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Doing business in Uganda

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Uganda is a landlocked independent republic with a democratic government. It lies between the Democratic Republic of Congo (formerly Zaire), Sudan and Kenya and forms part of the East African Region. It also shares a border with Rwanda. The capital city is Kampala and other major towns are Jinja, Mbale, and Masaka. Uganda has a year-round agricultural season and a location in the centre of a regional trading network. The official language is English but Swahili is widely spoken. The local currency is the Ugandan shilling.

In 2009 Uganda’s GDP was $14.5bn. The UK is Uganda’s largest Foreign Direct Investor with investments worth $1.1bn.

Uganda’s GDP has grown by more than 6% on average for the last decade, and by 7.4% in the 2008/9 financial year.

Major investments were made in mobile communications, petroleum exploration, banking, construction, agro-processing and manufacturing.

Strengths of the market

  1. Stable, liberalised economy
  2. Strong Natural Resource Base
  3. Government commitment to private sector
  4. Low-cost and trainable workforce
  5. Investment Incentives and security with total repatriation of profits
  6. Re-export Support Schemes

 

Opportunities in Uganda

With new stability in Southern Sudan and demand increasing in the DRC and Rwanda, Uganda has seen its regional trade grow strongly.

Uganda’s traditional agricultural exports continue to present opportunities. Coffee, tea and cotton, Uganda’s largest exports have increased both by quantity and value over the past several years. Non traditional goods such as fish, flowers and vanilla now account for significant shares of Uganda’s Exports. Uganda’s agricultural potential and untapped mineral resources have also attracted foreign investment.

The banking industry has also seen strong growth recently. Financial services are becoming more efficient with the presence of major banks and an increasing number of new commercial banks.

Opportunities by Sector:

Oil & Gas: New but fast growing – commercial viability of reserves is confirmed and reserves are estimated at 2bn barrels. Production will begin in late 2010 or early 2011 with an early production scheme of 3000 – 5000 bpd, building up to 150,000 bpd in 5 – 10 years. The government is in talks to build a refinery and pipeline to the Indian Ocean coast. Important opportunities lie in both upstream and downstream activities including exploration, refinery, engineering consultancy and services, construction and civil works and training

Non Oil & Gas Energy: Comprising of hydro-electric power, new and renewable energy sources. Important areas are the design and construction of hydro electric power stations, consultancy and engineering, and generators

Education: The education sector has undergone rapid transformation from government funding to private investment. With this development Uganda is becoming a regional hub for education

and knowledge ranks as the best in the region (UNDP Education Index). Important opportunities lie in setting up institutions, construction, educational materials, security printing of certificates and ICT.

Health: The government spends 7.4% of GDP on health and works closely with international organisations and donor agencies to ensure the development of the health sector. A Ugandan company as now been certified by the WHO to produce HIV and malaria drugs. Important opportunities lie in supply of medical equipment and consumables, production of drugs, consultancy services, building of private hospitals, provision of e-health services and other related opportunities.

Foods – processed and foods processing/packing: Agricultural processing is growing and there are investment opportunities in processing and packaging coffee, edible oils, tropical fruits, fruit juices and non traditional crops. Sales opportunities exist for food processing equipment, storage facilities, chemicals and additives, preservatives, canning, bottling and other packaging equipment and related materials.

Infrastructure: There is a pressing need for road and power improvements and international financial institutions are interested in these projects. Also with an estimated 300,000 housing units needed per year, commercial construction and residential construction are growing. Products to consider include; infrastructure design, construction and operation – particularly energy related, environmental consultancy and analysis, architecture, construction equipment, generators and transformers.

Telecommunications: The telecommunications sector boasts five internationally owned operators. Important products to consider include; cellular telephone systems, data transmission equipment, fibre optic equipment, truncated mobile phone systems and paging systems, switchers and routers, wireless access equipment, voice over internet telephony, VSAT; computers and peripherals.

Travel/ tourism services: The tourism sector is growing at 20%. Uganda boasts several national parks, for game and gorilla watching. There are opportunities for tourism management, travel agencies, hotel design, construction and management.

Light Manufacturing: Manufacturing has increased significantly in Uganda over the past 5 years with a focus on exports to regional markets of products such as plastic goods and consumer products. Important opportunities exist in cosmetics, used clothing, footwear and beverages.

Mining: Uganda is endowed with a diversity of geological formations and structures. Mining activities may offer good investment opportunities for experienced firms. Important products to consider are mining equipment, power generation equipment, civil engineering services, pumps, valves and related materials.

