In this section, the data on business opportunities in Uganda are presented, analyzed and interpreted. Generally, business opportunities in Uganda are articulated by Uganda Investment Authority (UIA) in several of its publications such as the investor brochure.
The general opportunities for the entire economy are presented in Table 1 and some specific opportunities for the financial sector in Table 2. Opportunities exist in agribusiness, fisheries, forestry, manufacturing, mining, infrastructure, financial services, tourism, printing and publishing, education, information and communication technology (ICT) and the newly found oil. Some of these opportunities are elaborated next.
Agricultural production is mainly from 2.2 million smallholders, mostly working 2 to 3 hectares of land, using traditional methods of cultivation and family labour. Any foreign investor could, therefore, leverage on the valuable lessons from these smallholders in commercializing its own farming in Uganda. Food crops (plantains, cassava, sweet potatoes, millet, sorghum, maize, beans, groundnuts and sesame) represent 60% of agricultural GDP, livestock 19% and export crops (coffee, cotton, tea and tobacco) 12%. Some high value crops, such as cut flowers and certain vegetables and fruits, are also being exported. The government is developing a strategy to encourage exports of both food crops and high value crops, in order to diversify its export base (RSA, 1998). The markets exist in Europe and Japan for these agricultural produce from Uganda.
Japan is a significant source of investment inflow to the developing economies. Unfortunately, Japanese investments in Africa account for only 0.6 percent of its total investments abroad and these are already concentrated in a few African countries especially in the North and South Africa, thereby excluding Sub-Saharan Africa (SSA). Thus, there is need to increase Japanese investments in Africa, and Uganda in particular. In a recent discussion with a delegation of 50 Japanese investors headed by the country’s Parliamentary Vice Minister for Foreign Affairs, Mr. Nobuhide Minorikawa, the Uganda private sector was challenged to seize the opportunity now that Japan has opened its doors to trade. Japan has already granted Africa quota-free, duty-free market access to 175 agricultural products from Uganda and other developing countries. Despite these opportunities, Uganda’s exports to Japan are still minimal due to supply side constraints and non-tariff barriers (NTBs) such as quality standards, production capacity, certification, information gaps among the exporters on Japanese regulations and inadequate knowledge of Japanese market (The Monitor Newspaper, Wednesday, September 17, 2008).
On the other hand, investments from such countries as Japan can be used in exploiting some of the identified opportunities in Uganda, especially in agribusinesses.
Information from the Fisheries Department in Entebbe indicates little hope for Uganda in fisheries for 2009; the country exported about 16,000 metric tonnes of fish down from the 23,000 tonnes exported in 2008. Uganda continues to register declines in fish export revenue and volume. This is threatening the country’s once promising economic resource. The report also indicates a decline in export revenue. Only US$70 million was realized from the fish exported in 2009 indicating a plunge from the 2008 mark of about US$117 million. This means the country lost close to $47 million in revenue. The falling trend has been on for the last four years. Uganda exported 35,000 tonnes of fish there-by earning the country a total of US $145.8 million (Shs247.8 billion) in 2006. In 2007 the volume exported fell to 32,000 tonnes, earning the country a total of US$124.7 million (Shs211.9 billion) less revenue compared to 2006.
The loss has been attributed to increased mismanagement of the water resources and the effects of climate change. A source at the Fisheries Department, who preferred anonymity, remarked that “If serious action is not taken, then the resource is at stake, revenues will continue to dwindle and incomes lost.” Over 0.4 million and 1.5 million Ugandans who directly and indirectly depend on fish are being affected by the plunge. The government and the private sector are adopting different measures to save the industry which was once the country’s leading non-traditional export (NTE). Currently, the government earmarks about Shs200 million- Shs400 million each quarter for the development of fisheries; an amount range that is not enough if the new intervention measures were to be implemented within the stipulated time frame. Thus, according to the Department, the funds allocated are less than the actual annual budget of about Shs6 billion required to keep the systems running and to realize the desired change (The Monitor Newspaper, Tuesday, January 26 2010).
Given the above, private investors with the required resources can step in to harness the fishery potentials that still abound in Uganda.
In the banking sub-sector, the rural areas are largely unbanked; hence creating a gap. Most of the banking activities are concentrated around Kampala, the country’s capital and other large towns, leaving about 42% of Ugandans at the mercy of the informal financial sector, and another 30% totally excluded from the financial services sector. There is, therefore, the need to attract banking, particularly micro-finance to the rural areas.
