Africa is widely looked at as the last frontier for investment for a variety of reasons, such as the presence of hugely untapped raw materials and a growing middleclass. However, you would have missed a huge opportunity if you decided to invest anywhere else before you have invested in Uganda.
Uganda’s liberalized economy is growing rapidly and has created a favorable investment climate mainly due to political stability and favorable economic policies. This has led to ease in doing business and trade freedom, and promoted property rights. This article discusses some of the key reasons why Uganda should be your first investment destination on the continent.
Favorable investment climate
Any potential investor considering investing in Uganda will find a well regulated and highly liberalized economy in which all sectors are open for investment. The 2013 Index of Economic Freedom ranked Uganda, the 8th freest economy out of the 46 Sub-Saharan Africa countries. Being a land linked country, Uganda has a strategic commanding base to be a regional hub for trade and investment. It enjoys pivotal trade partnerships that create a viable market for business.
Uganda has effective macro-economic policies that maintained economic growth at an average of 6.5% and enabled the country to withstand external economic shocks during the global economic downturn from 2008 to 2011 during which the economy still grew by 3%.
The country’s political and economic environment has been consistently improving and stable since its independence in 1986. Under the current regime, Uganda has been able to be a political stabilizing force in the region, which has provided a secure environment for business to thrive. Security of investment is also guaranteed under the Constitution of Uganda and the Investment Code 1991, as well as the major international investment related agreements / treaties to which Uganda is signatory.
A Young Vibrant Population
Labor availability and a ready market are some of the factors that spur investment in any area. Uganda is very rich on both counts. The population is hugely dominated by the youth. Uganda’s population is 37.58 million of which 77% is under 30 years. This youthful population has been ranked at the same level with the USA in terms of its flexibility under the World Labor Flexibility Index. Thus, you can be sure that any project that you start will have an abundance of educated young people who are more than eager to take on any task that may be required of them.
Secondly, the young population offers an unparalleled market that is willing to consume any goods or services that are brought onto the market. This is in contrast to older populations that may be more conservative in their consumption habits. Thus, your business would be gifted by a population that serves the dual role of labor and market for the products that you bring to the market.
Unreserved Government Support
The president announced an ambitious plan to fast track Uganda to a middle-income country by 2020. This drive has come on the backdrop of a variety of measures that have been put in place to attract and spur foreign direct investment in the country. For instance, the government is willing to allocate land to investors in the existing and planned industrial parks across the country. The process of obtaining an investment license has also been so streamlined that one can have that license in about 48 hours.
Additionally, the Uganda Investment Authority has been transformed into a one-stop center where you can get all the help that you need from the different relevant government agencies, such as the Uganda Revenue Authority, Uganda Registration Services Bureau and the Directorate of Citizenship and Immigration Control. This consolidation of different agencies in one location means that you will save time and money as you go through the process of setting up your business venture so that it becomes operational.
It is also possible to enjoy the tax incentives offered by the government depending on the sector in which you wish to invest. Information on those incentives is readily available once you express your investment interests to the individual or firm that is helping you to get started in the country.
Under Ugandan law, foreign investors may form foreign-owned limited or unlimited liability companies and majority or minority joint ventures with Ugandan partners without restrictions. The Investment Code allows foreign participation in any industrial sector except those touching on national security or requiring the ownership of land. The law also permits foreign investors to acquire domestic enterprises or establish Greenfield ventures.
Uganda keeps open capital accounts, and save for tax compliance, the law imposes no restrictions on capital transfers in and out of Uganda. Investors can obtain foreign exchange and make transfers at commercial banks without approval from the Bank of Uganda in order to repatriate profits and dividends, and make payments for imports and services.
Untapped Investment Opportunities
Another key reason why Uganda is an attractive investment destination is the nearly limitless abundance of largely untapped investment opportunities. For instance, Uganda is renowned for its edge over other African countries in terms of the ease with which agriculture can be carried out. This is largely due to the favorable climate characterized by two seasons of rainfall and the rich fertile soils. The abundant agricultural products ranging from fruits and food crops offer several opportunities for processing and value addition.
Education and healthcare are other sectors where one can get attractive returns after investing. The growing population demands for first-class education and healthcare facilities, yet the government and the current private players in those sectors are still unable to meet that massive demand.
There is a huge demand for manufactured products, such as those needed in the booming construction industry. Any investor targeting the manufacturing sector is assured of being received as someone filling a gap that was exploited by manufactured products from outside the country, such as China and neighboring Kenya.
Uganda’s ICT sector also reflects the increased use of ICT as there is a sizeable growth in e-business transactions amongst Ugandans and between Ugandan companies and overseas companies. The increased use of ICTs is playing a big role in economic development. Efforts by Government towards e-governance, e-education, the rural transformation policy, financing frameworks and distance learning (global and local) provide some of the good performance indicators in the sector.
Another untapped opportunity is the tourism sector. Tourism is a key driver of Uganda’s economy and represents a significant opportunity to the attainment of Uganda Vision 2040. More growth in the sector is expected over the next five years, thus calling for the development of the Sector Development Plan as a timely intervention and a step in the right direction. This plan is built around the aspirations of the National Development Plan II 2015/16 – 2019/20, and complements the Uganda Tourism Master Plan.
Mining is also a viable investment opportunity in Uganda. With an impressive list of minerals, Uganda’s mineral resources are an untapped source ready for investment. The Ministry of Energy and Mineral Development is responsible for geologic mapping, issuing exploration and mining licenses. Most of Uganda’s mining and mineral processing facilities are privately owned, including the cement and steel plants, the lead refinery, and the vermiculite mine.
Agro-processing is on top of the government’s agenda since Uganda has the unrivaled potential to be the food basket of the East African Community, as well as the Great Lakes regions. Uganda has two rainy seasons which gives a lot of opportunities to grow both cash and food crops throughout the year. This gives the country the capacity to export processed food stuffs to the wider COMESA economic bloc if more investment is targeted at processing more of the agro products. Opportunities include commercial farming and value addition, as well as the manufacture of inputs (fertilizers, pesticides etc.), supply of agricultural machinery and the establishment of cold storage facilities as well as the production of packing materials.
Uganda’s pharmaceutical industry presents numerous opportunities for new investors as reflected by the growing local and regional demand for medicines and health supplies. Per Uganda Bureau of Statistics 2011, 90% of the medicines in Uganda are imported mainly from India, Kenya, Netherlands, China and Denmark. The sector provides numerous opportunities with an assured internal market and external market given that pharmaceuticals, sundries and medical equipment are imported in to the country.
The list of possible investment opportunities is nearly endless. What all those opportunities have in common is that there is limited competition so the capital investment needed is relatively low for those pioneering in the provision of needed products and services.
As you can see, Uganda has a combination of different factors that distinguish it from other countries on the continent when it comes to the selection of an investment destination. It is therefore advisable for you to contact a locally based firm that will help you to explore how best you can take advantage of the numerous opportunities that abound in your preferred area of investment. It will then be easy for you to get your operations started in the shortest possible time, and the profits will start rolling in.