The primary mission of UMA is effective representation of the interests of manufacturers to Government and to advocate for better policies, a conducive business environment as well as a level playing field for all manufacturers.
Through her policy and advocacy arm, UMA engages with government in a bid to shape policies that can have a positive effect on manufacturing operations in the country. Policy advocacy involves consultation of UMAs various sectors followed by synthesis of the different sector positions into a coherent and an all-inclusive manufacturing position for the attention of the Government.
1. EAC Ministers adopt 35% as the EAC CET 4th Tariff Band
The East African Community (EAC) Council of Ministers adopted UMA’s position of a 4 – band tariff structure with a maximum tariff band of 35% as the 4th Band in the new Common External Tariff (CET), that came into effect on 1st July 2022.
35% was proposed as the maximum CET rate by the Uganda Manufacturers Association to increase protection for the infant industries that had ventured into production of final products from locally available raw materials against imports with a view of protecting farmers, and other player along the long value chains for job creation and income generation. This position was later acceded to by the Government of Uganda as an official Uganda’s position during the CET review process which commenced way back in 2016.
Previously, the CET had a three-band tariff structure: 0% for raw materials; 10% for semi-processed goods and; 25% for finished products) as well as a List of Sensitive Items offering extreme rates of protection of 35% to 100% alongside specific duties for selected products after its review.
The CET 2022 provides adequate cushion against for the infant industry, and resolve trade distortions that come with incessant Stays of Application of CET as well as a long list of Duty Remission Tariff Lines and a generous Exemption Regime. It also provides a basis for incentivizing and protecting regionally available products from unfair competition from imports that undermine the regions strategic goals of poverty reduction through job creation and self-sufficiency.
Products under the 4th tariff band include; agro -processed products, dairy and meat products, cereals, cotton and textiles, iron and steel, edible oils and beverages & spirits, furniture, leather products, fresh-cut flowers, fruits, sugar, confectionery, coffee, tea, spices, auto-mobiles, phones, exercise books, head gears, ceramic products and paints among others. The country also has a long list of sensitive products like juices, mineral water, horticulture products among others
The EAC CET review which is anchored on Article 12(2) of the Protocol provides for a review of EAC CET after every 5 years. The last review was done in 2016, meriting the recently concluded review.
2. Resolution of member issues
Members submitted a total of 517 issues through letters, phone calls and emails. UMA has since engaged the relevant MDAs to have the matters resolved. These ranged from;
- 223 on tax related issues
- 110 on standards
- 55 on power reliability
- 20 on local government infrastructure
- 13 on work permits and visas
- 9 on government procurement
- 7 on municipality charges
- 5 on government directives on measures to avert spread of pandemics
All issues have been responded to with 80% receiving positive response.
The outstanding issues pending resolution relate to infrastructure especially in industrial area and local governments around the country.
3. Budget proposals for FY 2021/22
UMA made 17 tax policy proposals in both the domestic tax and customs tariff and 16 cross–cutting Budget proposals.
The tax measures were meant to provide relief while creating an environment for robust economic recovery, market access, income boost, and certainty for the manufacturing sector.
The government lifted the lockdown in a phased manner and provided much of the market for the industrial output.
At least 70% of the proposals were adopted except for the tax proposals that were aimed at countering the escalating cost emanating from the global supply chain disruptions.
4. EAC CET
UMA continued to advocate for the finalisation of the EAC CET and 35% for locally/ regionally available finished products
The UMA position on CET as defined by a 4-band structure and a maximum rate of 35% was adopted as the official EAC alongside specific duties, marking the finalisation of the comprehensive review of the EAC CET.
UMA is a substantive member of the pre-budget committee and also sits on the Regional Task Force that reviews the CET.
UMA has consistently provided to government a list of sensitive products that has remained since 2018 to provide a leveled playing field for industry against imports
The duty remission facility is still available for members and UMA is represented on the Committee to give members relevance
UMA sits on the National monitoring committee of NTBs that aims at proving leverage for members to have access to regional markets under the Common Market Protocol.
