MAIN PAPER TO H.E.

THE PRESIDENT

ON

THE DRAFT STRATEGIC DIRECTION FOR THE THIRD

NATIONAL DEVELOPMENT PLAN (2020/21 – 2024/25)

Prepared by National Planning Authority for

H.E. the President’s Guidance

January, 2019
1.0. PURPOSE

Your Excellency, this paper sets to fulfill four objectives as follows:

1.1. First, to let you know that preparations for formulation of NDPIII and the Ten–Year
National Development Plan are underway. This is because; NDPII (2015/16–2019/20) ends
in June 2020.

1.2. Second, to notify you that formulation of the above plans is guided by Constitution of the
Republic of Uganda, NPA Act, East African Vision 2050, Africa Agenda 2063, and the
Sustainable Development Goals, among other instruments

1.3. Third, to consult you, and affirm to you that preparation of the Plans is being done in a
consultative manner. This is in consonance with Objective 10 of the Constitution of Uganda
(1995) under National Objectives and Directive Principles of State Policy; which provides,
for involvement of the people in formulation and implementation of development plans and
programmes. The Strategic Direction encompasses the major Theme, Goal, Objectives,
Strategies and issues to be addressed by the Plan. It is on this basis of this Strategic
Direction that detailed Interventions, Programs and Projects will be developed.

1.4. Fourth, to assure you that the draft plans shall be ready by September 2019, in time to feed
into the budget process for FY 2020/21

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2.0. EXECUTIVE SUMMARY

2.1. The country has registered significant economy wide achievements over the last
decade that have laid a foundation for delivering an industrialization agenda for
Uganda. These achievements include: a stable political and macroeconomic environment;
and, a reasonable stock of transport, energy, human resources, and social services
infrastructure. These are critical for driving a sustainable industrialization agenda. Indeed,
pockets of sustained growth based on value addition are already evident. For instance,
progress has been made in Dairy industry in Ankole, Vegetable Oil industry in Kalangala,
and Tea industry in Toro and the Kigezi sub-regions. These successes now need to be
replicated country wide for nation-wide transformation.

2.2. Nevertheless, there are areas where more work needs to be done. These include;
strengthening implementation in government; increasing agricultural production and
productivity; increasing the competitiveness through reducing costs of production and
doing business; increasing access to development financing; land acquisition; addressing
the scourge of corruption; creating positive development mindsets, and; strengthening the
private sector.

2.3. Based on the foundation laid, it is proposed that the NDPIII aims at enhancing
household incomes and improving the quality of life of the population by holistically
focusing on resource led industrialization for export led growth. This national agenda
is proposed to be achieved through focusing on; agro-based industrialization, mineral
beneficiation, labor-intensive light manufacturing. This will take advantage of the abundant
arable land, significant mineral deposits, and the abundant youthful and cheap labor force.
In addition, focus will be on exploiting the rich biodiversity and tourism potential through
elite and mass tourism.

2.4. Further, it is recommended that Area Based Commodity Planning framework be used
to develop regional/locality specific programs that deliver this agenda. In other words,
Area Based Commodity Planning is recommended to be used to replicate pockets of
progress already evidenced in some parts of the country. In this framework, regions are
proposed to be clustered into labor intensive light and selected heavy manufacturing local
economic zones based on; agro-industrialization, mineral beneficiation, and tourism
products. This is expected to be promoted along the entire value chain, targeting all the
levels from production to the final market.

2.4.1. In agro-industrialization, Districts are proposed to be clustered into nine (9)

agroecological zones and will be supported to maximize value addition in
selected commodities using an area-based commodity approach. Special
industrial parks are expected to be established in each cluster to support value
addition, promote local economic and export development. A value chain approach
will be adopted for each commodity. Labor intensive light manufacturing and
cottage industries are expected to be promoted in each cluster.

2.4.2. In mineral beneficiation, targeted exploitation of viable mineral and oil

resources will be developed. The priority minerals will include; Iron ore,
Limestone, phosphates, oil, Dimension Stones, oil, Gold, and Sand/Aggregates that
benefit the industrialization process. Major areas of focus will be reviewing the
regulatory framework to minimize speculation and hoarding of licenses,

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 enforcement of regulations, provision of ICT, energy, transport and other industrial
infrastructure for mineral beneficiation as well as oil related infrastructure.

2.4.3. In Tourism, it is recommended that a hybrid of mass and elite tourism strategy
be employed to fully develop a few selected products in an integrated
approach.

2.5. To deliver this agenda, it is also proposed that Export Oriented growth be pursued
because, not only does it target the wider global market, but it also produces for the
domestic market as the country saves and earns foreign exchange and further creates
jobs. This strategy is expected to target the development/servicing of Special Economic
Zones (EPZ) and bring them up to world class standards. Further emphasis should be put
on operationalization of Free Economic Zones and Industrial Parks. In addition, focus will
be on broadening ownership of the export drive by linking EPZs to local economic activity;
enforcement of standards; strengthening regional and bulk infrastructure integration
networks such as railways. The domestic market will be used as a learning by doing
(nurturing ground) in an import replacement approach that targets the wider global export
market in the medium to long term.

2.6. Further, a quasi-market approach should continue to be nurtured in private sector

led economy that allows strategic Government investment and regulation. In addition
to providing an enabling environment for private sector participation, Government shall
directly invest in businesses of national and strategic importance to crowd in the private
sector. To this end, priority will be given to; capacitating institutions responsible for driving
industrialization and financing of strategic investments. The incentive regime will be
reviewed, streamlined and harmonized to support this approach.

2.7. All Government and Non-Government efforts should be coordinated to deliver the
resource-based industrialization agenda. In this regard an integrated-program based
approach to; planning, budgeting and implementation will be strengthened so that all
government and non-government efforts are harmonized. Within the Area Based Planning,
programmes are proposed to be developed to operationalize each of the strategies, which
will be budgeted for through programme based budgeting and implemented in a
multisectoral approach. This agenda will have to be supported with requisite infrastructure,
skills, healthy labor force, macroeconomic management, adequate financing framework
and implementation mechanisms.

2.8. Specifically, it is recommended that Government investment plans in an integrated-

program approach should be consistent with delivery of this agenda. For instance:

2.8.1. In the energy sector, energy demand for this agenda will likely outstrip the
current and medium term planned supply. As such, investing in planned
electricity generation should be continued with appropriate transmission
investments to feed the industrialization plans.

2.8.2. In the transport sector, in addition to prioritizing maintenance, prioritizing

investments along the Export trade corridors such as the Northern and Southern
Corridor Initiatives, in a multi modal approach, will be crucial to deliver the
proposed agenda.

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 2.8.3. The skills requirement for this agenda will be massive and different from the
existing skills set. In this regard, industrial players will be critical in defining the
skill requirements.

2.8.4. Sustaining agriculture productivity for industrialization will require irrigation and
better agronomic practices.

2.9. To deliver this development agenda, the public service will need to be transformed
into an effective and efficient implementer of a quasi-market approach. This should be
done through re-engineering the public service to provide an environment conducive for
growth for the private sector and an efficient investor in strategic Government led
enterprises. This should also be supported through nurturing of development-oriented
mindsets amongst citizens.

2.10. It is proposed that Government makes use of all available financing options to ensure
that the priority programs of NDPIII are adequately financed and implemented.
Towards this end, project development shall be strengthened, to develop and categorize
projects to leverage and fit all available financing options. Profitable projects will be
developed and showcased for private sector, diaspora, PPPs and debt financing. Non-
profitable but socially desirable projects will target enhanced domestic resource
mobilization and concessional donor funding. Development financing will be strengthened
by reforming and consolidating Government owned Banks and other financial institutions
to provide long term strategic funding.

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3.0. INTRODUCTION

Your Excellency, over the last thirty years, Uganda’s quest to transform from a peasant to a modern
and prosperous country has been guided by deliberate policy effort. It has been a consistent and
long-term aspiration pursued over time by the NRM Government. Underpinned by a stable
security, political and macroeconomic environment, this journey can be summarized into three
stages namely; i) Fundamental Economic Reforms Phase (1986-1996), ii) The Poverty Eradication
Action Plan (PEAP) and Decentralization Phase (1997-2009), iii) The Growth and Socio-
Economic Transformation Phase i.e. NDPI &II (2010 - 2020).

i) Fundamental Economic Reforms Phase (1986-1996): - On assumption of office in 1986, the

NRM government inherited a collapsed economy shattered by mismanagement, political
instability and civil wars. In FY 1986/87, inflation was estimated at 215%, GDP was as low as
UGX 43 Billion and per-capita income was only USD 258. To stabilize the country and
resuscitate the economy, the government undertook a number of reforms and implemented a
number of programs. These included:

1. The Reconstruction and Rehabilitation Program;

2. The Economic Recovery Program;
3. The legalization of the parallel foreign exchange market;
4. The liberalization of commodity marketing;
5. Privatization of state-owned enterprises; and
6. Restructuring of Government to reduce public expenditure and increase effectiveness and
efficiency in service delivery;
7. Introduction and operationalization of the decentralization policy in 1993.

These programs and reforms contributed to a return of peace and security in much of the country
except the north and north east, a growth in the economy for the first time in more than two
decades as reflected in an increase in GDP to UGX 6.122 trillion, an increase in per-capita
income to USD 282 in 1996 from USD 258 in 1986.

ii) The PEAP Phase (1997-2009): After restoring security and political stability, and economic
growth had once again resumed; government attention now turned to poverty eradication and
expanded provision of public services in line with the Millennium Development Goals (MDGs)
with continued deepening of decentralization. Focused government attention on poverty
eradication and provision of public services led to continued economic growth, and
improvement in people’s living standards. By FY2010/11, GDP had soared to UGX 10.861
trillion, per-capita income had increased to USD 647, and Life expectancy increased to 50.4.

The 25% MDG target of the population living below the poverty line was achieved in
FY2010/11, five years ahead of the year 2015. In addition, external debt service requirements
fell from 23% of export earnings in 1999/2000 to 5.2% of exports in 2013/14.

iii) The Growth and Socio-Economic Transformation Phase (2010 - 2020): During this period,
the emphasis of economic policy shifted from poverty eradication to economic growth and
socio-economic transformation. Government drafted and launched Vision 2040 which seeks to
transform the country from a peasant to a modern and prosperous country within 30 years.
Government has planned to achieve this Vision through a series of six five-year plans. While
the first NDP focused on “Growth and Employment”, the second NDP focused on addressing
the drivers of “Uganda’s Competitiveness” as an investment destination for Private
Investments. Private investment is critical for Sustainable Wealth Creation, Employment and
Inclusive Growth. Under NDP I & II, government has focused on investing in Infrastructure
 and Human Capital Development to facilitate exploitation of growth opportunities (Agriculture,
Minerals, Oil and Gas, and Tourism). A number of achievements have been registered in
Infrastructure, Human Capital Development, and a little progress made in commercializing
Agriculture.

These achievements are exemplified in the increase in life expectancy at birth to 63.3 years in 2017/18
from 48.1 years in 1991; an increase in the per capita income to USD 724 in FY 2017/18 from USD
506 in 2010; a doubling in the percentage of the population with access to electricity to 22% in
FY2017/18 from 11% in 2010/11; and the more than doubling in the size of the economy to UGX
100.53 trillion in FY2017/18 from UGX 46.878 trillion in FY 2010/11, and many others as elaborated
in the next sections. As a result, there are a number of areas in the country where household incomes,
lifestyles and quality of life rival that of people in middle income countries. These successes now need
to be replicated country wide for nation-wide transformation through Industrialization as our chosen
vehicle.

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REVIEW OF PERFOMANCE UNDER NDP I AND NDP II.

4.0. ACHIEVEMENTS

Infrastructure

4.1. In infrastructure, the national electricity generation capacity has expanded from 601MW in
2010/11 to 974.2MW by the end of 2017 and is expected to increase to 2000MW in 2018/19
when Karuma and Isimba Hydroelectric power plants come on board. This has resulted into
increased access to electricity from 11% in 2010 to 23% in 2017/18 and a reduction in cost
of energy from USD 9 cents and USD 16 cents in FY2012/13 to USD 8 cents and USD 9.8
cents for extra-large and large industries in September 2018, respectively.

4.2. The national paved road network has increased from 3,050 km (or 14.66% of the national
road network) in 2008 to 4,551 km (or 21.1% of the national road network) in 2017/18. It is
now possible to drive on a paved road from Arua to Kabale (an equivalent of 899 Kms) or
from Busia to Arua in a single day. Further, the dual road carriage road network has increased
from about 16 km to over 80km by December 2018 with the completion of the Kampala -
Entebbe Express way. Though travel time has been reduced by 0.05m/km between 2012 and
2017 on national roads, it is being eroded by increased cargo traffic on these roads in addition
to the disastrous effects of climate change that could otherwise be moved by rail.

4.3. Progress has also been made under the ICT sector. By end of FY2016/17, the total optical
fibre network both Government and private owned spans 7,424 kms covering 49% of the
districts and 24% of the sub counties with presence at all the border points. The number of
internet users has increased from 13 million in 2015 to 18.8 million in 2017 translating to a
penetration rate of 45.4% and 297 government services have been automated, 71 of these are
being provided online. The automation of government services has led to a reduction in
processing times and an improvement in service delivery as indicated in the table below.

Table 1: showing progress on business registration

Service Time savings per transaction
E-Immigration (Work Permit) 30 days – 4 days
Online Declaration (Wealth declaration) 60 mins – 20 mins
E-City (Trading License) 24 hours – 15 mins
NEMA (Environment Assessment) 30 days – 24 hours
Program Budgeting (Budget consolidation) 7 days – 48 hours
ARV Web ordering (Processing of orders) 30 days – 24 hours

Social Services

4.4. Government has continued to invest heavily in the education sector since the late 90s when
Universal Primary Education was launched. Currently, 92% of all parishes have a
government aided primary school, 71% of all sub-countries have a government aided
secondary school. All major regions of the country have a public university. In addition, there
has been significant private sector participation in the provision of education. As a result, the
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 last decade (2008-2017), primary school enrolment increased to 8,655,924 for Primary and
1,457,277 for secondary in FY2016/17, while tertiary enrolment has been increasing and now
stands at about 270,000 of which 141,500 are attending universities. The aggregate impact
of all these is high literacy rate of persons aged 10 years and above which currently stands at
74% in 2016/17, a slight increase from 70% in FY2012/13 and mean years of schooling at
4.5 years for persons aged 7-24 years.

4.5. Skills development is another area of focus. Government has laid the critical infrastructure
for skills development in terms of refurbishment and establishment of technical and
vocational institutions. Currently about 55% of districts have technical and vocational
institutions. Consequently, enrolment into Business, Technical and Vocational Training
(BTVET) institutions increased from 25,262 to 129,000 between 2008 and 2017. There is
remarkable progress towards the establishment of the 4 centres of excellence at UTC Elgon
for Civil works and building technology; UTC Lira for Highways construction and drainage,
bridges and road construction; UTC Bushenyi for food manufacturing and food processing;
and Bukalasa Agricultural College for crop and animal husbandry. In addition, three
incubation centers have been established in Mbarara University for Science and Technology,
Gulu University and Makerere University to support fresh graduates and others to translate
their business ideas into viable business enterprises. However, the content and quality of
education services remains wanting necessitating for a transition towards a more holistic
education for sustainable development.

4.6. Progress has been registered in social protection especially in the introduction of dedicated
support for the youth, the women and the vulnerable. Several programs have been rolled out
to support those with limited copying mechanisms to shocks and those without savings. Some
of these include SAGE, YLP, and UWEP. These programs have cushioned these groups from
income vulnerabilities and ignited a spark in the entrepreneurial spirit of the youth. In
addition, improvements in the mobilization of savings by NSSF has resulted in significant
savings from both public and private sector formal workers. Total savings held by NSSF now
amount to over UGX 9.98 trillion which is equivalent to 9.9 percent of GDP.

