Kampala, Uganda | THE INDEPENDENT | The Uganda Investment Authority (UIA) has unveiled a groundbreaking initiative to encourage traders in Kampala’s business hub, popularly known as Kikuubo, to transition from trading in imported products to manufacturing them locally.
The “Transitioning Kikuubo Traders to Manufacturing” initiative” is hinged on the spirit of promoting import substitution, the initiative is to enable traders who have been trading in imported products for many years to seize import substitution opportunities and incentives that come with them like zero tax rates, free industrial park land and tax holidays, amongst others.
The Director General of the Uganda Investment Authority (UIA), Robert Mukiza, announced the initiative on Tuesday July 30 during a meeting at UIA head office with traders from Kikuubo and officials from the Global Competitiveness Initiative (GCI) and the Presidential Advisory Committee on Exports and Industrial Development (PACEID).
Mukiza said a special desk has been created under the Domestic Investment Division, full of work plans, targets, and timelines to ensure a faster transition of business people from trading to manufacturing.
Mukiza said traders, especially those in Kikuubo, have deeper knowledge of the business environment, and supply chains and have sizeable cash flow, key ingredients in the transition to local manufacturing of products the country imports.
“Domestic investors are crucial to Uganda’s industrialization that is why it is UIA’s special mission to see more traders transition to manufacture of products they have been importing,” said Mukiza, adding that once many traders successfully transition to manufacturing, more will follow suit, hence widening the domestic investment base.
According to Mukiza, manufacturing has greater multiplier effects than trading, citing that the former boosts local production, value addition to local raw materials, creates more jobs for especially young people, boosts personal and government incomes, and contributes to sustainable economic development.
Mukiza said Ugandans, when investing, should look at the bigger picture, by focusing on import substitution and beyond the Ugandan market and to the East African, Common Market for Eastern and Southern Africa (COMESA), the African continent, and the global market.
Mukiza said foreign investors are flocking to Uganda because it not only has the best environment for investment and business in East Africa but is also the third most profitable country after Egypt and Ethiopia.
He said to fasten the trading-to-manufacturing transition, UIA is acquiring additional land in Namanve Industrial Park specifically to cater to the Kikuubo traders interested in going for manufacturing, adding that land is also available in other industrial parks across Uganda.
“If you are targeting markets like the Democratic Republic of Congo or South Sudan, you don’t need to set up your factory in Greater Kampala but could go to industrial parks in Nebbi, Arua, or Kisoro,” he emphasized.
The representative of the traders, Joshua Kassibo, said for a long time they had perceived UIA as favouring foreign investors but through sustained engagements, they are now enlightened about investment opportunities and incentives they have been missing.
“We previously thought investors were only foreigners, but now we know we can transition to manufacturing, and we are ready. The main issue is how to work with UIA to enable our transition to processing and manufacturing,” said Kassibo.
The chairperson of the Global Competitiveness Initiative, Daudi Migereko, urged Ugandans to look at what to produce, process, manufacture, and export competitively.
“If you have been trading in a product for many years, it is time to start manufacturing it locally. Let us go with the new wave of import substitution,” said Migereko.
Richard Nuwenyesiga, the Director for Domestic Investment, assured the traders that UIA will handhold them throughout the transition process through its one-stop-shop that offers investment and business support services from over 15 government agencies and private sector players.
Two prominent Kikuubo traders who have already transitioned from trading to manufacturing are Gaster Lule Ntake and Badru Muwanga (Luuka Plastics).
Starting out as a basic bakery in 1986, Ntake is now transforming into one of the biggest edible oil refineries in Uganda and the East African region. The multi-billion-shilling Ntake Edible Oil Refinery is nearing completion in Namanve Industrial Park.
On completion, the refinery will employ 300 workers directly, and over 1,000 indirectly. Ntake Group of Companies, which dabbles in other products like confectionaries, flour, and serviettes, among others, already employs 1,426 people directly.
On the other hand, Luuka Plastics started out in 1996, initially trading in plastic products in Kikuubo. Later it pivoted to the manufacture of packaging materials for agricultural products, confectionaries, cement, pharmaceuticals, etc. The packaging products include both branded and unbranded ones, as well as packaging for tough products like nails.
Its first plant was in Kawempe, where it still has the plant and its headquarters. Today, Luuka Plastics has three plants, the biggest being in Namanve Industrial Park where the government, through Uganda Investment Authority (UIA), gave it land and facilitated its setup.
Uganda’s state of import substitution
Uganda’s merchandise export earnings increased by 39.4% from USD 639.86 million in April 2024 to USD 891.97 million in May 2024.
This increase was mainly driven by higher earnings from coffee and gold exports during the month. The import bill grew by 31.2% from USD 948.88 million in April 2024 to USD 1,244.66 million in May 2024.
The increase was on account of higher volumes for private sector imports such as animal & vegetable products, beverages, machinery, and motor vehicles among others during the month.
Uganda’s trade deficit with the rest of the world therefore widened by 14.1% to USD 352.69 million despite the increase in the export receipts during the month.