In Summary
  • Be fair to all. Local investors should be empowered and screening of foreign ones tightened. Normally, local ones are ignored because they do not have bribes to offer to the fat cats in the corridors of government.

Efforts by the NRM government to rapidly industrialise by spurring both local and foreign investment are continuously weighed down by a litany of factors that we need to point out and find solutions for. Land conflicts, arising out of wanton allotment of hitherto industrial land in major urban centres by land boards and local councils, have done great harm in delaying ground investments.

Industrial land has been parcelled out for residential use. On the other hand, there is multiple allocation, leading to lengthy court processes and costs of allocating other claimants in case an investor wants vacant possession. Money they could have used to set up industries (for production) is drained to settle fringe costs. We need to gazette public land for investment complete with social amenities such as roads, water and electricity to make them ready for investors to set up industries. Kapeeka in Luweero District is a good example of how this can be done.

These parks should not only be situated in urban centres. Like in Jinja, it does not have to be Walukuba all the time, We should consider outlying areas such as Mutaayi. In Mukono, it shouldn’t always be Namanve but also places like Katosi, where the Kampala Expressway will pass. Investors should be encouraged to set up ventures in the countryside since necessary infrastructure will have already been put place.

The malaise of officials who concentrate on soliciting commissions and bribes from investors in payment for their signatures and approval of plans has done great harm. This is corruption because these officials are paid by government to the job. Admitting and processing investment is part of their normal work for which they are not supposed to charge anyone. A lot of money is lost at this stage which would be used for production. A hotline has been provided to report such cases - it is managed under the department of Investment in the Ministry of Finance. But those manning the hotline should not succumb to the kind of malaise we seek to cure.

Taxman’s harassment. Investors are subjected to premature assessments based on money in the bank without establishing the nature and size of investment planned. An investor should be allowed to produce first then the tax is collected at the exit stage. Also, URA is weak on incentives to local investors, which is hampering local participation at a time we are aggressively pushing for import substitution in favour of Buy Uganda Build Uganda (BUBU).

As a government, we are sending mixed signals and confusing policy directions. Related to this, Ugandans have been “diagnosed” with reluctance to go into large scale investment and processing. They still carry the mentality that these are things for foreigners yet we are gifted by nature. All the raw materials any one could need for manufacturing are available-some not yet harnessed. This ideological uneasiness can be blamed on leaders who fail to market our wealth to their own people to make them realise and love our own capacity.

Everything is left to President Museveni to engineer this gospel. As an example, why import iron bars when we have abundant deposits of iron ore or cement when we have enough lime deposits? What is the logic?

Local investors should be empowered and screening of foreign ones tightened. Normally, local ones are ignored because they do not have bribes to offer to the fat cats in the corridors of government. Only foreign investors with proven profiles and own money should be admitted while indigenous ones should be bolstered with sufficient capital to compete. The public should watch out for fake foreign investors capitalising on our need and openness in a liberalised economy. Uganda Development Bank should be further capitalised beyond the current Shs50 billion so as to meet investment targets worth counting on. I hope the current fund is being utilised optimally.

Investment in Uganda is also hampered by low credit rating-access to financial services covering any investment portfolio. Banks are unwilling to put money in long-term ventures. Consequently, a willing investor incurs huge pre-production costs like putting in place certain specialised infrastructure. At the end of the day, they are left with no capital for production. Uganda Investment Authority, the body charged with overseeing investment, runs a meagre budget; in other countries, such a department is “overbooked”. A commensurate budget would cover major non-production costs as part of incentives for investment. This cost is recouped from taxes, jobs created, market for local raw materials and multiplier investment (attracted).

Some investors have found costs related to transportation of goods to and from Uganda prohibitive. If you consider shipping from Japan to Mombasa, a much longer distance, and transporting cargo by road from Mombasa to Kampala, the former route is cheaper. An investor always wants to maximise output and profit while minimising input; that is the law of economics. The sooner we have the Standard Gauge Railway (SGR) in place the easier we make Uganda a most attractive investment destination. Not forgetting new airports and improved security cover.

Ms Babalanda is personal assistant to national chairman, NRM and Senior Presidential Advisor.