4.7. Significant improvements have been registered in the health sector. Between FY2012/13 and
FY2016/17, infant mortality per 1,000 live births has gone down from 54 to 43 deaths of
children, maternal mortality decreased from 438 to 336 deaths per 100,000 live births, and
life expectancy has increased from 54.5 to 63.3 years. This is the result of investments carried
in the health sector particularly over the last ten years. In addition, stunting has reduced from
33% in FY2012/13 to 29% in 2016/17.

4.8. The health infrastructure network has increased and currently consists of 2 national referral
hospitals, 19 regional referral hospitals, 147 district hospitals, 193 HC4s, 1250 HC3s and
3610 HC2s. Significant progress has also been made in the provision of specialized medical
care in cardiology and gynecology. A modern state of the art women’s hospital with a
capacity of 320 beds was recently opened in Mulago, and the heart and cancer institutes of
Mulago hospital have also been expanded and improved. However, access and quality
services remain low making Uganda lag in realizing Universal Health Coverage.

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Harnessing Opportunities for Growth and Wealth Creation

4.9. Commercial agriculture is emerging in some regions and integrated agricultural value chains
linking production, through agro-processing to marketing are being established and
deepened. For instance; Dairy in Ankole, Vegetable Oil in Kalangala, and Tea in Toro and
the Kigezi sub-regions among others.

4.10. In Kalangala, the construction of the BIDCO vegetable oil processing plant plugged a crucial
gap in the value chain for palm oil production providing a steady market to produce palm oil
farmers and availing a steady supply of vegetable oil for both the national and regional
markets. As a result, jobs have been created, poverty levels have been reduced and the
cooking oil import bill reduced.

4.11. Similar interventions have been done in the Ankole sub-region through milk processing and
tea in the Tooro sub-region totally transforming the economic fortunes of these areas. Several
new milk processing plants have been established such as Amos Dairies, Pearl Dairies, and
Ankole farmers Dairies. For instance, exports of milk and milk products have increased to
USD50million in 2017/18 from USD5million in FY 2010/11.

4.12. Similar efforts are underway in the Teso sub-region with the construction of the Soroti citrus
fruit processing factory, in Nakaseke with the construction of the fruit processing factory,
and in Kisoro with the construction of the Potato Processing Industries. In addition, tea
processing plants in Kigezi and Zombo have been established. Though the contribution of
agriculture to total GDP has reduced to 24.2% in FY 2017/18 from 25.5% in FY2012/13, the
percentage of people employed in agriculture remains high at 68.4% in FY2017/18. Hence,
productivity in agriculture remains low at USD708 in 2016/17 compared to USD3,948 for
industry in the same year.

4.13. In the mineral sector, significant progress has been registered in the processing of limestone
into cement which has benefitted the construction industry. The total production capacity of
cement now stands at 6.8 million metric tonnes compared to 2.3 million metric tonnes in
2015 and 1.6 million metric tonnes in 2011. This has resulted in creation of jobs, reduction
in the cost of cement as well as reduction in the volume of cement imported. Since concrete
constitutes a substantial part of total construction costs, reduced cement prices will lead to
faster accumulation of public and private infrastructure as well as increased access to decent
and affordable housing. At its peak, a 50kg bag of ordinary grade cement cost about USD 12
compared to USD 7 at the present. Thus, given the fact that the construction sector has been
and is set to continue being one of the major drivers of our growth, the benefits cannot be
under-estimated. This is, however, still higher compared to potential import sources like
China where it costs USD4.

4.14. Factories have been set up with industrial complexes emerging in Namanve, Mbalala
(Mukono), Kawempe, Matuga and others. Factories have been set up in food processing, iron
and steel, ceramics, plastics & batteries and many others. The number of cement factories

5
 has increased to four (4) operational plants in country with a fifth (Sinoma Cement factory
in Mbale) being planned.

4.15. In addition, government has designated 22 areas for establishment of serviced industrial
parks. Factories have been established in ten of them already, namely: Namanve,
Bweyogerere, Luzira, Soroti, Karamoja (Moroto), Jinja, Mbale, Mbarara, Kasese, and
Luwero-Nakaseke. Others like Fort Portal are fast coming on board.

4.16. The percentage of labor force employed in industry slightly decreased to 7.4% in 2017/18
from 7.6% in 2010/11, as has the contribution of industry to total GDP to 19.9% in FY
2017/18 from 26.4% in FY 2010/11. We now have a dual economy where the productivity
and wealth of those engaged in manufacturing and other industries is rising while
productivity and real incomes in rural agriculture remain low.

4.17. Tourism is another area where progress has been registered. Visitor arrivals have increased
overtime from 945,899 in 2010 to 1,151,000 in 2013 to over 1,322,522 in the year 2017
resulting in foreign exchange earnings of US$1,371 billion (BOU). The increase in the
number of tourist arrivals has largely been based on improved security and political stability
that the country has witnessed over the last thirty years as well as the uniqueness, diversity
and virgin nature of our tourism attractions though they are yet to be fully developed.

Table 2: Summary of the progress made under NDP I and NDP II.
S/N INDICATOR FY V2040 NDPII Status NDPII
1986/ 87 baseline Baseline FY17/ 18 Targets
FY 10/11 FY12/13 FY19/2
0
Quality of Life
1. Life Expectancy 47.6 50.3 50.4 63.3 60
2. MMR/100,000 506 435 438 336 320
3. Under 5 mortality per 1000 147 137 90 64 51
4. Total fertility rate 7.1 6.7 6.2 5.4 4.5
5. Child stunting as percentage of under 5 47.6 38 33 29 25
6. % pop. with access to electricity 1.3 11 14 23 30
7. Average years of schooling 2.5 4.7 5.7 6.1 11.5
8. Primary to secondary transition rates 56 65.5 73 78 83
9. Net enrolment rates at primary level (%) 56.82 95.3 95.3 98.15 100
10. Net enrolment rates at secondary level (%) 10.53 24 24.7 35.6 40
11. Water usage (m3/ capita) N/A 26 27 30.27 N/A
12. Safe Water Rural 51 65 64 74.9 79
Coverage Urban 87 66 70 92.3 100
Growth and Incomes
13. GDP per Capita (USD) 264 506 744.8 724.1 1039
14. Employment to population ratio (%) 69.1 70.9 75.4 56.8 79
15. Share of Industry in Total GDP (%) 9.7 8.9 20.7 19.9 27.9
16. Poverty – (%) People living on USD 1or less 55.7 24.5 19.7 21.4 14.2
17. Income Distribution (GINI CO.) 0.364 0.43 0.395 0.410 0.452
18. GDP growth rate 3.9 5.6 3.6 6.1 6.3
19. Manufactured exports as a % of total exports 12.0 13.2** 14.5** 12.3** 19
20. Exports to GDP ratio 6.7*** 11.3 6.2 8.2 9.95
21. Value of exports ($ Mil.) 347.1 3,450.6 4,993.2 5,347.6 N/A
22. Gross capital formation 8.4 24.1 27.9 24.1 27.7
23. Savings to GDP ratio 5.12 14.5 15.4 16 35
24. Agriculture 53.1 22.4 25.5 24.2 19.9
Industry 9.5 26.4 20.6 19.9 27

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 S/N INDICATOR FY V2040 NDPII Status NDPII
1986/ 87 baseline Baseline FY17/ 18 Targets
FY 10/11 FY12/13 FY19/2
0
Sectoral Services 31.1 51.2 46.7 47.6 52
composition of
GDP
25. Percentage of labor Agriculture 75.4* 65.6 63 68.4 31
force as per Industry 7.1* 7.6 8.2 7.4 26
Sectoral Services 17.5* 26.8 28.8 24.2 43
composition of
GDP
Competitiveness
26. Ease of doing business ranking (GCI index) N/A 112/183 150/189 122/189 111/189
27. Global Competitive ranking N/A 118/139 123/148 113/138 90/148
28. Electricity consumption (kWh per capita) N/A 75 80 100 578
29. Paved National Roads as (% of National roads) 8.0 16 16.6 21.1 25
30. %tage of cargo freight on rail to total freight N/A 3.5 12 8.3 25.5
31. Labor Productivity Agriculture N/A 390 581 270 977.7
(GDP/Worker Industry N/A 3,550 5,106 2,763 7,871.4
USD) Services N/A 1,830 2,441 2,391 5,217.7
32. Unit cost of x-large industries N/A N/A 9 cents 8 cents 5 cents
electricity in cents Large Industries N/A N/A 16 cents 9.8cents 5 cents
USD Commercial consumers N/A N/A N/A 17 cents 5 cents
Domestic consumers N/A N/A N/A 23 cents 5 cents
Sustainability in Wealth Creation
33. Wetland cover (% of total) 15.6 8 11.9 10.9 12
34. Forest cover (%) 20.4 15 14 9.5 18
35. Population growth rate 2.4 3.2 3.2 3.02 2.9
*** 1986/87 figure has only export of goods. The rest includes both exports of services and goods. ** Numbers in parentheses are
from External Trade Data Base (Formal & Informal), * WB data,

A Conducive Macro-Economic Environment has been established

4.18. The attainment of these achievements has occurred within the framework of a stable
macroeconomic environment. The economy has remained resilient in the face of a stressed
global economic environment, geopolitical challenges, volatile exchange rate market, climate
change and other natural disasters. The rebound in real GDP growth in FY2017/18 to 6.1%
after a sluggish growth of 3.9% in FY 2012/13 is evidence of a resilient economy. Real GDP
growth is now projected to grow above 6.5 % in the next two years and is potentially
projected to grow at a minimum of 8% in the NDPIII period.

4.19. The medium to long-term annual inflation target of 5% has largely been maintained, albeit
with episodes of high and low inflation due to short-term shortages in supply. The Central
Bank has gradually reduced the CBR from 14.5 % at the start of FY2015/16 to 10% at the
end of September 2018 in order stimulate the economy as well as ease the supply of credit.

4.20. Gross domestic savings as a percentage of GDP have grown from 14.5% in FY 10/11 to 16.5
in FY17/18, while investment has grown from 21.1% to 28.5% of GDP over the same period.
Remittances from Ugandans working abroad have increased significantly from USD 819
million in FY2010/11 to USD 1.4 billion in FY17/18 further boosting the savings pool
available for investment though with limited government support.

4.21. The banking network has now increased to 24 commercial banks, six credit institutions and
three microfinance deposit taking institutions from 21 commercial banks in 2008. The total
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 assets of commercial banks grew by 9.0% in FY 2016/17, up from 5.5 % in FY 2015/16. The
increase in assets was mainly driven by banks’ increased holdings of securities, which more
than compensated for the reduction in their loan portfolios. The risk aversion by banks
follows the high default rates in 2016 when the ratio of non-performing loans climbed to 10.5
% of the total portfolio, an 18-year high. Customer deposits constituted 83.8% of combined
commercial bank liabilities, growing by 16.6% to Shs18 trillion.

4.22. However, ‘However, banking penetration in Uganda remains low and financial services are
concentrated in the urban areas. Similarly, the 2018 FinSope Survey reveals that Uganda has
a low insurance penetration rate of 1% which implies that 0.22 million Ugandan adults have
insurance cover. Although, most Ugandans earn a living through farming, there is negligible
uptake of crop and or livestock insurance. There are 30 insurance companies, 12 health
membership organizations, and 27 brokers. Mobile money banking has exploited the low
penetration of commercial banking services, particularly in the rural areas. By December
2017, the number of mobile money subscribers had grown to 22 million with a total
transaction volume of UGX 54 trillion, up from 18 million subscribers in June 2015 with a
total transaction volume estimated at UGX24 trillion’.

4.23. These results have contributed to an improvement in our economic indicators. For example,
Uganda’s nominal GDP has more than doubled over the last eight years growing from
UGX46.878 trillion FY2010/11 to 63.74 trillion in FY 2012/13 and UGX 100.53 trillion in
FY 2017/18. Subsequently, Uganda’s Per capita Income increased from USD 506 in 2010/11
to USD 724 in FY 2017/18. The performance of the economy over the past eight years is
summarized in table 2.

5.0. OUTSTANDING CHALLENGES/BOTTLENECKS

5.1. Uganda was ranked as the world’s most entrepreneurial country in the world (Guardian of
16th Feb 2016). However, many of the businesses that are started either collapse within three
years or remain small-scale and informal over their life time. Over 60% of businesses in
Uganda are categorized as small and medium enterprises (SMEs). A good number of them
collapse within their first year.

5.2. For sustained accelerated economic growth to take place, the country has to adopt the dual
strategy of supporting SMEs to grow and graduate into large scale enterprises as well as
attract large foreign firms to locate in-country and establish linkages with local firms. For
this strategy to be effective, several strategic outstanding bottlenecks and complexities need
to be addressed. These range from high cost of doing business, weak public and private
institutions, non-developmental mindsets, limited integration of local value chains and
limited value addition, inadequate and uncoordinated efforts to promote export growth, high
levels of youth unemployment, unplanned urbanization, a large informal sector, low labor
productivity, vulnerability to the impacts of climate change and poor work culture. These are
explained below:

8
5.3. High Cost of electricity. Progress has been made with reduction in cost over the last 4 years
from 9 cents to 8 cents and from 16 cents to 9.8 cents for extra-large and large industrial
consumers respectively. However, it is still higher than the target of 5 cents per Unit. The
cost is even higher for medium industrial consumers at 15.6 cents for a unit and for
commercial consumers (cottage industries) at 17.5 cents per unit; twice the charges for extra-
large industrial consumers. The under-pining factor responsible for the consistently higher
electricity tariffs is the low demand and capital recovery. Concerning the low demand, it is
expected that completion of Karuma, Isimba and other mini-power stations as well as the
drive to accelerate the pace of industrialization will raise the consumption and consequently
lower the cost.

5.4. Slow connections to the national electricity grid. In the newly “released ease of doing
business” report, Uganda was ranked among the worst (at 175 out of 190 countries) for new
customers trying to get access to the national grid. There are 6 steps that the customer needs
to complete to get access to power compared to a sub-Saharan Africa average of 5 steps.
Whereas access to the grid has increased to 22% as of FY2017/18, the pace needs to go up
significantly to reach the Electricity Regulatory Authority target of 60% by 2027.

5.5. Limited reliability of the Power Supply. Though loans have been contracted to improve
transmission and distribution systems, significant challenges remain with the evacuation,
transmission, and distribution of electricity from the plants where it is generated to the
industries where it is needed. The existing transmission and distribution networks are small
and aging. As at the end of 2016, there were 1,627 Km of high voltage power lines (63KV,
132KV, and 220KV) 60% of which are more than 50 years old. The installation lifetime for
these lines is 40 years. Consequently, serious technical power losses during transmission and
distribution of electricity have led to intermittent voltage supply to industries. To mitigate
against the instability of power transmission, factories resort to temporary suspension of
production or use of generators. A total of 100km was added to the transmission and
distribution network during the period 2000-2016, and 948 km are under construction
compared to additional 6,349km that are supposed to be added by 2021 under the “2016 –
2030 Electricity Grid Master Plan”. Consequently, UETCL needs to invest more to revamp
the transmission and distribution.

5.6. Insufficient electricity generation in the medium and long-term. The current total
electricity installed generation capacity stands at 947 MW while the peak consumption is
equivalent to 595 MW. While it may appear that we have a surplus, peak consumption is
established based on active demand, and not on the installed capacity of the various factories.
However, most of these factories report that they are operating at 47% or less of their full
capacity. This means that if market demand for the products from these factories goes up,
their electricity consumption will go up as well. In addition, several new factories are
currently under construction and will start operations in the medium term. Some of these
include Tembo Steel Mills and Pramukh that will consume a total of 120 MW.

5.7. The demand for electricity is expected to grow even more sharply with the commissioning
of the Tororo Phosphates and Steel factory with an estimated consumption of 200MW and

9
 another Iron and Steel Processing factory at Muko. There is danger that even when Isimba,
Karuma and the 15 micro generation plants (with a total additional combined generation
capacity of 862 MW) are completed and commissioned, demand could still outstrip supply
when industrialization picks up pace.

