Capitalising on natural advantages

H.E. Matia Kasaija, Minister of Finance, Planning and Economic Development of Uganda, discusses the importance of the main pillars of the economy to achieve its development goals




Leading Edge (LE): Economic growth in Uganda has outperformed Africa’s average in the past. How can your Ministry help achieve the expected growth of 5.8% estimated for 2017?

Matia Kasaija (MK): The competitiveness in Uganda is based on three pillars. The first and foremost is infrastructure — roads, electricity and ICT — to bring in business from the transport and communication industries. We are currently working on 35 roads. We are also building a railway line, which will connect us to Kenya.

In electricity, we have a little excess capacity, particularly at night when people are asleep, but we are also building two dams that should be finished within two years. One of them, the Karuma Hydropower Project, will add 600MW to our present capacity. Therefore, as far as the production of power is concerned, we are doing well; the challenge is transmitting and distributing it where it needs to go.

A bigger challenge still is the tariff for power: many industries think that the cost of power here is too high, and though the tariff has been lowered, it still makes
Uganda non-competitive. The second pillar is human capacity, to get people with the right skills. We have a programme that we call ‘Skilling Uganda,’ and we are creating a number of vocational institutions. If our programmes are well attended, then Uganda will become a competitive market. The third pillar would be to have other conducive policies that will attract foreign direct investment. In this sense we are also giving special terms to those who want to be in specific sectors, such as tax holidays, duty free, etc. We don’t tax production: the company that comes here can bring machinery free of tax, and even when it buys equipment here, we remit the local tax. We want to tax consumption, not production.

LE: How are you ensuring that Uganda capitalises on the private sector through public private partnerships (PPPs) to expedite the infrastructure projects needed, and boost the commercialisation of oil and gas?

MK: The legal framework for public-private partnerships is in place. We have even gone ahead and established a unit within this Ministry to assist those who want to engage in PPPs. There are a number of projects that have been designed as PPPs: one is a project to extract oil and build a refinery; there is another one, also in mining, between a Chinese company and the government. The Uganda Investment Authority looks for land that we can grant to investors for their projects and it also makes sure the licensing and registration are done as fast as possible. We have provided foreign investors with free land and we are ready to provide more.

LE: How can Uganda capitalise on its natural advantages and use foreign investment to add value to its exports? 

MK: The first and foremost priority for us is to add value. In Uganda we are in perpetual summer; the temperatures don’t go above 30 degrees Celsius or drop below 18 degrees. The biggest source of income we have is agriculture. So if we can commercialise our products, it will be very beneficial for the country. In the question of value addition we are giving small communities raw materials which can then be processed and exported. We also need to develop other industries, like textiles; I am told some of the best cotton in the world is here in Uganda, and though the price of cotton has dropped, if we can increase its production together with developing the textile industry, then we could create a very profitable sector. We also have coffee, and we have recently attracted Italian investors who are going to process about one third of their beans here in Uganda to make powder coffee for export. Their factories will be in the rural areas, so we can achieve some desirable urbanrural migration.

LE: What would you say to the international community in terms of the advantages of investing in Uganda?

MK: The message to the community of investors is that Uganda is a stable state with a democratically elected government. We have policies and programmes that are geared towards enabling investors to make a profit. We operate in a liberalised economy: investors can come here, develop their business and then repatriate their
profit; we also have good policies in regards to taxation. Concerning our economic performance, inflation has been in single digits for a long time. The rate of growth is now projected to be 5.8% for 2017 and our target is 7%. Our growth slowed down last year because of the volatility in our markets and environment, and also because some infrastructure projects were delayed. But this is all being redressed.

Uganda has many opportunities to offer investors in agriculture, minerals, education and tourism. We are at the heart of the African continent and we are a very good hub for anyone who wants to take their goods south, east or west. Finally, we have found oil reserves and this will have a great impact in our economy. I want to assure
the world that we will produce in a responsible manner; we have seen what has happened in other countries in Africa, and we will not repeat the same mistakes. We have many international companies here that are helping us to handle these resources, and transferring knowledge to us. We also have great resources of water, forests, mountains and all sorts of wildlife in over six national parks We are inviting the world to come and invest in us.