Assessment of the Influence of Macroeconomic Factors on the Export Values of Uganda’s Coffee on the International Market (1994-2017)
Abstract
The main purpose of this study was to establish the influence of macroeconomic factors on export value of coffee in Uganda from 1994-2017. It was driven by four specific objectives, that is, to examine the influence of inflation rate on export value of coffee in Uganda, to examine the effect of real interest rate on export value of Coffee (1994-2017), to establish the effect of real effective exchange rates on export value of Coffee, and to examine the effect of price on export value of coffee. Using time series data from the World Bank and Uganda coffee development authority, regression analysis was applied to investigate and build a model for explaining the variation in export value of coffee.
The results of the analysis indicate that the macroeconomic factors significantly affect the export volume of coffee in Uganda, (1994-2017). The significance of macroeconomic factors on export value of coffee is because the value of coffee exported is measured in monitory terms and the depreciation of macroeconomic factors can directly affect the value of coffee. Also, the export value is increased by processing, yet manufacturing id directly affected by macroeconomic factors. The analysis further revealed that the inflation rate and international coffee prices have a positive significant affect on the export value of coffee whereas interest rate and exchange rate do not have a significant effect on export value of coffee in Uganda. The study thus recommends that Ugandan government should establish policies on the level of quality of coffee to be produced from the farm level to the final level of processing in order to increase the standard of coffee exported since coffee is our main source of foreign exchange. The government should encourage dealers of coffee to process the coffee to powder form since it holds more value.. The government should also encourage production in new areas and expand acreage in traditional coffee areas. Improve the use of agro inputs in coffee production and processing of coffee beans and to put a standard on the coffee produced at farm level in order to increase the value of Uganda’s coffee on the international market. The research contributes that macroeconomic factors do not have statistical significance on export volume of coffee in Uganda and that macroeconomic factors have a statistical significance on export value of coffee in Uganda