5. Power tariff reduction
UMA has continued to follow up on the implementation of the Presidential directive aimed at reducing power tariffs for all manufacturers to US Cents 5/KWH.
- UMA caused an amendment to the Electricity Act (2022) to resolve much of the power related cost issues most notably the direct power purchase.
- ERA established both large and medium power tariff codes which now enables major power consumers to consume power at about US cents 8/KWH on average.
- UMA received a trajectory of further tariff reduction from ERA. This spoke to maintaining status quo of the power tariff given the prevailing cost/sector consuming power at US 5 cents.
- UMA negotiated a declining block tariff that allows large power consumers to further get lower power costs.
- UMA has negotiated a direct power purchase agreement with the new regulation under review, in a bid to reduce the cost further for our members towards US 5 cents
6. Local content mainstreaming
Amendment of the PPDA Law to provide regulations that would replace the reservation guidelines
UMA proposed 6 additional sectors to be considered under the reservation scheme from the original 3 (furniture, plastics, foam, steel, cement, and transformers)
The PPDA Law was amended and a provision was embedded that would give impetus for a reservations regulation in place of the guideline.
UMA undertook a survey that informed the capacity that exists within the sectors of choice and shared it with PPDA. furniture and transformers were considered and incorporated into the scheme. awaiting other sectors
Government committed Ugx 140 bn for settlement of outstanding domestic arrears
The PPDA is undertaking to publish the 1st regulation to replace the reservation guidelines, this has delayed but we are mounting the necessary pressure to have it done.
The ERA has put in place a supplier’s database for the UMA members who can supply the (ESI) Electricity Supply Industry to register and be considered to supply
UMA members can also benefit from the PAU who have in place a supplier database for members who can supply to the petroleum sector to register.
7. The NSSF Act amendment
The passing of the NSSF Amendment Bill into a law providing for among others mid term access to savings, voluntary membership to NSSF among others.
(i)Mid term savings access shall spur demand in the economy since it has potential to inject in the economy 900 Billion.
(ii) Government can for once access long term credit for institutions like UDB from NSSF. This is key for reduction of cost of capital given that NSSF has huge long- term deposits deployed everywhere in East Africa that should only be optimized for Uganda. Example, over UGX 5 trillion is invested in bonds in Kenya and Tanzania alone.
8. Amendment of the PVoC regulations
Eminent revision of the PVOC Regulation (s) to address manufacturing concerns among other things
UNBS is in advanced stages of causing the revision of the PVOC Regulation (s) to allow the streamlining of the exemption of UMA members from PVOC on importation of machinery, industrial in-puts/raw materials and spare parts on an annual basis.
The amendment takes into consideration annualised exemptions where a member of UMA can receive an exemption that would take a year as opposed to requesting exemption for every consignment.
9. Strategic partnership with URA on tax administrative matters.
Leveraging the working partnership with URA to ease tax administration/grow tax base
The new URA Administration has established a very robust framework for tackling Tax Matters. The operations of the Framework have since kicked off.
This framework will be used to ease Tax Administration concerns to bog down members. On the other hand, the Framework also avails opportunity for handling strategic issues like EFRIS, DTS without polarization that is costly to businesses.
Cooperation with UMA to provide annualised tax clinics for UMA members
The formalisation of two committees; UMA – URA technical committee to meet quarterly and URA – UMA strategic committee to meet bi-annually to resolve all the pending issues.
10. Resolution of tax policy and tax administration matters
Development of a Comprehensive Tax Matters Compact/Study as committed at last UMA AGM
UMA has developed the Study on Tax Matters which shall be leveraged in pushing for meaningful reforms beyond what normally appears during the Budget Cycle.
11. Enhancement of exports
Diversification of Regional Export Market following the coming into being of the Africa Continental Free Trade Area effective 1st January 2021
Beyond the unpredictable EAC market prone to unilateral adhoc prohibitions by EAC Partner States against Uganda, the Continental Free Trade Area presents options for Uganda to access other none EAC Markets. MTIC has crafted an Implementation Strategy, which, once implemented; can cause the change needed.
