Agro-based Investment opportunities in Uganda
The Minister for Agriculture and Land Affairs, Mr Derek Hanekom, recently led a trade and technical mission to Uganda. Uganda has abundant agricultural resources and offers many opportunities for investment in agricultural production and agro-processing, as well as for trade in agricultural inputs and products.
Uganda became independent in 1962. However, mismanagement by General Idi Amin during 1970 to 1980 and a damaging war to remove him ruined the economy. GDP fell by 20% from 1970 to 1980 and the infrastructure and capital assets became decrepit. Only subsistence farming and the small-scale coffee sector survived in some reasonable order.
The National Resistance Movement (NRM) government under President Yoweri Museveni came to power in 1986 and announced the Economic Recovery Program (ERP). This aimed to rehabilitate the production sectors and critical infrastructure, reduce inflation and to address the crisis in the balance of payments, which left the country with very low reserves. This was to be done through measures such as the promotion of exports, reform of the agricultural policy to restore producer incentives by removing price controls and abolishing parastatal marketing monopolies, the encouragement of foreign investment and the reform of the budget procedures. Since the launching of the ERP, the government has made steady progress in macro-economic stabilization. The inflation rate fell from 54.5% in 1992 to 6.7% in 1996 and the exchange rate has been stabilized. Low domestic tax revenue remains a problem. The GDP growth rate averaged 5% per year since 1986. The economy is, however, very dependent on rain fed agriculture, and therefore the performance of the economy from year to year reflects variations in weather conditions. Tourism is one of the fastest growing sectors of the economy.
Since 1986, considerable progress was made in the road rehabilitation program. Major trunk roads were resurfaced and the condition of most roads has been much improved. Railway facilities are also being rehabilitated and upgraded. The Entebbe International Airport has been upgraded and 16 airlines have regular scheduled flights to Entebbe, including British Airways and Alliance Air. However, cargo-handling facilities, especially cool storage, are still inadequate. There are international telecommunication links and a microwave network has linked most parts of the country. Almost 90% of Uganda’s total energy requirements are met from sources other than electricity and oil (mostly wood and charcoal). There is an urgent need to find other energy sources. Uganda has the potential to generate 2000 Megawatts of hydro-electricity. The Owen Falls power station is at present being upgraded. Much of the electricity network is still in a poor condition. Eighteen rural electrification programs have been identified and a number have been implemented already.
The economy is dominated by agriculture. Manufacturing contributed 8.6% of GDP in 1996/97. Most manufacturing is based on the processing of agricultural products, such as coffee, cotton, sugar and food crops. In 1992, manufactured goods constituted 72% of imports. A GDP growth rate of 5% was recorded in 1996/97, while the consumer price inflation was 7.1%. The exchange rate of the Ugandan shilling was NUS1015/$.
The economic output is dominated by agriculture, which was responsible for 44% of GDP in 1996/97. Agriculture employs over 80% of the labour force and also accounts for over 90% of export earnings. Total GDP amounted to US$5.4 billion in 1995, compared to US$134 billion in the case of South Africa. Most agricultural production takes place in the south, where the climatic conditions have always supported the densest rural populations.
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