Why Invest In Uganda?-Investment Opportunities
By Hon Evelyn Anite, Minister of State for Investment and Privatization
Uganda enjoys a unique location along the equator, in the heart of Sub-Saharan Africa within the East African region.
Its landscape encompasses the snowcapped Rwenzori Mountains, Lake Victoria – the largest fresh water body in the world, the western escarpments of the Great Rift Valley and it is home to the source of the Nile, which is the only river in the world that flows north.
Uganda also has unique Flora and Fauna, a modified equatorial climate with warm temperatures all year round. Uganda 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 Uganda a strategic commanding base for regional trade and investment. The people in Uganda are the most friendly and the most highly entrepreneurial community you are set to come across within the next decade. The economy also offers high returns on investment thus making Uganda your preferred investment destination.
WHY UGANDA IS THE BEST INVESTMENT DESTINATION
- Access one of the fastest growing regions in the world. Uganda and the East African region are growing steadily in both population and GDP.
- Uganda is open and secure for foreign investment. Uganda is the most open country in the region for Foreign Direct Investment (FDI).
- Uganda has a strong natural resource base.
- Uganda has several unexploited mineral deposits & tourism opportunities.
- Highly Competitive labor Costs.Uganda offers the lowest cost workforce in the region and labor costs are forecast to grow more slowly than other EAC country.
- GDP GROWTH: East Africa is one of the world’s fastest growing regions with an economy approaching USD $1 Trillion. Uganda has achieved an average GDP growth of 6.3% per annum for the last 30 years. Uganda’s GDP is forecast to grow by 6% p.a. from 2019-2023 (IMF, 2018).
- POPULATION GROWTH: By 2023, the population of the EAC is forecast to reach 200 million and GDP (in PPP) to reach US$ 0.75 trillion. (Source: IMF, 2018).
- EXPORTS TO SUB-SAHARA: Uganda has the highest percentage of exports going Sub-Saharan Africa ( World Bank, 2017).
- MOST OPEN COUNTRY TO FDI;All sectors of the economy are fully liberalised for investment. 100% foreign ownership of investment is permitted.
- PRO-BUSINESS REGULATIONS; Uganda ranks highly across many key business climate indicators for inward investors.
- HEALTHIEST GOVERNMENT BUDGET BALANCE; Uganda’s comparatively strong public finances help to create a lower risk and more stable business environment for foreign investors.
- LOWEST LABOUR COSTS IN THE REGION:Benefit from the lowest cost workforce in the region.The average yearly wage in Uganda for an unskilled production operative was $440 in 2017 (excluding social security costs). (fDi Benchmark & Financial Times)
- LABOUR COSTS FORECAST TO GROW MORE SLOWLY:Labour costs in Uganda are also forecast to grow more slowly than other countries in East Africa, reflecting Uganda’s faster growing labour force and skills availability (FDI Benchmark).
- SKILLED WORK FORCE:Benefit from a large and growing workforce. Uganda is very highly rated for recruitment potential, workforce trainability and women and youth engagement in the labour force. (Global Competitiveness Report, 2017/18 and WEF, 2017).
- FERTILE SOIL & FAVOURABLE CLIMATE;Uganda is richly endowed with rainfall, soils & favourable temperature ranges with a number of crops grown organically.
- UNTAPPED TOURISM OPPORTUNITIES: Uganda has been dubbed the Pearl of Africa’ due to its strong tourism potential with lots of forests, lakes and rivers.
- UNEXPLOITED MINERAL DEPOSITS:Uganda has confirmed deposits in Iron Ore, Phosphate, Gold, Wolfram, Petroleum, Diamond, Vermiculite, Silica, Limestone, etc.
- LOWEST REGIONAL COST OF LIVING FOR EXPATS:Kampala offers the lowest cost of living for international employees in the East African region.
- 6TH BEST COUNTRY IN THE WORLD FOR MAKING FRIENDS ABROAD;Ranking among the top 10 countries for the fourth consecutive year, Uganda has always been an excellent destination for expats looking to find friends easily.
