State of logistics in Uganda

Ridelink Series

Written by Henry Senkungu on July 5, 2023

State of Logistics in Uganda

Logistics is all about planning and executing the efficient transportation and storage of goods from the point of production to the point of consumption. 

The goal of logistics is to meet customer requirements in a timely, cost-effective manner.The logistics sector plays a vital role in economic development and is crucial as the region aims to achieve economic development.

 

The East African Community (EAC), is a regional value chain (RVC) that provides opportunities to countries in the region to boost their competitiveness through the production and exportation of high-value-added products and is a crucial framework for promoting regional competitiveness, accelerating industrialization, diversification and deepening regional value chain development. 

East Africa recorded a robust economic recovery in 2021, but most countries are yet to achieve their pre-Covid growth levels and projected the region's GDP growth will moderate at 4% in 2022 before recovering to 4.7% thus far  in 2023,buoyed by the reopening of the economies.

EAC GDP growth compared across Other African countries

Table 1

 

Logistics and transport naturally feed each other and from the previous financial year, the government of Uganda allocated about 1 billion USD to construct, upgrade, maintain, and improve transport infrastructure and services. This included road, aviation, railway, and water transportation since these are the key stakeholders in the logistics industry, investment in transport infrastructure will drive the desire to increase the volume of goods that can be moved and significantly reduce transportation costs too.

Given the structure of Uganda’s economy, logistics are essential. Agriculture accounts for 42%, manufacturing accounts for 9% and mining stands at 6%(and set to grow with the discovery of oil) combined these sectors account for 57% of Uganda's GDP and these sectors require transportation of large quantities of freight of low to medium value.   

   A chart showing percentage Uganda's main exports as of the year 2023

 

Like all industries, logistics has its inefficiencies that need to be addressed for the industry to grow and achieve its potential, and as quoted by the CEO of Ridelink, a third-party e-logistics company in Uganda, Uganda loses up to about 890 million USD every year due to logistics inefficiencies.

Some of these are high rates of taxation, lack of skills in the sector, unpredictable and unreliable revenue generation, poor quality infrastructure, delays at weighbridges, congestion and lack of enforcement of regulations these majorly have cost Ugandan transport and logistics firms in providing high-quality and reliable services,comparing to Europe and USA it takes 1 day to cover 1000 km well as in Africa it takes 7 days, however the african market is there to tap into with over 44 million formal small businesses and spend a haulage of about 180 billion USD per year.

Ridelink aims at a solution where we aggregate trucks from multiple transporters through vetting and provide on demand availability through a simple mobile and web application with just a 15% commission on each completed trip and its is being welcomed with a 96% retention rate per month.

Amidst all these challenges, the future of logistics in Uganda is promising, as we advance towards a high-performing, middle-income economy, marked by the emergence of advanced manufacturing and service sectors, the logistics industry is set to undergo a commensurate evolution, adopting greater sophistication and efficiency.









 

Comments



Jenga- July 26, 2023, 3:13 p.m.
Great research work