The EAC member state has presented opportunities to European investors

Trade between Uganda and European Union has over the years been critical in terms of creating jobs and strengthening the economies for the two parties.

This opportunity is expected to be sustained evidenced by the recent inaugural two day Uganda – Europe Business Forum that was held at Speke Resort Munyonyo. More than 1,000 delegates from selected participating countries attended the Forum.

The first ever Forum happened at a time the EU was firming its trading ties with other countries following Britain’s exit from the 27member bloc at the end of January 2020.

Minister presents big opportunities  

Speaking during the Forum, the Minister of Trade Industry and Cooperatives, Amelia Kyambadde said that Uganda and EU were good trading partners and that the relationship should be kept strong.

She listed Uganda’s trading partners within the EU as Netherlands, Italy, Belgium, Germany, UK and Denmark on the import side.

Uganda exports to Europe food and live plants/animals, crude materials, inedible and more. She said that Uganda exports on average $60.7million out of the $100bn of EU’s annual average imports.

Uganda’s major imports from the EU are machinery, transport equipment, chemical and related products, miscellaneous manufactured articles and manufactured products.

Kyambadde said, Uganda’s exports are not as diversified as her imports from the EU because it exports mainly primary unprocessed products and imports manufactured industrial products.

In terms of foreign direct investment, inflows into Uganda increased from the $543.9million in 2010 to $1.337bn in 2018. In the same period, Uganda accounted for an average of 13% of total FDI inflows to the 11 Eastern Africa countries – an indicator of Uganda being more attractive than the other countries.

Globally, the EU is a major source of FDI accounting for 30% of global inflows according to figures compiled from 2010 to 2018.

EU companies mainly from Dutch, French, German, Italian, Danish, Belgian and Swedish are already actively investing in Uganda in the various sectors of the economy. The sectors in question include; energy, services (tourism, construction, professional transport and logistics, manufacturing, food processing, metal and basic manufacturing.

“More investment opportunities abound; more companies needed,” Kyambadde said. She added that opportunities to invest in other sectors like oil and gas are immense.

Kyambadde said Uganda has a very supporting business environment. First, she said that the country has reviewed and updated the 2008 industrial policy which is now targeting increasing manufacturing value added to GDP from 8.2% in 2018 to 16% by 2030.

The policy also envisages strong public – private and private-private sector partnerships. She also said the country’s electricity generation has improved currently at 1, 182MW as at June 2019 – which provides opportunities for value addition and food preservation. She also said that investments in green economy is a government priority and an opportunity for the private sector.

The good business environment also has to do with improved road infrastructure – border to border movement on tarmac with 4, 971km tarmac. More expressways are lined up for construction. The rehabilitation of the meter gauge railway is ongoing and initiatives for construction of the Standard Gauge Railway (SGR) is in advanced stages.

A total of 22 industrial parks are to be set up, of which at least six are already functional (Namanve, Luzira, Bweyogerere, Soroti, Mbarara and Jinja). There are also private sector developed industrial parks in Kapeka, Mbale and Kiruhura.

In terms of regional trade facilitation, Kyambadde said the country has got functioning infrastructure like electronic cargo tracking system, regional customs guarantee scheme, trade portal, and electronic single window. The others are construction of one stop border posts and plans are on to construct Border Export Zones linking Uganda to key and strategic regional markets.

In terms of communication, private sector companies and government investments have enhanced ICT infrastructure with 4G internet availability, high penetration of mobile telephone and mobile money services. There is also an opportunity to co-invest with government in big and strategic investments through the Uganda Development Corporation (UDC).

There is also strong political will to fight corruption in all forms – this is backed by the presence of the legal and institutional measures such as the leadership code act, anti-corruption court, inspectorate of government, presidential hotline for receiving corruption reports.

Above all, she said that the thrust of the economy is being sustained under National Development Plan III focusing on industrialization (agro-industrialisation, mineral beneficiation, oil and gas and tourism).

In addition, the launch of the Sustainable Business for Uganda Platform and the Uganda-EU Business Forum provide avenues for working together to make trading and investing with each other even better, according to Kyambadde.

