Kampala 5 ^March, 2024 – Themed, “30 years of progressive policy advocacy for the Industrial sector to realize the National Vision 2040 and 2021/26 NRM manifesto objectives,” the Uganda Manufacturers Association (UMA) held her inaugural National Pre-budget Breakfast Dialogue at the UMA showgrounds, Lugogo.

The dialogue sought to highlight the progress and challenges of Uganda’s manufacturing sector over the last 30 years and to brainstorm on strategies that can facilitate industrialisation and promote regional trade.

The National Development Plan III (NDP III) prioritizes industrialization as a key driver for Uganda’s prosperity in line with Vision 2040. Currently, Uganda boasts over 7,000 factories, up from 1,289 in 1994, making the manufacturing sub-sector the largest contributor to GDP at 19.3%

Mr. Deo J.B Kayemba – UMA Chairman, while delivering his opening remarks, pointed that Uganda’s economy has expanded to a GDP of USD 50 billion (Shs.185 trillion) as of June 2023, and it is projected to expand further to USD 55 billion by June 2024.

He called upon Government of Uganda to support the manufacturing sector through Public Private Partnerships (PPPs) to set up key primary industries.

“In order to grow our economy by 12% as envisaged in the NDP III, manufacturers must be clearly supported,” he echoed.

The chief guest, Hon. David Bahati, State Minister for Industry noted a significant shift in import substitution and export promotion over the years.

“Exports of goods and services have grown to USD 6.2 billion as of September 2023 (a growth rate of 49%). EAC is the major destination of Uganda’s exports accounting for 40% of the total exports, followed by the Middle East (22%) and Asia (20%). As a result, the goods trade deficit has declined by 8.9% to $3.3 billion,” said Hon. Bahati. 

Notably, Uganda has registered a trade surplus with the EAC and EU of USD 775m and USD 63m during the recent twelve months ending September 2023.

Hon. Bahati also reiterated Government’s commitment towards supporting the development of the manufacturing sector through; infrastructural development, reduction of the cost of power (commits to achieving USD 5cents /KWH), creation of cross-border markets (EAC, AfCFTA), peace & security, access to working capital, among others.

“Government has deployed Shs. 1.4 trillion through UDB and invested another over Shs. 1 trillion through UDC. Arrangements have also been finalized to deploy USD 218 million (Shs. 820 billion) under the Investment for Industrial Transformation and Employment “INVITE” Fund to facilitate manufacturing SMEs to export.”

Meanwhile, manufacturers continue to decry the high cost of doing business and limited access to credit. Industry requires long-term low interest rate financing; therefore, it is imperative for Government to innovate around locally available resources like NSSF and insurance services to underwrite trade and development.

Speaking on the manufacturers’ behalf, Mr. Kayemba also relayed the challenge of EAC market access.

“The EAC remains Uganda’s leading trade partner, however, stays of application and unilateralism still rule. We cannot plan to produce and sell anything to the region because once you start some kind of NTB is imposed by the other partner state (milk, sugar, tea etc),” he stressed.

Other notable issues include: market access, cost of standards/certification, tax policies and administration (especially EFRIS), the need to digitize the land registry, human capital development and the need to mainstream local content among others.

The UMA conducted a base-line survey on policies that impact the manufacturing sector and merit government redress in the National Budget FY 2024/2025. Download Presentation Here

UMA, therefore, proposes that Government:

1. Repeal Excise Duty on plastics for its far-reaching challenges on implementation and distortionary effects on competitiveness of the entire manufacturing industry.
2. Reinstate duty remission on sugar for industrial use while controlling for uptake of locally available capacity, to allow the sugar users to compete favourably within the EAC region.
3. Review the tax exemption regime to ensure that all businesses and individuals who are supposed to pay taxes must pay taxes without exception and at the same rates including new entrants.
4. Remove all EFRIS bottlenecks once and for all and apply it across board to all dealerships, while fulfilling the promise to provide EFDs or subsidizing their cost to boost their use.
5. Reduce document processing time, certification cost, and ensure professionalism in enforcement of certification procedures.
6. When importing machinery, and CKD, parts locally available including low voltage cables should be procured locally and therefore removed from the unit.
7. Release PPDA regulations to enforce BUBU and local procurement.
8. Strengthening the capacity of URA in tax administration to perform one comprehensive audit per year, through an effective PPP strategy by co-opting CPAs. Reality shows that the rate at which the private sector grows cannot be matched by the slow recruitment of staff.
9. Create compulsory industrial training/apprenticeship for students in those areas that impact manufacturing leveraging on the South-to-South cooperation.
10. Do away with annualized tax changes so as to create a predictable (stable) tax regime that spans 3 – 5 years to enable proper planning and implementation of long-term sustainable investment plans by enterprises.

With these in place, we hope to achieve ‘Full monetization of the Ugandan Economy through Commercial Agriculture, Industrialization, Expanding and Broadening Services, Digital Transformation and Market Access,’ as is the theme of the National Budget FY2024/25.