Eng. Dr. Frank Sebbowa on Why would anyone invest in Uganda
by Milly Kalyabe – Editor, Uganda Economy
In the past few years Uganda’s economy has improved and is continuously improving. Experts believe that the country’s economy has great potential as it has several major advantages and virgin opportunities. Coupled with natural endowments such as fertile land, regular rainfall and rich mineral deposits, the economy is one of the fastest growing in the East African region.
Ahead of the 3rd Uganda-UK Trade & Invest Forum on the 14 September in London, our local Editor Milly Kalyabe interviewed the Executive Director of Uganda Investment Authority, Eng. Dr. Frank Sebbowa who explained extensively as to why Uganda is the top most investment destination. Below are the excerpts
Q: Why would anyone invest in Uganda?
A: It’s the best investment destination. Basically investors look for stable environment within which to do business and Uganda has been stable for more than twenty something years. Also they look for stable economy with good economic policies as well as stable society. They need reasonable infrastructure and we are lucky that government is has worked and is continuing to work on roads and railway lines like you know we have concessioned it out with Egyptians.
Plus, investors look for markets and Uganda is land linked on all its boarders we have consumers. Although we are only 35 million as Uganda, we are 149 million consumers as East Africa, plus the 340 million COMESA members where we have all these trade arrangements in that if you manufacturer here you could have access to all these markets.
Additionally we have an educated population which is fairly young, most of them almost already to be employed. With just minimal skills training you can definitely get a good and cheaper workforce.
Uganda is also committed to exports with in the country and outside.
Q: Which opportunities are available for investments?
A: Nearly all areas are available for investment but currently we would strongly encourage four strategic sectors because of their importance in the economy and these include:
- Agriculture and Agro based including processing agricultural products to add value as well inputs such as fertilizers, tractors, irrigation systems and commercial farming.
- ICT would attract and benefit the young workforce I mentioned earlier who are well educated and we would strongly encourage that. We also recognize the fact that no country can move forward without the ICT base in its economy.
- Tourism, especially Eco-Tourism which is based on culture or environment should be highly focused on.
- Minerals. We have a lot of minerals which need to be explored and mined and mineral beneficiations, a term they use when minerals get polished and made marketable. We have close to 50 different minerals and I can’t emphasize enough.
But of course we have the traditional areas like in the oil and gas industry where we have quite enough spin offs like plastics and also from the residues you can get fertilizers among things.
Q: Are you able to give us some statics on the inflow investments in the recent years
A: We carried out joint survey with Bank of Uganda and Uganda National Bureau of Statistics of which investments have come in for the period between 1991-2012. FDI has grown tremendously to about $ 2 billion by 2008, with over 3500 projects licensed. Power stations have been developed with some support from government and other donors but mainly by FDI; we are doing quite a number of roads etc. In The Agriculture sector we have made a lot of difference. You are aware of the Kaweri Coffee, Mukwano Sunflower and huge ranches among others.
Q: Any government guarantees?
A: Uganda is the only country I know in the world where you can come in with your money and go away with your money without anybody asking you, as long as it’s legal money. Between you and your bank, subject to legal taxation, you take away all your money without any restrictions.
Q: Is it a good thing to the economy?
A: I think so because anyone who thinks it’s a bad thing, they need to try other countries where to change even $100 you fill two pages of form and even to take it back is also another hassle. If you have a solid sound investment environment, there will be more money flowing in than flowing out.
Like I said earlier our survey report shows that more has come in over the years. FDI has been growing steadily not reducing. So if that is coming in what is it coming in to do? To create jobs for us, to bring in new technology because they buy new equipment which we didn’t have before, bring in new skills, they also pay taxes that government can use to do other things.
Q: There has been a lot of concern over the quality of investments UIA approves and yet many of these so called investors get tax holiday. What is your comment?
A: I don’t think it’s correct to say they get tax holiday because tax holiday has been tightened in only specific sectors and they are being closely monitored by Uganda Revenue Authority (URA). And because their job is to collect taxes, by the time they give you a waiver you have really qualified for it. And there are provisions under which they are guided to give waivers.
Now this takes me to my job. My business is to license investors. These investors come with sort of money and technology we don’t have and they usually come with skilled manpower we don’t have. But they are compelled on the personnel side to train our locals and after five years or so they must demonstrate to the immigration department why they would still need expatriates and what they have done about training local people.
Q: What are some of requirements for investing here?
A: The people we license must bring in $100,000 for foreigners and for locals it’s a half of that amount.
Q: Downtown in the central business district, you find Chinese operating businesses with far less capital than the stipulated minimum amount of $100,000. Who is responsible for this?
A: Many people think these people are bad. I don’t think so. I would like to say they get an annual trading license from your local town council, from Kampala Capital City Authority (KCCA) or from somebody. So if these people were bad they wouldn’t get these licenses.
Additionally those Chinese or Indians or whoever, have saved some money from abroad, may be they didn’t come with a lot of money but their money is here. And even if they employ one or two drivers, those are jobs created which were not there before them.
