After decades of being classified as a Least Developed Country (LDC), Uganda has now been given a green light by the United Nations (UN) to begin preparing for graduation into the developing country category, the Monitor has established.
Uganda has been part of the LDC group since 1971 after being classified as such by the UN until recently when the same body, whose work includes protecting human rights, delivering humanitarian aid, supporting sustainable development, and upholding international law, sanctioned the transition expected to be completed within the next three years.
According to the Ministry of Trade, Industry and Cooperatives, this transition is a result of meeting specific economic and development criteria and is already underway. Part of the perks that Uganda would benefit from as a result of being a developing country includes cashing in on preferential treatment, mainly through duty-free market access for goods, preferential access for services, and what the Ministry of Trade describes as “tailored technical assistance and capacity building” from developed and developing countries.
This publication has established that these international support measures are rooted in the World Trade Organization agreements, designed to help vulnerable economies integrate into the global trading system with a view to increase their participation in world trade.
The government is convinced that by graduating from the LDC category, the benefits will include economic progress, improved living standards, and increased investor confidence. Analysts, however, note the downside, including losing access to specific LDC support measures like preferential trade access and development aid, something technocrats at the Ministry of Trade and Ministry of Finance are aware of.
With the graduation from LDC to developing country category, Trade Minister Francis Mwebesa noted in a statement shared by the Ministry’s senior communications officer, Ms. Khadija Blessing Nakakande, that it translates to an improved national image of stability and development, leading to higher foreign investment and credit ratings. The focus now is towards managing the phased withdrawal of specialized support during the transition to becoming a fully developed economy, Mr. Mwebesa is quoted to have said in the statement.
Notification for graduation came in March 2024, when Uganda received a notification from the UN Committee for Development Policy that the country had fulfilled the criteria for graduation from the LDC category for the first time. Uganda, together with Rwanda and Tanzania, met the minimum two criteria for graduation, which include the human assets and the economic and environmental vulnerability indices.
Following the notification for graduation, the Monitor can reveal that Uganda is currently undergoing two assessments by the United Nations. One is expected to cover the impact of graduation on trade preferences and resilience amidst global trade dynamics, and the second assessment analyzes Uganda’s vulnerability on economic, social, and environmental aspects. This was corroborated by the Permanent Secretary at the Ministry of Trade, Industry, and Cooperatives, Ms Lynette Bagonza.
She said in a statement: “During the three years of assessment, Uganda has to keep its development trajectory without backtracking on the required parameters for graduation. As part of Uganda’s preparation for the transition and ultimate graduation, a National Workshop on Enhancing Trade Resilience in Preparation for Uganda’s Graduation from the LDC category was organized by the Ministry of Trade in partnership with the UN this month.”
The workshop brought together UN dignitaries, senior government officials, private sector leaders, development partners, research and civil society actors who discussed practical strategies for strengthening Uganda’s trade competitiveness and economic resilience. “Government has taken steps in enhancing the private sector competitiveness through the tenfold growth strategy, prioritizing value addition to agro-produce and manufactured products. In addition, resources are being allocated to the development of trade infrastructure among other interventions,” Ms. Bagonza said.
“We have a responsibility to prepare the private sector for this transition. Trade resilience is key to ensuring that Uganda not only meets the graduation criteria but thrives in the post-graduation environment,” she emphasized.
As an LDC, Uganda enjoys benefits from preferential trade arrangements with major developed economies like the European Union, who offer duty-free quota-free market access for all products from LDCs, except arms and ammunition. In the first half of Vision 2040, Uganda’s merchandise exports increased by nearly fivefold – 463 percent – with a 36 percent increase in FY 2024/25. Currently, Uganda’s total exports are valued at $10.6 billion or Shs 37.1 trillion.
Beyond the EU, Ugandans enjoy benefits from countries such as China and India. These schemes allow preferential access to a variety of goods from developing countries, typically without quantitative restrictions. “As an LDC, we have attracted trade financing under the Enhanced Integrated Framework (EIF) of the World Trade Organization (WTO), we receive funding to improve our productive capacities, trade infrastructures, and institutional support. We also enjoy preferential rates for our subscription fees to international organizations and logistical support to travel and attend technical meetings,” Ms. Bagonza said.
Trade and treaty negotiation specialists interviewed for this article revealed that Uganda’s graduation from LDC to a developing country means the country will forgo all the aforementioned benefits. Uganda will also lose out on access to certain concessional financing and travel assistance, lower contributions to UN budgets, WTO flexibilities for LDCs, among other benefits.
However, according to Trade Minister Francis Mwebesa, the focus should be on the bigger picture, saying that graduation offers unique prestige. “For a country to graduate from LDC is a symbol of progress, national pride, and international recognition. Graduation can change our investment climate and potential as a country and increase foreign direct investment as a result of improved perception,” Mr. Mwebesa said.
He continued: “The graduation comes with a momentum for policy reforms and stronger development planning to build the country’s resilience. Also, with Uganda becoming a developing country, the private sector will be able to attract partnerships with investors, access technology transfer, and improve their competitiveness in the global economy.”
When contacted, the Private Sector Foundation Uganda (PSFU) Coordinator for Trade, Transport, and Logistics, Mr. Collins Agaba, said they are excited about this development but worried about the preparedness of the private sector to absorb the shocks that will result from graduation. “The graduation is a good sign of growth. However, as a private sector, we are going to lose out on the benefits we have been enjoying while exporting to developed countries. Focus should now be turned on supporting Micro, Small, and Medium Enterprises through trade financing to cushion themselves from the shocks that will come with the changes,” he said.
If Uganda meets the criteria during the second UN assessment in 2027, it will be granted a transitional period of five years before the actual graduation is confirmed.