UGANDA INVESTMENT AUTHORITY OUGHT TO TELL GOVT. THE FACTS ABOUT COSTS IN PRODUCTION IN UGANDA

Uganda is to host the Uganda - Gulf Cooperation Council (GCC) Investment Forum from May 28 to 30, 2012 at Sheraton Kampala Hotel. The forum which is to focus on Cotton; Dairy; Meat; Tourism; Energy; Fruit and Vegetable is welcome, however, there is a problem that the Government of Uganda has failed to address appropriately if viable investments are to be attracted in the country. It is the problem of cost of production. Much of what would be produced in Uganda given the available resources can not be produced economically or competitively. It is for that reason that Star Coffee ventured to do their processing in Tanzania and the extraction of oil which is done in Kenya. It is time Uganda got serious. Uganda Investment Authority (UIA)ought to come out open and tell Government that it is waste of time to want to call in investors who will find production costs on the high hence will not be able to market competitively what they will produce. The power tariffs are a big problem in the country. Recently, a gentleman from UMEME was heard telling someone who does the business of Milling maize flour that it is not possible to make profits if the one milling has no method of cheating to see that he pays for fewer units of power than what has actually been consumed. That is the Uganda that is attracting foreign investment. Uganda investment Authority ought to get the real facts of the actual costs on ground in Uganda to the prospect investors so that those people get the right picture and are able to judge whether it is worth wasting time to venture into the country or not. We should move from the politics of State House safe guarding any selected investment or even waiving off taxes that should have normally been paid. If we get the information regarding the various variables in the production process brought out clearly in comparison with other countries, it may be a worthy starting point. It is true that debt servicing is one reason the taxes/tariffs are high, but the Government of Uganda ought to see to it that as a priority, the production cost are comparable to those in countries that we are bound to compete with. UGANDA SET TO HOST GULF INVESTMENT FORUM

Minister Aston Kajara KAMPLA, , 6 Rajab/27 May (IINA)-Uganda will this week host a Gulf Cooperation Council (GCC) investment forum in which Ugandan businessmen will find opportunities to meet international businessmen. The GCC forum which has been organized by the Government through the Uganda Investment Authority (UIA) with a theme ‘Uganda a country of opportunity and prosperity’ will be held on May 28-29, 2012 at Sheraton Kampala Hotel. During a press briefing at the Media Centre Aston Kajara, the Minister of State for finance in charge of privatization said the business meet will give opportunity to local investors to discuss business collaboration with potential investors. He said the local businessmen will have an opportunity to meet and discuss with representatives of key private sector bodies and investment banks from mainly the GCC countries. Some of the GCC countries are; Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and United Arab Emirates and they possess wealthy businessmen and private sector bodies who can partner with Ugandans to create businesses, projects and incomes. The GCC businessmen and bodies have expertise in construction, oil, banking and other financial services that Ugandans can take advantage of to start and grow businesses. The other organizers of the GCC are the Islamic Development Bank Group (IDB), Arab Bank for Economic development in Africa (BADEA), The United Nations Industrial Development Organization (UNIDO) and the Federation of Gulf Cooperation Council (GCC) chambers. Tom Buringuriza the acting Executive Director of UIA said they had developed about 200 business ideas(projects) which Ugandans can access for free and be able to present them to potential investors for partnership and business collaboration during the forum. “The local businessmen should this week come to UIA office and access the business ideas for free which they can present to potential investors and business partners” Buringuriza said. Kajara said the GCC has in the past operated in North Africa and some parts of Europe and that it was a great opportunity to host them in East Africa, particularly in Uganda. The minister said that Uganda will showcase opportunities it has in agriculture and agribusiness, energy and tourism which would be spurred to grow and promote investment and development. Buringuriza said over 200 delegates are expected at the forum, of which 75 hail from the GCC countries. “We see this as a great breakthrough to host the GCC here in Kampala,” he added. He however stressed that