5.8. High interest rates, high collateral requirements and short-term lending. Lack of patient
capital continues to constrain business growth in Uganda. The main source of development
finance for businesses is short-term credit mainly from commercial banks where lending rates
average 20%. Hence, businesses choose to remain small and informal further motivated by
the need to maintain low operational costs by avoiding taxes and registration costs. But this
comes with the opportunity cost of missing opportunities, like bidding for government
contracts, which could offer financial security and a path for growth as well as the loss of
potential jobs that could have been created through business expansion. Other challenges
include poor entrepreneurial/business skills, and weak/poor service delivery like commercial
justice, agricultural extension, and inconsistent enforcement of government regulations.

5.9. Low Competitiveness due to insufficient investment in STEI. Science, Technology,

Engineering and Innovation (STEI); private sector support; and industrial support
infrastructure all work together to generate momentum for industrialization. However,
investment in the three is still inadequate. Uganda was ranked 113th out of 138 countries
surveyed in 2017, which though improving is still low (Global Competitive Index - GCI).
The reason for the country’s low ranking is mainly because of a labor force that is not
innovative, not appropriately skilled and has a poor work culture. The country’s secondary
school curriculum is too wide, and the vocational education curriculum is not dynamic i.e. it
does not respond fast enough to the needs of the labor market. The higher education
curriculum does not sufficiently incorporate practical work-based training as a form of
preparation for the world of work. Consequently, employers spend significant amounts of
work time and resources re-orienting and training new entrants into the job market. Our
higher education and training, innovation and technological readiness are particularly poorly
ranked. All three are directly linked to the quality of education our graduates receive in our
education institutions which remains unsatisfactory.

5.10. Inadequate funding for Research. Uganda spent 0.001% of total GDP on research and
development in FY 2017/18 compared for instance to Germany (USD 100 billion or 2.7% of
GDP), U.K. (USD 44 billion or 1.7% of GDP), Kenya (USD788 million or 1.1% of GDP)
according to UNESCO. Funding for research and development in Uganda, most of which go
to NARO and the Uganda Industrial Research Institute, is inadequate. Funding for the
medical sciences account for only 2.3% of that figure.

5.11. Infrastructure that is not well maintained and un-integrated. Whereas government has
significantly invested in Transport infrastructure, its interoperability is inadequate, that is, it
does not seamlessly connect to one another in an efficient manner. In addition, there is poor
maintenance of this infrastructure. Development of transport infrastructure has been done in
segments, without an overarching vision to increase interconnectedness between the road,
rail, air and water transport systems and hence access to areas with potential for tourism,

10
 minerals, oil or agriculture. For instance, a tourist wishing to visit Kidepo national park must
brave a more than 12-hour drive from Kampala through Tororo and Mbale (or through Gulu
and Kitgum) to Kotido or charter a private plane ride both of which are very un-attractive
options in terms of time and cost. Operationalizing the ferry crossing from Bukungu to
Teso/Lango plus upgrading of the interconnecting roads would reduce the travel time from
Kampala to Kotido by over 3hours.

5.12. Low Export Volumes. Uganda has not yet fully exploited its duty free and quota free access
to markets in the US (under AGOA), Europe (EBA) and China (GFT) as well as unrestricted
market access to the regional markets (EAC and COMESA. This is due to inadequate market
information to local producers, poor quality of products, high energy tariffs, high interest
rates, and high transport costs. The transportation costs for a 40-foot container is USD9.3 per
mile compared to USD4.2 for the U.S. and USD2.5 for China. Using the SGR or Bukasa port
would reduce the cost to USD2.5 and USD2.2 respectively. Additionally, absence of export
credit guarantee schemes and/or an export fund to mitigate the inadequate capitalization of
export businesses has limited the growth of our exports.

5.13. As a result, our export base is still small and dominated by export of raw materials with low
value addition. Our production (particularly industrial production) levels are small,
inconsistent and unable to secure and maintain markets. Also, due to poor certification
systems, the quality of our products is poor and non-standardized. In addition, the level of
manufactured exports in total exports is low and has been declining. Between 2012 – 2016,
manufactured exports as a percentage of total exports declined by 12%, and by a further 12%
in FY 2015/2016. Unless the issues of low value addition, poor quality and certification, low
volumes and inconsistency in commodity supply are addressed; the country is unlikely to
maximize the benefits offered by the current markets as well as new integrated markets
offered by the introduction of the African Continental Free Trade Area (ACFTA) and the
regional trading blocs (like EAC, COMESA etc.).

5.14. Industrial parks that are not fully serviced. Government has set up industrial parks in
different parts of the country to promote value addition and exports. However, most of these
parks are not fully serviced. Water, electricity and sewerage systems are still lacking.
Physical plans together with requisite infrastructure like service roads inside the parks are
not yet in place.

5.15. For instance, at the Kampala Industrial and Business Park (Namanve) coverage of the
tarmacked road network within the park stands at only 14.8% and 30km (68.2%) of the road
network have been opened to first class marram level. The corresponding numbers for “Bulk
Industrial Power Network” stand at 30%; and “Bulk Industrial Water Network” is 30%. In
addition, the numbers for railway sidings, drainage system, waste management, sewage
treatment, and fibre optic cable backbone all stand at zero, meaning that these services are
non-existent in the park. This means that most investors that want to set up shop in these
industrial parks must use their own resources to have these installed. The same can also be
said for those entrepreneurs who set up factories in other areas outside of the industrial parks.

11
5.16. A large import bill dominated by final consumer goods. As of 2017, the total import bill
was USD 5.7 billion comprising mostly consumer goods as opposed to intermediate
goods/inputs for local manufacturing that would increase production of locally manufactured
goods for either domestic consumption or export. The result has been a negative trade balance
as shown Figure 1.

Figure 1: Trade Balance, Millions USD

8,000 Trade Balance - Value in Millions USD

6,000

4,000

2,000

-
FY10/11 FY11/12 FY12/13 FY13/14 FY14/15 FY15/16 FY16/17 FY17/18
(2,000)

(4,000) Exports Imports Trade balance

5.17. Low Agricultural Production and Productivity. The productivity of the Ugandan worker
remains low. In the Fiscal year 2017/18, the output per worker in agriculture (where most
population is employed) was estimated at USD 270 while the corresponding number for a
person employed in industry stood at USD 2,763 (or about ten times labor productivity in the
agriculture sector). In 2017/18, 68% of the households indicated that their main source of
livelihood was subsistence agriculture, but 40% (6 million persons) of the working
population of 15 million were engaged in subsistence production.

5.18. Even though Uganda has rich fertile agricultural soils plus two rain seasons in a year and can
grow two harvests of most annual crops within a year, labor productivity in the sector has
remained low. The sector has been dogged by several challenges that have inhibited its
profitability and compromised its potential for sustained growth in production/productivity
and commercialization. Agriculture remains largely rain fed and practiced using traditional
methods and equipment. Use of fertilizers and irrigation is negligible. It is characterized by
cycles of “gluts” and “shortages” driven by changes in rainfall patterns and prices.
Agricultural exports are mostly raw and unprocessed and face significant competition from
other countries like Brazil in the case of coffee. To make agriculture commercial and
profitable there is need to agro-industrialize.

5.19. In the last decade, climate change effects manifested through noticeable changes in rainfall
patterns and total annual rainfall amount have been evident and are forecasted to worsen in
the near future. This is majorly attributed to the significant reduction in the forest cover from
15% in 2010 to 9.5% in 2017 as well as wetland degradation and encroachment. The wetland
cover has reduced from 11.9% in 2012 to 10.9% in 2017. The changes in the climate system
are already contributing to increased food insecurity; higher incidence of tropical diseases
and pests in humans, livestock and crops,; soil erosion and land degradation; flood damage
12
 to infrastructure and settlements and shifts in the productivity of agricultural and natural
resources. And, it is the poor and vulnerable who feel these impacts the hardest. For example,
malaria is now common in the Bugisu sub-region while it was virtually non-existent in the
area before the 2000s. Also, the viability of growing crops like coffee in certain areas may
be compromised leading to reductions in household income and an increase in poverty levels.
Intensification of efforts to increase the forest cover, promote climate change adaptation and
mitigation, disaster risk reduction as well as the conservation and regeneration of wetlands
will moderate and even reverse some of the impacts.

5.20. Low capacity in public service and prevalence of corruption. The Civil service is weak
and not adequately equipped to drive development. For instance, many project ideas that were
included in NDPII still remain project ideas three years into its implementation. Of the total
42 core projects in NDPII, only fifteen (15) projects are on schedule to be completed before
end of the Plan in FY 2019/20. Another five (5) projects are being implemented but behind
schedule. For the rest of the projects, either feasibility studies have just been completed, are
currently ongoing or have not even started. The pervasively low implementation of
development programs is a result of weak government institutions, duplications in mandates
and corruption/incompetence. Capacities in project preparation and appraisal in government
ministries are inadequate and procurement processes are long. Sometimes, the long
government processes are used by government officials as opportunities for extortion.

5.21. Performance of the Judiciary remains below target. Case backlog remains a serious issue
with many cases taking longer than 2 years to be disposed off from the judicial system. An
inefficient judiciary is bad for business and for the economy. As of January 2017, there were
155,400 pending cases, including cases of a commercial nature. Whereas, government has
steadily increased the number of Judges from 52 to 82, another 32 Judges, 51 magistrates,
and 320 Grade I Magistrates remain un-appointed. There is also need to introduce a
performance management system to ensure each justice, Judge or Magistrate disposes off a
minimum number of cases using supportive technology driven systems.

5.22. Inadequate tourism infrastructure. The Tourism potential has not been sufficiently
exploited. Though tourist arrivals have been growing, tourist expenditure per capita is low
largely because most of them come on personal business and stay for short periods of time.
On average 67% of tourists spend only 5 days or less, and the majority (60% of all tourist
arrivals) classified their reasons for travel (to Uganda) as personal of which this category
typically contributes the least towards tourism revenue compared to 18% coming on holiday,
leisure and recreation and 22% on business/professional. By comparison, Kenyan tourist
arrivals were 72% for holidays, leisure and recreation; 13% business/professional; and 15%
on personal visits. In addition, most tourist arrivals in the country were from the African
continent (79.2 percent) followed by Europe (8.3 percent) Asia (5.5 percent) and America
(5.4 percent). Tourists from the EAC and DRC accounted for 64 percent of all visitor/tourist
arrivals, and travelled by road as shown in Figure 2.

Figure 2: Tourist arrivals and purpose of visit

13
5.23. The reasons for the insufficient numbers of holiday and leisure tourists who are able to stay
longer and spend more range from inadequate tourist infrastructure (hotels, roads, vehicle
fleet) especially outside the greater Kampala Metropolitan Area; inadequately developed
tourism products (without proper sanitation, access roads, fully serviced space for
restaurants, cultural shows, craft shops); inadequate brand recognition (pearl of Africa) due
to insufficient marketing; and poor air transport connections to Entebbe (due to absence of
a national airline).

5.24. Inadequate execution of the legislative function. The legislature also has significant
challenges of its own regarding the number of bills that remain pending more than a year
after their initial tabling on the floor. For instance, this includes bill like “The Sale of Goods
and Supply of Services Bill (2015) which has been pending for more than three years” and
whose passage would positively impact the business environment and bring the law
governing trade in goods and services at par with the modern practices of business.

5.25. Multi-sectoral approach to implementation planning remains a challenge. Government

institutions continue to operate in “silos” while planning and executing major projects totally
ignoring the impact their projects might have on projects being implemented by other
institutions and vice versa. This is true, both within and between sectors. Many examples of
this abound. For instance, designs for the Standard Gauge Railway (SGR) were done totally
oblivious of the route for the high voltage power line evacuating power from Bujagali to
Lugogo which will have to be moved at great cost to the taxpayer. The same was done for
the designs of the road interchange at the ‘former Jinja road’ roundabout that did not consider
the proposed route for the SGR as well as the road interchange at Busega with the SGR route.
In the case of the road interchanges at Jinja Road and Busega, significant losses in terms of
money and time will be incurred to correct this ‘oversight’.
14
5.26. Planning and implementation not yet fully aligned. There remains some level of mis-
alignment between the priorities of the National Development Plans, the actual budget
allocations and actual expenditure. During the FY2016/17, the variance between the NDP
II recommended budget allocations and the actual expenditure on those same priorities was
20.4% (or Ug. Shs 4.5 trillion below the NDPII recommended expenditure) and 17% in the
FY 2017/18. The expenditure outturns in the tourism sector was 61% below the NDPII
recommended levels. The figures for the Energy/Minerals and Works/Transport sectors
were 53% and 44% below the NDPII recommended levels, respectively. This is due to
failure by sectors to translate sector plans into budgets or delays in the preparation of
bankable projects when the funding has already been set aside or a combination of all three
(source: MOFPED Presentation to top management on alignment between NDPII and the
budget – 5th September, 2018).

5.27. Low Domestic Revenue Mobilization. Domestic revenue to GDP ratio remains low at
14.4% in FY 2017/18 compared to the 21% average for Sub-Saharan Africa. With
dwindling Official development Assistance and volatile remittances, domestic revenue
mobilization has re-emerged as a key source of funding for national development plans.
There are significant weaknesses in tax administration and compliance. For example, the
World Bank estimates revenue losses of 2.5% of GDP due to VAT exemptions. If VAT
exemptions were to be abolished, the NDPII modest revenue to GDP target of 16 % would
have been achieved even within the Plan period. Efforts to increase domestic revenue
collection is further undermined by the large size of the informal sector which experts
estimated to be more than 35% of GDP.

5.28. Rising demand for Social protection. A change in the structure of the economy has been
observed over the last ten years. The share of agriculture has declined from 30% of GDP
in 2006/7 to 24.2% in 2017/18. This change in the structure of the economy has been
accompanied by movement of labor out of agriculture but has not been absorbed into the
industrial sector. In addition, increase in life expectancy is consistently increasing the
number of “seniors” in our society. The increase in the number of “seniors” as well as the
number of people who are unemployed, ill or have been impacted by disasters necessitates
the strengthening of the social protection system.

5.29. The population segment aged 15-34 years, otherwise characterized as the youth, have been
more affected with this change in the structure of the economy. The number of youths was
estimated to be 22.6 million (or more than 50% of the total population) in 2015. Due to our
low industrial base, significant numbers of these youths who moved out of agriculture did
not find employment in industry and instead ended up in disguised unemployment in the
services sector. There is higher than average unemployment within this population segment
as they tend to have no significant experience or capital to enable them launch out as
entrepreneurs. In 2016/17, the youth unemployment rate stood at 13% (18-30 years), much
higher than the national unemployment rate of 9%.

15
5.30. Previous attempts at solving this youth unemployment problem have been disjointed,
inadequate and have not addressed the issue of appropriate skills suitable for the labor
market. In addition, reversal in the poverty trends from 19.7 % in FY2012/13 to 21.4% in
FY2017/18, coupled with low savings rate (16% of GDP) and the disastrous impacts of
climate change have led to increased vulnerability. This, therefore, calls for more focus on
increasing social safety nets e.g. universal health insurance, cash handouts for the elderly
and food for work for those physically able to work.

5.31. Negative mindsets. Most Ugandans find it difficult to appreciate the potential for job
creation and wealth creation that the country offers. They do not take personal
responsibility for the betterment of their lives. As a result, a number of able bodied youth
are busy seeking jobs outside the country, most of which are menial/housekeeping jobs.
Such jobs diminish their sense of self-worth and consequently their ability to succeed in
life. Internally, most people have a negative mindset and are not able to see or are not
assisted to take advantage of the opportunities the country has to offer. Our political history
has not provided clear ideological direction to guide the country’s development path. This
has led to failure to establish and implement a national value system which would include
aspects such as patriotism, work ethics, integrity, positive attitudes and mindsets, national
identity and positive cultural practices. In sum we have a large section of the population
largely youth with a negative development mind set.

