WHY INVEST IN UGANDA

           

Uganda enjoys a unique location at the heart of Sub-Saharan Africa within the East African region and lies astride the equator. The country is bordered by South Sudan in the north, Kenya in the east, the United Republic of Tanzania in the south, Rwanda in the southwest and the Democratic Republic of Congo in the west. This land linked position, gives the country a strategic commanding base to be a regional hub for trade and investment. Uganda enjoys pivotal trade partnerships that create a viable market for business.

A potential investor considering investing in Uganda, will find a well regulated highly liberalized economy in which all sectors are open for investment and there is a free movement of capital to and from the country.

The 2013 Index of Economic Freedom ranked Uganda, the 8th freest economy out of the 46 Sub-Saharan Africa countries. The business operating environment allows the full repatriation of profits after the mandatory taxes have been paid, as well as 100% foreign ownership of private investments. The incentive regime is structurally embedded in the country's tax laws making them non discriminatory and accessible to both domestic and foreign investment depending on the sector and level of investment. 

The minimum capital investment required for a foreign investor to be eligible to invest in the country in virtually any sector, apart from those that may compromise the country's security, is US$100,000.

Uganda's labour is highly trainable, English speaking and the cost compares favourably in Africa.

 

Return on investment is about 5% projected to increase to about 7% due to ongoing and planned infrastructural (roads, railway, energy) development that will ensue from the developments in the oil sector (refinery and crude oil export). Uganda's GDP is between US$25 billion to US$26 billion, with stable economic growth averaging 5 to 7%.

Inflation has now stabilized to 6.6% after the global economic downturn against which the Uganda economy was resilient and continued to attract foreign direct investment during the period.

The country's political and economic environment has been consistently improving and stable since 1986. Under the leadership of H.E. Yoweri Kaguta Museveni, Uganda has been able to be a political stabilizing force in the region, which has provided a secure environment for business to thrive. Security of investment is also  guaranteed under the Constitution of Uganda and the Investment Code 1991, as well as the major international investment related agreements / treaties to which Uganda is signatory.

In order to provide a conducive environment for doing business in Uganda, the government of Uganda has created a One Stop Centre (OSC) for business registration and licensing at the Uganda Investment Authority. The OSC also assists in tax advice and registration, immigration and work permit issues, land acquisition and verification, as well as environmental compliance and approvals.  Accessing all these services under one roof saves the investor both time and money to have their projects licensed and implemented expeditiously.

UGANDA'S PRIORITY SECTORS FOR INVESTMENT

       1. COMMERCIAL AGRICULTURE AND AGRO PROCESSING 

Uganda - Global yield

Uganda has the unrivaled potential to be the food basket of the East African Community, as well as the Great Lakes regions, with the capacity to export processed food stuffs to the wider COMESA economic bloc if more investment is targeted at processing more of the agro products. Uganda is among the leading producers of coffee and bananas. It is also a major producer of tea, cotton (including organic cotton), tobacco, cereals, oilseeds (simsim, soya, sunflower, etc), fresh and preserved fruit, vegetables and nuts, essential oils, orchids, flowers and sericulture (silk). Opportunities include commercial farming and value addition, as well as the  manufacture of inputs (fertilizers, pesticides etc.), supply of agricultural machinery and the establishment of cold storage facilities as well as the production of packing materials. Public Private Partnership investment opportunities exist in the commercial production of cereals (maize and rice) and beans. 

       2. ADDING VALUE TO MINERALS

Uganda has large under-exploited mineral deposits of gold, oil, high grade tin, tungsten/wolfram, salt, beryllium, cobalt, kaolin, iron-ore, glass sand, vermiculite, phosphates (fertilizer), Uranium and rare earth elements.

GEOLOGY AND MINERAL OCCURENCES OF UGANDA


There are also significant quantities of clay and gypsum. Gold occurs in many areas of the country, including Busia in the east, Buhweju and Kigezi in the west, Mubende - Kiboga in the central region and significant occurrences in Karamoja in the north east. Particularly, the demand for iron and steel is rising due to the need to develop the infrastructure projects in energy, oil and gas, as well as the railways.

Uganda provides special incentives to the mining sector with some capital expenditures being written off in full. 

Oil and Gas: 

According to the Petroleum Exploration and Production Department, 21 oil and/or gas discoveries have been made in the country to date. 87 oil wells have been drilled and there are 21 fields in existence. Currently over 3.5 billion barrels of STOIIP have been discovered with over 1.2 billion barrels of oil equivalent estimated as recoverable. However, appraisal of the discoveries is still ongoing. Less than 40% of the Albertine Graben has been evaluated.

IMF Survey : Uganda’s Ambitious Infrastructure Plan

Investment opportunities available in upstream activities include:

  • Licensing for petroleum exploration and production
  • Joint Ventures and farm-in arrangements in existing licenses
  • Heated crude oil pipelines to refinery
  • Environmental services, given that most activities are located in ecologically sensitive areas. Waste treatment and disposal for both solids and liquids is critical
  • Service provision and contracts in the fields of Engineering, Procurement, Construction, Environmental consultancy, drilling services, down-hole services etc.

       3. INFORMATION COMMUNICATION TECHNOLOGY (ICT) 

Uganda's ICT sector is one of the most vibrant within the region and fastest growing sector in the economy. This vibrancy hinges largely on the good legal and regulatory frameworks.

The supportive investment climate therein has exposed numerous opportunities in ICT innovation services leading to maximum utilization of the existing youthful human resource base as quite suitable for the ICT work. The newly developed and highly qualitative ICT infrastructure is also ready to accommodate more future investments. Uganda is now connected to three marine fibre optic cables.