partners and potential investors would be interested in finding and working with honest and trustworthy partners and businessmen. Buringuriza said GCC will not immediately establish a bureau but will work through UIA to follow up on issues and partnerships built during the two days’ forum. AH/IINA WHY MADE IN CHINA IS A CAUSE FOR WORRY Friday, 02 March 2012 10:52 Written by Henry Zakumumpa Over the last festive holidays, I strolled through my home town of Mbarara and was astonished at the number of Chinese immigrants engaged in retail business, manning outlets selling commodities such as Chinese mobile phones in set-ups which in Kampala-speak would be called emidaala. I know it is not unusual in today’s Uganda to find Chinese immigrants in retail business, as we have seen it in Kikuubo in Kampala, and I occasionally shop at a Chinese-run supermarket in the suburb of Wandegeya. But Mbarara was a new thing for me. Now, this is no homophobic treatise, but I was struck by what these developments said about the changing character of Ugandan commerce and how Chinese industry in Uganda has truly come full circle by completing the supply chain. Products are made in China, imported by Chinese traders in Uganda, through an efficient export machinery and are now directly sold in Uganda by Chinese retailers! If you have shopped at any local supermarket in any town in Uganda, you will be forgiven for thinking that everything is ‘made in China’ these days. Chinese products have an irresistible lure. They are quite cheap. They typically cost less than any other similar product (including Ugandan-made ones). But there is definitely a catch. Chinese industry has made many products seem cheap and affordable and many Ugandans have bought their first TV set or electric fan because cheap Chinese products have made it possible, but this may very well be coming at the expense of the local manufacturing sector. It now seems very few Ugandan manufacturers can locally produce goods at prices that rival Chinese products. And this is the reason why. The cost of doing business in Uganda is not terribly competitive. Commercial bank loan interest rates in Uganda have been as high as 30%. The cost of energy is so prohibitive and saw a recent 40% hike in electricity tariffs. Many businesses have to make do with expensive thermal generators during regular and prolonged power cuts. Uganda can’t even compete with China on labour costs. Chinese engineers and construction companies typically bid lower than Ugandan construction firms for civil works and deliver their projects much faster than Ugandan contractors. But there are also some exogenous variables working in favour of Chinese businesses in Uganda and elsewhere. The Chinese government subsidises Chinese businesses in Africa and in many cases offers very low interest loans to businesses willing to set up shop in Africa. You have heard the Americans perennially complain that the value of the Chinese currency is kept artificially low, making Chinese products much cheaper for importers. Then Senator Barack Obama, while visiting Kenya in 2007, pitied Kenyans for thinking that they could compete with the Chinese industry, saying that even Europeans and Americans had just given up. Whenever I return from Europe, I am amazed at how many souvenirs and items I bring in ‘from Europe’ that are actually ‘made in China’! Statistics show that in 2008, Ugandan exports to China that include cotton, coffee, leather and fish amounted to $20m while imports from China such as mechanical and electrical appliances stood at $202m. Uganda’s trade deficit with China has more profound effects on the economy. Besides turning Uganda into a net importer of Chinese products and rendering local manufacturing uncompetitive, with losses in manufacturing jobs, the repercussions extend to the value of the Uganda shilling and imported inflation from China, among many other ills. An economic report shows that Chinese textile imports have caused 80% of Nigerian factories to shut down, resulting in 250,000 workers losing their jobs. In response to these challenges, South Africa has introduced a quota system for Chinese textiles that limits their entry into that country. For Uganda, joint ventures between Chinese and Ugandan entrepreneurs could be an alternative middle ground. But the Chinese have built us a football stadium, a city hospital, a twin-tower President’s office and our Foreign Affairs ministry office block. However, should we at all be surprised at their benevolence? And I typed this opinion piece on a laptop made in China, while wearing my made-in-China slippers, drinking coffee out of a mug made in China. Well, looks like there’s just no getting away from the grip of this giant, thousands of miles away! The author works with Makerere University zakumumpa@yahoo.com