On 1 April 2026, the Ministry of Finance tabled the External Trade (Amendment) Bill, 2026 before Parliament. If passed, the proposed changes will take effect on 1 July 2026 and will significantly influence Uganda’s import landscape, balancing public welfare objectives with economic protectionism.
External trade taxes and levies have long been used as tools to control imports, raise revenue, and protect local industries. Under the current framework, imported goods are subject to charges such as the infrastructure levy and import declaration fees, which contribute to government revenue but also increase the cost of imported goods.
Historically, these levies have applied broadly across goods, including essential items such as medical supplies. At the same time, Uganda has maintained relatively low restrictions on second-hand goods, particularly clothing, making them widely accessible to low-income households.
The Ministry now proposes a dual policy shift.
On one hand, the Bill seeks to remove the infrastructure levy and import declaration fees on critical goods, including vaccines, medicines, medical supplies, pesticides, rodenticides, and insecticides. This is a targeted intervention aimed at reducing the cost of healthcare and supporting agriculture.
From a public policy perspective, this is a significant move. Lowering the cost of medical imports has the potential to improve access to healthcare services, reduce treatment costs, and strengthen Uganda’s public health system. Similarly, reducing costs for agricultural inputs can support productivity and food security.
On the other hand, the Bill introduces a 30% environmental levy on imported second-hand clothing and worn articles. This is one of the most notable and potentially controversial proposals.
Second-hand clothing, commonly known as “mitumba,” plays a critical role in Uganda’s informal economy. It provides affordable clothing to millions of Ugandans and supports a large number of small traders.
The introduction of a 30% levy is intended to achieve multiple objectives:
- Protect local textile and garment industries
- Reduce environmental waste associated with imported used clothing
- Encourage domestic production and consumption
However, if passed, the immediate impact will likely be an increase in the price of second-hand clothing, affecting affordability for low-income households.
For traders in the mitumba business, this could reduce demand and profitability, potentially leading to job losses in the informal sector.
At the same time, local manufacturers may benefit from reduced competition, creating opportunities for growth in Uganda’s textile industry. However, this will depend on whether local production can meet demand in terms of price, quality, and variety.
From a broader economic perspective, the Bill reflects a shift toward strategic trade policy, using taxes not just for revenue, but also to influence economic behavior and industrial development.
If passed, the External Trade (Amendment) Bill will create a mixed-impact landscape. Healthcare and agriculture will benefit from reduced costs, while the clothing sector will face increased pressure.
Ultimately, the success of these reforms will depend on how quickly local industries can respond and whether the benefits of protectionism outweigh the immediate costs to consumers.