Opportunities in Africa featuring Uganda

 

 
As part of Sassda’s drive to highlight business opportunities for its members and promote exports, each month we highlight a growth ‘hot spot’ in Africa and provide exclusive market intelligence, including the latest key data and in-depth analysis on a particular African country.
 

BACKGROUND

Map of UgandaThe colonial boundaries created by Britain to delimit Uganda grouped together a wide range of ethnic groups with different political systems and cultures. These differences complicated the establishment of a working political community after independence was achieved in 1962. The dictatorial regime of Idi Amin(1971-79) was responsible for the deaths of some 300,000 opponents; guerrilla war and human rights abuses under Milton Obote (1980-85) claimed at least another 100,000 lives. The rule of Yoweri Musevenim since 1986 has brought relative stability and economic growth to Uganda. In December 2017, parliament approved the removal of presidential age limits, thereby making it possible for Musevenim to continue standing for office. Uganda faces numerous challenges, however, that could affect future stability, including explosive population growth, power and infrastructure constraints, corruption, underdeveloped democratic institutions, and human rights deficits.

 

ECONOMY

Uganda’s estimated GDP growth rate in 2017 was 4.8% rising from 2.3% in 2016. It has substantial natural resources which include large recoverable oil reserves and deposits of copper and gold.  However, the main source of employment is the agricultural sector which employs 72% of the population and the major export from this sector is coffee which had record harvests in 2017 and 2018 and boosted the economy, these exports accounted for 16% of total exports.  Increasing gold exports also assisted the economy and these contributed 10% of total exports.

The country has poor infrastructure and a lack of modern technology in agriculture and the largest infrastructure projects are financed through concessional loans.  Oil revenues and taxes are expected to become a larger source of government funding as oil production will commence in the next couple of years.  Foreign investors are planning to invest $9 billion in these production facilities and a further $4 billion in an export pipeline. An additional $2-3 billion is planned for a refinery production facility producing petroleum products for the domestic market as well as other countries in the East Africa community.

Some of the economic challenges that Uganda faces are instability in South Sudan resulting in an influx of refugees and the government’s failure to invest in health, education and economic opportunities for a growing young population.

The African Development Bank (Afdb) reported that real GDP growth was an estimated 5.3% in 2018, a further growth on the 2017 figure.  They stated that greater investment in public infrastructure was the main contributor to growth in 2018.

TRADE WITH SOUTH AFRICA

In an agreement signed in February 2018 the Trade Ministers from Uganda and South Africa have reaffirmed their commitment towards facilitating trade and investment flows between the two countries.  The two ministers Amelia Kyambadde, the minister of Trade, Industry and Cooperatives and her counterpart Gratitude Bulelani Magwanishe, the South African Deputy Minister for Trade and Industry signed the declaration in Pretoria.  South Africa recognised the imperative to build a mutually beneficial trade and investment relationship that supports the industrialisation imperative of the two countries.In her remarks, Minister Kyambadde underscored the widening and imbalanced trade and investment flows between Uganda and South Africa.  By 2016, Uganda’s trade imbalance with South Africa was estimated at $198 million – Uganda’s imported from South Africa goods worth $215 million against Uganda’s exports worth $17 million.  “Imports from South Africa are mainly processed and manufactured products that include flat rolled products of iron or non-alloy steel, transport goods vehicles, electricity meters, semi-finished products of iron and non-alloy steel, printed matters, apples and medicine, while Uganda’s export was mainly coffee,” she said.

In her response, Gratitude Magwanishe said that South Africa was committed to maintaining and improving the already vibrant relations between both countries however, cautioning Uganda to work harder towards improving her exports to South Africa.  “The onus is on Uganda to work harder in improving exports to South Africa and thus should effectively utilize the Joint Trade Committee for the two countries to achieve this,” she said.Currently, there are over 60 South African companies in Uganda, and they are broadly in the areas of financial, telecommunications, hospitality industry, power generation and manufacturing.  Some of the notable companies are Stanbic Bank, MTN Uganda, Shoprite, Game, Eskom and Woolworths.At a meeting in November 2018 Minister Rob Davies stated “Our Council for Scientific and Industrial Research (CSIR) and the Uganda Industrial Research Institute (UIRI) have already renewed a Memorandum of Understanding (MoU) and have since agreed to collaborate in the areas of agro and food processing, clean production, waste management, product development, human capital and Organisational Development,” he said.  “In addition to this he reiterated the need for the South African Bureau of Standards (SABS) and the Uganda National Bureau of Standards (UNBS) to strengthen their collaboration on the harmonisation of standards in order to facilitate the smooth flow of trade between the two countries.”

OPPORTUNITIES FOR STAINLESS STEEL

  • As stated previously in this report Uganda’s Agro-processing sector has very outdated technology and this is an opportunity together with Meat and Fish processing;
  • They have a growing Sugar industry, and this could be a possibility for 3CR12;
  • Uganda has a brewing industry which they would like to further develop as they would like to export more to the East African region;
  • Their mining industry in terms of gold and copper is relatively small but their reserves are good and there are some opportunities in the sector;
  • The discovery of oil reserves has pointed to the development of a petroleum industry and refinery, as yet not commenced, but they are likely to embark on this sector in the next two to three years.

 

Thanks and Kind Regards


Lesley Squires
Market Intelligence & Exports
Tel: +27 11 883 0119 | Cell: +27 82 758 8074