Wednesday, June 2, 2010
Who are the investors that should be encouraged in rural areas?
To the right is Dr. Maggie Kigozi Executive Director; Uganda Investment Authority
We have investors coming to Uganda and the 1st thing they think of is to get land for estates name it. I think the better way id for investors to come encourage our people to grow whatever they would like on big scale and instead buy this produce from them. It is a win win situation where the investor makes his money and the people retain the land while they produce according to the standards as required by the investor.
Analysis of relative profitability of key Ugandan agricultural enterprises by agricultural production zone - Source: http://www.ifpri.org/publication/analysis-relative-profitability-key-ugandan-agricultural-enterprises-agricultural-produ-0
Uganda’s economy remains heavily dependent on the agricultural sector. In 2008/09, the agricultural sector contributed 90 percent of total export earnings, generated 23.7 percent of Gross Domestic Product (GDP), and directly or indirectly provided livelihoods for about 90 percent of the population (MFPED, 2009). However, most of the agricultural production is by small-scale subsistence farmers who use rudimentary technology and are largely engaged in non-market production. The Plan for Modernisation of Agriculture (PMA) was, therefore, designed by the government of Uganda as a strategic framework for eradicating poverty through the implementation of multi-sectoral interventions aimed at easing the multifaceted constraints faced by farmers. Specifically, PMA is aimed at increasing income and quality of life, improving household food security, providing gainful employment, and providing sustainable use and management of resources.
In support of PMA priority interventions, the Government of Uganda is implementing the Prosperity for All development framework that embraces rural enterprise and promotes industry by building on the Plan for Zonal Agricultural Production, Agro-processing and Marketing. Through zoning and enterprise selection criteria, PMA intends to provide information and guidance for agricultural investment to local governments and individual farmers at the agricultural production zone level (Figure 1). The International Food Policy Research Institute is assisting PMA in building capacity to target profitable types of enterprises. This study is aimed at providing information about the profitability of PMA priority enterprises in the 10 established agricultural zones of Uganda. The findings and recommendations provided here were obtained through analysis of the Uganda National Household Survey (UNHS), the most frequently updated database on household economic activities in the country. This policy brief concludes with suggestions on how the UNHS could be improved to provide more accurate information on relative enterprise profitability in the future.
International Food Policy Research Institute (IFPRI)
Why Invest in Uganda? - Source: http://www.myuganda.co.ug/economy/investment.php
Since 1991, over 2000 enterprises of various sizes have committed in excess of US$2.5 billion in actual investment into the country for projects that range from agriculture, manufacturing to transportation. For many investors, Uganda is an attractive investment location in Africa for the following reasons: -
* Strategic location at the heart of Africa that guarantees ready access to regional markets
* A predictable and stable economic environment
* A fully liberalized economy
* An abundant natural resource base
* Demonstrated Government commitment to the private sector
* Existence of a well-trained, English speaking workforce
* Well-developed basic infrastructure, compared to other countries in the region
Uganda is strategically positioned within East and Central Africa - a region that includes some of Africa's most economically important countries. This location at the heart of Sub-Saharan Africa, gives Uganda commanding importance as a base for regional trade and investment.
Since 1986, Uganda has implemented a radical economic program aimed at reversing the past economic stagnation in the country. As a result, the country has achieved macroeconomic stability characterized by over twenty years of low inflation, stable exchange rates and consistently high economic growth. Uganda currently ranks as the fastest growing economy in Sub-Saharan Africa and in many ways, has come to reflect the new face of emerging Africa.
The Uganda Government's strategy is to modernize the economy through relying on the markets and the efforts of private investors as the basis for efficient and productive economic activity, while the government itself provides the necessary legal and policy framework and physical infrastructure for private investment to flourish. The strategy which ahs been in place since 1987, is endorsed by the World Bank, donor community and the private sector. In line with the above strategy, Uganda boasts of a liberalized economic environment where the market forces determine prices and where almost all economic activity is unrestricted.
Large-scale commercial agriculture is encouraged because Uganda is largely a fertile country with plenty of arable land that is currently unutilized. Uganda enjoys comparative advantage in agriculture because of the lesser requirement for inputs i.e. water (irrigation) and fertilizer. Foreign investors, however, require special cabinet approval to engage in commercial agriculture. UIA, however, can facilitate the process of securing this approval.
Agro-processing is a major opportunity in so far as it exploits local products by adding value through canning or manufacture of value added products. There is significant scope for export both to the regional and the international market.
More details on investment opportunities are available in the Sector Profiles and copies are available with the Uganda Investment Authority.
Foreign investors can apply for loans from the local banking sector. Investors can also list their projects on the local stock exchange. A number of projects exist to support investors in given sectors. UIA can advise potential investors on the how and where to access existing financing options for their planned investors.
Getting Started - A Brief Guide
Foreign investors require a minimum investment of US$100,000 in order to secure an investment license from the Uganda Investment Authority. For local investors, the minimum investment requirement is US$50,000. Local investors, however, may proceed with their investors without licensing with the Uganda Investment Authority.
As a new investor, you will need to go through the following steps to start up your investment in Uganda: -
Step 1 - Register your company in Uganda
Register your company in Uganda at the Registrar General's office and obtain the following documents: -
* Memorandum and Articles of Association
* Certificate of Incorporation
Step 2 - Get your Investment License
Apply for an investment license using UIA Form 1 and attach the following:-
* Memorandum and Articles of Association
* Certificate of Incorporation for (limited liability companies)
* Business Plan
Normal processing time for an investment license is 2 - 5 days.
Step 3 - Secure necessary secondary clearances
As you proceed to implement your project, you may require certain secondary permits or clearances depending on the nature of your investment e.g. for mining activity, air transport, banking, forestry. UIA can assist you to obtain such secondary licenses as well as get access to other services. UIA can also assist you in obtaining suitable industrial land, work permits for your expatriate staff, and utilities like telephone, electricity and water.