The general opportunities in banking are indicated in Table 1 row 7 while more detailed opportunities in the financial sector are in Table 2. These opportunities yearn for investment, especially of the FDI type.
With the newly-discovered oil deposits in the Lake Albert region of western Uganda, the country presents opportunities that need to be exploited by foreign investors who have both the resources and the necessary technology in the oil industry. In this regard, Dr Maggie Kigozi, the then executive director of the UIA, had asked Libyans to invest in oil exploration and drilling in Uganda. She opined that Libya has the necessary experience and expertise to manage Uganda’s virgin petroleum sector. “Uganda was looking for more capacity to explore oil, build refinery for oil by-products”. In Uganda, Libya already boosts of investments by constructing the Uganda-Kenya oil pipeline.
According to UIA, Libya was among the top 10 countries that lead in Uganda’s FDI (The Monitor Newspaper, Thursday, May 27 2010). Libya has also made inroads into East Africa’s oil sector premised on an oil pipeline deal worth about Shs714 billion. The Libyan government through Tamoil, a state owned firm, won a deal to construct an oil pipeline linking Uganda to Kenya from Eldolet in the Kenyan Rift Valley Province. The project, however, stalled over the years due to compensation failures, diversion of funds, rising expenses and technical obstacles, which forced the cost to rise from a previous low of about Shs212 billion to a high of Shs714 billion (The Monitor Newspaper, Tuesday, March 22 2011); and finally to the cancellation of the project in September 2012, and an estimate of USD300 million for its fresh execution.
Uganda is blessed with abundant mineral deposits such as gold, tin, cobalt, iron-ore, gypsum, etc. These resources have remained virtually unexploited, largely due to the absence of relevant geo-scientific information and the capital intensive nature of their exploitation. These make mining very attractive for the foreign investors who have the requisite scientific knowledge and funding that are critical in the operations in that sector of the economy. In the quest to boost Foreign Direct Investment (FDI) into the country, President Museveni of Uganda urged investors at the Third East African Investment Conference in 2010 to exploit the EAC’s sizeable mineral resources in the region; while also mentioning other key sectors such as tourism and hospitality, transport, energy as well as the Information and Communication Technologies (ICT) (Walter Wafula & Dorothy Nakaweesi, 2010).
Tourism presents great opportunities in Uganda. The country is blessed with such tourist attractions as forest reserves, wild-life, water-falls, etc. These have potentials to attract enormous holiday makers from European and Asian countries than they currently do. For instance, approximately 19 million Japanese tourists travel abroad annually, while Uganda only gets about 1,000 of these tourists valued at $2.9 million. In 2005/6, only 500 out of this number visited Uganda. (The Monitor Newspaper, Wednesday, September 17 2008). Tourism opportunities exist in Uganda in the areas of provision of high quality accommodation facilities, organizing packaged tours and travels, development of eco-tourism, and so on. Kenya and Egypt remain some of the tourism top earners in Africa.
Another area of great business opportunities in Uganda is in the provision of infrastructure. The potentials lie in the transport and logistics businesses and energy. Uganda is land-locked, and depends on land transportation for its import and export trade. Unfortunately, the road network is inadequate and their state deplorable. The rail system seems to have virtually collapsed. On energy, the exploitation of the abundant hydropower remains minimal, even as most part of the country’s hinterland remains without power. Only 10 percent of the potential 2700 megawatts of hydroelectricity in the country has been exploited, while only about the same proportion of the country’s population has access to electricity. Opportunities, therefore, exist in the commercialization and building of road and rail systems, as well as in power generation and transmission. These are very capital intensive ventures with long gestation periods that are well beyond the capital and financial resources available in the country. These opportunities, consequently, appear exclusive for the foreign investors with the requisite technical and financial resources.
Manufacturing opportunities abound in Uganda, with its low manufacturing base. These are in virtually all products, particularly the basic ones such as beverages, paper, textile, pharmaceuticals, plastics, etc. This has made the country dependent on imported manufactured goods, mostly from Europe, Asia and the neighboring Kenya. Foreign investors, with superior financial bases, can take advantage of these opportunities, as the locals appear handicapped.
Table 2: Investment Opportunities in the Financial Sector in Uganda in 2010