When Uganda Investment Authority (UIA) rolled out the Strategic Plan 2020-2025, the strategy was to accelerate domestic and foreign direct investment for sustainable industrialization.
Fast forward to today as the country nears the deadline, tentative results show there has been a 275 per cent increase in Foreign Direct Investment (FDI) contribution to Uganda’s Gross Domestic Product (GDP), writes GEOFREY SERUGO.
According to the recent Private Sector Investment Survey Report released by the ministry of Finace, the FDI contribution to GDP has increased from $666 million in 2020 to $2.5 billion in 2024, representing 275.38% increase on year-over-year.
The report notes that this performance is primarily driven by UIA’s enhanced investment facilitation and promotion, partnerships and collaborations with development partners, industry associations and international stakeholders. According to Robert Mukiza, the UIA director general, the sharp increase in FDI in Uganda demonstrates resilience and growth.
“For instance, participating in global events such as the Dubai Expo 2020, the Uganda-Turkey Investment Summit and the Uganda-European Union Business Forum enhanced Uganda’s visibility and investment landscape. These platforms allowed UIA to showcase the country’s potential, streamline investor facilitation and strengthen the overall business environment. For instance, Uganda was recognized at the AIM Awards 2023 as Africa’s top FDI destination and the best investment promotion agency in East Africa. These accolades validate our efforts to make Uganda competitive on the global stage,” he says.
Key to the success of the strategic plan was for UIA to take a proactive approach to transform remittances from mere consumption support into meaningful investments and achieve target of at least 10 per cent by 2025.
According to Mukiza, UIA started out by identifying key sectors that resonate with diaspora investors which include real estate, bonds and agro-processing.
“We also developed investment opportunities and these are accessible through our online platform at Ugandainvest.go.ug/ resources. We now provide clear, actionable information that inspires confidence and encourages Ugandans abroad to invest back home,” he says.
It is also worth noting that the results have improved Uganda’s global ranking in the ease of doing business and competitiveness. One vital initiative was the establishment of the One-Stop Centre, a centralized place where investors access essential services to start and run businesses in Uganda.
“Some of the services accessed is investment licensing which is issued within 24 hours, company registration which takes four hours and TIN issuance is now completed within four hours. What’s more, work permits are processed in four days, compared to the previous two-week wait,” Mukiza says.
“Additionally, UIA has expanded digital services from three to nine, streamlining processes of investment license issuance, company registration, tax filing, work permits, and land Information. This digital transformation reduces bureaucratic hurdles, improving efficiency for investors. These reforms have made Uganda a more attractive investment destination by lowering operational costs and turnaround times. Investors no longer need to navigate multiple agencies or endure lengthy delays, leading to significant time and cost savings. Furthermore, Uganda’s incentive regime offers attractive benefits, such as a 10-year tax holiday for qualifying investments in strategic sectors, encouraging industrialization in line with Vision 2040.”
ONE MILLION JOBS!
One of the key strategic plan outcomes was to create one million jobs by 2025 through increased value addition, technology, and knowledge transfer. According to the National Planning Authority’s Employment and Skills Status Report (2023), UIA had facilitated the creation of 1,002,407 new jobs, a 54.5% increase from 2020. Initially, the country recorded 258,286 jobs in FY 2020/21. The number rose to 345,039 in FY 2021/22 as key projects matured and hit 399,082 in FY 2022/23.
“The services and industry sectors have been the backbone. In services, ICT, hospitality and financial services have expanded, driven by technology and foreign investments. Meanwhile, the industry sector, especially manufacturing, agro-processing and construction, has flourished due to investments in industrial parks and infrastructure. Collaborating with partners and aligning our efforts with national development goals amplified these outcomes,” Mukiza adds.
DOMESTIC DIRECT INVESTMENT
The program sought to increase the value of domestic direct investment from 24.5% to 50%. But according to Mukiza, UIA’s targeted initiatives mostly support local investors.
“Over 60% of companies in the Namanve Industrial Park are local investors, benefiting from free land allocations and infrastructure support. Additionally, UIA in collaboration with Bank of Uganda (BoU), Uganda Development Bank (UDB) and other financial institutions facilitate access to affordable financing through government-backed funds like Agricultural Credit Facility and Small Business Recovery Fund, among others,” he says.
“UIA also provide free costed investment opportunities to help local investors make informed investment decisions. Our National SME portal has been a game- changer in promoting business linkages, compliance and visibility, while providing access to critical business resources 24/7,” he adds.
CHALLENGES
In spite the fact that UIA is on course to achieve most of the goals, Mukiza admits there are still some bottlenecks. According to Mukiza, the biggest hurdle is insufficient budgeting due to competing national needs that are equally important. This has limited UIA’s ability to execute key activities such as industrial park development and maintenance, investment promotion, feasibility studies and SME support.
“These are critical components for fostering growth and the delays have inevitably slowed the pace of investment expansion. External factors like the Covid-19 pandemic and geopolitical tensions, such as the Russia-Ukraine conflict, disrupted global supply chains and impacted local industries.”
He further admits that limited access to affordable credit remains a significant challenge for many local investors.
“Investors raise concerns of high interest rates and stringent loan requirements which affect the realization of value addition projects,” he says.
“Skills gaps in specialized areas like advanced manufacturing and quality control further limit innovation and high-value production. Infrastructure challenges, especially the lack of fully equipped industrial parks across all regions, increase operational costs and reduce competitiveness.”
Despite these challenges, Mukiza says there are efforts in place to facilitate technology transfer, policy reforms like improvements in legal regulations governing investments and infrastructure development in the industrial parks to overcome these hurdles and to drive value addition across Uganda’s industries.
Another deep concern is the increasing number of investors setting up factories in wetlands or those who pollute natural resources. This has led many to question UIA’s stance on environment protection and also led to clashes with other government agencies such as National Environment Management Authority (Nema) and the National Forestry Authority (NFA).
In spite of this concern, Mukiza insists UIA prioritizes environmental protection. He says they ensure that every project that is licensed complies with environmental regulations by mandating an Environmental and Social Impact Assessment (ESIA) certification from Nema as part of the approval process.
What’s more, UIA records show that Uganda currently has eight operational parks, providing free land and infrastructure support for investors. Over 400 companies are already operating in these parks and are said to have created over 200,000 jobs.
To further expand this initiative, UIA has mobilized 57,450 acres of land across the country and feasibility studies are currently underway for newly acquired sites. However, questions remain whether UIA really cares about the environment because environmentalists have often criticized UIA of setting up these industrial parks in wetlands.
To this, Mukiza revealed that UIA have stopped considering land for industrial park development unless it is 100% free of wetland.
“This is going to ensure compliance with environmental standards and eliminates conflicts over inappropriate land use,” he says.
GOING FORWARD
Mukiza insists that for Uganda to fully realize its industrialization agenda, there is need to prioritize investing in industrial parks, equipping them with critical utilities like roads, power and water.
“These are fundamental to creating jobs, boosting value addition, and providing markets for our raw materials. More so, the importance of agility in responding to global disruptions, strengthening partnerships, enhancing digital capabilities, and building local resilience will be central in mitigating future shocks.”
