicate monetary policy, particularly when global commodity prices fluctuate.
Economist Michael Byaruhanga explains:
“When 30 or 40 percent of exports go unrecorded, the central bank can’t accurately plan foreign reserves or forecast inflation. It’s a silent leak in the economy.”
🚀 The Way Forward
Experts recommend simplifying customs procedures, expanding One Stop Border Posts (OSBPs), and investing in digital trade systems. Reducing bureaucracy, they argue, could encourage traders to go formal.
Additionally, improving infrastructure — such as the upcoming Kenya–Uganda expressway project — could streamline logistics, cut transport costs, and reduce the incentive for informal routes.
Trade analyst Naomi Turyasingura suggests that more community engagement is key:
“Instead of criminalising every small trader, authorities should integrate them into formal systems through cooperatives and border markets.”
💬 Social Impact
Many small traders involved in informal trade are women. In border towns like Busia, over 60 percent of informal cross-border traders are female, according to the Uganda Women Entrepreneurs Association. These women often face harassment, lack access to finance, and are excluded from formal export programs.
Integrating gender-sensitive policies into trade facilitation is therefore critical. Simplified trade regimes, micro-credit access, and cross-border cooperative programs have proven effective in Rwanda and could be replicated in Uganda.
📈 Outlook
The government has pledged to expand trade facilitation zones and implement new digital tracking systems by mid-2026. If successful, analysts expect Uganda’s formal export revenue to rebound, strengthening its balance of payments and boosting GDP growth.
