Market Intelligence

UNLOCKING UGANDA’S POTENTIAL FOR SA STAINLESS STEEL

To further member interests across the continent and explore the full gambit of export opportunities for the South African stainless steel sector, Sassda Market Intelligence Specialist Lesley Squires recently attended the South Africa-Uganda Business Forum event in Midrand, Gauteng based on the theme Boosting Trade and Investment Relations between South Africa and Uganda…

Against the backdrop of South Africa and Uganda signing a Mutual Cooperation Agreement, Ugandan Minister of Trade and Industry Ntabazi Harriet commented that there were a number of non-trade barriers between the two countries and that these were being addressed during the South Africa-Uganda Business Forum event. As an example of this, Harriet pointed out that the current Visa requirement for Ugandans entering South Africa will fall away in October.

She added, “South Africa has also managed to substantially increase its value-added exports and we would like to learn from the South Africa experience to allow Uganda to do the same.”Harriet also expressed the wish that the forum becomes an annual event given that the last time South Africa and Uganda had met to discuss trade was in 2011, during the Presidential visit of President Museveni to South Africa.

At that stage, there were 70 South African businesses operating in Uganda. In 2023, this number has dropped to 38 businesses with the two largest South African companies currently MTN and Stanbic, both of which had representatives present at the forum.

A fast growing economy

At a macro level, Uganda is the fastest growing economy in East Africa at a rate of about 3.5% per annum. Key mechanisms that have facilitated this level of growth include the development of a one-stop business registration centre and the allowance of 100% overseas ownership of companies with the ability to repatriate all profits.

Power to the private sector

Also speaking at the event was Private Sector Foundation of Uganda (PSFU) Chairperson Humphrey Nzeyi who heads up this apex body for Uganda’s private sector consisting of 230 business associations, corporate bodies, and the major public sector agencies.

Since its inception in 1995, the PSFU has served as a focal point for private sector advocacy as well as capacity building and continues to sustain a positive dialogue with government on behalf of the private sector. The PSFU is also the government’s implementation partner for several projects and programmes aimed at strengthening the private sector as an engine of economic growth in Uganda.

Nzeyi explained that the PSFU’s competitiveness agenda is driven by the urge to increase private investments and productivity. “The Ugandan private sector appreciates that the government of Uganda is moving steadfastly to establish such an environment and both local and foreign direct investments.

He added that as an apex body the PSFU has expanded and scaled up its reach from merely providing business information, managing projects, grants, training and business development support, to a diverse private sector think tank and innovation hub with a new stable platform for growth and sustainable development.

Nzeyi explained; “This is being conducted in full collaboration with the government of Uganda and the United Nations Development Programme given that the PSFU is a value-based and ethically driven entity premised on ten sectors that drive Uganda’s economic growth.
“The foundation is also the focal point for the East African Business Council and the COMESA Business Council. Using this platform, the PSFU has spearheaded the Trade Policy and Trade Development agenda on behalf of the Uganda business community, directly engaging with regional policy platforms.”

Farming for the future

Ugandan Investment Authority representative Robert Mukiza focused on the opportunities for Agricultural
Value Addition. He reported that the agricultural sector continues to be the most important in Uganda employing approximately 72% of the population and contributing about 32% to the GDP. “However, productivity is limited by a reliance on natural weather conditions and the still widespread use of traditional methods and equipment,” said Mukiza.

Fortunately, Uganda remains 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 therefore pushing for greater commercialisation of agriculture by encouraging the use of irrigation and mechanised farming.

Investment opportunities 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

Under-exploited mineral deposits

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, therefore, exist in mining and mineral processing with special incentives provided to the mining sector, including writing off capital expenditures in full.

Energy

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 has excellent potential for the development of hydro, geothermal, petroleum resources, and solar thermal yet only a small fraction of this potential has been harnessed.

The Ugandan government is making a concerted 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 Ugandan oil and gas sector has significant potential to contribute to inclusive growth in the country as it is expected to bring in investments between US$15-billion to US$20-billion in the next three to five years. The discovery of 6.5-billion barrels of oil (1.2-billion barrels recoverable) is the foundation of two major investments:

  1. ) an oil refinery that will process 60 000 barrels per day, and
  2. ) the 1445km of an oil pipeline from Hoima in Uganda to Tanga Port in Tanzania. This paves the way for projects 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 also unlock many opportunities for investors and Ugandans.