Trade Sector


Market - Nakasero, fruits

Credit: Photo/Newvision

 

Size and Structure

The trade sector comprises of manufacturing, wholesale & retail trade, Hotels & Restaurants, other business services, exports and imports.

 
Size and structure of the Trade Sector 2011/2012


Subsector
Contribution to GDP% Equivalent in Ugx (Billions)
Manufacturing 8.4% 4,130
Wholesalers & retail& repairs 13.3% 6,541
Hotels & restaurants 5% ,468
Exports 0.3% 9,974
 Import 37% 18,179
Other business services 1.5% 755
Source: UBOS Abstract 2012    

 

Economic Activity in the Sector

           

Manufacturing sub sector:The sector is still small but diverse in terms of its composition. Food processing makes up 40% of all manufacturing; drinks and tobacco 20%; Chemicals, paint, soap and foam products 9.7%.

 

Wholesale and Retail Trade: Uganda has a buoyant and growing wholesale and retail sector. It is still highly fragmented.

Hotels & Restaurants: This subsector has enjoyed sustained growth fuelled by a growing economy and increasing tourist numbers.

Imports

In 2011, the total imports bill stood at US $ 5,684.8 million, of which, formal imports accounted for US $5,630.9 million. Informal imports were estimated at US $ 53.9 million. The overall imports expenditure rose by 20.2 % in 2011 compared to an increase of 9.0 % in 2010. Although the formal imports bill increased over two consecutive years (2010 and 2011) informal imports maintained a stable decline of 18.9 % in the same period.

In 2011, Petroleum and petroleum products still took the highest import bill of US$ 1,288.4 million accounting for 22.9 % of the expenditure on imports. This was followed by Road Vehicles with US $499.7 million (8.9 %), then Telecommunication instruments with US$ 343.4 million (6.1 %) and Iron and steel valued at US $ 271.0 million (4.8 %).

Exports

Traditional Exports

  • Coffee
  • Cotton
  • Tea
  • Tobacco
  • Timber
  • Hides and skins
  • Minerals (gold)

Non-Traditional Exports

  • Fish and fish products
  • Cellular telephones
  • Animal fats
  • Vegetable fats and oils
  • Cement
  • Horticulture
  • Apiculture
  • Food stuffs

 

Direction of Trade

The Common Market for Eastern and Southern Africa (COMESA) regional bloc is the main destination for Uganda’s exports. The EU bloc ranks the second, followed by the Asian continent, and then the Middle East.

The main trading partners within the Asian continent were India, China and Japan whose market shares stood at 16.3%, 9.2% and 5.7% in 2011 respectively. The African continent ranks second, with an import expenditure of US $ 1,148.3 million in 2011 and accounting for 20.2% of the total imports.

Current Structure Of Players In The Sector

 

Manufacturing: The manufacturing sub-sector is characterized by Small and Medium Enterprises (SMEs) which account for over 90% of the sub-sector.  39% of these are agro-based industries. Large industries include: Madhivani and Mehta sugar factories; Uganda Breweries; Nile Breweries; Hima Cement and British American Tobacco plant.

The majority of these are owned by families or individuals. Multinational companies in Uganda’s manufacturing sector include British American Tobacco - Tobacco; SAB Miller and Diageo - Drinks; and Lafarge – Cement and aggregates.

Export Incentives


1. Foreign Exchange Liberalization

The foreign exchange regime is fully liberalized and exporters are entitled to retain 100% of their foreign exchange earnings accruing from their export transactions. - Contact Bank of Uganda or any commercial bank for details

2. Duty and VAT exemptions

There are no taxes charged on exports (zero rated). This is meant to reduce costs for the exporters and to make exports from Uganda more competitive - Refer to Uganda Revenue Authority

3. Market Access

The Government of Uganda strongly supports global economic integration as it increases volume of trade as well as offers other economic opportunities. Because of our membership, Uganda’s exports qualify for preferential tariff rates in COMESA, EAC. In addition Ugandan products enter the European Union and USA markets duty and quota free under the Cotonou Agreement (ACP – EU) and the African Growth and Opportunity Act (AGOA) initiatives respectively. - For details refer to Trade Agreements Page

4. Value Added Tax (VAT) on Exports

All exports of goods and services are zero rated for VAT. However, exporters are required to be VAT registered. This enables them to re-claim VAT expended on all inputs used in the process of producing and processing exports. - Contact Uganda Revenue Authority

5. Duty Drawback

The rationale for duty drawback is to enable manufacturers and other exporters to compete in foreign markets without the handicap of including costs of imported inputs in the final export price, the duty paid on imported inputs. This allows exports to draw back up to 100% duties paid on materials inputs imported to produce for export. - Contact Uganda Revenue Authority

6. Manufacturing under Bond

This scheme allows manufacturers to seek custom license to hold and use imported raw materials intended for manufacture for export in secured places without payment of taxes. It makes available working capital, which would have been tied up through paying duties immediately after importation. - Contact Uganda Revenue Authority

7. Others

Other incentives are available under the Investment Code as administered under the Income Tax Act 1997, by Uganda Revenue Authority for export oriented investment projects. - Contact Uganda Revenue Authority 