- MOST LIVEABLE CITY IN EAST AFRICA; Kampala has continually topped the Mercer Quality of Living City Ranking in the East Africa.
Opportunities in Agriculture Value Addition
The Agricultural Sector continues to be the most important sector in Uganda; it employs approximately 72% of the population and contributed about 32% to the GDP. However, Productivity is limited by reliance on natural weather conditions and the still widespread use of traditional methods and equipment.
Uganda is among the leading producers of coffee, bananas and oil seed crops (sesame, soybean, sunflower etc.). It is also a major producer of other crops like tea, cotton, organic cotton, tobacco, cereals, fresh foods and vegetables, nuts, essential oils, flowers, poultry and freshwater fish.
The Ugandan Government is pushing for greater commercialization of agriculture by encouraging the use of irrigation and mechanized farming. Opportunities for investment exist in:
- Commercial farming in both crops and animal industries as well as aquaculture;
- Value addition (agro-industries, agro food industries);
- Manufacturing of inputs such as improved seeds, fertilisers and pesticides
- Cold storage facilities and logistics
- Farm machinery manufacturing and assembly
- Packaging
- Irrigation schemes.
Opportunities in Information Communication Technology (ICT)
Uganda’s ICT sector is one of the most vibrant within the region and a fast-growing sector in the economy, offering many opportunities. Growth in this sector is supported by solid legal and regulatory frameworks.
It is also connected to the three marine fiber optic cables off Africa’ east coast in the Indian Ocean. The newly developed and quantitative ICT infrastructure is ready to accommodate new investment. Uganda is positioning itself as a hub for business processing and management outsourcing in East Africa.
The main opportunities for business process outsourcing and ICT services exist in agriculture, health, tourism, banks, insurance and public administration.
SCIENCE, TECHNOLOGY & INNOVATION (STI) PARK
AMOUNT: US$59, 000, 000, LOCATION: 20km From City Centre
The project aims to setup a place for interaction of innovators, the academia and international and local entrepreneurs, comprising of; Centers for science technology and innovation; Centers for academic excellence in STI; Centers for industrial commercial rollout of indigenous innovations; A business center; Residential neighborhoods. The project is estimated to cost US $ 1.5billion and shall be implemented in five( 5) phases in fifteen (15) years.
IT/BPO PARK
AMOUNT: US$428,00,000,LOCATION: ENTEBBE
17 acres of land are available for the development of an Information Technology (IT) – Business Process Outsourcing (BPO) Park that will act as a catalyst from raw material based exports to a knowledge-based economy.
Opportunities in Energy and Mineral Sector
Energy is the prime mover of any country’s economic growth and prosperity. Uganda needs adequate, reliable and affordable energy to enhance sustainable development. It is for this reason that energy is a priority sector for development in the Country.
Uganda is well endowed with enormous natural resources such as Minerals, hydro, geothermal, petroleum resources, solar thermal yet only a small fraction of this potential has been harnessed.
Power Generation
Power Generation Projects in the Medium Term Government is making effort to develop the following power generation projects through Public-Private Partnership (PPP).
- 30MW cogeneration from bagasse by 2020.
- 450MW geothermal power
Oil & Gas
The oil and gas sector has significant potential to contribute to inclusive growth in the country as it expected to bring in investments between US$15 to US$20 billion in the next three to five years. With the discovery of 6.5 billion barrels of oil, 1.2 billion barrels of it recoverable, it is anticipated to spur two major investments:
An oil refinery that will process 60,000 barrels per day and the 1,445km oil pipeline from Hoima in Uganda to Tanga port in Tanzania. Opportunities exist in community development, upgrading transport infrastructure and the development of a petroleum-based industrial park in Kabale Hoima. Uganda’s policy on local content will unlock many opportunities for investors and Ugandans.