5.32. Inadequate planning for and utilization of the population dividend. The country has
not yet fully undertaken comprehensive planning for harnessing the demographic dividend.
The total fertility rate has consistently declined from a peak of 7.1 (in 1989) to 5.8 in
2012/13 and to 5.4 in 2017 and is projected to decline even further signaling the onset of a
demographic transition. A decline in fertility means a reduced dependency ratio and a larger
proportion of the working age population, which should lead to higher rates of economic
growth if the right investments are made in education and health. However, evidence shows
that the movement of labor from agriculture (from 72.4% in FY2012/13 to 60.7% in FY
2016/17 of mostly youth aged 15-34 years) was not absorbed in industry due to the low
industrial base. In addition, the quality of education and health services is still inadequate.
This explains the reversal in poverty rates from 19.7 % in FY2012/13 to 21.4% in
FY2017/18.

5.33. Inadequate Quality of Education and Health Services. The quality of education and
health services remains wanting at all levels despite the significant improvements made in
access to these services. Education management at primary and secondary level remains a
key constraining factor in improving the quality of education. There is no leadership
training for individuals that are appointed into management positions of the schools. At
tertiary and University levels, a challenge remains in linking education to industry and
community needs. Similarly leadership and management in the health sector is also a big
issue that needs to be addressed.

5.34. Staffing levels in the health sector remain low based on the 1995 norms which are not
commensurate with the current demands and needs and far below the recommended WHO
health worker to population ratios for Africa. This has therefore undermined the quality in
16
 service provision. This situation is made worse by an inadequate number of specialists in
areas such as anesthesia, neuro-surgery, renal surgery as well as cardiology. Despite heavy
investment in expanding geographical coverage of health facilities to now almost 100
percent within a 5km distance, the challenge of low functionality of the health facilities
persists. This is a result of critical human resource gaps (25% nationally, 60% super
specialists, 61% specialists, 80% supportive critical care cadres). The other reasons are;
inadequate medical equipment, frequent drug shortages and low motivation levels of health
workers.

5.35. The disease burden remains high and yet 75 percent of it is preventable. For example,
diarrheal diseases contributed 69 percent of childhood illnesses in 2016. 29 percent of
children were stunted, 13 percent of the NCD was caused by accidents/injuries and malaria
prevalence is still high at 19 percent.

5.36. In addition, Non- Communicable Diseases (NCDs) such as cancer, heart diseases, and
diabetes are rapidly increasing and now account for 40 percent of the disease burden, with
high mortality rates. Therefore, the country has a double burden of disease 60 percent CDs
and 40 percent NCDs and yet the health system is not well prepared to handle this
challenge.

5.37. Slow Project Implementation. As shown in Table 3, implementation of core projects,

including the Oil refinery and the pipeline has been slow adversely affecting growth and
job creation.

Table 3: Status of implementation of Core Projects – FY2017/18

PROJECT
UNDER IMPLEMENTATION AND ON SCHEDULE
1 Karuma Hydro Power Plant
2 Isimba Hydro Power Plant
3 National Grid Extension incl. Regional Power Pool
4 Road Construction (Earth Moving) equipment
5 Phosphate Industry in Tororo
Markets & Agriculture Improvement Project
6 launched, phase 2 ongoing)
7 Farm Income Enhancement and Forest Conservation
The Entebbe Airport Rehabilitation
8 apron one extension of the taxi way completed
9 Upgrading of Kapchorwa – Suam road
Uganda Women Entrepreneurship Programme
10 (UWEP)
11 Youth Livelihoods Programme (YLP)
ICT National Backborne Project
12
13 Entebbe Expressway
Albertine Region Roads
14
Renovation of 25 Selected General Hospital
15
17
STATUS
On schedule (82% of the works are complete)
On schedule (92% of the works are complete)
On schedule (88% of the works are complete)
Completed and launched
On schedule (50%-phase 1 completed and launched)
On schedule (50% Phase 1 subprojects completed &
On schedule (10% in the first year of implementation)
On schedule 34.3% out of 80% on targets works for new
cargo centre complex and 6.7 % out of 65% of works on
On schedule (first year of construction)
On schedule (66.1% disbursement)
On schedule (64% disbursement)
On schedule (implementation upto Phase 4 has been
finalized), phase v and financing request stage.
95.6 % cumulative physical progress
Three (3) packages are on schedule & 3 packages under
tendering
Renovation of 25 General Hospitals on schedule for
completion by 2019
 PROJECT STATUS
16 Olwiyo-Gulu- Kitgum – Musingo road Construction is ongoing. Lot one is almost complete
Albertine Region Airport (Kabaale international Construction of runway and limited structures ongoing
17 airport-Hoima) (Project is 5 months ahead of time)
UNDER IMPLEMENTATION BUT BEHIND SCHEDULE
Agriculture Cluster Development Project Implementation behind schedule (only 5% of project
18 delivered)
Marketing and Product Development Project for Implementation behind schedule (only 20% of project
19 Namugongo delivered)
Comprehensive Skills Development Programme Implementation behind schedule (only 3% disbursement as
20 of December 2017)
21 Revitalization of UDC Legal framework and governance structures established Shs.
55bn provided out of required Shs. 500bn). Recruitment of
staff still slow.
Recapitalization of UDB Implementation behind schedule (35% only Shs.105Bn
22 disbursed out of Shs.300Bn)
FEASIBILITY COMPLETED, READY FOR IMPLEMENTATION
Hoima Oil Refinery Feasibility finalized, RAP finalized up to 98.3%, Investor
23 Secured, Final End Engineering Designs finalized.
Grid Extension in North East, Lira and Buvuma Islands Feasibility finalized, RAP ongoing for 50% of area, under
24 tendering
25 Kabale – Mirama Transmission line Feasibility finalized, RAP at 10%, tendering ongoing
26 Kampala – Jinja Expressway Feasibility finalized (procurement of contractor ongoing)
27 Kibuye – Busega Express Highway Feasibility finalized (Sourcing of financing ongoing)
28 Kampala Southern bypass Feasibility finalized (procurement of contractor ongoing)
29 Busega – Mpigi expressway Feasibility finalized and under procurement
30 Rwenkunye – Apac – Lira-Kitgum-musingo Feasibility finalized. Under procurement.
Industrial Substations (Luzira-35%, Iganga 75%, Feasibility Study-RAP 60% completed
31 Mukono 78%, Namanve 80%)
32 Masaka – Mbarara Transmission Line Feasibility, RAP at 90%, tendering ongoing.
33 Bukasa Port Feasibility Study and Master Plan Finalized
34 Kampala - Bombo Express highway. Feasibility Study, Detailed designs prepared.
Oil related Infrastructure Projects -pipeline Front End Engineering Design and procurement process for
35 contractor ongoing
36 Ayago Hydro Power Plant Feasibility completed
ONGOING FEASIBILITY STUDIES
Marketing & Product Development Project for Source Feasibility Study and master plan in progress
37 of the Nile
38 Standard Gauge Rail Feasibility study, RAP and negotiation of financing ongoing
39 Strengthening Effective Mobilization, management Feasibility study ongoing
and Accounting for use of Public Resource (SEMMA)
40 Development of Iron Ore and Steel Industry Pre-feasibility ongoing
NOT YET STARTED
41 Storage Infrastructure Not yet started
42 Mass treatment of Malaria Not Yet started

6.0. PROPOSED NDP III STRATEGIC DIRECTION

18
6.1. Under NDP III, it is proposed that government will pursue strategies to increase
production, expand exports and reduce imports by promoting resource-led
industrialization as per strategic direction in the box below. To drive this development
agenda, special emphasis will be placed on promotion of both domestic and foreign
Investment in order to increase the volume of locally manufactured goods for both domestic
consumption (through import substitution) and exports.

Theme: Sustainable industrialization for inclusive growth, employment and wealth creation

Goal: Increased household incomes and improved quality of life.

Objectives:

1. Enhancing value addition in Key Growth Opportunities (Agriculture, Tourism, Minerals, Oil

and Gas),

2. Strengthening the private sector to driver growth and create jobs,

3. Consolidating and increasing the Stock and Quality of Productive Infrastructure,

4. Increasing Productivity, Inclusiveness and Wellbeing of the Population,

5. Strengthening the role of the public sector in the growth and development process

19
It is also proposed that this theme, goal and objectives be adopted for the ten (10) year NDP
to ensure consistency and continuity in the pursuit of the chosen development path until
tangible results are realized. This will enable synchronization of these NDPs with the regional,
continental and international, agenda (EAC Vision 2050, Agenda 2063 and the SDGs). It is also
recommended that the national annual budgets adopt the same theme, goal and objectives over the
same period for the same reasons.

6.2. Sustained peace, security, good governance, and a stable macro-economic environment will
provide the basic anchor for economic growth and development under this plan. In addition,
this strategic framework will streamline and direct government, private sector, CSO and
development partner investments towards:

a) Increased agricultural production/productivity and agro-processing, Mineral

Beneficiation, Oil refining, Tourism expansion, and labor intensive light manufacturing
(including cottage industries).
b) Well sequenced infrastructure investments in energy, roads, water, air, rail, industrial
parks, and mechanized irrigation schemes to support increased production/productivity
for export expansion and import substitution.
c) Increased production of more skilled, motivated and healthy workforce for the industrial
sector as well as a modernized agricultural sector.
d) A strengthened private that is able to drive growth and investment.
Why Industrialization as a theme for NDP III

6.3. Expansion of manufacturing industry is critical in the pursuit of accelerated rates of economic
growth hence the focus on industrialization as the engine for take-off. Industrialization
provides unmatched potential for sustained accelerated growth by adding value to raw
materials that are produced locally. The forward and backward linkages created within the
economy result into;

e) Increased demand for agricultural, mineral, oil and gas related commodities through
providing opportunities for producers and suppliers of inputs,
f) Job creation for a relatively larger number of gainfully employed unskilled or
semiskilled workers especially those not integrated in the formal economy, which
increases household incomes and overall domestic demand,
g) Improved trade balance (external account) by reducing imports and diversifying exports
thereby increasing the country’s resilience to external shocks, and
h) Higher labor productivity due to changes in the methods of production.

6.4. Government will adopt a sustainable resource-led form of industrialization by maximizing

value addition in Agriculture, Tourism, selected Minerals, and Oil & Gas; hence increased
Job Creation and Sustainable Wealth Creation. Accelerating the rate of industrialization
necessitates an increase in effective demand for locally manufactured goods, while nurturing
and/or strengthening national value chains. Such an approach would further integrate the
economy linking production value chains in manufacturing, agriculture and the services
sector.
20
6.5. Industrialization will involve increasing the share of industry in total GDP as well as
movement of labor from agriculture to industry and (within agriculture) from low value to
high value activities. The “East African Vision 2050” sets a target of 27% as the contribution
of Industry to total GDP with manufactured exports comprising 20.3% of total exports by the
year 2030. Currently, Industry contributes only 19.9% to total GDP in Uganda, and
manufactured goods comprise only 7.6% of total GDP.

6.6. With industrialization, the ensuing movement of labor from agriculture to industry will lead
to increased productivity and higher incomes. Research has established that higher
household incomes, lead to increases in demand for quality education, better health services
and hence better health outcomes, more domestic revenue, and more importantly a
sustainable peace. Shared prosperity is the best guarantor of sustained peace.

6.7. Government will pursue a two pronged approach in the quest to expand markets and
increase demand for the goods produced domestically. Government will pursue an export
oriented strategy by expanding the value and share of manufactured goods in total exports.
Government will also pursue an import substitution strategy aimed at reducing the value of
finished goods in total imports, while significantly increasing the share of intermediate
goods as well as Plants and Machinery.
6.8. Over the last five years, Uganda has imported goods worth more than USD28 billion. In
2017 alone, Uganda imported goods worth USD 6.2 billion. These imports largely
comprised petroleum, cereals, vegetable oils, base metals, mineral products, foodstuffs,
beverages, machinery, equipment, vehicles and accessories. About 50% of the total import
bill equivalent to USD 7 billion can be replaced over the medium term if we pursued
industrialization for the commodities identified under the “import substitution strategy”
section.

6.9. To augment the returns from sustainable industrialization, Government will follow
Uganda Vision 2040 aspiration of leap frogging in technology to advance industrialization.
This will entail adoption of clean, innovative, efficient and low greenhouse gas emitting
technologies in its industrialization process while harnessing Uganda’s vast clean energy
sources especially for cottage industries in rural areas. This industrialization approach
driven by optimal and efficient use of finite natural resources will inevitably result into
sustainable and inclusive wealth creation through green jobs, higher return on investment
and positive spill overs with minimal social and environmental negative impacts.

Overall Goal: Increased Household Income and Improved Quality of Life

6.10. Successful implementation of this plan will deliver higher economic growth rates, higher
GDP per capita and lower poverty rates while reducing vulnerability as well as income
disparities between regions and between population segments. Strategies will also be
designed to lower maternal and infant mortality, increase literacy and numeracy as well as
increasing life expectancy at birth while ensuring environmental sustainability, resource
use efficiency and climate change resilient livelihoods. It is proposed that successful

21
 implementation of this Plan will contribute to the achievement of the following outcomes
:

a) Higher Income per Capita;

b) Reduced Poverty rates;
c) Lower Income Inequality (Gini coefficient);
d) Higher Human Development Index score.
e) Sustainability index score

In addition, the Plan will aim to achieve the following results;

No. Expected key targets

1. Higher GDP growth rates; from an average of 6.1 percent to above 8 percent
2. Increased Income per Capita; from USD 724 to 1,100 USD
3. Reduced Poverty rates; from 21.4 percent to 14.2 percent
4. Reduced Income Inequality (Gini coefficient)); from 0.41 to 0.38
5. Increased contribution of industry to GDP; from 18.6 percent to 25 percent
6. Rate of growth of the industrial sector from 6.1 percent to 8.1 percent
7. Rate of growth of the agricultural sector from 3.8 percent to 5.1 percent
8. Reduced Youth unemployment; from 13.3 percent to 6.6 percent
9. Increased value of manufactured exports in total exports; from 12.3 percent to 20 percent
10. Increase in the ratio of Exports to GDP from 12.7 percent to 20 percent
11. Increase in the share of intermediate goods (inputs) in total import bill from 18.6 percent
to 25.5 percent
12. Reduction in the percentage of h/holds dependent on subsistence agriculture as a main
source of livelihood from 68.9 percent to 55 percent
13. Increased tourism receipts; from USD 1.3billion to USD 2.5billion
14. Increased electricity consumption per capita from 100kwh to 578kwh
15. Increased forest cover; from 9.5percent to 18percent
16. Reduction in the cost of electricity to USD 5 cents for all processing and manufacturing
enterprises
17. Increased Population with access to electricity; from 21 percent to 60 percent
18. Increase in Revenue to GDP ratio from 14.4 percent to 20 percent

6.11. In pursuit of the industrialization agenda as the focus of this NDP, the proposed NDP III
objectives are based on the country’s comparative advantages that lie in its abundant natural
resources and young population, the achievements registered from investments in
productive infrastructure as well as the partnerships forged between the public and private
sectors as well as the CSOs. These objectives meet the purpose of accelerating growth of
the economy, transforming the lives of the people and strengthening the country’s
competitiveness. These are briefly explained in turn below.

7.0. Strategic Objective 1: Enhancing value addition in Key Growth Opportunities

To maximize value addition and exploitation of these growth opportunities/priorities, a

number of strategies will be deployed by government to ensure achievement of this objective.
These include:

22
 a) Sustainable pursuit of domestic and foreign investment for resource-led
industrialization,
b) Import substitution through acceleration of labor-intensive light manufacturing,
c) Leveraging the services sector (insurance, financial services and ICT) for sustainable
growth
d) Promotion of Export Oriented growth, and
e) Harnessing the Tourism potential through promotion of elite and mass tourism.

