Easing the burden of Covid-19 in Uganda: Lowering food prices by reducing tariffs

Policy brief COVID-19

  • This note explores a measure to ease economic pressure from COVID-19 in Uganda: the elimination of high import tariffs on four important agricultural products, namely rice, vegetable oil, sugar and wheat/wheat flour.
  • Using a dataset on household income derived from as well as expenditure on agricultural products, the researcher estimates that eliminating tariffs on these four items would increase average real household income by up to 1.3 percent. Taking into account imperfect price pass-through of tariff cuts, this figure translates into economy wide gains of around $59 million per year in the form of higher household incomes.
  • These gains from liberalisation stand against fiscal losses of around $17 million per year from duty revenues foregone that could be offset with higher tariffs on goods that are predominantly consumed by wealthy Ugandans.
  • In light of these results, Uganda could consider implementing zero tariffs on rice, vegetable oil, sugar and wheat/wheat flour through Stays of Application from the Common External Tariff of the East African Community.