Uganda is poised to benefit substantially from the African Continental Free Trade Agreement as it strengthens its focus on export-led growth, according to a new report by the Economic Policy Research Centre.
Titled African Continental Free Trade Area: Potential Benefits for Uganda, the report outlines how the trade agreement could unlock broad economic opportunities through enhanced trade flows, increased foreign direct investment, and deeper integration into regional and global value chains.
“The African Continental Free Trade Agreement provides immense opportunities for Uganda to achieve its export-oriented growth strategy,” the report states.
“The more immense market opportunities will trigger more trade and investment and allow greater value addition, export diversification, and productivity growth, leading to better quality jobs and greater social inclusion.”
The agreement expands access to a continental market and facilitates foreign direct investment inflows. Citing research by Echandi and colleagues (2022), the report explains that the trade framework strengthens Uganda’s capacity to attract capital, technology, and expertise while enabling local firms to establish international business linkages and access wider markets.
According to the Economic Policy Research Centre, investment flows linked to the agreement are expected not only to create jobs but also to improve the competitiveness of firms and build local capacity.
Transparent and enforceable trade rules will also enhance predictability in regulatory systems, attracting more cross-border investment.
The report highlights the agreement’s potential to support industrialisation, noting that the framework can stimulate economic diversification, regional value chain development, and structural transformation.
In particular, Uganda is expected to benefit from increased intra-African trade in five key sectors: business services, communication, finance, transport, and tourism.
The free movement of people under the agreement is also expected to revitalise Uganda’s tourism sector, a vital source of foreign exchange.
“Uganda has a reasonable capacity to offer different products: culture and heritage sites, religious events, education and sports, meetings and conferences, specialised health care services, plus nature and wildlife,” the report notes.
The World Bank has projected that eliminating tariffs and non-tariff barriers through the agreement could raise real incomes in Africa by 8 percent by 2035.
This growth would be driven in part by the creation of a unified market of 1.3 billion people with a combined gross domestic product of 3.4 trillion US dollars.
The report identifies several high-growth sectors in Uganda likely to benefit from increased trade and investment, including textiles and apparel, chemicals, rubber and plastic products, and processed foods.
It also anticipates reduced trade costs that will favour the export of transport services, wood and paper products, petroleum, and coal products.
Capital-intensive industries such as energy-intensive manufacturing, fossil fuels, and communication services are expected to attract significant investment, leading to job creation and expanded output.
“The increase in foreign direct investment will lead to a more significant expansion of the output of construction, energy-intensive manufacturing, communication services, and insurance services,” the report adds.
The Economic Policy Research Centre concludes that the agreement will likely spur further growth in the service economy, especially in air transport and hospitality, potentially accelerating inclusive development and employment opportunities.
With Uganda deepening its commitment to regional integration, the agreement is shaping up as a key driver of the country’s economic transformation.