Areas of discussion:
Moderator: Edward Katende, CEO, Uganda Agribusiness Alliance
Opening statement: Subhash V Thakrar B com FCA FRSA-Vice President and Past Chairman, London Chamber of Commerce
Edward Katende the moderator started by saying there are a lot of opportunities in the Agri-business sector.
Hon Kamya, the minister for Kampala Capital City invited investor to look at investing in Kampala sub region. Kampala contributes more than 60% of the National GDP and also Kampala raises 70% of the annual revenue of Uganda. The greater Kampala metropolitan area has a total population of 15million people.
Kampala is an excellent opportunity for investing in tourism , the story beginning in Kampala with religious wars that were fought at the beginning of colonialism which resulted in Mwanga II, the Kabaka (King) of Buganda ordering the death of about 30 Martyrs and out of that Uganda hosts one of the biggest religious shrine in the world called The Namugongo Martyrs Shrines where over 3 million pilgrims are recorded to have visited in just the month of June 2019.
Hon Kamya confirmed by saying that sir Winston Churchill named Uganda as the pearl of Africa but she said probably he wanted to say Uganda is a garden of Eden, Uganda boasts of 60% of the world’s highland mountain gorillas, Uganda also has 11% of the worlds bird spences, Uganda is only 93 square miles.
Uganda has 1500 bird species, by comparison the USA which is about 3.6 million square miles has got only 600 bird species and the entire Europe has only 700 bird species and Uganda has over 2 million live animals and plant species. This why I call Uganda The Garden of Eden, so this makes tourism a great sector to invest in, Hon Kamya said.
James Mugerwa the managing director Pearl Marina introduced that Pearl Marina is part of Centum, the east African biggest investment company with a portfolio that extends from real estate to fast moving consumer goods (FMCG), banking and agriculture.
To date over $100 million dollars has been invested towards Pearl Marina project along Lake Victoria in Garuga and in the next seven to ten years more investments will be done. Centum believes that Uganda has a lot of opportunities but also believe that the real estate sector can be different. Pearl Marina model is different from other developments in the country. Pearl Marina Estates sits on 389 acres of prime real estate with 3km of lake frontage all developed and managed by the developer from construction to management of services, estates security, power regeneration and this managed by a single company. This gives the buyer or investor confidence that if you buy a property from Pearl Marina you are entering an agreement for 99 years because the company will be there.
The project is located in a convenient location; 22km to the Entebbe International Airport and 32 Km from Kampala, the development is set to become Uganda’s prime lakeside community. Mugerwa further explained that, Pearl Marina is currently undertaking the development of residential units and the associated infrastructure on the west Pearl estate comprising of villas, townhouses and apartments set to be completed by end of Q1 of 2020.
Pearl Marina is now a municipality with four resorts, four hotels and going to implement two international schools and an international hospital, a commercial area, a marina and lots residential opportunities has made the housing in the country different, its affordable with units that goes at lower as $39000 and that is very affordable considering also the fact that these are constructed by Roko ensuring the best quality. Investors and buyers are assured that the developer will deliver as promised and if there is any delay, the buyer will be given back their money at a premium.
James invited those who are also interested to partner in joint venture.
Richard Jabo, the executive director, Uganda Free Zone authority stated that The Uganda Free Zones Authority is a body corporate under the supervision of the Ministry of Finance, Planning and Economic Development. It was established following His Excellency the President’s assent to the Free Zones Act, 2014 and started operations on 1st September 2014. The Agency is responsible for the establishment, development, management, marketing, maintenance, supervision and control of free zones and to provide for other related matters.
The Free Zones law was set up with the aim of promoting exports, increasing employment and increasing commodity processing from trading raw materials to finished goods but with due regard to environmental impacts during product processing.
Added that, passing of the law is a positive step towards increasing Uganda’s trade participation in the region to try and align with its counterparts in Kenya where the law has operated since 1990, Tanzania where Special Economic Zones have been in existence since 2002 following the enactment of the Export Processing Zones Act 2002 and Rwanda, since 2010.
The overall objective for adoption of Free Zones in the country is to create an enabling environment aimed at enhancing economic growth and development of export-oriented manufacturing in all sectors of the economy, in order to diversify the country’s economic base, attract foreign direct Investment (FDI), generate employment, increase foreign exchange earnings, enhance technology transfer, skill acquisition/upgrading as well as create backward linkages.
The Uganda Free Zones Authority is designing the third national development plan, one of the key strategies in the plan is to take Uganda to a middle-income status focusing on industrialisation.
The next phase is providing the non-physical incentives which looks at work spaces of the actual zones and constructing them to provide facilities for operators to promise a more conductive environment where customs’ facilities and support are provided on site, where distributors can easily locate you.
Now the authority is undertaking a project at Entebbe international airport where a free zone facility will be constructed
Mr Nyeko started by praising Uganda immigration who served him within a short time proving the fact corruption is getting minimised in Uganda. Being in business for over 44 years, he represents a lot of companies, a chairman of Bencolly Group, The Kampala Diplomatic School. He boosted to have put professors in various top universities including the professor in nuclear medicine in south American university where among the students top of the 35 scientists nominated by MIT was also Elizabeth Nyeko, one of the directors at Bencolly Group.
