Doing Business in Uganda

Benefits and Challenges of Investing in Uganda

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Why you should consider international expansion in Uganda

There has been a rise in the number of multinational and international companies setting up overseas in Uganda over the recent past. This can be attributed to many reasons especially liberalization of the economy allowing many multi national corporations to set up like in the telecom sector; MTN and Airtel Bharti, Orange, in the Financial Services sector ;- Citi Bank, Standard Chartered, Standard Bank, Barclays, Letshego, Oil and Gas Sector; Tullow Operations Pty, Total, Vivo Energy, CNOOC, Beverages Sector;- Diageo, SabMiller, Coca Cola, Pepsi; Fast Moving Consumer goods (FMCG);- Uniliver, Bidco.

Some of the benefits of setting up business in Uganda include;

  1.  Wide regional market including Kenya, Tanzania, Rwanda, Democratic Republic of Congo and Southern Sudan.
  2. Easy and investor friendly labour/employment laws
  3. Conducive Investment Climate
  4. Positive income tax regime that provides incentives to investors including double taxation treaties
  5. Good physical climate
  6. Liberalized economy where there is repatriation without restrictions and there are no foreign exchange controls.
  7. Political, economic and market stability
  8. Emergence of the regional common market of the East African community. Uganda is a member of the East African Community common market with 5 member states
  9. State of infrastructure
  10. Availability of adequate energy
  11. Legal regulatory framework, there are no stringent laws to doing business
  12. Availability and the costs of raw materials and natural resources
  13. Attractive foreign investment policies
  14. presence of environmental laws and regulations

Some of the drawbacks of investing in Uganda include;-

  1. Dis economies of scale
  2. Limited skilled labour in specialized fields hence supervision of business becomes a challenge
  3. High interest rates

Top Investment areas in Uganda/ hotspots for overseas expansion

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HOTSPOTS FOR OVERSEAS EXPANSION IN UGANDA

There are several hotspots for overseas expansion and investment areas in Uganda. Some of the main sectors are discussed below:

Energy and Mining

Uganda has favourable geological conditions associated with a rich and diverse mineral resource base. Over 33 metallic and non metallic minerals are found in the country. Some of these minerals are currently being mined and others explored. Minerals found in Uganda include but are not limited to gold, iron ore, Tin, Copper, Cobalt, Phosphates, Vermiculite, Diamond, Petroleum, Limestone, Chronite, Magnetite, Uranium, Wolfram, Salts, Nickel, Glass and Sand.

Uganda has both renewable and non – renewable energy resources. Renewable energy sources include plentiful woody and non- woody biomass, solar, wind, geothermal, and hydrological resources.

Oil & Gas

The discovery and confirmation of commercial oil reserves along the western border has put Uganda in the spotlight. In January 2009, Heritage Oil announced the discovery of an estimated 400 million barrels of oil in a field dubbed Giraffe1, in the Lake Albert region and that the wider field named Buffalo Giraffe is thought to have well over two billion barrels of oil in place. Foreign companies already involved in oil operations in Uganda include UK-based Tullow Oil, Tower Resources, China’s China National Offshore Oil Corporation (CNOOC), France-based Total SA and Italy’s Eni Spa,

Real Estate, Construction and Infrastructure

The population of Uganda is steadily increasing and is currently estimated to be at 34 Million people. This has led to an increase in the demand for housing provision and construction services. Investment opportunities in this sector include the provision of low-cost housing for the population in urban and peripheral areas; the manufacture of prefabricated concrete systems and other fittings for the building & construction industry, supply of furniture & fittings among others.

Trade and Commerce

The recent economic dynamism has also opened up opportunities in manufacturing and services. Linked to almost all of the primary sector industries are opportunities in up-stream or down-stream manufacturing activities. These include, among other things, packaging and the construction of storage facilities. In addition, the extensive privatization programme of the Government has opened up industries that were formerly closed to the private sector, particularly in the infrastructure sector.

Agriculture and Food processing

Uganda is endowed with a good climate and fertile soil. Temperatures range between 15 and 30 degrees centigrade and annual rainfall between 750 and 2000 millimetres. Investment opportunities in this sector range from forestry to food-processing and the manufacture of inputs. Specific agriculture-related industries with attractive opportunities include food products and oil seeds, fruits and vegetables, forticulture, fish and fish products, livestock and dairy products, and commercial coffee and tea farming.

Transport and Communication

Uganda is served by road, rail, inland water and air transport. Road is by far the dominant transport mode in terms of scale of infrastructure and the volume of freight and people movements. The shortage of proper infrastructure facilities, in particular air, road and rail transport, is an obstacle to users but an opportunity for investors to get contracts in Road/Railway/Bridge construction. Opportunities in the Communications sector include provision of Technology Hardware and Software, Extension of Internet connectivity solutions, Software development, webhosting/Design solutions, Mobile telephone services

Other sectors include manufacturing, service delivery to mention but a few.

Doing Business in Uganda

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About Uganda

The Republic of Uganda is a landlocked country located in East Africa. It borders Kenya in the East, Democratic Republic of Congo in the West, the United Republic of Tanzania in the South, Rwanda in the South West and Republic of South Sudan in the North.

Despite the limitation of being landlocked, Uganda has numerous opportunities created by its being land linked; as shown above, it has five countries bordering it. Its biggest opportunity is the ease of trade with all the five neighbouring countries.

Uganda has a population estimate of 34 million people which translates into a high market for manufacturing services, construction, leisure provision, infrastructure development, agriculture and potential for all sectors. It is blessed with ideal climate, green vegetation and indeed stands true by its motto “gifted by nature”. Uganda is said to have been called the “Pearl of Africa” by Sir Winston Churchhill, the former British Prime Minister visited Uganda. Although certain literature and research suggests that it was first named the Pearl of Africa by Henry Stanley. See the interesting research presented by Jonathan Musere at http://mozambi5.wordpress.com/2010/11/21/winston-churchill-and-henry-stanley-who-named-uganda-the-pearl-of-africa/