7.1. Sustainable pursuit of domestic and foreign investment for resource led
industrialization:

Agro-industrialization occupies a very important place in the agricultural value chain, creating
backward and forward linkages between the farm and the markets. Agro-industrialization will
create backward and forward linkages between the farm and the markets for inputs and outputs.
This linkage will stabilize demand for raw agricultural commodities, enhance use of improved
inputs, improve prices, increase investments in agro-processing, research and reduce postharvest
losses. As noted above, some progress has been made in Kalangala, Ankole and Tooro sub-regions
with the processing of palm oil, dairy products, and tea, respectively with great transformational
results.

7.2. We now propose to replicate this approach nationally under NDP III, while focusing on
fourteen (15)1 commodities: coffee, cotton, tea, vegetable oil, fisheries, dairy, poultry, beef,
cassava, sugarcane, sorghum, bananas, citrus fruits, Cocoa and maize. Agro-ecological
zoning will be used to determine regions with competitive advantage commodities using the
“Area Commodity Based Approach” and investment in labor-intensive agro-based industries
that are linked to the specific commodities to increase household incomes, exports and
employment. (See Spatial map 1 in annex 6).

7.3. It is expected that these industries will drive production of the selected commodity through a
strong pull effect that will stimulate adoption and utilization of improved technologies in
order to increase farm level production and productivity. Formation and strengthening of
cooperatives or member-based organizations for commodity bulking, agro-processing and
collective marketing will be the linchpin for the success of the Agro-industrialization
strategy, including serving as a link between farmers and market. Agro-industrialization will
target poverty reduction and wealth creation at the household level by providing a stable
market for agricultural goods thus stimulating increases in production.

7.4. In summary, the following issues will be addressed at the various levels of the value chain to
improve the competitiveness in the agricultural sector:

a) Further operationalization of Agricultural extension reform, using the parish as the

planning and implementation unit, including an efficient distribution system for
agricultural inputs for increased production/productivity;

1
The Steadman report recommends a total of 9 commodities, but this list excludes a number of commodities like
sorghum, sugarcane which are major income earners for some regions raising concerns for regional balanced growth.
23
 b) Increasing use of water for production, mechanized irrigation, including water storage
e.g. using solar power in off grid areas, valley dams along the lake Kyoga flood prone
axis;
c) Affordable agricultural finance and insurance;
d) Strengthening of agricultural cooperatives for better warehousing of produce and
stabilization of prices using the voucher system;
e) Establishment of value addition/agricultural processing factories at both district and
zonal industrial centres;
f) Promoting use of appropriate technology
g) Increasing the use of fertilizers, agrochemicals and farm implements, management of
pesticides, and vectors;
h) Promotion of Fish cage farming in lakes, rivers and swamps;
i) Development and enforcement of standards through regulation, certification, and
enforcement of Phyto-sanitary standards;
j) Strengthening of the regulatory framework with respect to sourcing and supply of
inputs to maintain quality;
k) Strengthening the testing and research across the value chains;
l) Improving the rural road network to facilitate transportation of agricultural produce;
m) Increasing forest cover, enhancing wetland management and protection of biodiversity
in general.
n) Sustainable land management practices, and;
o) Strengthening public private partnerships in agricultural value chains.

7.5. Beneficiation is key to unlocking the wealth from the minerals resources that Uganda
is endowed with, which will then be re-invested in other parts of the economy. Our
mineral deposits spread around the country include Iron ore, Copper, Phosphates, Dimension
stones, Limestone, Vermiculate, and Uranium, among others. Strategic and targeted
exploitation of these resources is not only good for income generation but can also produce
inputs that can facilitate the exploitation of the other opportunities. For instance,
Processing/beneficiation of phosphates, limestone, and Iron ore into fertilizers, cement and
Iron and Steel (respectively) provides inputs to commercial agriculture and the construction
industry which are essential for industrialization to happen. Therefore, this plan will prioritize
and fast-track interventions aimed at facilitating the processing of Oil and Gas as well as the
mining and beneficiation of seven minerals namely, Iron Ore, Phosphates, Copper,
Marble/Limestone, Gold, Dimension Stones, and Sand/Aggregates that will benefit the
industrialization process. (See spatial map 2 in annex 6)

7.6. Regarding processing of phosphates, a fertilizer processing plant is under construction in

Tororo that will turn the large deposits of phosphates in that area into fertilizers. The
increased use of fertilizers that will be made available by its production in-country will play
a catalytic role in increasing production and productivity in the agriculture sector with
significant benefits for agro-industrialization. Currently, use of fertilizers by Ugandan
farmers is negligible.

24
7.7. Regarding iron and steel, priority will be on fast-tracking construction of the two iron ore
processing factories in Muko and Tororo. Manufacture of iron and steel in-country will
reduce our import bill for steel products valued at US$279.557 million and increase exports
to EAC states none of which processes iron ore to steel.

7.8. Processing of Limestone into cement is far more advanced than the other two. At present, the
number of cement factories has grown to four (4) significantly increasing the volume of
cement produced locally, and lowering the price. This plan will prioritize interventions aimed
at further increasing the volume of cement production to take advantage of major upcoming
infrastructure projects like highways, Ayago hydro-power generation plant, as well as the
regional markets like South Sudan, Congo and even Rwanda.

7.9. Commercially viable crude oil reserves in the Albertine Graben were discovered in 2006. To
date 21 discoveries have been made and evaluated. The reserves in place are estimated at 6.5
billion barrels of oil with a recoverable volume of 1.4 billion barrels. Efforts are already
underway to exploit this resource including the construction of a refinery and an oil pipeline
through Tanzania. This plan will prioritize interventions aimed at facilitating the completion
of the oil refinery and pipeline as well as continuing exploration of additional wells.

7.10. With these natural resources that the country is endowed with in commercially viable
quantities, pursuing sustainable natural resource-led industrialization will deepen the value
chains beyond the export of raw materials to processed goods with significant value addition
carried out in-country. This will enable the country to earn more from the same volume of
goods produced, but also create jobs in the process.

The Focus areas under this strategy include:

a) Fast tracking Investment in oil related infrastructure; storage, refinery, pipeline, and
other transport infrastructure; airport, roads;
b) Supporting the private sector in development of capacity to benefit from the oil
industry;
c) Building the capacity of UNOC in exploration and other upstream and mid-stream
management
d) Review of the licensing regime to minimize speculation and hoarding;
e) Enforcement of performance-based system for renewal of licenses;
f) Establishing a proper inventory of the national mineral resource base;
g) Strengthen the capacity for inspection and enforcement;
h) Establishment of the legal framework for non-conventional minerals such as sand and
rocks and Streamlining artisan mining;
i) Increasing the use of local content in public procurement;
j) Putting in place the right infrastructure (energy, roads, rail, oil and gas) to facilitate
the exploitation of the priority minerals;
k) Development and operationalization of master plan for further investment in iron ore;
l) Reducing the cost of electricity and;
m) Speeding up the land compensation and land related legal litigation.

25
7.11. Harnessing the Tourism Potential. Global projections indicate that tourism will grow at an
annual rate of 4.2-5.4% for the next 10 years. As such, tourism will continue to be a major
employer and foreign exchange earner for Uganda, providing an opportunity for many
Ugandans to earn a living at the various levels of tourism value chain (as tour guides,
interpreters, waiters and waitresses, drivers, chefs, transportation and aviation industry, etc.).
With the diversification and development of the tourism products, creative marketing,
expansion of tourism source markets beyond the traditional ones, and the (now) significantly
improved infrastructure, the country can double or even triple the number of tourist arrivals
as well as the revenue generated by the sector creating a lot more jobs in the process. Uganda
will be marketed both as a niche tourism ‘product’ offering an un-paralled and unique tourism
experience and as a mass tourism destination. Special products will be designated for the
different categories of tourism. Mass tourism products will include: Culture and heritage
sites, religious events, sports, and education. Elite tourism products include: Meetings,
Incentives, Conferences and Events (MICE), specialized health care services, plus nature and
wildlife. The key focus areas for promoting tourism include:

a) Improving tourism related infrastructure, including transport interconnectivity (roads,

airfields), and tourist vehicle fleet as well as fast racking the provision of special
incentive packages for developers of high end hotel/accommodation chains in major
industries parks (See spatial map 3 in Annex 6);
b) Targeted development of tourism products e.g. improvement of Sanitation facilities and
fully serviced space for establishment of restaurants and crafts shops as well as
construction of viewing platforms and paved walk ways at source of the Nile, nature
based tourism spots, as well as cultural and religious sites;
c) Developing Skills essential for Tourism growth (Hospitality, Hotel management,
marketing);
d) Increasing affordable accommodation in the tourist hotspots outside of the Greater
Kampala Metropolitan Area;
e) Aggressive marketing especially in non-traditional markets (China, S.E. Asia and the
Arab world); including the use of diplomatic missions abroad;
f) Increasing private sector access to cheap long-term credit for development of
infrastructure, particularly hotels;
g) Strengthening regulation and enforcement of standards, and;
h) Health insurance cover for tourists coming into the country to avoid overburdening the
public health budgets.

7.12. Utilization of the Abundant Youth Labor through labor-intensive light manufacturing
of Import Substitutable commodities. Government will adopt an import substitution
strategy to promote labor-intensive light manufacturing for job creation and technology
transfer with the major objective of creating jobs for the youth. Construction of labor
intensive light manufacturing industries that are not necessarily linked to our natural resource
base will go a long way in creating jobs for this restive group and forestall attempts by
political actors to manipulate them.

26
7.13. Such industries will include: assembly of electronic products; Manufactures of metals e.g.
simple spare parts; Iron and steel; textile yarn, fabrics, made-up articles; Paper, paperboard,
and related articles; Medical and Pharmaceuticals, Starch, Prefabricated buildings e.g.
sanitary, plumbing, fixtures & fittings; Furniture & parts thereof; beddings and mattresses;
and manufacture of ceramics “tiles and china” kitchen ware. The full list of commodities that
are currently imported but can be manufactured locally, thus creating jobs and incomes is
shown Table 4:

27
Table 4: List of Imports with High Potential for Substitution (value in Million US Dollar)

Key
: Greatest potential for import substitution
Possible potential for import substitution
Least potential for import substitution

Description 2013 2014 2015 2016 2017

Grand Total 5,871.1 6,139.3 5,592.3 4,894.3 5,676.6
Petroleum, petrol products and related materials 1,311.35 1,415.57 1,009.35 776.32 1,017.76

Road vehicles (including air-cushion vehicles) 516.37 531.98 519.01 412.87 449.31

Machinery specialized for particular industries 225.03 252.26 257.62 158.18 321.32

Cereals and cereal preparations 260.18 293.83 216.03 208.70 288.83

Iron and steel 259.06 252.27 276.17 207.81 282.02

Medical and pharmaceutical products 350.19 360.67 373.42 315.74 272.77

Fixed vegetable fats and oils, crude, or refined 223.15 258.42 202.99 225.42 270.70

Plastics in primary forms 162.77 178.61 183.04 164.44 200.98

Paper, paperboard,& articles of pulp or paperboard 132.65 129.62 126.26 134.73 153.98

Electrical machinery, apparatus and appliances, nes 141.72 192.36 169.56 159.12 153.78

Non-metallic mineral manufactures, nes 142.79 159.31 159.29 144.47 149.51

General industrial machinery and equipment, nes, 127.65 127.33 147.56 141.56 147.46
machine parts, nes
Telecommunications and sound 214.59 145.39 204.91 122.13 144.33
recording/reproducing apparatus, etc
Chemical materials and products, nes 78.26 87.48 119.54 106.48 127.07

Sugars, sugar preparations and honey 148.52 111.31 104.21 84.43 126.22

Textile yarn, fabrics, made-up articles, & related 113.74 106.92 94.03 126.73 115.75

Essential oils, perfumes; toilet cleaning preps. 106.21 119.71 111.52 94.90 108.33

Miscellaneous manufactured articles, nes 121.44 119.53 118.37 120.90 108.24

Organic chemicals 102.36 85.75 91.36 92.89 102.58

Professional, scientific and controlling instruments 148.48 94.40 73.71 79.15 91.64
and apparatus, nes
Textile fibres (other than wool tops), wastes; not 70.78 78.44 74.95 81.63 79.85
manufactured
Manufactures of metals, nes 106.45 130.99 85.99 101.98 79.16

Footwear 51.46 50.84 50.15 56.59 63.22

Office machines and automatic data-processing 77.61 94.78 56.56 55.10 62.39
machines
Rubber manufactures, nes 66.67 69.09 60.56 66.02 60.28

Vegetables and fruit 21.41 29.78 32.68 41.02 54.93

Articles of apparel and clothing accessories 46.33 48.20 40.52 42.99 52.56

Miscellaneous edible products and preparations 40.34 42.75 42.79 39.17 45.07
Crude fertilizers and minerals (excl. coal, petrol, 28.42 45.62 40.20 45.80 43.72
precious stones)
Plastics in non-primary forms 28.89 32.83 49.88 37.67 43.71

Inorganic chemicals 38.60 35.16 37.24 36.58 41.75

Power generating machinery and equipment 37.29 41.75 58.62 65.33 40.04

Non-ferrous metals 30.03 37.17 34.61 26.01 35.89

28
 Dyeing, tanning and coloring materials 23.13 26.32 30.71 26.87 35.54

Other transport equipment 47.75 54.53 49.81 40.39 33.48

Coffee, tea, cocoa, spices, & manufactures thereof 14.59 37.80 27.50 22.41 32.42

Fertilizers, manufactured (other than of group 272) 49.74 23.26 32.86 33.48 26.45
Prefabricated buildings; sanitary, plumbing, etc, 21.17 29.73 23.49 23.36 26.32
fixtures and fittings
Beverages 44.90 48.89 43.69 33.47 25.76
Furniture and parts thereof; bedding, mattresses, 19.94 21.77 20.21 19.20 17.59
mattress supports, etc.
Metalliferous ores and metal scrap 6.46 12.15 15.52 14.45 16.27

Metal working machinery 14.69 16.30 20.97 13.04 13.62

Travel goods, handbags and similar containers 10.34 11.79 10.97 13.15 13.61

Fish, crustaceans and molluscs and preps. thereof. 3.07 4.15 2.91 3.96 13.50

Animal feeding stuff (not incl. un-milled cereals) 4.06 4.76 7.15 8.27 11.48

Crude animal and vegetable materials, nes 6.36 6.99 11.56 10.34 11.16

Gas, natural and manufactured 14.35 15.92 9.67 8.51 9.91

Oil-seeds and oleaginous fruits 3.54 4.19 5.71 6.13 9.56

Tobacco and tobacco manufactures 9.59 10.62 10.07 8.74 9.04

Live animals other than animals of division 03 2.16 4.06 3.97 3.66 4.37

Coal, coke and briquettes 4.23 3.16 3.01 2.38 4.29

Photographic apparatus, equipment & supplies and 6.17 5.43 5.42 3.48 4.01
optical goods; watches
Dairy products and bird's eggs 7.52 7.50 5.56 3.59 3.77

Cork and wood manufactures (excl. furniture) 5.07 4.53 4.29 4.33 3.75

Hides, skins and furskins, raw 2.57 4.48 5.71 2.58 3.58

Crude rubber (including synthetic and reclaimed) 0.09 0.45 1.48 3.02 3.20

Meat and meat preparations 2.58 2.71 2.87 2.21 2.99

Electric current 11.02 7.18 8.98 5.72 1.94

Cork and wood 1.20 4.77 2.05 1.82 1.33

Anim. or veget. fats and oils, processed; animal or 3.02 5.01 2.19 1.74 0.97
vegetable waxes
Animal oils and fats 0.42 0.16 0.50 0.38 0.60

Pulp and waste paper 0.41 0.36 0.62 0.47 0.52

Leather, leather manufactures, nes, and dressed 0.23 0.23 0.23 0.34 0.40
furskins
Gold, non-monetary (excl. gold ores & concentrates) 0.00 0.01 0.04 0.00 0.00

Coin (excl. gold coin), not being legal tender - 0.00 0.00 - -

Source: UBOS, URA, UCDA, CAA, UETCL

7.14. Youth groups will be trained and financed to form cottage industries along the agro-industrial
and mineral beneficiation value chains to take advantage of the local content policy. In
addition, contradictions within the import tax regime will be addressed to encourage
consumption of locally produced goods. For instance, while we import welding rods, Tembo
steel locally makes this product which is then exported. In such a case, taxation of imported
iron welding rods should be applied to promote domestic consumption and export. The major
areas of focus include:

29
 a) Lowering costs of doing business and increasing competitiveness of local
goods/services in the global markets through lowering the energy tariffs, interests rates,
and transportation costs;
b) Identifying opportunities for technology importation from China and other countries
that are moving on to high end technology;
c) Streamlining and strengthening support to the “Juakalis” for instance in Katwe and;
d) Development of a limited number of fully serviced Industrial Parks (10-15), within the
context of regional and balanced development. It is proposed that the development of
these industrial parks be phased as indicated in annex 5 and spatial map 4 in annex 6).