The truth of the matter is, the people you are referring too, in a way they are not really the way we describe our investors because those are traders and UIA does not license traders. The people we license are genuine investors who bring in money, equipment and invest in manufacturing systems.
So there is as a lot of difference but am emphasizing the fact that whether they are traders as we are referring to them or investors, to the economy they are all good – we need them.
The people who are complaining are inefficient traders, they don’t want the competition. I think that there should be open competition so that somebody whether Chinese or anyone with a good genuine business, they are helping the consumers to lower costs. People think we should create a ring fence around them so that they continue working inefficiently and charge our population highly. I don’t agree. I think that people should compete openly, transparently and fairly so that the real consumers get value for their money. You could say that that these people have cheap money, not it’s true. Even where they come from, they work for this money to come and invest here.
Q: How would advise anyone intending to invest here?
A: They need to know their target market and we advise anyone to project that environmentally friendly.
They should know how many people they are planning to employ because it’s key to us.
Q: What are the requirements for investing here?
A: These are really simple requirements:
1) We need to know that you are a genuine entity, meaning you are recognized by the law.
2) We need to know that you have the money
3) We need to know that you have a project
4) We need to know whether you need land from government or you have your own.
Q: Is land available from government?
A: Yes land is available from government if you have a good project.
Q: Is this a good time to invest here?
A: I think it’s a good time because of several reasons. We are now close to our oil boom which I see in 2-3 years from now. You need to get in the market now rather later so that by the time the benefits of oil start flowing in you are already there. You can’t wait for the oil to take off; you need be on ground in good time.
The economy is ready to set off in many ways. It has been growing and our population is expanding. People are going to need food, so you have passion for agriculture I would encourage anyone to get in and start investing now rather than later. The traditional food we used to enjoy is now hard to find, why? Because the market, the consumers have increased. Before we could not take goods to Southern Sudan, now things like eggs, chicken, cabbages etc are going every day. Fish used to be plenty, now with new markets in Europe, we may need to grow fish, and we can no longer rely on the lake, the natural fishing.
The needs of the oil industry is incredible, it’s a lot. They will need people to give them cabbages, Irish potatoes, eggs etc, cleaning services, simple mechanics and so on. So I will advise anyone to go into training people with hands on experience so that by time the oil market demands many of these people, they are already there and still many young people will come to you for training.
Uganda for long time was not connected on the Marine Cable for ICT. Now we are connected to the three rights from the East African coast. So why not start businesses in say, the call centers? In fact, some people might want to process routine accounts. So almost in all fields I see opportunities and just make your package now. This is the time to do so.
Q: What is UIA doing to attract new investments?
A: Well, we have our road shows. We have developed a catalogue of projects that people can invest in and we are sending these to all our 30 embassies.
We are launching these catalogues ourselves. Last week we were in Nairobi after we launched it here. Soon we will go to USA, UK, Denmark, Middle East so that people get to know the projects are available.
We are also using foreigners who have invested here as our goodwill ambassadors. When they hear it from their colleagues, we think it’s more believable.
We have TV talk shows here and even when we go abroad, we do whenever we get chance to give as many interviews as we can.
Even government is taking the right steps to ensure that our macro and economic policies are correct and ensuring peace and stability in the country.
Q: How about the local investors, how are you attracting them?
A: We have developed a small to medium enterprise division within UIA which looks after those numerous investments. We started training them since last year into business and entrepreneur skills, improving productivity in their businesses, improving quality and standards.
For the larger ones, we are trying to cut down bottlenecks so we work for the whole spectrum.
Q: One of the contentions is the elaborate procedures for licensing an investment. Anything being done about it?
A: We have restructured our front office into a physical one stop centre. May be this week we will be launching it. We will house all offices we think are key to an investor, for example, UIA, Registrar of Companies, Immigration, NEMA. So all these desk officers will be here and they will be connected by computers to their parent organizations. This, we think will quicken the processes. And as I speak now, if you come with the requirements, you will walk away with your license in two days.
Q: Anything specific to UK Forum of investors that is coming up next month?
A: Yes. The compendium that we are taking to them of 230 investments is a good chance for them to send money here. Currently money comes from UK to pay for fees, to buy food and plots of land. We are saying help those same relatives to run a business so that not all the money you send goes directly to consumption. This will improve our economy.
We think they are a major contributor to this economy and they should continue to remain engaging with us. The informal remittances are good but we have good tips to give them on investment and also work with them on the local scene. Instead of giving fish let them also give the fishing net.
Those who have acquired skills let them come back and use them here. We can make arrangements where they can support local industries.
Q: What is your target for this forum? What do you want to achieve at the end of the day?
A: We want to link up with those Ugandan living in the UK but also to link up with their associates of whatever nationality who could invest here.
If we can get 20-30 medium enterprises arising out of this forum, we will be very happy. If we can get joint ventures, we will appreciate.
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