TRADE LOGISTICS PERFORMANCE IN UGANDA

1. Introduction

Globalization has significantly increased the demand for logistics services by expanding international trade and production networks, as well as strengthening national production capacities (Song & Lee, 2022). Logistics performance reflects the efficiency with which goods move across global supply chains, and the components of the Logistics Performance Index (LPI) are critical indicators of international trade facilitation (World Bank, 2023). While many countries prioritize trade facilitation to stimulate economic growth, international competitiveness largely depends on the ability to efficiently manage logistics systems in order to minimize delivery time and associated costs (Shikur, 2022; World Bank, 2023).

According to the World Bank’s 2023 LPI, South Africa ranked as the top-performing country in Africa with a score of 3.70 (World Bank, 2023). In contrast, Uganda ranked 102nd out of 139 countries in 2018, with an LPI score of 2.58, indicating relatively weak logistics performance (Monitor, 2023; World Bank, 2020, 2023). This disparity highlights significant variations in logistics readiness across African countries. Moreover, Uganda’s LPI has shown a declining trend since 2012 and remains below the Sub-Saharan African average, as illustrated in Appendix 1.

A comparison of Uganda’s LPI components with those of the Sub-Saharan African region in 2018 shows that Uganda performed below the regional average across nearly all dimensions, although scores for customs and international shipments were relatively similar. However, both Uganda and the region lag significantly behind developed economies.

Intra-African trade remains relatively low, accounting for 14.9% (approximately $192.2 million) in 2023 (NPA, 2025). The Fourth National Development Plan (NDP IV) identifies opportunities to expand intra-African trade driven by population growth, reduction of trade barriers, improvements in cross-border transport infrastructure, and expanding regional economies within the East African Community (EAC) and the African Continental Free Trade Area (AfCFTA). The plan prioritizes these regional markets as key avenues for value addition (NPA, 2025). Enhancing logistics performance has the potential to significantly boost trade flows, with estimates suggesting that improved trade facilitation could increase trade volumes by more than 10% (United Nations, 2025; Wassie et al., 2025; Yangailo, 2024).

2. Theoretical Framework: Transaction Cost Theory

This study is guided by Transaction Cost Theory (TCT), developed by Williamson in the 1970s. The theory considers transactions as the fundamental unit of analysis and focuses on the costs and efforts involved in facilitating exchanges between parties (Williamson, 1979; 1981). It conceptualizes firms as systems of contracts designed to organize and regulate economic transactions efficiently. Transaction costs refer to all expenses incurred beyond the price of a product or service, including search costs, bargaining costs, and enforcement costs.

TCT aims to identify governance structures that minimize transaction costs and maximize efficiency. It is based on several key assumptions: bounded rationality (individuals have limited decision-making capacity), opportunism (actors may pursue self-interest at the expense of others), asset specificity (some assets are tailored for specific uses), and transaction frequency (which varies from occasional to recurrent interactions).

Despite its relevance, TCT has been criticized for its limited ability to explain how opportunism can be mitigated through alternative governance mechanisms and for its narrow view of human behavior as inherently self-interested. It also assumes imperfect information about past, present, and future conditions. Furthermore, in cases where transactions are infrequent, alternative governance structures may not be practical.

Nonetheless, TCT remains useful in explaining the organization of economic activities, particularly in areas such as supply chain management, outsourcing decisions, and institutional coordination.

3. Problem Statement

The Government of Uganda has undertaken various initiatives to promote regional trade, including the development of road infrastructure, establishment of one-stop border posts, rehabilitation of the Meter Gauge Railway, and acquisition of modern locomotives. These efforts aim to improve transport efficiency, reliability, and the movement of both goods and passengers.

Despite these interventions, Uganda’s logistics performance remains relatively poor. The country recorded an LPI score of 2.58 compared to the Sub-Saharan African average of 2.89 (World Bank, 2020), ranking 102nd globally. The logistics system is characterized by persistent challenges such as delays in customs clearance, limited tracking and tracing capabilities, fragmented border operations, and high logistics costs (World Bank, 2020). Shipment traceability scores remain below 2.50, while complex clearance procedures contribute to longer lead times and reduced predictability (Monitor, 2023).

These inefficiencies result in prolonged transport times, elevated transaction costs, increased vulnerability to disruptions, and reduced competitiveness of Ugandan exports (Ssennyonjo et al., 2022). Although digital systems, improved border management, and multimodal transport infrastructure have been identified as key drivers of logistics performance (Gideon et al., 2024; Samieva, 2025; Shepherd et al., 2011; TradeMark Africa, 2024; Wassie et al., 2025), their impact in Uganda remains limited due to weak implementation, poor inter-agency coordination, and restrictive regulatory frameworks.

Existing studies tend to examine these factors in isolation and provide limited empirical evidence on the role of inter-agency coordination in influencing logistics performance. Consequently, the determinants of trade logistics performance in Uganda remain insufficiently explored. This study therefore seeks to examine the effects of trade facilitation practices, multimodal connectivity, and digital visibility on logistics performance, with particular focus on the mediating role of inter-agency coordination.

4. Objectives of the Study

General Objective

To examine the influence of trade facilitation practices, multimodal connectivity, and digital visibility on inter-agency coordination and trade logistics performance in Uganda.

Specific Objectives

• To assess the influence of trade facilitation practices on trade logistics performance.
• To investigate the effect of multimodal connectivity on trade logistics performance.
• To examine the role of digital visibility, particularly tracking and data sharing, on trade logistics performance.
• To evaluate the mediating role of inter-agency coordination in the relationship between trade facilitation practices, multimodal connectivity, digital visibility, and logistics performance.

5. Conceptual Framework

The conceptual framework illustrates the relationships between trade facilitation practices, multimodal connectivity, digital visibility, and trade logistics performance. Trade logistics performance is the dependent variable and is measured using indicators such as delivery cost, timeliness, reliability, and transit time.

The independent variables include trade facilitation practices, multimodal connectivity, and digital visibility. Inter-agency coordination serves as a mediating variable, while regulatory quality and enforcement act as moderating factors influencing these relationships.

This framework highlights how improvements in logistics systems, supported by effective institutional coordination and regulatory environments, can enhance trade performance outcomes.