Source:Uganda Export Promotions Council

Institutional Structures

  • Ministry of Trade, Industry & Cooperatives (MTIC)
  • Uganda National Bureau of Standards,

  • Uganda Industrial Research Institute,

  • Management Training and Advisory Centre,

  • Uganda Integrated Programme of UNIDO, and

  • Uganda Cleaner Production Centre.
  • Uganda Commodity Exchange (UCE)
  • Uganda National Chamber of Commerce and Industry
  • Kampala City Traders Association (Kacita)
  • Uganda National Bureau of Standards (UNBS)
  • Management Training and Advisory Centre
  • Uganda Industrial Research Institute
  • Faculty of Food Science and Technology, Makerere University
  • Uganda Export Promotion Board

Demand Drivers And Resource Base Factors

  • Good market based macroeconomic policies
  • Improving infrastructure and energy supply
  • Uganda’s economy continues to enjoy sustained economic growth at rates averaging 7% plus over the last 10 years. That has fuelled demand for manufactured goods, and imports of raw material.
  • Growing population that has increased the size of the local market fuelling demand for wholesale and retail related trade.
  • Increased manufacturing has resulted in opportunity to export manufactured products to regional markets
  • Free trade and reduced of tariff and non tariff barriers.
  • Regional integration and free movement of goods and services bringing together a population of over 135 million people as a market.

Key Trends

 

Overall imports have been increasing faster than exports resulting into a wider trade imbalance.

Uganda pursues a strategy of value addition to her agricultural products. With the regional harmonization, Uganda products can access regional markets without facing stiff tariffs.   The country has also secured market access for a  number of her products through bilateral trade preference schemes and double trade treaties.

 Sector Specific License Requirements
(Refer to Appendix 3)

Investment and Business Opportunities

 

There exist investment trade and business opportunities in:

Value addition (Agro-processing)

  • Import-substitution manufacturing
  • Contract manufacturing targeted at export markets
  • Retail chains targeting niche markets include supermarkets and consumer goods; building materials.

Show rooms

  • Distribution Centers
  • Warehousing

Transport and logistics

Packaging

Bulk-breaking and assembly

Clearing and forwarding services

Support professional services; marketing, branding, marketing, distribution and insurance.  

  • Trade with neighbouring countries to take advantage of free trade opportunities in the East African Community and COMESA. .
  • E-commerce to target customers within Uganda and across the world

  Useful Web links and Contacts

Uganda Integrated Programme of UNIDO
Head office of UNIDO Operation in Uganda
Plot 11 Yusuf Lule Road Nakasero.
P.O.BOX 7184, Kampala, Uganda
Mobile 256-759-711-711
Tel: 256-312-338-100
Web site:www.unido.org
Management Training and Advisory Centre.
Plot M175, 4.5km, Jinja Road, Nakawa Head office.
P.O.BOX 4655, Kampala, Uganda.
Tel: 256-221011/213
Fax: 256-41-223-853
Email info@mtac.ac.ug
Web site: www.mtac.ac.ug
Minister of Trade, Industry and Cooperatives
Plot 618, Parliamentary Avenue
P.O.BOX 7103, Kampala
Tel: +256-414 314 268/0414 314
Fax: +256-414-341247
http://www.mtic.go.ug/
Uganda Cleaner Production Centre
Plot 42A Mukabya Road
P.O.BOX 34644, Kampala, Uganda.
Tel: 256-41-287938/958
Fax: 256-41-287940/286767
Email: ucpc@ucpc.co.ug
Web site: http://www.ucpc.co.ug
Uganda National Chamber of commerce & Industry
(UNCCI), Plot 1A, Kiira Road. Mulago Kampala,
Uganda
Tel:+256(0)75350, 3035
Fax: +256 (0)414230310/ 312266324
email: info@chamberuganda.com
URL. http://www.chamberuganda.com
Uganda National Bureau of Standards
Plot M217 Nakawa Industrial Area
P.O. Box 6329 Kampala
Tel.: +256-414-505995, +256-414-222369
0800133133 Toll Free 0800133133
Fax: +256-414-286123
Email: info@unbs.go.ug
Uganda Commodity Exchange Ltd.
Plot 4 Jinja Road,
Social Security House,1st Floor, Northern Wing,
P. O. Box 35998, Kampala, Uganda.
Tel: +256 31 262922; Fax: +256 31 2262951
E-mail: uce@uce.co.ug
enabled to view it
Website: www.uce.co.ug
Uganda Industrial Research Institute (UIRI)
Plot 424 Mukabya Road
P.O.BOX 7086 Kampala
Nakawa Industrial Area
Tel:256-414-286245
Fax:256-41-286695
Email: info@mtac.ac.ug
http://www.uiri.org
Uganda Export Promotion Board (UEPB)
5th Floor Conrad Plaza Plot 22 Entebbe Road
P.O.BOX 5045, Kampala, Uganda.
Tel: 256-414-230250/230233
Fax: 256-414-259779
Email:uepc@starcom.co.ug
http://www.ugandaexportsonline.com
Kampala City Trader’s Association (KACITA)
16B Market Street Nakasero, Opp. Platinum House
Ro Kampala, Uganda
Tel: 031-3200401, 031-2200400