Inside Museveni’s export ambitions through trade finance solutions

By Bagatagira Derrick Arinaitwe

Trade finance and export promotion are interconnected mechanisms that enable businesses to move goods across borders while mitigating risks and accessing new international markets. Together, they bridge the financial and operational gaps exporters face while selling globally.

Recently, President Yoweri Kaguta Museveni has, on several occasions, advocated not only for an expanded export portfolio but also for increased value addition to Uganda’s exports instead of exporting raw materials.

In May 2026, President Museveni criticized the continued export of raw minerals and agricultural products as a major economic setback, emphasizing that local value addition generates significantly higher revenue. In November 2025, his administration flagged off the first consignment of dried chilli exports to China as part of an agricultural export drive. Earlier, in March and December 2023, Museveni met the Presidential CEO Forum and the PACEID Committee, directing stakeholders to increase both the quantity and quality of exports across 13 key product categories.

His underlying intention is to grow export earnings in the spirit of improving household incomes and enhancing public service delivery through efficient utilization of export revenue.

Trade finance solutions can be used as an engine to elevate Uganda’s export ambitions. Before delving into possible solutions, let me first define trade finance in simple terms so that all stakeholders within this ecosystem can understand how to apply these concepts to their businesses.

Trade finance refers to financial instruments and products used to facilitate transactions between importers and exporters while fulfilling their contractual obligations. It streamlines international trade by overcoming cross-border business risks, allowing better control of cash flow and providing working capital.

Trade finance also synchronizes global trade by facilitating smooth transactions, providing working capital to importers and exporters, and expanding market access.

Among the major trade finance instruments that promote exports are export letters of credit, standby letters of credit, post-shipment financing, invoice discounting, warehouse financing, collateral-free trade working capital, performance guarantees, advance payment guarantees, retention guarantees, export credit insurance, goods-in-transit insurance and currency hedging.

I will briefly explain the importance of these instruments in promoting export business.

Export letters of credit and guarantees mitigate the risk of non-payment and build trust between importers and exporters by transferring the payment obligation from the buyer to a financial institution.

For example, members of the Uganda Grain Traders Association supplied large quantities of goods to the Government of South Sudan and local partners before and during the South Sudan civil conflict. Claims are estimated in the tens of millions of dollars, originally exceeding US$56 million, with significant amounts still outstanding despite partial payments.

The Ministry of Finance has maintained that affected traders should continue negotiations with the Government of South Sudan over unverified or outstanding claims.

Export promotion depends on a synchronized network of government agencies, private enterprises and trade organizations working together to help domestic businesses successfully access international markets. This involves overcoming barriers such as inadequate market information, weak infrastructure and limited access to capital.

All stakeholders in the export value chain should regularly engage under one platform to agree on flexible, favourable and risk-free payment terms while ensuring quality standards with international buyers to avoid similar losses.

Letters of credit also reduce the risk of exporting poor-quality goods by ensuring payment is only released after the seller satisfies agreed shipping and quality requirements, including certificates of conformity or quality certification issued by independent inspection agencies.

A notable example occurred in March 2021, when Kenya banned imports of Ugandan maize after authorities detected high levels of aflatoxins, making the grain unsafe for consumption.

Export letters of credit also improve cash flow by replacing the buyer’s payment risk with a bank’s guarantee, allowing exporters to plan working capital more predictably while securing financing before or after shipment.

Post-shipment financing enables exporters to receive immediate cash advances, often up to 80 percent, after dispatching goods instead of waiting months for buyers to pay. When combined with a Letter of Credit, it provides a secure bridge between shipment and final payment.

Warehouse financing and invoice discounting similarly convert stored inventory into immediate working capital, allowing exporters to fulfil large orders without waiting for buyers to complete payment.

Collateral-free working capital injects liquidity into export businesses without requiring physical security such as land or buildings. This enables exporters to purchase raw materials, pay suppliers, meet payroll obligations and offer more competitive payment terms to overseas buyers.

In Uganda, access to working capital remains one of the biggest constraints facing exporters.

Government should therefore consider establishing patient capital dedicated specifically to export promotion while reviewing the current eligibility criteria for accessing export financing through institutions such as Uganda Development Bank, Pearl Bank and Stanbic Bank to make such facilities more accessible.

Such reforms would allow exporters to finance larger international contracts without being constrained by limited physical assets.

Collateral-free working capital also facilitates the acquisition of standby letters of credit for bid bonds, performance bonds and advance payment guarantees.

Financial institutions such as Stanbic Bank, Absa Bank Uganda, Centenary Bank, Euro Exim Bank and Equity Bank already offer unsecured trade finance products that support export businesses.

For example, India’s Collateral Support for Export Credit Scheme, implemented through CGTMSE, guarantees up to 85 percent of working capital loans for micro and small exporters and 65 percent for medium-sized exporters.

Ugandan exporters also face considerable foreign exchange risk arising from fluctuations between the Uganda Shilling and the US Dollar.

Currency hedging provides financial protection against these exchange rate movements through instruments such as forward contracts and options, helping exporters preserve profit margins.

Another challenge is the understaffing and operational inefficiencies affecting Uganda’s diplomatic trade desks.

Budget constraints have limited recruitment of trained commercial attachés, while many ambassadorial appointments continue to prioritize political considerations over commercial expertise.

Government should therefore strengthen Uganda’s foreign trade missions by recruiting qualified trade and investment specialists capable of actively promoting exports abroad.

Export credit insurance remains another critical instrument because it protects exporters against buyer default, insolvency and political risks such as war or currency restrictions.

Government, working together with the Uganda Bankers Association, has already begun developing a Shs1.8 trillion Export Insurance Guarantee Fund, an initiative that significantly reduces risks faced by exporters.

While this is commendable, Government should consider increasing the fund to adequately cover high-value export sectors such as mineral fuels, precious metals, pharmaceuticals, chemicals and dairy products.

Goods-in-transit and marine cargo insurance further strengthen Uganda’s export competitiveness by protecting shipments against theft, damage and loss while ensuring compliance with international trade contracts and boosting buyer confidence.

Stakeholders should also intensify sensitization on digital trade platforms to improve regional and global competitiveness.

Initiatives spearheaded by the East African Business Council and Sustainable Business for Uganda (SB4U) are already equipping small businesses with digital commerce skills and payment technologies.

Institutions such as Ecobank, operating across 34 African countries, demonstrate how integrated digital banking systems can facilitate continental trade.

Platforms including Ecobank Omni, Rapidtransfer and RapidCollect simplify cross-border payments, improve liquidity and reduce transaction costs, thereby strengthening intra-African trade.

Uganda should also maximize opportunities available through the East African Community (EAC), the Common Market for Eastern and Southern Africa (COMESA) and the African Continental Free Trade Area (AfCFTA), which collectively provide duty-free and visa-free access to hundreds of millions of consumers.

Uganda’s transition into a globally competitive economy depends on building a robust export base. Achieving upper-middle-income status requires prioritizing targeted trade financing alongside domestic value addition to bridge existing market gaps and drive sustainable wealth creation.

The author is a Trade Finance Specialist and Consultant Tel: 0705 771171 / Email: [email protected]

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