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‘We are endowed with huge natural resources’

Interview - May 26, 2014
Uganda’s FDI inflows increased by 92 percent from US$ 894 million in 2011 to US$ 1.721 billion on account of investments in the nascent oil sector, making it the number one destination in the region. In this interview with United World, Minister of Trade, Industry and Cooperatives Amelia Anne Kyambadde discusses Uganda’s competitive advantages and in what areas she would like to see more cooperation with the US
AMELIA ANNE KYAMBADDE, MINISTER OF TRADE, INDUSTRY AND COOPERATIVES
AMELIA ANNE KYAMBADDE | MINISTER OF TRADE, INDUSTRY AND COOPERATIVES
Uganda has substantial natural resources, including fertile soils, regular rainfall, deposits of copper, gold, and other minerals, and recently discovered oil. Agriculture is the most important sector of the economy, employing over 80% of the workforce. Which facts and figures would you like to point out about your country?
 
Uganda has a population of 36.5 million as of 2012 (according to the World Bank), and a population growth of 3.4% (which is quite big) so we are working very hard to make sure that we correlate the growth with infrastructure development. Uganda’s GDP is between US$25 billion to US$26 billion, with growth of up to 7% (one of the highest in the world). Inflation has gone down to 6.6%. Food and labor are reasonably priced and the cost of living is affordable. Our main language is English, which has given us a competitive advantage over all the other countries in Africa. It makes it easier for people from around the globe to communicate with us. 
 
Speaking of cross-country interactions, what can you tell us about the trade partnerships between Uganda and other countries?
 
We have pivotal trade partnerships. First, there is the East African Community (EAC), which has a population of 149 million people—that is our main market. Then we have the Common Market for Eastern and Southern Africa (COMESA), which has 19 member states and a population of 470 million—that is a huge market. We are in both regional blocs because we want to create a broader market for people who are investing in Uganda.  
 
What are Uganda’s comparative advantages? 
 
When you compare Uganda to other countries in the continent, we are endowed with huge natural resources. First, you have oil and gas (O&G), which is a new industry. We have developed the legal framework, and started exploiting. Very soon, we will start trading. Current projections reveal that we will be able to drill about 3 billion to 4 billion barrels of oil. That is quite an achievement. 
 
Our mineral resources are substantial. We have cobalt, copper, gypsum, limestone, phosphate, and others. The list is endless. We have virgin areas that have not been mined in. They have been discovered to have a lot of potential, but because they are capital-intensive, we are looking for investments in that area (including PPPs). Uganda can come in as equity and partner with prospective investors in that area to mine those minerals. ‘
 
Tourism is another promising area. When you talk about tourism, you must come to Uganda. The potential that we have in the area of wildlife is big. There is the Big 5. It is rare in Africa to find a country that has all 5. Most of them are extinct. Most of them are killing the elephants—a huge tragedy. To have the lion is very rare, and we have it. We are the only country in Africa with climbing lions. That is an advantage. 
 
What can investors expect when they get here?

They can expect a well regulated highly liberalized economy where they can repatriate their funds as they wish. They get to enjoy a number of incentives. For example, they can bring in the machinery for their respective plants without paying taxes. Likewise, they are exempted from corporation tax for about 10 years. Unlike other administrations in the region, the Ugandan government does not require a 50% ownership. As for labor, they can expect a highly competent pool to choose from. Local content laws (LCLs) require them to hire a certain percent of our local manpower. These people are highly trainable and will no doubt be an asset to their organizations.   
 
We understand that the Export Promotions Board (EPB) falls under your Ministry. 
 
Yes, it does. It markets our products here, and links our business community to markets in and out of the region. It is poised to link the Ugandan market to the external markets. We are currently restructuring it. It is one of the things that we want to promote aggressively. 
 
How are you upgrading the standards of the products “made in Uganda” and controlling those that come from abroad?
 
We are very strict when it comes to standards. We have developed 900 standards for various commodities. We have various machines for various goods. Within the country, we have the Ugandan National Bureau of Standards (UNBS), which carries out the sampling of products from various factories. There is a quality mark to follow. Those who do not meet the standards are given recommendations on how to improve their products. Those who fail to follow these recommendations are often put out of circulation.   
 
