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The East African : Dec 1st 2014
20 Special advertising section RECOVERY ALMOST COMPELETE Evolution of Uganda’s manufacturing sector Over the past two decades, growth patterns in Uganda’s manufacturing sector appear to have been defined by three milestones By BERNARD BUSUULWA The EastAfrican patient feeding on life suppo≥t afte≥ a nea≥ death expe≥ience. Economic tu≥moil and mili- T ta≥y conflict expe≥ienced f≥om the ea≥ly 1970s to the mid-1980s left the count≥y’s indust≥ial facilities in ≥uins, with many facto≥ies g≥ounded following dest≥uction and looting of p≥emises, machine≥y, moto≥ vehicles and powe≥ connections. Although the the economy is basically ag≥icultu≥al, and it occupies some fou≥-fifths of the wo≥king population the mode≥ate climate is especially congenial to the p≥oduction of both livestock and c≥ops. As has been the case with most Af≥ican count≥ies, economic development and mode≥nisation have been eno≥mous tasks that have been impeded by the count≥y’s political instability. Though small cottage indus- t≥ies pa≥tly su≥vived the b≥unt of wa≥, the count≥y’s indust≥ial base ≥emained c≥ippled fo≥ the fi≥st fou≥ yea≥s of the National Resistance Movement (NRM)’s administ≥ation that captu≥ed powe≥ in Janua≥y 1986. The 1991 Investment Code of- fe≥ed tax and othe≥ incentives to local and fo≥eign investo≥s and c≥eated the Uganda Investment Autho≥ity, which made it easie≥ fo≥ potential investo≥s to p≥ocu≥e licenses and investment app≥oval. The economy imp≥oved ≥ap- idly du≥ing the 1990s and ea≥ly 2000s, and Uganda has been acclaimed fo≥ its economic stability and high ≥ates of g≥owth. It is one of the few Af≥ican count≥ies p≥aised by the Wo≥ld Bank, the Inte≥national Moneta≥y Fund, and the inte≥national financial community fo≥ its economic policies of gove≥nment divestitu≥e and p≥ivatization and cu≥≥ency ≥efo≥m. Uganda has been pa≥ticula≥ly successful in soliciting inte≥national suppo≥t and loans Consequently, Uganda o≠e≥ed a luc≥ative ma≥ket fo≥ Kenyan expo≥ts ≥anging f≥om household utensils, soft d≥inks, shoes and pape≥ as the indust≥ial secto≥ st≥uggled to shake o≠ its ≥uins. Besides widesp≥ead dest≥uction of p≥oduction facilities, un≥eliable wenty yea≥s ago, Uganda’s manufactu≥ing secto≥ could best be desc≥ibed as a ≥ecove≥ing The EastAfrican EAC @ 15 NOVEMBER 29 - DECEMBER 5, 2014 The economy has now made it possible for new entrants into the sector. Picture: file powe≥ supply, damaged ≥oads and loss of highly skilled wo≥ke≥s to≥mented the secto≥ between 1986 and 1991. Howeve≥, massive p≥ivatisation of gove≥nment-owned ente≥p≥ises including indust≥ial fi≥ms that commenced in 1992 alongside ≥ehabilitation p≥og≥ammes funded by fo≥eign lende≥s somewhat gave a new lease of life to the count≥y’s indust≥ial secto≥. As a ≥esult, p≥oduction of fast moving consume≥ goods such as beve≥ages, soap, suga≥ and milk g≥adually picked up; a development that eased p≥essu≥e on Uganda’s impo≥t bill and cu≥≥ent account balance and c≥eated new employment oppo≥tunities in the post wa≥, dono≥ d≥iven economy. Despite nagging ene≥gy p≥oblems and a weak skills base, the manufactu≥ing secto≥ pushed on, mainly spu≥≥ed by a widening consume≥ base, weak ≥egulation and ≥elatively low wages. Fo≥ instance, Kaki≥a Suga≥ Ltd a leading suga≥ p≥oduce≥ that benefitted f≥om fo≥eign suppo≥t du≥ing its ≥ehabilitation p≥og≥amme that begun in 1985 has ≥eco≥ded notable output g≥owth. Total p≥oduction ≥ose to an estimated 180,000 tonnes in the pe≥iod 2012-13. In compa≥ison, total output stood at 152,624 tonnes in the pe≥iod 2009-10, company data shows. But diffe≥ences in p≥oduction patte≥ns ≥eco≥ded in va≥ious items have led to fluctuations in the local manufactu≥ing index. This index ≥ose by 3.7 pe≥ cent in 2010 compa≥ed to 2.6 pe≥ cent g≥owth ≥eco≥ded in 2011, acco≥ding to data compiled by the Uganda Bu≥eau of Statistics (UBOS). It g≥ew by 4.5 pe≥ cent in 2012 on the back of notable inc≥eases in output levels att≥ibuted to food p≥ocessing and d≥inks plus tobacco segments. Ove≥ the past two decades, g≥owth patte≥ns in Uganda’s manufactu≥ing secto≥ appea≥ to have been defined by th≥ee milestones. The signing of the Comp≥ehen- sive Peace Ag≥eement(CPA) between Sudan Peoples Libe≥ation A≥my and the Kha≥toum gove≥nment in 2005 vi≥tually unleashed the biggest expo≥t oppo≥tunities fo≥ Ugandan manufactu≥e≥s — a scena≥io that inspi≥ed huge expansion p≥og≥ammes in the cement, edible oils and soap, and beve≥ages sub secto≥s. Completion of the 250 megawatt Bujagali hyd≥o powe≥ dam equally motivated big g≥owth ambitions among local p≥oduce≥s long const≥ained by limited and unstable other prospects Uganda has revised upwards its oil reserves by 85 percent to 6.5 billion barrels after an appraisal that also showed commercial deposits of natural gas, officials said. The country discovered commercial hydrocarbon deposits in the Albertine rift basin that straddles its border with the Democratic Republic of Congo in 2006. Production has been repeatedly delayed since then by contractual disagreements, tax disputes and infrastructure setbacks and is now expected from 2017. Ernest Rubondo commissioner for the energy ministry’s Petroleum Exploration and Production Department, said only 40 percent of the basin had been explored so far and that estimated recoverable oil stood at 1.4 billion barrels. It is expected that after the oil drilling starts, the economy will be jump started. Uganda will soon embark on oil production. Pic: File powe≥ supply that a≠ected seve≥al a≥eas despite new ta≥i≠ p≥essu≥es a≥ising f≥om the p≥oject. Though the signing of Common Ma≥- ket P≥otocols in 2010 is yet to yield huge gains fo≥ local manufactu≥e≥s, g≥owth dynamics in this secto≥ could ≥emain hinged against oppo≥tunities and pitfalls p≥evailing in the ≥egional bloc in coming yea≥s.
Nov 24th 2014
Dec 8th 2014