7.15. Promotion of Export Oriented Strategy; An export oriented strategy has huge benefits for
our socio-economic transformation but has high private costs of entry, hence the need for
strong government involvement using a quasi-market approach. Emphasis will be placed on
development/servicing of Special Economic Zones bringing them up to world class
standards as well as operationalization of Free Economic Zones and Industrial Parks. Our
export oriented strategy will seek to increase the value and volume of manufactured food
products processed from the agricultural commodities specified above and processed
minerals and oil. Proceeds from the sale of minerals and oil will be spent on the construction
of infrastructure to further increase competitiveness as well as the importation of plant and
equipment to drive the industrialization process. Focus areas under this strategy include:

a) Organization of farmers into clusters to support them to produce reliably and

consistently, equipping UNBS with staff and laboratory equipment for testing and
enforcement of standards. Development of local supply chains to ensure consistent
production of high quality exportable commodities;
b) Lowering costs of doing business and increasing competitiveness of local
goods/services in the global markets through lowering the energy tariffs, interests rates,
and transportation costs;
c) Operationalization of Special Economic Zones and Free Economic Zones within the
context of regional and balanced development;
d) Strengthening commercial diplomacy in targeted export markets missions to generate
market intelligence for the benefit of Ugandan businessmen and;
e) Strengthening regional integration efforts through support for regional institutions and
infrastructure.

7.16. Leveraging the Services Sector for Sustainable Growth; Insurance, finance and ICT
services will be leveraged to enhance productivity by including access to long term capital
with low interest rates, deepening the insurance industry to increase risk management,
establishing ICT incubation centres, and increasing internet access and band width.
Government will prioritize investments in ICT services to increase coverage as well as usage,
down to the household level for increased productivity, especially in agriculture and the
informal sector.

7.17. Increasing access to broadband as well as reducing internet access will require government
to choose one of three options:

30
 Option 1: Revive and strengthen Uganda Telecommunications Limited with government as
total or majority shareholder to manage the extension and management of the NBI. Use of a
fully or majority government owned telecom company will reduce profiteering by private
players and hence enable government deliver voice and data services at lower costs.

Option 2: Extend the NBI to the remaining districts using the NBI underground cabling.
However, the sector must demonstrate that the major private players (MTN, Africell and Airtel)
have open access to the NBI as required by the National Broadband Policy to lower internet
costs and increase capacity utilization. This option comes with a funding requirement.

Option 3: Use the existing transmission infrastructure for electricity companies to transmit the
available broadband. These companies (Uganda Electricity Transmission and Distribution
Limited) have already laid fiber for monitoring and control of their networks in almost all
districts. Your Excellency, this option has the potential to substantially reduce the cost and time
required to extend the broadband across the country.

7.18. It is recommended that government selects options 1 and 3, where the existing electricity
infrastructure is used for transmission of broadband, and UTL is revived to manage the
broadband at reduced prices to increase competitiveness.

7.19. To enhance domestic resource mobilization and increase access to affordable finance,
government will act to deepen and broaden formal savings and investment channels.
Government will also work at increasing insurance usage as an approach to sustainable risk-
mitigation especially for small medium and large entrepreneurs (SMEs) in Agriculture and
other businesses.

8.0. Strategic Objective 2: Consolidating and Increasing the Stock and Quality of
Productive Infrastructure

8.1. It is proposed that government continues prioritizing infrastructure development to further

improve competitiveness by reducing the transportation costs of goods within the country
and in the region, reduce travel times especially for the transportation of perishable goods,
improve efficiencies in connecting the different modes of transport, and further reduce the
cost of energy. It is proposed that special emphasis be placed on acquisition of joint
infrastructure corridors to promote transport integration as well as save on costs of land
compensation.

8.2. The strategies to be used in the achievement of this objective include:

a) Institutionalization of regular Infrastructure Maintenance,
b) Mainstreaming of climate resilience in infrastructure design,
c) Develop intermodal transport infrastructure to enhance interoperability,
d) Increase access to affordable energy, and
e) Leveraging urbanization as a driver for growth.

8.3. Institutionalization of regular Infrastructure Maintenance. In transport, focus will be on

prioritizing regular scheduled maintenance of roads to increase lifetime through, for instance,
31
 building the capacity of the local construction industry and the establishment of local hire
pools. Secondly, and more importantly, climate proofing the already existing transport
infrastructure through for instance raising bridges and improving drainage systems. Adequate
provision will be made for operation and maintenance expenditure. In addition, audit of
operation and maintenance activities will be strengthened to ensure value for money.

8.4. Development of intermodal transport infrastructure to enhance interoperability.

Government will selectively implement a few but strategic interventions in the transport
network to further enhance interoperability to harness the exploitation of opportunities,
increase exports and open up export opportunities in new markets. It is recommended that
focus be put on the development of bulk transportation of goods both within the country and
to the regional and global markets by2:

a) Linking the country to Regional and Global Markets

Your Excellency, the country can pursue one of three options depending on the volume of
cargo that needs to be moved to Mombasa and/or Dar es Salaam and the impact of financing
these projects on the country’s debt sustainability.

Option 1: Parallel construction of the Standard Gauge Railway (SGR) and an inland
water ports.

Construction of the SGR from Malaba to Kampala for bulk transportation of goods to
Mombasa and beyond concurrently with the Development of Bukasa inland port (together
with Jinja, Portbell and Bukakata ports as feeder ports) and the related water transport
infrastructure to facilitate connections across Lake Victoria to Kisumu port onward to
Mombasa and to Mwanza port onward to Dar-el- salaam. This is the most ideal option as it
would increase access and reduce the travel time to the ports of Mombasa and Dar es Salaam
as well as greatly increase the volume of cargo that can be moved to the two ports. Choosing
this option would add a minimum of USD 4.5 billion to our debt stock.

Option 2: Development of Bukasa inland port, Portbell, Bukakata ports as Meter gauge
railway);

Development of Bukasa inland port (together with Jinja, Portbell and Bukakata ports as
feeder ports); the rehabilitation of the meter gauge railway line to Pakwach, Kampala and the
Busoga loop; the development of a road network for bulk transportation of large volumes of
cargo from the industrial parks in Kampala to Bukasa; as well as the deployment of the related
water transport infrastructure to facilitate connections across Lake Victoria to Kisumu port
onward to Mombasa and to Mwanza port onward to Dar-el- salaam. This option would still
increase access to and reduce the travel time to Mombasa and Dar es Salaam as well as

2
These investments will increase efficiency and increase access of production/manufacturing zones to markets
(both local and foreign) for increased competitiveness.
32
 increase volume of cargo to these two ports. Choosing this option would add a minimum of
USD 2.2 billion to our debt stock.

Option 3: Construction of only the Standard Gauge Railway

Construction of the SGR from Malaba to Kampala for bulk transportation of goods to
Mombasa and beyond. Choice of this option would also require the construction of the SGR
line from Kisumu to Malaba. This option would increase access and reduce travel time to the
port of Mombasa. Choosing this option would add a minimum of USD2.3 billion to our debt
stock.

21. From the above analysis we propose option 2 as the most viable option, in the medium
term. In addition, if Option 2 is adopted by government, the capacity of Uganda Railways,
ports and harbors Corporation should be strengthened to enable them manage the rail and
port services to enhance the country’s competitiveness.

b) Increasing Interconnectivity within the Country

Over the last decade, construction and resurfacing of major highways have improved inter-
connectivity over much of the country. However, the collapse of the meter gauge railway
with the interconnecting Busoga line has left much of the Busoga and Teso sub-regions
isolated and inaccessible to trade with the neighboring regions and the rest of the country.
The same is true of Karamoja. Consequently, these three sub-regions remain the poorest and
experienced reversals in poverty levels between FY 2012/13 and FY2016/17. To address
poverty in these areas, in addition to implementing the agricultural area commodity based
approach above, the transport network in these regions has to be improved as follows:

i) Upgrading transport infrastructure around L. Kyoga to facilitate connections across

Lake linking Nakasongola, Lango, Teso and Busoga through tarmacking of roads
around the lake and introduction of ferry services on the lake. This will open the remote
areas around the lake to tourism and trade.
ii) Rehabilitation of the meter-gauge railway for bulk transportation of goods from the
heart of the country to Jinja/Bukakata and then onward to Bukasa inland port.
iii) Upgrading of urban infrastructure particularly in the greater Kampala area to reduce
traffic congestion and its cost to the economy.

8.5. Increasing access to affordable energy. Increasing power generation to meet the demand
of upcoming heavy industries; power evacuation, transmission and distribution from the
points of generation to consumers; improving monitoring systems; and improving
competitiveness in order to attract more industries will form the major areas of focus.

8.6. In order achieve the targets of 5 cents per a unit of electricity, 60% access of the total
population to the national grid by 2025, and availability of sufficient electricity by the
mushrooming factories, we propose a three-pronged approach as follows:

33
 i) Restructuring of the power sector to reduce profiteering of the multiple agencies
involved in the generation, transmission and distribution of electricity. It is
recommended that the generation stage of the energy sector value chain should remain
liberalized to encourage as many firms as can generate and evacuate power to the
national grid at government pre-determined costs per unit. However, government
should form one agency to manage the generation (of government owned power
stations), transmission and distribution of electricity countrywide at a uniform and
centrally determined price. The ministry of energy would assume the responsibility for
carrying out the policy and regulatory function. By reducing the number of players in
the energy sector, government will make significant financial savings as well as increase
cohesion in the policy and implementation framework of the sector.
ii) Construction of Ayago (800MW) and other mini hydro’s through the PPP arrangement
will be prioritized to increase power generation to meet the power demands in the
medium- and long-term. To meet the target of 70% population with access to power by
2027, at current per capita consumption of 100kwh per capita, the country should
generate at least 3500MW, compared to the projected 1839.364MW available by end
of 2019. The energy generation need increases further if the target of 578kwh with an
access rate of 70% by 2027 is used. In this regard, the country needs to generate 20,230
MW to satisfy this demand.
iii) Prioritize refurbishment and expansion of electricity transmission and distribution
network in order to ensure that the power generated is evacuated, transmitted and
distributed to consumers. In this regard, the industrial parks and free zones will be
prioritized. This will enable:
a) Increased electricity consumption through increased access to the national grid
particularly for productive use; (spatial map 5 in annex 6)

b) Increased manufacturing output by factories when they have access to more stable,
reliable and affordable electricity. Currently, the existing factories produce at an
average of 47% of installed capacity due to unstable and unreliable power.

iv) Improving monitoring systems, minimizing illegal connections, reviewing energy

pricing and expanding use of prepaid meter systems to increase efficiency and lower
the tariff.
v) The scale up of off grid community solar plants to increase access especially in remote
areas will be considered to ensure energy equity.

8.7.

8.8. Leveraging urbanization as a driver for growth. Studies show that industrialization,
economic growth and urbanization are all interlinked and correlated. However, in spite of the
evidence that Uganda is beginning to industrialize, there is little effort that is going into
planning for urbanization. The resulting disconnect between industrialization and urban
planning has begun to show in form of severe infrastructure and service gaps as well as
severe traffic congestion that is costing this nation severely in lost opportunities for job
creation and improved well-being. Pursuit of planned inclusive green cities with standards
that create economic opportunities for all including the growing urban poor will be brought
to the fore over the NDPIII period.

34
8.9. Government will re-establish the connection between urban and industrial
development. This will be done through deliberate policies, strategies and investments as a
priority. Government will pursue planned inclusive green cities that create economic
opportunities for all, including the urban poor. Opportunities arising from urbanization for
industrialization and from industrialization for urbanization will be articulated to better
leverage urbanization for accelerated industrialization. Industrial policy, spatial plans,
national value chains will factor in ways urban functionality can support productivity of
firms. In addition urban planning will aim to achieve more balanced national urban systems,
optimizing the complementary roles of the different cities, both large and small i.e. the
national capital, regional cities, and strategic cities as articulated in Vision 2040. Under
Urban Planning, the following will be the focus areas:

a) Development of master plans for the regional and strategic cities as proposed in Vision
2040;
b) Implementation of the GKMA strategy,
c) Development/implementation of the land use and physical planning master plan,
d) Development of low-cost housing, upgrading of slums and promotion of green jobs
through turning National Housing and Construction Corporation into a government
corporation, and;
e) Improvement of urban infrastructure with focus on increased mobility and safety,
f) Improvement of urban waste management

9.0. Strategic Objective 3: Increasing productivity, Inclusiveness and wellbeing of

population. Industrialization requires access to both domestic and foreign capital. For the
country to become an attractive destination for FDI, there is need for a skilled, innovative
and healthy labor force with the right mindset. Many studies however, have shown that there
is a significant gap between the requirements of industry and the skills taught in the education
institutions. In that regard, focus under this objective will be on skilling, social protection
and access to education and health services.

The following strategies will be pursued to ensure achievement of this objective:

a) Improving access and quality of social services including the delivery of Specialized
Medical Care,
b) Institutionalizing human resource planning for the economy,
c) Enhancing skills and vocational Development,
d) Increasing access to social protection, and
e) Promoting Science, Technology, Engineering and Innovation.

9.1. Improving access and quality of social services including the delivery of Specialized
Medical Care. In recognition of the shift in the disease profile of the country, and to save
the country significant foreign exchange lost through Ugandans seeking specialized medical
care in Europe, India and South Africa, government will increase funding for the
development of specialized medical care. It is proposed that sectoral budgets for education,
health and skills development will be skewed towards improving the quality (in terms of
35
 resourcing, maintenance, and staffing) of education and health services within existing
facilities, and development and enforcement of service delivery standards. The health
services will require a restructuring to focus more on a disease prevention model in a multi-
sectoral approach as opposed to the current curative focused model. An increased focus in
addressing the ever-increasing burden of NCDs will be important in reducing high mortality,
impoverishment due to prolonged ill-health and economic loss due to medical referrals
abroad.

The key focus areas include:

a) Quality of primary school education delivery to increase the literacy and numeracy of
primary school graduates e.g. through reduction of teacher to student ratios;
b) Leadership development for education managers at all levels particularly head teachers
c) Operationalization of the recently reviewed national curriculum for secondary
education;
d) Linking university and tertiary education to industry for instance through internships,
attachments, and involvement of industry practitioners in curriculum design to
strengthen research, innovation and acquisition of practical knowledge;
e) Nurturing of talent and creativity (games and sports, performing arts) in the education
system;
f) Quality of health service delivery with reference to the development of centres of
excellence for delivery of Specialized Medical Care;
g) Lowering the doctor to patient ratios, increasing the number of specialized health
professionals; and health prevention, and;
h) Improving the quality of health services by ensuring availability of human resources at
all levels of care, optimal medical equipment, medicines and other medical supplies.
i) An increased focus and investment in disease prevention by addressing the key
determinants of health in a multi-sectoral approach. These include; nutrition, WASH,
road safety, improved housing conditions, life-styles, immunization, and environmental
management.
j) Investing in prevention and management of NCDs by expanding geographical coverage
of services as opposed to Kampala based and up-grading the cancer and heart institutes
into centres of excellence in delivery of specialized and super-specialized health
services., including research and training.