In terms of imports, we have introduced a pre-verification scheme where we expend goods from their point of origin (to eliminate the influx of substandard goods in the market). We have a number of agencies that are doing that. These agencies have branches near the points of origin. For instance, if we buy goods from Spain, we can attach an agency to those who are importing from that area. We have a branch here where you can register. Quality inspection will take place in Spain itself because they have a branch there.  

Which are your priorities and goals for the short and medium term as Uganda's Minister of Trade? What have you done to reduce the red tape, fight against corruption and eliminate trade barriers?
 
When you look at the non-tariff barriers (NTBs), we are cutting the red tape. For instance, you will find that we used to have so many weighbridges all the way from Mombasa, up to Rwanda (which is the main road). We have agreed within the EAC to reduce this. They say that the weighbridge will be at the points of entry and exit. When a truck enters Mombasa, it is monitored right up to its destination. That has reduced travel time from Mombasa to Rwanda from 26 days to 5 days. Time was, at every stop, your products would be checked. Now, everything is digitalized. That has really reduced the cost of doing business (particularly, the NTBs).
 
In a bid to fight corruption, we have had people audited, and taken to court. Disputes are taken to the commercial court and the Inspector General of Government (IGG). We have representatives in every office who monitor operations. Not everybody is keen about it, but I like it because it increases accountability and helps end corruption. This increased awareness has encouraged people to speak out without fear. 
 
Former US President Bill Clinton signed the African Growth and Opportunity Act (AGOA) in 2000. Its goal is to expand US trade and investment relations with Africa. What are some of the advantages that Uganda has when you talk about AGOA?
 
Uganda has access to a substantial market because of our strategic position. We are land-linked to our neighbors. Our macroeconomic stability affords us a predictable investment environment. It is a fully liberated economy driven by the private sector. You can invest in anything and take out anything. Furthermore, our country has a strong natural resource base. The government is committed in supporting the private sector.   
 
How effective has this program been?
 
Admittedly, we still have to improve on AGOA. The first obstacle that we have is the distance. In 2004, total exports to the US only amounted to US$25.8 million. This rose to US$45.8 million in 2011 and US$47 million in 2013. This goes back to the lack of information. Both parties do not have sufficient information about each of our markets. How do we penetrate the niche in America?    
 
Local people do not benefit very much from the arrangement. Americans tend to send their fellow citizens to come and manage their business. Let us say, you are exporting leather sandals. Americans come to finance it a bit and become a part of it. Yes, you will be exporting the product, but the Americans will get more from it because they have put in some money. Because of capital, the local producer could not compete. There is a trade imbalance. We are doing a lot of importing from the US. For 2013, the import ration is US$111 million to US$47 million. It would be good for American companies to come here and add value. For the moment, most of them handle small projects. We are looking into capacity building. As you know, the EU has invested in capacity building in Africa. The US has yet to do the same. 
 
In the past, US contribution to health and education was large. It has seen a decline since then. The good news is that we two years ago, East Africa signed a memorandum of agreement (MOA) on trade and investment with the US. It is a new MOA (other than AGOA) that we signed in Nairobi. We are now at that level. You can see that the US is also trying. We are partners in areas such as defense.
 
Where would you like to see increased cooperation between Uganda and the US?
 
I would like to see more partnerships in the area of value-addition for agriculture. We would like to see them add more value to some of the products that they grow here (e.g., fruit, cassava, tea, forest products, cotton, and the like). 
It would be nice to have a textile factory here to process our cotton. We have one of the best cottons in the world (long-strand), but most of them are exported. The US has extended AGOA but we still have to improve a lot of things there. Of course, this all goes back to the things that we need to work on (e.g., infrastructure, energy, etc.). Maybe it will be different once we address these issues.  
 
We would like to encourage them to participate in the construction of storage facilities. We could partner in the building of silos and warehouses. The thing to do now is to research and find out why there is not more trade between the US and Uganda. When you look at the list of eligible products, it does not include coffee, tea and dairy. The focus is more on footwear (particularly, sandals), and other minor apparel. If we could open up and the list could expand to include some of the major commodities that we have (e.g., coffee, cotton, tea, dairy, etc.), I think that would really be mutually beneficial. 

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