       4. TOURISM 

Uganda is home to the source of the Nile, the longest river in the world and around Jinja. The Nile offers the best white-water rafting experience globally. 

Lake Victoria, which is shared with Tanzania and Kenya, is the 2nd largest fresh water lake in the world, while Lake Bunyonyi in south western Uganda is the 3rd deepest in the world! 

It is estimated that 50% of the world's population of mountain gorillas lives in Uganda.

 Uganda mountain gorillas

It is no wonder that even during the British colonialist times; Uganda's unique character and incomparable beauty were recognized by Sir Winston Churchill who described Uganda as the "The Pearl of Africa", a coined phrase that depicts Uganda today. 

Potential areas for investment in this sector include: 

Establishment of a white sand resort beach

The project offers a complete package of lodging and dinning for tourists/ visitors, and conference hall for different clients for holding meetings and seminars. 

  • The total investment cost is estimated at US$ 4,227,044.
  • The project is proposed to have 62 separate executive huts and 30 standard rooms.
  • The payback period is estimated at five (5) years.

Domestic air transport 

The objective of this project is to provide efficient and reliable domestic air transport services to Uganda's major tourist destinations as well as providing reliable and fast air transport services to local travelers. 
  • The total investment cost is estimated US$ 5,391,240.
  • The payback period is estimated at five (5) years.

Establishment of a tourism & hospitality training institute 

The objective of this project is to produce competent graduates who are capable of working in the tourism and hospitality industry offering internationally rated professional services. 
  • The total investment cost is estimated at US$ 3,492,995.
  • The payback period is estimated at five (5) years.

Proposed design of a new UHTTI:

Construction of a wild life/forest lodge

The objective of this project is to provide additional accommodation to mid-range travelers to Uganda's protected areas (PAs).

Uganda protected areas
The proposed locations include Mabira and Budongo forests, Queen Elizabeth National Park (QENP) and Murchison Falls National Park (MFNP). The project is also aimed at providing water rafting services between Karuma and Murchison Falls, game drives, angling and nature walks in addition to accommodation. 

  • The total investment cost is estimated at US$1,136,170.
  • The project is proposed to have 20 spacious cottages with en suite facilities.
  • The payback period is estimated at five (5) years.

Other sectors include:

       5. PACKAGING 

Many Ugandan enterprises are missing out on the opportunities in larger markets because their packaging doesn't meet international standards.

In order for Ugandan processed honey, fruit juices, mineral water, herbal medicines and chemicals, among other products to be competitive nationally, regionally and globally, the packaging has got to be quality.

Currently, there are about seven companies involved in producing packaging materials among which is Riley Packaging in Mukono, Afroplast Enterprises Ltd in Luzira, General Molding in Industrial Area, Rwenzori Bottling company. However, most of them deal in general plastics using the blowing technology. The PVoC packaging technology is more acceptable worldwide. 

Most of the companies that need good quality packaging, import their customized packaging from Kenya, South Africa and China.

       6. PHARMACEUTICALS

Uganda's pharmaceutical industry presents numerous opportunities for new investors as reflected by the growing local and regional demand for medicines and health supplies. 90% of the medicines in Uganda are imported mainly from India, Kenya, Netherlands, China and Denmark (UBOS, 2011).

Medicine accessibility stands at 45.7% in public health facilities, 57.5% in missionary units and 56.3% in private health units. Although Uganda's market comprises both antibiotics and injectibles, the level of antibiotics prescribed by health facilities is higher than that of injectable medicines. The high demand for Essential Drugs for the treatment of Malaria, HIV/AIDS and Tuberculosis is reflected by the trends in causes of morbidity in Uganda. HIV/AIDS, Tuberculosis, and Malaria which are some of the major killer diseases account for 54% of the total disease burden in Uganda. Malaria is the leading cause of morbidity and mortality but Tuberculosis is on the increase.

The growing demand for medicines and health supplies in Uganda has instigated the emergency of the Pharmaceutical Industry evolving from 2 manufacturers in the 1990s to over 10 licensed manufacturers by 2010. The sector has also recorded rapid growth in the number of pharmacies and drug shops country wide but these are predominant in urban and semi urban areas. The sector provides numerous opportunities with an assured internal market and external market given that 90% of pharmaceuticals, sundries and medical equipment are imported in to the country. The opportunities ranging from small scale to large scale include:

a) Production of Human Liquid formulations;
b) Manufacturing of Diagnostic material and equipment;
c) Production of Human Parenteral Drugs;
d) Production of Human vaccines;
e) Processing of Herbal medicines from the neem tree and aloe vera;
f) Manufacturing of veterinary pharmaceuticals;
g) Production of Human Solid dosage forms such as tablets , capsules, etc;
h) Processing of medical sundries (Cotton wool, syringes, sanitary pads, bandages, glucose, water for injections, infusions syrups and oxygen etc and;
i) Manufacture of Medical Equipment.
j) Research and Development in ARV drug production and formulation

      7. OTHER VIABLE INVESTMENT OPPORTUNITIES 

Government has completely divested itself from these sectors and private investment is thriving in the mentioned areas as Uganda has positioned herself to be an education hub in the region.

There is a need for diverse financial solutions for the quickly expanding middle class In Uganda.

The health sector is also a viable sector for investment considering many Ugandans travel outside Uganda for specialized treatment and healthcare. The investment environment has been conducive for investments in the health sector.

Click here for a guide to investing in Uganda

Resources: