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Doing Business in Uganda Guide-1
Doing Business in Uganda Guide-1
Doing Business in Uganda Guide-1
Are you a member of a UK company wishing to export overseas? Interested in entering or expanding your activity in the Ugandan market? Then this guide is for you!
The main objective of this Doing Business Guide is to provide you with basic knowledge about Uganda; an overview of its economy, business culture, potential opportunities and an introduction to other relevant issues. Novice exporters, in particular will find it a useful starting point. Further assistance is available from the UKTI team in Uganda. Full contact details are available at the end of this guide.
The purpose of the Doing Business guides, prepared by UK Trade & Investment (UKTI) is to provide information to help recipients form their own judgments about making business decisions as to whether to invest or operate in a particular country. The Reports contents were believed (at the time that the Report was prepared) to be reliable, but no representations or warranties, express or implied, are made or given by UKTI or its parent Departments (the Foreign and Commonwealth Office (FCO) and the Department for Business, Innovation and Skills (BIS)) as to the accuracy of the Report, its completeness or its suitability for any purpose. In particular, none of the Reports contents should be construed as advice or solicitation to purchase or sell securities, commodities or any other form of financial instrument. No liability is accepted by UKTI, the FCO or BIS for any loss or damage (whether consequential or otherwise) which may arise out of or in connection with the Report.
Content
Introduction Preparing to Export to Uganda How to do business in Uganda Business Etiquette, Language and Culture What are the challenges? How to Invest in Uganda Contacts Resources/Useful Links 4 9 10 14 15 16 17 18
Introduction
Uganda is a landlocked independent republic with a democratic government. It lies between the Democratic Republic of Congo (formerly Zaire), Sudan and Kenya and forms part of the East African Region. It also shares a border with Rwanda. The capital city is Kampala and other major towns are Jinja, Mbale, and Masaka. Uganda has a year-round agricultural season and a location in the centre of a regional trading network. The official language is English but Swahili is widely spoken. The local currency is the Ugandan shilling. In 2009 Ugandas GDP was $14.5bn. The UK is Ugandas largest Foreign Direct Investor with investments worth $1.1bn. Ugandas GDP has grown by more than 6% on average for the last decade, and by 7.4% in the 2008/9 financial year. Major investments were made in mobile communications, petroleum exploration, banking, construction, agro-processing and manufacturing.
Opportunities in Uganda
With new stability in Southern Sudan and demand increasing in the DRC and Rwanda, Uganda has seen its regional trade grow strongly. Ugandas traditional agricultural exports continue to present opportunities. Coffee, tea and cotton, Ugandas largest exports have increased both by quantity and value over the past several years. Non traditional goods such as fish, flowers and vanilla now account for significant shares of Ugandas Exports. Ugandas agricultural potential and untapped mineral resources have also attracted foreign investment. The banking industry has also seen strong growth recently. Financial services are becoming more efficient with the presence of major banks and an increasing number of new commercial banks. Opportunities by Sector: Oil & Gas: New but fast growing - commercial viability of reserves is confirmed and reserves are estimated at 2bn barrels. Production will begin in late 2010 or early 2011 with an early production scheme of 3000 5000 bpd, building up to 150,000 bpd in 5 10 years. The government is in talks to build a refinery and pipeline to the Indian Ocean coast. Important opportunities lie in both upstream and downstream activities including exploration, refinery, engineering consultancy and services, construction and civil works and training Non Oil & Gas Energy: Comprising of hydro-electric power, new and renewable energy sources. Important areas are the design and construction of hydro electric power stations, consultancy and engineering, and generators Education: The education sector has undergone rapid transformation from government funding to private investment. With this development Uganda is becoming a regional hub for education
and knowledge ranks as the best in the region (UNDP Education Index). Important opportunities lie in setting up institutions, construction, educational materials, security printing of certificates and ICT. Health: The government spends 7.4% of GDP on health and works closely with international organisations and donor agencies to ensure the development of the health sector. A Ugandan company as now been certified by the WHO to produce HIV and malaria drugs. Important opportunities lie in supply of medical equipment and consumables, production of drugs, consultancy services, building of private hospitals, provision of e-health services and other related opportunities. Foods processed and foods processing/packing: Agricultural processing is growing and there are investment opportunities in processing and packaging coffee, edible oils, tropical fruits, fruit juices and non traditional crops. Sales opportunities exist for food processing equipment, storage facilities, chemicals and additives, preservatives, canning, bottling and other packaging equipment and related materials. Infrastructure: There is a pressing need for road and power improvements and international financial institutions are interested in these projects. Also with an estimated 300,000 housing units needed per year, commercial construction and residential construction are growing. Products to consider include; infrastructure design, construction and operation particularly energy related, environmental consultancy and analysis, architecture, construction equipment, generators and transformers. Telecommunications: The telecommunications sector boasts five internationally owned operators. Important products to consider include; cellular telephone systems, data transmission equipment, fibre optic equipment, truncated mobile phone systems and paging systems, switchers and routers, wireless access equipment, voice over internet telephony, VSAT; computers and peripherals. Travel/ tourism services: The tourism sector is growing at 20%. Uganda boasts several national parks, for game and gorilla watching. There are opportunities for tourism management, travel agencies, hotel design, construction and management. Light Manufacturing: Manufacturing has increased significantly in Uganda over the past 5 years with a focus on exports to regional markets of products such as plastic goods and consumer products. Important opportunities exist in cosmetics, used clothing, footwear and beverages. Mining: Uganda is endowed with a diversity of geological formations and structures. Mining activities may offer good investment opportunities for experienced firms. Important products to consider are mining equipment, power generation equipment, civil engineering services, pumps, valves and related materials. Fisheries: Uganda has stocks of Nile perch and tilapia which is locally processed and exported. However, the industry has been hit by diminishing sources of fish in Lake Victoria. Important products to consider are fishing equipment, processing equipment, materials related to construction and operation of fish processing facilities and chemicals used for value added fish products. Agriculture: Ugandas land is considered among the best in Africa, with low temperatures and two seasons of good rainfall for the Southern half of the country. Important products to consider are processing equipment, bio fuels, fruit and vegetable processing, edible oil production, staple food crops processing, flowers, livestock and food products.
2007 47 16 31
2008 50 19 31
2009 50 12 38
37 12 25
39 13 26
2007
2008
2009
41 33 8
33 39 -6
36 31 5
52 25 27
59 42 17
Top exports of goods from the UK to Uganda in 2009 are: Specialized machinery Road Vehicles General Industrial Machinery Power generating Machinery Miscellaneous manufactured articles 6m 6m 5m 4m 4m
Top imports of goods to UK from Uganda in 2009 are: Vegetables and fruit Electrical Machinery Coffee, tea & Spices 4m 3m 1m
With the discovery of commercially viable quantities of oil and their subsequent development, the oil and gas sector is expected to become a leading driving force for economic development both through direct revenue and spill-over effects. Oil production in Uganda is expected in late 2010/ early 2011. Growing impact of East African regional integration: The East African Community comprises a market of over 130m consumers and total GDP of $40bn. Intra community tariffs are gradually being reduced: 1. Common external Tariff on all goods imported into the region. 2. Zero duty on most goods originating and traded within East Africa. 3. Zero duty on most capital goods, agricultural inputs, medicines and medical equipment, raw materials and chemicals. 4. Tax incentives for producers of goods for exports through various export schemes covering export processing zones, manufacturing under bond, duty drawback for manufacturers of goods for export, inward processing.
Ugandas socioeconomic profile: Population: Population growth rate: GDP per capita: Political: Uganda is a democratic presidential republic. It is a multi-party parliamentary system with universal suffrage of all citizens over the age of 18 years. The ruling party, the National Resistance Movement (NRM) has been in power since 1986. The President, HE Mr Y K Museveni has been in office throughout this time. The next presidential and parliamentary elections are due in March 2011. The government with a relatively stable polity and a pro-business oriented president continues to attract foreign investment and promote both regional and international trade. 31m (2009) 3.3% $453
At the airport
Taxis from Entebbe Airport to Kampala cost about 25. The journey may take up between 45 and 90 minutes depending on traffic.
By Road
Nearly all major towns are connected by tarmac roads. Driving is on the left-hand side of the road, as in the UK. Buses connect the entire country.
Visas
British Nationals require a visa to enter Uganda. Passports should be valid for at least three months beyond the date of the end of your visit. Visas may be obtained on arrival by air with a cash payment of US$50 but it is recommended that visas are obtained in advance through a travel agent or from a Uganda High Commission or Embassy. Your visa allows re-entry to Uganda after visits to Kenya or Tanzania.
Your stay
The Uganda Tourist Board (www.visituganda.com) is a good source of information and can help you plan your trip. UKTI Uganda can help you plan your business visit to Uganda.
You can commission our Overseas Market Introduction Services to assist your company to enter or expand your business in Uganda. Under this service, the Embassys Trade & Investment Advisers, who have wide local experience and knowledge, can identify business partners and provide the support and advice most relevant to your company's specific needs in the market. To find out more about commissioning work, please contact your local UKTI office. See also: www.ukti.gov.uk
Companies wishing to set up a local base may also benefit from support and advice by the UKTI Section of the British High Commission in Kampala. The Uganda Investment Authority (www.ugandainvest.com) can also help.
Consumer products in Uganda are generally distributed through regional wholesalers, who in turn supply small and rural shops. With entry of large retailers, suppliers can now deal directly with major purchasers. (b) Selling Factors / Techniques Companies commonly market through billboards, road signage, newspapers, radio and television advertising. Companies have also promoted themselves through music concerts and by supporting sports and other community events. (c) Electronic Commerce E-commerce is still undeveloped in Uganda. Few Ugandan companies sell their products through the internet, although many do have websites. Mobile phone banking and trade is increasing both in-country and within the East African region. (d) Pricing Price competition from Asian producers means UK products are generally considered expensive, albeit of high quality. It is common for experienced buyers to favour products from the UK and other European producers based on quality. (e) Sales Service / Customer Support Customer support can be a major boost for UK companies. It is therefore important that they should carefully select, train and monitor service providers for their products. (f) Protecting Intellectual Property Uganda has started to improve the protection of intellectual property rights, although police and courts are slow in prosecution. The Uganda Revenue Authority and the Uganda National Bureau of Standards regularly seize counterfeit goods, although many are readily available. (g) Due Diligence Credit reporting is in its infancy in Uganda and due diligence is difficult to perform. Sellers are advised to deal in cash transactions or use a letter of credit from a reputable bank, especially when dealing with new clients. Companies should check document accuracy with financial institutions or through a commercial law firm. Support on most of the above issues can be attained from the UKTI team at the British High Commission Kampala.
Responding to Tenders
All major tenders are mainly published in the major daily newspapers, or on the website of the organisation issuing the tender. Government tenders may be issued through an open tender or through pre-qualified tendering. Prequalification is usually done and reviewed once a year by various government bodies. Projects which are considered an opportunity for UK companies will be published on the UKTI website under the Business Opportunities section. You may contact UKTI Uganda for guidance in applying for a publicised tender.
Documentation
Companies need a number of documents to set up in Uganda, including: Certificate of registration; Company PIN Number; VAT Number. UKTI Uganda can advise on this. It is also essential to obtain/issue receipts and invoices whenever transacting to avoid potential disputes.
agents who have offices in the UK and Uganda. Please contact the UKTI office in Uganda if you need a list of recommended freight forwarders.
Language
Most business is conducted in English, though many local languages exist in Uganda. Swahili is often understood but not frequently used in Kampala where Luganda is largely used as a second language.
Business Customs
Ugandan business decisions are often made by a group within the company and there is a premium on consensus. Many Ugandans like to discuss business extensively, and usually seek external advice, before making decisions. Ugandans want to get to know people with whom they are dealing and begin most meetings with introductory conversation about peoples backgrounds and families. Ugandans are generally conservative and formal when making speeches to a group. Greetings and acknowledgements invariably precede formal speeches in strict accordance with protocol.
Negotiations
When negotiating, companies will respond to your approach in an equal manner. Therefore, if a potential partner demonstrates flexibility and willingness to commit, they will gladly put the same effort into the partnership. Personal contact with potential and existing partners/clients and regular visits to the market therefore of the utmost importance and it is natural for the business relationship to be built with time.
Infrastructure
Ugandas infrastructure, particularly its systems of roads, rail, electricity and water is relatively poor. However, in recent years the government has committed relatively large funds to their development in preparation both for the East African Common market and the production of oil.
Cost of Energy
Both the cost and availability of electricity remains a challenge. Over 80% of the country does not have access to grid electricity. Measures to reduce this are underway with the construction of new hydro-electric dams and power stations.
Affordable financing
Lack of affordable financing is another impediment to business. Loans are generally short-term with interest rates ranging from 15-24%. In addition to high rates, little liquidity exists for loans over three years.
Counterfeits
The sale of counterfeit goods smuggled into Uganda is a real challenge to legitimate companies. The sophistication of counterfeits is growing and public awareness is not strong. In addition, enforcement authorities are ill equipped to fight this.
Companies are registered as limited liability companies as in 1 and 2 above, and regulated by the Companies Act. Ugandas legal system is based on English law and practice. A wide range of legal services are locally available. Considerable investments continue to be made throughout Uganda especially in infrastructure and energy. The road networks are being upgraded and expanded to improve connections between major centres while tenders for the port and rail system have been issued so as to expand trade capacity. Privatisation of various institutions has also been ongoing.
Getting Paid
In Uganda, retailers normally receive payment for consumer goods in cash. However, exporters of capital goods or other equipment, machinery and services normally seek payment through wire transfers. Ugandans may attempt to pay by cheque, but increasing cheque fraud makes this a highly risky proposition.
Project Financing
Multilateral institutions active in Uganda include the International Monetary Fund (IMF), the World Bank, the African Development Bank as well as several European institutions. Major development projects in health, education, agriculture and infrastructure are financed by bilateral donors and/or international organisations.
Contacts
If you have a specific export enquiry about the Ugandan market which is not answered by the information on this report please contact:
Fax: +256 414 334419 www.ugrevenue.com Uganda National Bureau of Standards (UNBS) P O Box 7279, Kampala Tel: +256 414 222367 Fax: +256 414 286123 www.unbs.go.ug
Although these lists are not comprehensive, and inclusion does not constitute an endorsement or recommendation by UKTI Section, they are a useful starting point for firms that need professional services in Uganda.
Others
Uganda Investment Authority (UIA) P O Box 7418, Kampala Tel: +256 414 301000 Fax: +256 414 342903 www.ugandainvest.co.ug Uganda Revenue Authority (URA) P O Box 7279, Kampala Tel: +256 417 442001
Resources/Useful Links
Business Link: International Trade
Business Links International Trade pages provide an overview of export basics including licensing, customs procedures, classifying and movement of goods, other regulatory information and export paperwork issues. It also introduces exporters to the UK Trade Tariff.
Country Information:
BBC Website: http://news.bbc.co.uk/1/hi/country_profiles/default.stm FCO Country Profile: http://www.fco.gov.uk/en/travel-and-living-abroad/travel-advice-by-country/country-profile/
Economic Information:
Economist: http://www.economist.com/countries/
Export Control
Export Control Organization: http://www.berr.gov.uk/whatwedo/europeandtrade/strategic-export-control/index.html/strategicexport-control/index.html
Intellectual Property
Intellectual Property Office: www.ipo.gov.uk
Market Access
Market Access Database for Tariffs (for non-EU markets only): http://mkaccdb.eu.int/mkaccdb2/indexPubli.htm SOLVIT Overcoming Trade Barriers (EU Markets only) www.bis.gov.uk/EUMarketAccessUnit
Trade Statistics:
National Statistics Information: http://www.statistics.gov.uk/hub/index.html UK Trade Info: https://www.uktradeinfo.co.uk/
Travel Advice:
FCO Travel: http://www.fco.gov.uk/en/travel-and-living-abroad/ NHS: http://www.nhs.uk/nhsengland/Healthcareabroad/ Travel health: http://www.travelhealth.co.uk/