Analysis of the Trends of Tea Exports in Uganda (2007-2016)

Abstract

There have been efforts by the government of Uganda to increase the volume of exports through various strategies which include tax incentives, widening of the export market, and removal of price controls among others. However, with these policies being implemented, the level of Uganda’s tea exports still remains very low on the international market. It’s for this reason that the main aim of this study was to carry out analysis of the trends of tea exports in Uganda (2007-2016) and specific objectives were to establish the existing trends of Uganda’s tea exports; fit an Auto Regressive Integrated Moving Average (ARIMA) model of tea exports and forecast the tea exports for 2017.Secondary data obtained from the Uganda Bureau of Statistics was used to analyze the trends of tea exports with the aid of the ARIMA model commonly known as the Box-Jenkins methodology. It involved determination of the distribution, fitting an appropriate model and forecasting the series. A model (3, 0, 1) was generated and proven through the diagnostic tests based on its potentials for prediction and computational requirements. The results indicated that the volume of tea exports had a positive trend which is good indicator of an increase in the country’s tea exports. However, significant declines in tea exports were observed between 2011 and 2013 which were attributed to unfavorable seasonal factors and natural calamities like floods. These declines in tea exports results into reduction in Uganda’s foreign earnings. The forecast values however showed a positive trend in the volume of tea exports for the year 2017 which is a good indicator for an increase in the country’s tea exports. However, it’s recommended that the government of Uganda should investment more in the export sector since agriculture is the backbone of Uganda. Investment in tea exports improves on the country’s balance of payment position hence economic growth.