9.2. Institutionalizing Human Resource Planning for the Economy. Under this strategy,
government will focus on developing capabilities for forecasting the human resource needs
of the changing structure of the economy to address the situation where unemployment exists
side by side with unfilled positions in firms due to skill gaps.

As required by the Comprehensive National Development Planning Framework (CNDPF)

and the National Human Resource Development Planning Framework (NHRPF),
Government will prepare the first 10-Year Human Resource Plan (HRP) and the first 5-Year
Human Resource Development plan (HRDP). The HRP and HRDP will provide the
framework for guiding human resource development at the macro level. The CNDF and

36
 NHRPF also place a similar requirement on sectors and local governments to produce human
resource development plans for their sector and local government development plans,
respectively.

Focus areas:

a) Developing human resource plans that project the human resource needs of the
economy,
b) Developing a skills development strategy,
c) Operationalizing the labor market information system, and
d) Undertaking manpower survey/Plans and labor market surveys.
e) Develop and operationalize a National Local Content Development Strategy;
f) Develop and operationalize a national strategy for employment creation.

9.3. Enhancing skills and vocational Development. Government will prioritize skills and
vocational development to address unemployment, especially among the youth. This will be
done through undertaking quick skills mapping with emerging or anticipated job
opportunities due to a changing structure of the economy. Government will then develop a
comprehensive strategy to address these needs in a coherent manner through existing or new
vocational and tertiary institutions. Preference will be given to supporting the existing
vocational and tertiary institutions to start or expand programs that produce graduates with
the required skills, while at the same time reducing intakes for courses that no longer address
the needs of our economy. For instance, vocational and tertiary institutions will be supported
to develop a pool of national expertise in the emerging mining, light manufacturing, oil and
gas industries.

The following will be the Focus areas:

a) Operationalization of an International Certification for TVET programs and

accreditation of TVET institutions particularly in the Oil and Gas and Tourism sectors.
This could involve negotiating contracts with international firms as certification
agencies;
b) Quality of vocational education service delivery in the vocational schools built
countrywide especially with regard to availability of equipment, and qualified
instructors,
c) Decentralization of TVET curriculum development, recognition of prior learning,
expansion and implementation of the qualification framework to enable uniform
grading of vocational education qualifications;
d) Job-readiness programs including apprenticeships, internships, and mindset
orientation for smooth transition from training to the world of work.
e) Build a closer link between TVET and industries so as to enhance quality and leverage
industry financing of TVET programs.

9.4. Increasing access to social protection. Government is already implementing programs

aimed addressing the needs of some of the vulnerable populations. But these programs leave

37
 out significant numbers of the vulnerable. Under this strategy, government will prioritize
merging, modification and/or expansion of existing programs to cover more beneficiaries
within the existing age cohorts or to include new age cohorts. It is only when existing
programs cannot be modified or expanded to meet emerging needs that consideration will be
given to designing new ones.

The following will be the Focus areas:

a) Enactment and operationalization of the National Health Insurance scheme; in the

short-term, mobilizing communities to form and or subscribe to community and private
health insurance schemes;
b) Build capacities of vulnerable populations to manage social and economic risks;
c) Create resilience to cope with shocks (disability, disasters unemployment, age, and
sickness);
d) Promote equity and inclusive growth through affirmative action to redress imbalances
and special needs of discriminated and vulnerable groups/persons.

Promotion of Science, Technology, Engineering and Innovation. Science, technology,

engineering and innovation are essential for the sustainability of the industrialization process to
support the achievement of the NDPIII and 10-year goal of industrialization and poverty
eradication. The proposed areas of focus are; infrastructure development, training, policy and
institutional framework development, standards development, collaboration and defining a
national research agenda. To realize this, there is need to;

a) Build science, technology, engineering and innovation infrastructure, which includes: at least
two state of the art science laboratories, which can support advanced research to be carried
out within the country; incubation centers that facilitate the development of ideas into
commercial products; science and technology parks where new industries can be nurtured to
maturity; strengthen technical institutions to build a strong cadre-ship at the technical level
to support the industrialization drive;
b) Provide hands-on-training of scientists at all levels (secondary, technical institutions,
undergraduate and graduate levels), in areas of engineering, medicine, agriculture, materials
science, pharmaceutical, chemical industry, to support the industrialization agenda; in order
to create a pool of scientists that can translate the scientific knowledge into enterprises to
benefit society;
c) Develop policy and institutional framework for importation of appropriate technology in
order to reduce the research and development time and cost of investment. This will facilitate
faster diffusion, ownership and operation of the technologies by the citizens and enable
indigenous ownership of the industrialization and development process;
d) Strengthen the legal framework around innovation to increase technology adoption and
diffusion so as to maximize the number of innovations being translated into commercial
products and thus the number of factories/jobs being started/created;
e) Establish standards for the science, technology, engineering and innovation practice to guide
certification and supervision processes;

38
f) Establish strong collaboration between training institutions, incubation centers and industries
and provide adequate funding to the incubation centers in order to translate research findings
into commercial products;
g) Develop a national research agenda that will guide and propel national development;
h) Improving remuneration for scientists and approve the framework for operationalizing the
innovation fund.

Strategic Objective 4: Strengthening the private sector to drive growth

The private sector will continue to be the main engine of growth, creating jobs and increasing
household income. However, its growth is constrained by bureaucratic and slow decision making
by the public service, corruption, an inefficient judiciary with a high backlog of cases, inadequate
access to patient capital and inadequate access to skilled managers and technocrats. In that regard,
government will pursue the following strategies to capacitate the private sector to lead growth:

a) Transformation of the public service into an effective and efficient driver of private
investment,
b) Provision of an enabling environment for the private sector to invest
c) Enhance partnerships with non-state actors for effective delivery of services, and
d) Promote a development-oriented mind-set.

9.5. Transformation of the public service into an effective and efficient driver of growth.
Government has adopted a ‘developmental state’ stance, intervening in the development
process where necessary to remove market distortions, lower entry barriers (particularly
capital) in key strategic sectors, as well as introduce and enforce policies, regulations and/or
incentives to promote private investment. The recently approved plan by cabinet to
rationalize government institutions is a good first step in the process of turning the public
service into an effective and efficient driver of growth. It is proposed that government
streamlines its operations to cut red tape and speed up clearances for business operations,
streamline judicial operations to reduce case backlog particularly of a commercial nature, as
well as introduce and enforce policies, regulations and/or incentives to promote private
investment and exports.

9.6. In order to consolidate delivery of social services, it is recommended that the parish becomes
the focus of government intervention to eradicate extreme poverty, ensure food security and
increase access to health services. Under this model, it is recommended that the parish
remains an administrative unit. However, its capacity to perform administrative functions be
significantly beefed up. It is recommended that government recruits and deploys a parish
chief, an agricultural extension officer, and a public health official for each parish in Uganda.
Between these three officials, a performance management system (complete with rewards
and sanctions) should be implemented to ensure each family implements the four acre model,
each family has adequate sanitation (toilet, akatindiro, clean home environment), each family
has a source of regular daily income, sufficient acreage to ensure food security, and a
perennial crop/commodity to ensure development income.

39
9.7. In addition, Government will address issues relating to increased use of technology such as
e-extension and marketing in agriculture; popularizing the use of virtual tours and destination
management systems in tourism; as well as tele-medicine in health in order to deliver services
more efficiently and effectively and in a transparent and accountable manner. It is also
proposed that government builds capacity across the entire government to prepare/conduct
feasibility studies, design and manage programs and projects as well as conduct negotiations
e.g. for program/project funding
Focus areas under this strategy include:

a) Implementation of the recommendations on harmonization and restructuring of

institutions;
b) Strengthening performance management;
c) Fighting corruption and enhancing accountability mechanisms. For instance through
strengthening beneficiary participation in service delivery (e.g. use of community
advocacy fora (Barazas), more effective use of radio to enhance community awareness
of service delivery), and reform of the anti-corruption institutional framework to
increase efficiency and effectiveness in handling corruption cases;
d) Improving the efficiency of the judicial due process and adjudication in terms of the
number of court appearances as well as time taken to conclude a case, particularly with
regard to cases of a commercial nature;
e) Automation of public service delivery processes including government data systems;
f) Implementation of pay reforms.

9.8. Strengthening the private sector to drive growth. It is proposed that government provides
an enabling environment for growth of the private sector through maintaining
macroeconomic stability, provision of long-term finance at affordable rates, reduction in the
amount of domestic arrears and putting in place mechanisms to ensure these are kept low as
well as strengthening the use of PPP arrangements.

Focus areas under this strategy include:

a) Providing a wider range of long-term finance options at affordable rates e.g. agricultural
finance;
b) Strengthening institutions for development financing, for instance, continued
recapitalizing UDB;
c) Strengthening the investment and industrialization role of government, for instance,
through strengthening role of UDC;
d) Reviving and strengthening the cooperative movement, including the cooperative bank
e) Maintaining macro-economic stability; and
f) Increasing integration of local value chains.

9.9. Enhancing partnerships with non-state actors for effective delivery of services. CSO
interventions and resources are not included in the NDP framework. This is also true for
programs and resources that are implemented directly by development partners or by MDAs
through off-budget financing. Under this strategy, all development programs will be

40
 mainstreamed into the plan and included in the national budget to optimize resources for
national development. This reform will facilitate formation of a partnership of the public
sector, private sector and the NGOs/CSOs where all resources are deployed in the
implementation of the same set of priorities. The key issue to be addressed here includes
review of the NGO law to ensure that all CSO/NGO interventions are mainstreamed into the
national development framework and the full implementation of the Busan partnership
principles and the Paris Declaration on AID effectiveness of 2005.

9.10. Promotion of a development-oriented mind-set. A number of initiatives are already

ongoing to re-orient the mindsets of Ugandans. In fact, a full Ministry of Information and
National Guidance has been established to lead interventions under this strategy plus a
number of other government agencies e.g. the Ministry of Ethics and Integrity and
Kyankwanzi NLI. In addition, the role of faith-based organizations, cultural institutions and
families in re-orienting the mindsets of Ugandans to development will be explored.
The key issues to address include:

a) Development of a national guidance strategy to harmonize interventions and

communicate progress on development issues;
b) Implementation of a National Service programme to empower citizens with information
to change their outlook on life and the opportunities it presents, e.g. through the courses
conducted at the Kyankwanzi National Leadership Institute (NLI);
c) Increasing participatory civic engagement in decision making e.g. by going beyond the
current participation in budgeting to assessing the performance of policies, programs
and projects, and;
d) Review of the mandates and coordination mechanisms of the agencies involved in these
interventions with a view of assessing their effectiveness.

10.0. Implementation Reforms

For Uganda to experience rapid economic growth as a precursor for socio economic
transformation four things need to be in place:

1. A visionary and strong leadership that is focused;

2. A coherent, capacitated, incentivized and business friendly bureaucracy;
3. A distinctively pro-business environment; and
4. An effective coordination mechanism with the private sector to advance international
competitiveness

Significant strides have been taken towards putting in place a visionary, focused and strong
leadership and a pro-business environment. However, there are still significant challenges in
building a capable, coherent and business friendly bureaucracy. As a consequence, there are
no effective mechanisms for coordinating with the private sector in developing international
competitiveness based on comparative advantage. Consequently, this plan will design
strategies to:

41
 1. Fast-track implementation of the recommendations contained in the government re-
structuring report with a view of minimizing profiteering occasioned by the mushrooming
government agencies;
2. Rebuilding the capacity of the reconstituted institutions
3. Reviewing the salaries and incentives of staff in key institutions of government
4. Building coherence and mindset change within these institutions
5. Establish/strengthen mechanisms for coordination with the private sector at the different
levels of government, mirroring the Presidential investors roundtable to enable the private
sector have regular interface with key decision makers in government. It is recommended
that in addition to the Presudential roundtable, such a mechanism should be established
at the macro level spearheaded by Ministry of Finance, and the at the District Chaired by
the District Chairperson.

In addition to the specific strategies that will be employed by government to achieve the
above objectives, significant effort and resources will also got into streamlining and
tightening implementation of the plan as follows:

10.1. Consolidation of all wealth creation funds into one, and utilize some of these funds for
capitalization of the Uganda Development Bank. UDB should then work with the private
sector to identify opportunities in strategic areas of the economy for investment. It is
recommended that such investment opportunities should attract lending at preferential
interest rates. The remaining part of the consolidated investment fund should be used to
further capitalize government owned banks like; Pride Microfinance, Postbank and Housing
Finance Bank with a view of increasing their share of the credit market;

10.2. Strengthening the capacity for conducting feasibility studies. To quicken implementation of
development projects, capacity building for undertaking feasibilities will be undertaken
for both public and private sector;

10.3. Introduction of an integrated Program Approach to Planning, budgeting and implementation.

This will be done to ensure that government ministries, departments and agencies plan,
design and implement programs that cut across jurisdictional boundaries as well as sectoral
mandates. Programmes and projects will be developed that cut across mandates and will be
budgeted and implemented in a multisectoral manner. Interventions will be planned,
sequenced and implemented along the value chains to create synergy and maximize impact.

10.4. Introduction of Area Based Commodity Planning as the major driver of Local Economic
Development (LED) to address area specific priorities and disparities in growth, incomes and
wealth creation. Interventions as seen in the Kalangala, Ankole and Tooro sub-regions are
good examples of this approach that can be replicated in other areas. Successful
implementation of this approach will contribute to balanced regional development. NDP III
will articulate the interventions that sectors will need to implement to ensure achievement of

42
 the plan’s objectives with a fair amount of detail. These interventions will then be costed on
an annual basis with the support of the sectors and local governments. The aggregated annual
costs of these interventions will then form the development part of the national budget.

10.5. Enforcement of multi-sectoral implementation planning, including demarcation of service

infrastructure corridors. Adoption of this approach will eliminate ‘mistakes’ like those
described above that necessitated the re-design of major infrastructure like the road
interchanges at Jinja Road and Busega round-about. This will necessitate performance review
of the Prime Minister’s Delivery Unit that had been envisaged to take on this role.

10.6. Tighter alignment of planning, budgeting and expenditure to minimize financing of off-
budget expenditure. This is critical in ensuring that the development budget implements the
national strategic direction especially directing resources to productive sectors of the
economy as defined in the NDPs. To mitigate the effects of sectors not translating sector
plans into budgets, government will introduce a sanctions system that will penalize
accounting officers that budget or spend outside of the NDPIII priorities.

10.7. Effective use of Public-Private-Partnership arrangements to optimize use of capital and

management expertise from both the public and private sectors. This will necessitate
strengthening capacities for preparation of bankable projects to shorten the project
preparation process.

10.8. Integration of risk management planning and implementation for major programs and
projects. It is recommended that in order to achieve maximum returns from public
investments, risk management systems and frameworks will be instituted for instance
insurance of major construction projects.

10.9. Development of service delivery standards. Service delivery standards will be introduced to
standardize service delivery and increase efficiency and effectiveness with which public
services are delivered.