The European Union Ambassador to Uganda Attilio Pacifici reiterated the EU’s commitment to investing further in Uganda.

“This event marks a milestone in the economic relations between Uganda and the European Union,” he described the Forum.

He added that by taking part in the Forum, they were illustrating that the EU aims to “do business” and partner with Uganda differently as compared to the past.

The domestic and European companies have so far identified three main areas that they would work together to support business growth. The first one is skills and attitude. The second area is the high cost of capital.

Pacifici said the lengthy and complex procedures when applying for a loan in commercial banks makes access to finance challenging for the private sector.

The third issue is on economic governance and corruption. Despite several anti-corruption initiatives launched by government, according to various reports, corruption remains common in Uganda, he said.

“It is a major obstacle for better investment climate and sustainable private sector growth,” Pacifici said.

Pacifici concurred with Kyamabadde that public private partnerships, business incubators or industrial parks are critical in growing businesses and growing the economies.

Elly Karuhanga, the chairperson of the Private Sector Foundation Uganda, said that trading with the EU is a blessing given the strength of its economy.  The GDP of Europe was estimated at $18.8trillion in 2018 and is the world’s largest trading bloc.  Also, the EU has a population of 741 million people – which means there is demand for goods and services.

Karuhanga said the EU remains the leading market for Ugandan largest exports including coffee ($290million) and several other major exports such as fish, flowers and cocoa.

“The opportunities available are immense,” he said. He added that what is required is collaboration to enhance company’s enterprising nature to take advantage of the opportunities in agriculture, tourism, oil and gas, manufacturing, ICT, construction, transport and logistics, financial services, education and health.

He said that the country’s aim going forward is to promote sustainable private sector investments between European and Ugandan business community and to create partnerships with the business community in Uganda.

President Yoweri Museveni said the Forum was being held in the context of the Africa-Europe Alliance for Sustainable Investments and Jobs.

He also said that fostering collaboration between the public and private actors and partnerships between Ugandan and European companies is critical.

He added that the government of Uganda in partnership with development partners including the European Union and its Member States has made significant strides in laying a firm foundation for investments, industrialization and international trade.

“By participating in this Forum, therefore, you are availing yourselves an opportunity to network and share ideas with each other with a view to harness the opportunities created by the firm foundation,” Museveni said.

Speaking about the investment climate in Uganda, Museveni said, the road network, power, peace and security and more are all in place to support business growth.

On the regulatory side, he said they have been steadfast in easing the process of investing and doing business in Uganda.

“A One Stop Investment Centre has been set up at the Uganda Investment Authority to ease the investment process while several One Stop Border Posts have been constructed to hasten international trade,” he said.

Meanwhile, Museveni said his administration has been keen on expanding export markets through trade negotiations at bilateral, regional and multilateral levels, such as the recently concluded African Continental Free Trade Area; and fostered increased use of electronic platforms in international trade.

“It is, therefore, not surprising that between 2010 and 2018, Uganda alone accounted for 13% of total Foreign Direct Investment inflows into the eleven Eastern Africa countries; while merchandise exports have been growing at an annual average of 8.7% over the last five years. These, in themselves, are positive pointers to the outlook of the Ugandan economy,” he explained.

He said going forward, Uganda and the EU should promote technology transfer and collaboration, as well as financing to enable the private sector harness opportunities that exist on both sides of the Mediterranean Sea.

Other private sector players were equally moved by opportunities that the Forum would create but offered cordial advice to their colleagues in the trade. Patrick Bitature, the chairman of Simba Group said as business owners in Uganda look forward to more trading with the EU, they need to be flexible, be positive in terms of attitude and be professional, ethical while going about their work.

Money deals

Finance Minister Matia Kasaija applauded the European Union for being one of Uganda’s partners that have continued to provide grant financing in the areas of trade and investment.

“Today [at the Forum], we are signing three grant financing agreements worth 85.9 million Euros that will support various projects and programs in Uganda. Budget support is 32 million euros, green economy 45 million euros and technical support is 8.9 million euros,” Kasaija said in a speech.

 

Disclaimer: The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of TradeMark Africa.