OPPORTUNITIES IN EDIBLE OIL PRODUCTION
Uganda combines a rapidly growing market of nearly 40 million people with access to the EAC market of 175 million people. With the lowest cost and fastest growing labour force in the region, suitable land availability, and an investor-friendly environment, Uganda is a good location for edible oils.
Why Uganda ?
- Uganda has a large domestic market with demand for edible oils expanding rapidly (Uganda’s imports of edible oils increased more than five-fold to over $ 30 million in 2017).
- Member of EAC, which had recorded ever imports of edible oils in 2017, with 50% growth reaching nearly $1 billion.
- Uganda has a strong track in the production of agricultural products and is the most open trading country in the region.
- 35% of Uganda’s land is arable and suitable for growing edible oil seeds. such as sesame, soya bean, and sunflower.
Opportunities in premium oils include;-
- Production of Premium Virgin oils for export is realisable in Uganda in the medium to longer term. The premium oils segment has higher margins and less aggressive. Some players like Mukwano are already exporting premium/pure sunflower oils from Uganda to Switzerland and Belgium and demand in these and Asian markets is expected to continue growing steadily as awareness and incomes
- There are also opportunities for investment in the up-stream value chain in Uganda to expand raw material supplies {e.g. avocado production), for which there is strong demand.
INVESTMENT OPPORTUNITIES IN ELECTRONICS
Uganda provides an unrivalled and largely untapped opportunity for electronics assembly operations. Uganda combines first-rate labour availability, the most competitive labour and overall operating costs in the EAC, an attractive and stable investment and working environment, an attractive incentives package and major market access.
Why Uganda?
- Lowest labour and operating costs in EAC.
- Highly trainable workforce, excellent recruitment potential and labour participation.
- Good availability of management & technical employees in Uganda and EAC.
- Generous incentives on tax, import tariffs and training costs.
- Large and growing market opportunity.
- Core member of free trade areas – EAC (175 million) and COMESA (529 million).
- Stable and investor-friendly political and economic environment.
- Great location for key employees – excellent working and living environment.
- Excellent potential for early-mover advantage.
Opportunities in Pharmaceuticals
Uganda combines a growing pharma market with access to the EAC market of 175 million people. With relatively high levels of skills and education and an investor-friendly environment, Uganda is a burgeoning pharmaceuticals centre.
Strength of the Pharma sector in Uganda;-
- In 2018, there were over 300 life sciences companies and over 30 pharmaceuticals and medical devices manufacturing companies in Uganda {Source: fDi Benchmark from the Financial Times Limited).
- These companies currently manufacture 173 pharmaceutical products in Uganda {Source: Uganda National Drug Authority).
- Uganda is highly specialized in pharmaceuticals; the chemical sector (which includes pharmaceuticals) accounts for over 10% of Uganda’s manufacturing value added – the highest in the region.
Medical Consumables
- Medical consumables is a rapidly growing segment of Uganda’s healthcare sector. In 2017, the import of medical consumables in Uganda grew by over 60% compared to 6% growth in Sub-Saharan Africa as a whole.
- Total medical consumables imports into EAC are averaging over $250 million per annum with Uganda the fastest growing market.
- There is strong investment potential to produce cotton-based consumables in Uganda including wadding, gauze, bandages and surgical cotton wool. Raw materials can be sourced locally given Uganda’s comparative advantage in cotton production.
- There are also opportunities to manufacture medical supplies and instruments which have strong market.
Opportunities in Infrastructure
Infrastructure is a key priority of the Ugandan Government. During the past few years, infrastructure development has contributed immensely to increased productivity by facilitating efficient connectivity and easing the movement of goods and the provision of services.Infrastructure funding currently comprises about 32.8% of the Government’s total annual expenditure.
Road Transport
The road network includes the national road network, city road network, as well as district, urban and community access roads. In line with the Government’s target of starting commercial oil production by 2020, physical works on three oil roads equivalent to 363km out of 600km are under way. This will help the development of an oil and gas industrial park in western Uganda and the promotion of business start-ups.