11.0. Financing

It is proposed that government utilizes all available financing options as articulated in the debt
management strategy while endeavoring to maintain macro-economic stability through; sustaining
a stable exchange rate regime, inflation targeting to ensure low and stable prices, maintaining a
stable fiscal policy, and pursuing policies designed to lower interest rates. Since the domestic
revenue mobilization strategy is currently under review, this section will be reviewed once it is
finalized. With this context in mind, it is proposed that resources to finance this development plan
will come from eight (8) main sources, in descending order of priority:

11.1. Domestic Revenue Mobilization. Domestic revenue will be our main source of financing.
Given concerns that new taxes could be regressive, careful study will be conducted before
the introduction of new taxes. In addition, there is more potential, and significantly more
revenue can still be generated through more efficient and effective tax administration by

43
 enforcing compliance and reducing tax evasion as shown in Fig. 3 in the annex 2. In
particular, it is recommended that government:

a) Maintain a stable and predictable tax regime over the medium term given the consensus
that the country has limited room for introducing new measures without overburdening
the tax payer;
b) Strengthen the enabling environment for tax collection through for instance upgrading
the eTax system, integrating data management systems across government, expanding
the metrics used to assess URA performance, and addressing the perception of
corruption among tax officials, and establishing a Taxpayer Ombudsman;
c) Strengthen the integrity of the taxpayer register and addressing inaccuracies in filing,
payment and enhance self-assessment;
d) Widens the revenue base by reducing informality and streamlining local government
taxation;
e) Deploys technology to facilitate construction of the tax database, assessment and
collection of rental income tax;
f) Demonstrates and strengthens the link between taxation and public service delivery in
order to increase citizen trust and confidence in government;
g) Removes VAT exemptions, imposes training levies and reduces the granting of
discretionary exemptions which undermine fairness;
h) Enforces the centralization of Non-Tax Revenue collection for the remaining agencies
that are still spending at source.

11.2. Infrastructure Bonds: To expand on the pool of resources required to invest in

infrastructure, provide the legal framework enabling corporations and eligible urban
authorities to issue bonds to raise long-term capital. In addition, improve access to
government bond markets in the primary market and widen participation in them for all
potential investors. This will increase the diversity of the investor base (both foreign and
domestic) and reduce Government’s cost of borrowing.

11.3. Development of the secondary Market infrastructure. Secondary markets will be

developed to promote more participation of Nationals in the buying and selling of financial
securities in order to support the mobilization of patient capital. The failure of investors to
sell and buy securities amongst themselves hinders the development of Uganda’s capital
markets. One of the means of promoting the development of the secondary market is to
conduct all government bond secondary trading on the local stock exchanges and subject to
regulation by the CMA.

11.4. Consolidation of funding for special programs. There is a multiplicity of special and
affirmative action programs targeting the youth, elderly, women and other special interest
groups. Funding for these initiatives will be consolidated and integrated into area based local
economic development programming.

11.5. Use of CSO budgets to implement national priorities. CSOs and NGOs largely implement
programs outside the scope of government priorities as articulated in the NDPs. To ensure

44
 effective use of all resources available for development, government will enforce use of
country systems and require that CSOs and NGOs use their resources to implement national
priorities as articulated in NDP III;

11.6. Donor resources will be mainstreamed into the MTEF and national budgets.
Government will enforce that the Busan principles and the Paris Partnership agreement of
2005 requiring development partners to use country systems and align their plans with
national priorities to ensure all development resources are pooled to implement national
priorities.

11.7. Effective use of pension funds to support development. The pension fund remains a largely
under-utilized resource. The pension sector will be liberalized to attract more local players
into the industry. In addition groups of employees will be organized into groups to participate
in pension funds of their choice.

11.8. Re-directing remittances from consumption to development. Remittances from Ugandans

abroad, which have grown significantly over the years. However, these are used largely for
consumption. Government will implement policy measures aimed at redirecting the use of
remittances from consumption to development as an additional source of financing by for
instance issuing diaspora bonds, enabling diaspora Ugandans to buy treasury bills over the
internet.

11.9. Increased use of Public Private Partnership arrangements. Government will promote
private sector financing through use of PPP arrangements. Also, government will promote
more private sector participation through use of the quasi market approach by lowering entry
barriers and enforcement of regulations. It is proposed that local project ideas will be
developed into full bankable projects that shall be marketed globally for purposes of
attracting financing.

11.10. Use of domestic and external loans. “Financing from the above sources is insufficient
to implement priorities of the plan. Therefore, government will borrow from both external
and internal sources to cover the budget deficit. Domestic borrowing will be limited to ensure
that the private sector is not “crowded out” of the credit markets. External borrowing will be
considered carefully to avoid a situation where growing interest charge payments due to
rising external debt do not act as a drag on economic growth. The contribution of new project
loan to accelerating growth and productivity of export related activities will be assessed to
minimize the risks associated with unforeseen circumstances.”

11.11. Internal resources realized from efficiency gains. In addition to these six sources,
significant resources will also be released and made available for development through re-
organizing and streamlining government institutions and operations.

12.0. Conclusion

45
Your Excellency, your vision for Uganda has consistently been on industrialization for value
addition, job creation and wealth creation. The Theme, Goal and Objectives presented to you in
this paper are consistent with this vision and provide an effective and realistic development
framework for the allocation and/or utilization of the country’s natural, human, and financial
resources over the next five years.

Once approved, NPA in consultation with both government and non-government actors will
proceed to fully develop the new plan that will be both vertically and horizontally integrated.
Vertical integration requires ensuring harmony between national, sectoral (institutional) and local
government planning; while horizontal integration requires incorporation of social, economic and
environmental aspects. During the process of developing this plan, all efforts will be made to strike
a balance between top down and bottom up planning to ensure ownership and buy-in from a broad
range of stakeholders, including the ordinary ‘Wanainchi’ in the rural areas as well as on the streets
in the urban areas.

In conclusion your excellency, our prayers are that you:

a) Guide us further on the proposed strategic direction and on the reforms in the NDP III
implementation architecture as presented above;
b) Approve the submission of this “Strategic Direction for the third National Development Plan”
to Cabinet for approval, upon incorporation of your ideas.

I Thank you

For God and My country

David Bahati (Hon.)

Minister of State for Finance, Planning and Economic Development (Planning)

46
 Annex 1: Summary of NDPIII Strategic Direction

NDPIII: Sustainable Industrialization for inclusive growth,

employment and wealth creation

Goal: Increased household incomes and improved quality of life

(GDP per capita, poverty, inequality, human development score)

Objective 1: Enhancing value Objective 2: Consolidating and

Objective 3: Increasing the stock of Objective 4: Strengthening the private
addition in Key Growth increasing the Stock and Quality of
Skilled, Innovative and Healthy sector to drive growth
Opportunities Productive Infrastructure
Population
Strategies
Strategies Strategies
Strategies
4.1 Transform the public service into
1.1 Sustainable pursuit of 2.1 Institutionalisation of regular
3.1 Improve access and quality of an effective and efficient driver of
resource led infrastructure maintenance
social services growth
industrialization 4.2 Provision of an enabling
2.2 Develop intermodal transport
1.2 Acceleration of labor 3.2 Institutionalisation of human environment for the private sector
infrastructure to enhance
intensive light resource planning for the economy to invest
interoperability
manufacturing 4.3 Enhance partnerships with non-
1.3 Promotion of export- 3.3 Enhance skills and vocational
2.3 Increase access to affordable state actors for effective delivery of
oriented growth Development
energy services and Innovation
1.4 Leverage of the services 4.4 Promote development-oriented
3.4 Increase access to social protection
sector (insurance, financial 2.4 Leverage urbanization as a driver mind-set
services and ICT) and for for Uganda’s socio-economic 3.5 Promote science, technology,
sustainable growth transformation engineering and innovation
1.5 Harness the tourism
potential
47
Annex 2

Fig. 3 - Revenue to GDP trends FY 2008/09-2017/18

18000 16.0

16000 14.0
14000
12.0
12000

% rev to GDP
10.0
UGX Bn

10000
8.0
8000
6.0
6000
4.0
4000

2000 2.0

0 0.0
2008/09 2009/10 2010/11 2011/12 2012/13 2013/14 2014/15 2015/16 2016/17 2017/18

Revenues and Grants Revenues Grants rev/gdp

48
Annex 3

Table 2: List of Import substitutable Commodities by year and value (USD Mil)

Description 2013 2014 2015 2016 2017

AGRO-BASED PRODUCTS
1. Textile yarn, fabrics, made-up articles, nes, & related 113.74 106.92 94.03 126.73 115.75
products
2. Cereals and cereal preparations 260.18 293.83 216.03 208.70 288.83
3. Fixed vegetable fats and oils, crude, refined or 223.15 258.42 202.99 225.42 270.70
fractionated
4. Sugars, sugar preparations and honey 148.52 111.31 104.2 84.43 126.22
5. Beverages 44.90 48.89 43.69 33.47 25.76
6. Vegetables and fruit 21.41 29.78 32.68 41.02 54.93
7. Coffee, tea, cocoa, spices, and manufactures thereof 14.59 37.80 27.50 22.41 32.42
8. Crude animal and vegetable materials, nes 6.36 6.99 11.56 10.34 11.16
9. Feeding stuff for animals (not including un-milled 4.06 4.76 7.15 8.27 11.48
cereals)
10. Oil-seeds and oleaginous fruits 3.54 4.19 5.71 6.13 9.56
11. Fish, crustaceans and molluscs and preparations thereof 3.07 4.15 2.91 3.96 13.50
12. Dairy products and bird's eggs 7.52 7.50 5.56 3.59 3.77
13. Hides, skins and fur skins, raw 2.57 4.48 5.71 2.58 3.58
14. Live animals other than animals of division 03 2.16 4.06 3.97 3.66 4.37
15. Meat and meat preparations 2.58 2.71 2.87 2.21 2.99
16. Processed anim. or veg. fats & oils; animal or veg. waxes 3.02 5.01 2.19 1.74 0.97
17. Animal oils and fats 0.42 0.16 0.50 0.38 0.60
FORESTRY and TIMBER PRODUCTS
18. Furniture & parts thereof; bedding, mattresses and 19.94 21.77 20.21 19.20 17.59
supports etc.
19. Cork and wood 1.20 4.77 2.05 1.82 1.33
MINERAL-BASED IMPORTS
20. Iron and steel 259.06 252.2 276.17 207.81 282.02
21. Manufactures of metals, nes 106.45 131.0 85.99 101.98 79.16
22. Fertilizers manufactured (other than those of group 272) 49.74 23.26 32.86 33.48 26.45
23. Crude fertilizers & minerals (excl. coal, petrol, precious 28.42 45.62 40.20 45.80 43.72
stones)
24. Metalliferous ores and metal scrap 6.46 12.15 15.52 14.45 16.27
OIL AND GAS BASED IMPORTS
25. Petroleum, petroleum products and related materials 1,311.4 1,416 1,009.4 776.32 1,017.76
26. Gas, natural and manufactured 14.35 15.92 9.67 8.51 9.91
ASSEMBLY AND LIGHT MANUFACTURED GOODS
27. Electric current 11.02 7.18 8.98 5.72 1.94
Total for import substitutable commodities (USD 2,823.6 3,020 2,420.0 2158.2 2,653.04
mil.13,074.7)
Total Value of all imports for five years (USD Mil. 5,871.6 6,139 5,592.3 4,894.3 5,676.58
28,173.8)

49
ANNEX 4: List of Pending Bills (December 2018)

1. The Civil aviation Authority amendment Bill 2017

2. The Cooperative society amendment bill,2016
3. The data protection and privacy bill,2015
4. The administration of the Judiciary Bill,2018
5. The Anti-counterfeiting goods Bill 2015
6. Uganda Forestry association bill 2015
7. The Persons with the Disability bill 2014
8. The Supplementary appropriation Bill 2017
9. The Kampala Capital City (amendment) bill 2015.
10. The Local Government Amendment Bill 2017
11. The Retirements benefits sector Liberalisation Bill 2011
12. The Uganda National Health Laboratory service bill,2016
13. The indigenous and complimentary medicine bill 2015
14. The Law revision (Penalties in Criminals matters Miscellaneous) Amendment bill 2015

50
ANNEX 5: Proposed Development of Industrial and Business Parks -Phase One – NDP III
(FY2020/21 – FY2024/25) and Phase two NDPIV 2025/26-2029/30

Industrial Park Acreage progress Costs for completion (UGX) Completion cost
(Billion UGX)
1. Namanve 2,200 100% Light engineering types. – Metal fabrication, 1,058,649,415,226
allocated machine making, pharmaceuticals,
2. Bweyogerere 50 100% electronics, Fruit processing, garbage 7,565,000,000
allocated processing.
3. Luzira 64 100% 1,315,000,000
allocated
4. Soroti 219 Allocation Fruit processing, dairy processing, leather 23,328,600,000
ongoing processing, cassava processing, fish
processing.
5. Moroto 417 Allocation on Cement manufacturing; green marble 53,000,000,000
going polishing, dairy products, fruit processing esp.
grapes and leather processing industry.
6. Mbale, 619 Allocation Light manufacturing, pharmaceuticals, Grain 77,978,000,000
complete. milling especially wheat, fruit processing,
compensation dairy industry and coffee processing.
ongoing
7. Masaka 800 Allocation on Fruit processing, fish processing, tea 82,674,000,000
going processing, beef industry
8. Jinja, 182 90% Steel rolling, vegetable oil, leather processing, 33,311,000,000
allocated Fish processing, grain milling,
pharmaceuticals, sugar, cassava processing,
Textiles.
9. Mbarara 12.2 Dairy & beef industry, leather industry, wood 14,065,000,000
SME industry (industrial wood); fruit processing
industries
10. Kasese 217 Fruits processing, cement production, cobalt, 29,518,000,000
copper, dairy, tourism, fish processing
11. Luwero- 500 Land not Tomato processing, fruit processing, dairy 44,976,000,000
Nakaseke acquired coolers, fish farming and processing, poultry
farming, dairy farming and processing
12. Arua 500 Land not Honey, fruit processing, coffee processing, 55,230,000,000
acquired textiles, fish processing.
13. Gulu 500 Land not Fruit processing, rice hurling, cassava 54,210,000,000
acquired processing, oil seeds processing and sugar
processing
14. Kabarole FP 100 Land Tea, fruit, fish processing 0
Acquired
Total 1,535,820,015,226
Phase Two – NDP IV (FY2025/26 – FY2029/30), cost of new acquisition and development
1. Bushenyi 500 Land not Tea-processing, wood industry, banana 57,710,000,000
acquired processing, fish farming and processing
2. Kabale, 500 Land not Fish farming and processing, dairy processing, 56,210,000,000
acquired flower growing and exporting, temperate
fruits processing
3. Hoima, 500 Land not Petroleum refinery; tobacco factories; sugar 57,210,000,000
acquired processing, fish processing
4. Mubende 500 Land not Tea processing, coffee processing, dairy 54,710,000,000
acquired processing, grain milling, Fruit processing
5. Lira, 500 Land not Textiles; cassava processing; oil seeds 54,210,000,000
acquired processing; fruit processing, fish processing

51
Industrial Park Acreage progress Costs for completion (UGX) Completion cost
(Billion UGX)
6. Tororo, 500 Land not Cement manufacturing, fertilizer 55,710,000,000
acquired manufacturing, steel manufacturing, gold
processing, fish processing
7. Iganga, 500 Land not Fruit processing, dairy processing, fish 55,710,000,000
acquired processing, coffee processing
8. Nakasongola, 500 Land not Textiles, military industries, fish farming and 54,210,000,000
acquired dairy industries
9. Mbarara 500 Land not Dairy & beef industry, leather industry, wood 45,376,000,000
Main park acquired industry (industrial wood); fruit processing
industries
10. Mityana 400 Land not Tomato processing, fruit processing, dairy 46,186,000,000
acquired coolers, fish farming and processing, poultry
farming, dairy farming and processing
Total Phase two 537,242,000,000

ANNEX 6: SPATIAL ILLUSTRATIONS

52
Map1: Agro ecological Zones for farmer organization, production and value addition to be
linked to various industrial parks

53
Map 2: Mineral and related infrastructure to support industrialization

54
Map 3: Tourism sites and proposed tourism circuits for further development

55
Map 4: Location of Industrial and Business Parks to be developed for industrialization

56
57
Map 5: Power generation and transmission lines proposed to link to industrial zones / parks
and other key value addition centers

58