UMA is a substantive member of the strategic committee that is reviewing the strategy.
UMA has been instrumental in creating links for Ugandan manufacturers on the numerous trade initiatives and business summits held around the region for visibility
12. Enhancement of exports
Leveraging the National Development Plan Three (NDP3) Implementation
NDP 3 pitches agro industrialization and value addition onto the extractives as key to growth. It mainstreams need for imports replacement in addition to focusing on exports growth for especially manufactured goods. NDP3 identifies even critical projects that should be established by Private Sector or as PPPs to drive the development trajectory.
This also spans into the current hot debate on mineral beneficiation especially for copper and iron ore. Sector Associations like UGISMA is in high gear and discussions ongoing in line with members partaking of this development. With at least one member utilizing the iron ore to produce wire rods.
13. E-Government and digitization of processes
COVID 19 restrictions forced the world to innovate around doing business resulting into rapid digitization of Government processes including public procurement. GoU needs to follow best practice as other jurisdictions.
This is great news for the formal sector that constitute all UMA members. It avails opportunity for Government to black-list informal players that distort the market. This shall even out to create a level field of play with intensified digitization.
14. EAC Sectoral Council report
UMA made major submissions through the head of delegation of the Ugandan team at the last concluded Council, in November 2022, where a number of sector wise issues aimed at improving Uganda’s competitiveness in the region and creation of a level playing field for the local industries were presented.
At least 90% of the submissions were granted, with the exception of rubber gloves, which required amendment of the EAC Customs management Act, and were deferred to the next Council meeting for consideration.
Issues granted include;
Remission of duty on parts used for the manufacture of deep cycle batteries
Removal of the tariff split for the edible oil that was causing major distortions.
Training on Strategic Goods Control and use of single transit documents for manufacturers.
Duty remission for wire rod of tariff lines 7213.91.10 and 7213.91.90 at 0% to manufacturers of wire products to enable them access regional market
15. Sector specific resolutions
- Sugar for industrial use: When government moved to impose 100% on the sugar and close the duty remission facility in a bid to protect the sugar companies, UMA on realising the capacity gap proposed to government to allow remission while consuming the locally available quantities.
- Wire rods and boron issues: Uganda moved to unilaterally impose duty on major material inputs for the steel sector while the rest of the region was applying o% duty. Given the distortion caused and the loss of market by industries, UMA caused government to revert to the regional rates as applied.
- Plastic excise duty: The Government of Uganda during the FY 2020/21 imposed excise duty of 2.5% or $70 per ton whichever is higher on plastic raw materials. UMA lobbied MoFPED and Parliament to cause an amendment to the duty in a bid to reduce cost on sectors that had been affected.
- Sub-standard steel: UMA, UGISMA and UNBS partnered to reduce the prevalent sub-standard steel bars on the market.
- Import Duty on animal feeds: UMA proposed a 10% protection from imported complete feeds, since capacity to produce feeds inhouse had grown substantially.
- Government agreed to open duty remission for manufacturers who use the sugar as a major input. as an interim measure at this time while local manufacturers build capacity. Currently only Kinyara sugar is in production, while GM sugar and Mayuge are also coming on board
- Government agreed to revert to regional rates and grant regional remission to the steel manufacturers in Uganda. This has settled mush of the would be challenges of the sector
- The MoFPED has since given guidance through a regulation to URA to relieve and exempt affected companies that are involved in the manufacture of water and sanitation items, pharmaceuticals, mattresses, textiles, etc alongside those involved into recycling.
- The crack-down on the dealers of sub-standard steel articles, caused major reduction in their sale, creating confidence among customer on the quality of Ugandan steel. UNBS continues with the activity with support from the sector.
- Government, through URA invoked the law to provide the much-needed protection for the feeds industry.
Have a Question?
Lugogo Show Grounds
P.O. Box 6966 Kampala
+256 414 221 034, 220831