Railway Transport
The Government of Uganda is committed to the development of the national railway system as the cheapest means of transport. The rail sub-sector is set to undergo major changes, including upgrading from the meter gauge rail (1 067mm) to the standard gauge (1 435mm).
The air transport system is served by 47 aerodromes distributed evenly throughout the country. Of these, 14 are owned, operated and managed by Uganda Civil Aviation Authority (UCAA), including Entebbe International Airport which is the main entry and exit point for international traffic.
The Government has designated five other airports as entry/exit (international) points to promote trade and tourism. These are Arua, Gulu, Pakuba, Kidepo and Kasese. The rest of the aerodromes are owned, operated and managed by the private sector and local authorities.
The government has revived the National Airline, Uganda Airline to fully support the aviation industry. It is also developing Kabale International Airport in the Albertine region in the western Uganda to service the oil sector.
Inland Water Transport
Water transport is one of the quickest and cheapest means of transport in Uganda. The country is endowed with 18 inland water ports spread across the different water bodies, most of which are on Lake Victoria, which are plied by more than 170 vessels carrying an estimated 6 to 8 million passengers a year.
The Government is increasing investment in water transport infrastructure to enhance the movement of both passenger and cargo traffic. The underexploited infrastructure provides a viable investment opportunity, especially for the increasing tourism market and intra-regional trade activities.
Energy Infrastructure
The total electricity generation capacity is currently 1,200MW. A total of 17 hydro and solar power projects are under construction and an additional 800MW will be added to the national grid. The Government is adding 726.3km of electricity transmission lines to the network.
ICT Infrastructure
Uganda’s National Backbone Infrastructure, an initiative that aims to connect all major towns within the country to an optical fibre cable-based network and to connect Government entities to the e-Government Network, has been extended to districts countrywide.
The total span of fibre optic cables laid out across the country by both the government and private sector is 5,110km, providing seamless connections. Additionally, in order to provide faster internet speeds, 4G technologies have been rolled out with the objective of transforming access to public and private spectrums as well as promoting e-commerce to boost economic growth and efficiency.
Opportunities in Mineral Value Addition
More than 80% of the country has been surveyed for mineral quantities and locations. New geo-data shows that Uganda has large underexploited mineral deposits of gold, oil, high grade tin, tungsten/wolfram, salt, beryllium, cobalt, kaolin, iron ore, glass sand, vermiculite, phosphates (agricultural fertiliser), uranium and rare earth elements.
There are also significant quantities of clay and gypsum. Investment opportunities exist in mining and mineral processing with special incentives provided to the mining sector, including writing off capital expenditures in full.
TOURISM INVESTMENT OPPORTUNITIES IN UGANDA
Tourism is a fast-growing sector supported by the fact that Uganda is ranked as a top tourist destination and one of only three countries with about 50% of the world’s known population of endangered mountain gorillas. (Source: Lonely planet 2012 and CNN 2016, which ranked Uganda among the top 16 holiday destinations in the world)
Game viewing is the most popular tourist activity in the country’s national parks. This is because the country has a variety of game, including the rare tree-climbing lions of Ishasha, white rhinoceros, and elephant and it is home to 11% of the world’s bird species (a total of 1,060 bird species). It is also blessed with unspoiled scenic beauty including forests, hills and mountains, rivers and lakes.
Opportunities in tourism range from:-
- Constructing high quality accommodation facilities,
- Operating tour and travel circuits (bicycle tours, air balloon travel, marine activities on Lake Victoria and river rafting on the Nile River)
- Development of specialised eco and community tourism facilities and faith-based tourism such as pilgrimages to the Namugongo-Uganda martyrs, Mahatma Gandhi statue, and Bishop Hannington landing site on the Nile.
- Steadily growing tourist numbers are estimated to have reached 1.5 million per year, contributing 7.7% to GDP.
