UMA & USAID Conduct Capacity Validation Study on Uganda’s Steel and Plastics Sector.

by | Apr 25, 2023 | Communication

The Uganda Manufacturers Association (UMA), in partnership with the United States Agency for International Development (USAID), concluded a capacity validation study on Uganda’s steel and plastics sector on 12th April 2023. The study aimed at assessing the capacity of these sectors to raise domestic revenue in Uganda. The study is an activity under the Domestic Resource Mobilization for Development Project, which seeks to assess the capacity of sectors with the view of improving tax education and voluntary compliance for SMEs in the manufacturing sector.

The steel and plastics sectors have been instrumental in Uganda’s economy. In 2018, the steel sector contributed 1.3% of Uganda’s total tax revenue, amounting to over UGX 200 billion (USD 55 million), and represented 2.4% of the country’s total GDP for the same period, contributing over UGX 1.5 trillion (USD 413 million) to the economy. The plastic industry contributed UGX 37 billion (USD 10 million) in taxes in 2019/20, with an additional UGX 15 billion (USD 4.1 million) expected from the newly introduced tax on single-use plastics. In terms of GDP contribution, the plastic industry accounted for approximately 0.9% of Uganda’s total GDP in 2019/20, with an estimated value of UGX 559 billion (USD 155 million).

With a baseline survey conducted beforehand, the plastics and steel sectors were identified as candidates for the capacity study. These sectors possess the related value chains with significant potential to grow Uganda’s economy. Forty-one members from the Uganda Plastics and Recyclers Manufacturers Association (UPMRA) and seventeen members from the Uganda Iron and Steel Manufacturers Association (UGISMA) participated in the study.

The study collected data on factors such as availability of raw materials, production capacity, market availability, market constraints, and human resource capital.

Key Findings:

The steel sector has an average capacity utilization of 48.8%, driven by strong demand from the construction and infrastructure sectors. This indicates the potential for further expansion and increased production in the industry.

The plastics sector has an average capacity utilization of 50%, with significant investments in recycling and waste management. This demonstrates the industry’s commitment to sustainability and environmental responsibility.

The study identified issues that curtail the growth of businesses in the sector, including market constraints and challenges related to raw material availability.

The findings from the capacity validation study highlight the challenges and potential for growth in Uganda’s steel and plastics sectors.

Way forward

These findings will also inform UMA’s advocacy initiatives for policy changes and support in addressing these challenges. UMA plans to use this information to conduct regular engagements with relevant MDAs to lobby the government to create opportunities for subsector growth. The subsector analysis will also provide evidence to support the inclusion of selected products on the Public Procurement and Disposal of Public Assets (PPDA) Reservation Scheme list, promoting the Buy Uganda Build Uganda Policy and positively impacting Uganda’s economy.


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