Dealing with renewable energy is the new trend the world is moving towards. The whole world is now looking for clean energy, he disagreed with the minister for Kampala, that Kampala is for now but not tomorrow. He said that the rural areas are going to contribute more money to the treasury. Mandulis Energy is not only dealing in agriculture in order to harness the biomass for generating power, but is making use of the rural farmers in partnership to produce more food and after the food, Mandulis is giving more income to the farmers from waste especially rice husks and maize crops.
Since going back to Uganda from the diaspora Mr. Nyeko was well received because his family business was giving back to the society and determined to be like Fiat and Ford and are moving forward.
Very successfully giving back the society and help government Mandulis help rural people by training them in modern ways of farming so that they produce more , Mandulis provide storage facilities and training centres and, determined to make rural areas produce more money than Madhavi (applaud), right now over 27000 accounts have been opened and Google mapped over 5000 farmers, now Mandulis is building over 16 off-grids using agriculture wastes , two of the off grids are up with one running with factories being run by these bio-mass power generators and aiming at building 16 industrial parks not only off-grids but plus 20 megawatts bio-mas power generators to be built to serve Gulu city and this is already financed by Africa development bank and hasmany other partners supporting Mandulis.
Eric Olanya, Head of Trade, Uganda, Department for International Trade, British High Commission quoting the minister of finance who said Uganda’s economy is growing steady-fast. the UK departments of trade has been pushing more on financing infrastructure projects on oil and gas renewable energy and on agriculture. Uganda has been the most successful in east Africa on project financing. The British government has $600million fund for projects this year and are lobbying for more finance cover for the country and UK Export Finance is positive on good projects in Uganda.
As of now Britain is looking at supporting the oil pipeline of over a £billion of business on the infrastructure side and UK companies are supported to work with local companies in uganda to deliver on projects
Subhash Thakrar, Vice President, London Chamber of Commerce and Industry Chartered accountant a truly a guardian of British-Asian entrepreneurship started by congratulating Willy Mutenza for 10 years of tireless work for Uganda and in-time has raised the bar by now hosting the events at the Hilton Park Lane not only that but the quality and prominent speakers.
He asked why Uganda hasn’t got award system like is in UK because Willy Mutenza deserves an award. Uganda should also be proud of what Ugandans are here in the UK, Lord Popat is the first Ugandan Asian to be made a peer in the UK political scene and in the 140 years of the London Chambers of Commerce, Subhash was the first ethnic chairman and also born in Uganda. Also, Ugandan Asians are the best politician’s group there is in the house of parliament in all the history of UK.
Subhash said that Public Private Partnership (PPP) projects he said that the private sector is needed for partnership. For the private sector, entrepreneurship and leadership will be brought in which always is missing in the public sector. The Public sector might have the vision but the private sector will be committed to make money and it is the private sector that will bring in funding.
Recently, he said, in India, on the London stock exchange they have managed to list Masala bond, and now we should be thinking of Matoke bond and these can be denominated in local currency and a lot of money can raised. $ 7.5 billion us dollars has been raised for India in the last two years.
On the private equity , according to a deal making company called Pitch book, there has been 2,524 recorded private equity deals in Africa and in the last 10 years that number is 1600 and only 104 deals took place in the last twelve months in the whole of Africa and the biggest of all was the Airtel transaction of $16 billion dollars. Looking at Uganda specifically, there has been only 3 deals in the last 10 years, 37 recorded altogether in private equity and overall deal size are around $12 million dollars. Within East African Kenya takes the biggest share but very closely followed by Ethiopia and Uganda in private equity deals.
For private equity deals to work, similarly to what is done in the west, there has to be improved environment. There has to be easy regulatory environment for investors, the most difficult thing when it comes to private equity in Africa is difficult to visualise an exit, when people invest in private equity, they need to see their exist within 5-10 years’ time. Also, it is a challenge because there is no established stock exchange systems although some are merging in Kenya and Nigeria. Also, solid companies with solid management needs to be established Subhash said he was impressed by Mr Nyeko for having private equity money invested in his projects.
The government must create the right environment for private equity companies to invest. This means dispute resolution mechanisms, effective legal system where the rule of the law exists and less burdensome tax system.
Subhash decried that he has heard companies wanting to set up in Uganda but importing equipment they face taxes to pay, this is a discouragement as that tax may take long time to recover because when business start, they need to be able to minimise all out goings.
Subhash disclosed that they have just started a confectionary factory and have paid tax on equipment imported and that tax should be differed to be paid later.
Then there should be strong vigilance to sort out corruption and corruption is not only demanding money but also for people not cooperating, not doing thing that you ought them to do. As British investor we can’t give bribe as it will be a jail able offence in the UK.
Uganda scores in the transparency index at 149 over 180 and 149 is not a good score but a poor score. And compared with south Africa at 73 out of 180 and UK stand at 11.
In the public sector corruption, Uganda scores only 26% and this is an area that needs dealt with and hopefully the new a corruption unit under presidential office created will tackle this vice
On the positive on the private equity Africa is the next India and we are going to see tremendous growth at over 6%.
New emerging middle class, this is seen in Uganda, Kenya and other parts of Africa who are spending money keen to buy goods and services, increasing, urbanisation is happening.
Harmonisation of communities like African community like COMESA, east African community, these are all opening up boarders and the market size increases and changing.
As the president of Uganda said Uganda may be landlocked but is much trade-linked.
Africa is benefiting from all these external investors including china, Europe, India and US.
Growth is going to emerge and that is what the private equity companies are going to chase.