- Luxury tented camps and cottages
- House Boats, Cruise Launches on the Nile and Sport fishing on the Lakes Victoria, Albert, Edward and George
- Walking Safaris in the wilderness areas and the volcanic craters
- Canopy Walkways in tropical forests and sky trams
- Development of Lodges and other types of accommodation to suit the various categories of visitors
- Nature walks, game farming, game ranching and sport hunting on private property (private wildlife reserves).
- House boats and other water based activities
- Mountaineering packages for Rwenzori, Elgon and Mgahinga Mountains
- Internal air transport services to the national parks and other domestic touristic hubs.
- White water rafting on the Nile
- Hot springs baths and supporting facilities
- Stop over facilities en-route to the national parks along major tourism circuits e.g. Kampala – Mbarara – Kasese – Mubende – Kampala; Kampala – Masindi – Gulu – Kitgum
- Establishment of a cable car system and ancillary facilities. The proposed cable car system and ancillary facilities in the Rwenzori Mountains National Park will unlock the tourism potential of the Rwenzori and Queen Elizabeth National Parks. Also, known as mountains of the moon, Mount Rwenzori is situated in Kasese district in the borders of Uganda and the Democratic Republic of Congo. The Rwenzori Mountains are a UNESCO (United Nations Educational, Scientific and Cultural Organization) World Heritage site, with snow-capped peaks at the equator endowed with rich and unique flora and fauna as well as outstanding scenic beauty. Among these are the 994 recorded plant species, 217 bird species, and animal species such as the Rwenzori duiker, Chimpanzee and the African Elephant.1 Mount Rwenzori stands at 4,500m above sea level and is the second highest peak in Africa after Mount Kilimanjaro in Tanzania. The high altitude has been a great challenge for travellers taking 5-6 full days to reach Margherita, the highest peak of Mount Rwenzori at 5,119m above sea-level making it quite hard, deterring many tourists from visiting it to explore its uniqueness. The installation of cable cars will not only ease movement for mountain climbers, who take approximately five days to reach the mountain top, but will also provide easy and controlled access to showcase the region’s rich, natural and historical heritage.
- Establishment of luxury accommodation; Tourists within the Rwenzori region consume a number of goods and services such as transportation, hotel and restaurant services, crafts and communication services. Accommodation & Food Service accounted for 3.9% and 6.3% of the total GDP at market prices in Quarter 1 and Quarter 2 of the financial year 2019/20.2 However, our field visits, consultations and the review of secondary data has revealed shortages in accommodation facilities for tourists within the region, especially in Kabarole and Kasese districts. Therefore, an international and local investor looking for an investment grade opportunity with acceptable returns will look to invest in a chain of luxury accommodation within the region. Tourists find acceptable quality accommodation scarce across several districts within the region.
HIGH END COTTAGES
AMOUNT: US$3,000,000
LOCATION: 10 NATIONAL PARKS
The project will construct 100 cottages for tourist accommodation. The project seeks to address bed shortage in Bwindi, Mgahinga, Queen Elizabeth, Rwenzori, Semuliki, Kibale, Elgon, Murchison falls, Kidepo & Lake Mburo.In the high tourism season, there’s a 50% shortage of beds in the national parks.
SOURCE OF THE NILE DEV’T
AMOUNT: US$150 Million
LOCATION: SOURCE OF THE NILE, JINJA
The project is meant to build infrastructure around the source of the Nile such as public infrastructure (beautified), Cultural centres, Entertainment facilities, Hotel and recreation, Tourism water activities , Zip lines, Information Centre, Monuments and floating restaurants, alongside an improved golf already in existence for socio- economic benefits.Target market are tourists from all over the world, so the investments are to be first class.
ECO-TOURISM PRODUCTS
AMOUNT: US$ 1 – 55 MILLION
LOCATION: COUNTRYWIDE
There are numerous investments which can be undertaken in different national parks and en route to national parks. These opportunities include Luxury hotels, tented camps and cottages; House Boats, Cruise Launches on the Nile and Sport fishing on the Albert, Edward and George; Walking Safaris in the wilderness areas and the volcanic craters; Canopy Walkways in tropical forests and sky trams;
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