Fisheries: Uganda has stocks of Nile perch and tilapia which is locally processed and exported. However, the industry has been hit by diminishing sources of fish in Lake Victoria. Important products to consider are fishing equipment, processing equipment, materials related to construction and operation of fish processing facilities and chemicals used for value added fish products.

Agriculture: Uganda’s land is considered among the best in Africa, with low temperatures and two seasons of good rainfall for the Southern half of the country. Important products to consider are processing equipment, bio fuels, fruit and vegetable processing, edible oil production, staple food crops processing, flowers, livestock and food products.

 

Trade between the UK and Uganda

Bilateral trade between the UK and Uganda in 2009 was: UK exports to Uganda £50m (goods) and £59m (services) while imports were at £12m (goods) and £42m (services).

Bilateral trade in goods: (£ million)

2005

2006

2007

2008

2009

UK Exports

37

39

47

50

50

UK Imports

12

13

16

19

12

Balance

25

26

31

31

38

Source: HMRC

Bilateral trade in services: (£ million)

2005

2006

2007

2008

2009

UK Exports

41

33

36

52

59

UK Imports

33

39

31

25

42

Balance

8

-6

5

27

17

Source: ONS UK Balance of Payments

Top exports of goods from the UK to Uganda in 2009 are:

  • Specialized machinery £6m
  • Road Vehicles £6m
  • General Industrial Machinery £5m
  • Power generating Machinery £4m
  • Miscellaneous manufactured articles £4m

Top imports of goods to UK from Uganda in 2009 are:

  • Vegetables and fruit £4m
  • Electrical Machinery £3m
  • Coffee, tea & Spices £1m

Politics and the Economy Economic:

Uganda is one of the fastest growing economies in Africa, with GDP growth averaging 6% per annum over the past decade. The World Economic Forum ranked Uganda 4.5 (on a 7-point scale) in macroeconomic performance, well above the average of Sub-Saharan Africa (average rank 3.7).

In recent years agriculture hás played a decreasing role in the economy with industry increasing, to the current 22% and 29% respectively. Services accounts for 49% of GDP. Agriculture employs 80% of the population. Government policy promotes and supports private sector-led development.

The main industry sectors in the country are agro-processing oriented, made up mostly of fish processing, sugar, tea, cooking oil, dairy processing, breweries and soft drinks. The manufacturing of textiles, paper products and tobacco also takes place.

With the discovery of commercially viable quantities of oil and their subsequent development, the oil and gas sector is expected to become a leading driving force for economic development both through direct revenue and spill-over effects. Oil production in Uganda is expected in late 2010/ early 2011.

Growing impact of East African regional integration:

The East African Community comprises a market of over 130m consumers and total GDP of $40bn. Intra community tariffs are gradually being reduced:

  1. Common external Tariff on all goods imported into the region.
  2. Zero duty on most goods originating and traded within East Africa.
  3. Zero duty on most capital goods, agricultural inputs, medicines and medical equipment, raw materials and chemicals.
  4. Tax incentives for producers of goods for exports through various export schemes covering export processing zones, manufacturing under bond, duty drawback for manufacturers of goods for export, inward processing.

Uganda’s socioeconomic profile:

  • Population: 31m (2009)
  • Population growth rate: 3.3%
  • GDP per capita: $453

Political:

Uganda is a democratic presidential republic. It is a multi-party parliamentary system with universal suffrage of all citizens over the age of 18 years. The ruling party, the National Resistance Movement (NRM) has been in power since 1986. The President, HE Mr Y K Museveni has been in office throughout this time. The next presidential and parliamentary elections are due in March 2011.

The government with a relatively stable polity and a pro-business oriented president continues to attract foreign investment and promote both regional and international trade.

 

Getting here By air

There are direct flights between London and Entebbe by British Airways and international flights to and from Entebbe leave daily. SN Brussels and KLM offer non-stop flights to other destinations in Europe 3 or 4 times weekly.

 

At the airport

Taxis from Entebbe Airport to Kampala cost about £25. The journey may take up between 45 and 90 minutes depending on traffic.

By Road

Nearly all major towns are connected by tarmac roads. Driving is on the left-hand side of the road, as in the UK. Buses connect the entire country.

Visas

British Nationals require a visa to enter Uganda. Passports should be valid for at least three months beyond the date of the end of your visit. Visas may be obtained on arrival by air with a cash payment of US$50 but it is recommended that visas are obtained in advance through a travel agent or from a Uganda High Commission or Embassy. Your visa allows re-entry to Uganda after visits to Kenya or Tanzania.

Your stay

The Uganda Tourist Board (www.visituganda.com) is a good source of information and can help you plan your trip. UKTI Uganda can help you plan your business visit to Uganda.