Overview on State of Investment

End. Dr. Ajedra Gabriel Aridru

Minister of State for Finance, Planning & Economic Development (Investment)

April 17, 2013

Presidential Investor’s Round Table 2013

Presentation Structure

• Introduction• Key Country Facts

• Investment Climate• Security of Investment

• Status of Investment • Investment trends• Sources of FDI• Ownership of

investment• Investment by sector• Incentives

• Key Sectors for Investment

• Investment Constraints

• Why Uganda?

• Conclusion

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Key Fact Highlights

Geographical & Demographical

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Male, 7.27

Female, 7.04

Sex distribution in labor force (millions, 2012 est.)

Proportion engaged in agriculture

Urban Population:

13.5%

Population: 35 million (2012 est.)

World Population Rank: 35

Population Growth Rate: 3.2%

Rural Population:

86.5%

81.8% 80.7%

Location

Investment Climate• - Peace and security of

persons and property.

• Good macroeconomic

policy and environment

• - Fully liberalized economy

• - Competitive market access

• - Stability and good

democratic governance• - Excellent weather Climate• and conditions.• - Strong natural resource

base Friendly population

• - Government commitment to private sector.

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Security of Investment

The Investment Code provides the following guarantees:• Non-nationalization, or non-confiscation of investment• Acquisition is only allowed by law and for fair consideration

Investment Guarantees

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Following tax incentives are listed in the Investment Law:•VAT refund on building materials for industrial/commercial blds•Duty and Tax free import of Plant & Machinery•Duty exemptions for personal effects and motor vehicle

Favorable Tax Environment

• Disputes between parties settled according to law.•Otherwise those not solved through the national courts, the law also allows settlement via international bilateral or multilateral agreements or any other int’l arrangement.

Dispute Settlement

Agreements and Associations

Uganda is a member of/ signatory to the following:• COMESA comprising 19 member States• Intergovernmental Authority on Development (IGAD)• East African Community (EAC)• African Growth and Opportunity Act (AGOA), giving duty

free access to the US market• Generalized System of Preferences (GSP) • EU Everything but Arms initiative

Regional Trade Associations and Blocs

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Uganda is a signatory to and member of the following :• Multilateral Investment Guarantee Agency (MIGA), which

provides guarantee against non commercial risks• International Centre for Settlement of Investment Disputes

(ICSID), for settling disputes between foreign investors and host governments

• Overseas Private Investment Corporation (OPIC) of USA• Convention on the recognition and enforcement of foreign

arbitral award (CREFAA)• Islamic Corporation for the Insurance of Investment and

Export Credit (ICIEC)

International Investment Guarantees and

Agreements

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254229 237 237

295

380

644

792

729

842

544

792

0

100

200

300

400

500

600

700

800

900

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

FDI VALUE (US$ MILLIONS)

Source: UNCTAD World Investment Reports

FDI Comparison in the EAC

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2006 2007 2008 2009 2010 2011Uganda 644 792 729 842 544 792Kenya 51 729 96 116 178 335TZ 403 582 1247 953 1023 1095Rwanda 31 82 103 119 42 106Burundi 0 1 4 0 1 2

0

200

400

600

800

1000

1200

1400

U.S

$ (M

illio

ns) Uganda

Kenya

TZ

Rwanda

Burundi

Source: UNCTAD World Investment Report, 2012

Ownership of Investments in Uganda

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Percentage ownership ofnumber of projects.

Source: UIA Data

33.336 Ugandan Owned

Foreign Owned

Percentage ownership ofvalue of investment

59.659.7

Ugandan Owned

Foreign Owned

Joint ventures make up about 30 % of the investments in Uganda

Investment into Uganda by Sector (USD), 2011/2012

Electricity, Gas & Water,

564,396,700

Transport, Storage and

Communication, 296,880,553

Fin, Ins, Real Estate and

Business Services , 165,137,207

Agric, Hunt, Forest & Fish,

135,136,380

Mining & Quarrying,

130,583,682

Others, 182,330,026

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10Source: Investment Statistical Abstract, 2011/12, UIA

Incentives to Investors

Non negotiable and Non discretionary – Stipulated bythe Investment Code

Incentives are available to all investors, local and foreigninvestors

There are some additional sector specific tax exemptions

Value addition on agro and mineral raw materials forexport is granted a 10 year tax holiday among otherexport incentives (terms and conditions apply)

In the UIA Industrial Parks, investment in the followingareas may access free land; Agro processing, ICT, Mineralbeneficiation and Tourism.

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Key Sectors for Investment 6/25

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Agriculture and Agro processing Opportunities

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• PPP Investments in commercial farmingand agro-processing (value-addition) toenhance maize, beans, rice etc productionfor export and household food security .

• PPP Investment in Irrigation Schemes toenhance Agricultural outputs.

• Cotton Processing for edible oil andtextile mills, for foreign owned firms or JVwith local partners:

• PPP JVs in the manufacture of DairyProducts with a Ugandan Firm SorotiDairy Ltd .

Tourism Opportunities

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• The Government projects include construction ofup / mid market accommodation within QueenElizabeth and other Conservation areas, 20-50bed facilities in the protected areas

• Construction of Wildlife Forest Lodgecomprising 20 spacious cottages to provideadditional accommodation for mid range travelerswithin the Tourist Areas of Mabira and BudongoForests, Queen Elizabeth National park andMurchison national Park.

• Private joint venture to expand the 22 acreSsese Palm Beach Resort (SPBR) locally owned bySPBR Ltd. It is one of the beach hotels in LutobokaBay, Bugala Island in Lake Victoria.

Mining Opportunities

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• Dimension stone products

(Marble & granite)

• Phosphates (Sukulu)

• Gold

(Buhweju, Busia, Mubende, et

c)

• Iron ore (Muko)

• Vermiculite

• Container glass from silica

sands

• Petroleum (Petrochemical

related Ind.)

ICT Business Opportunities• Business Process Outsourcing

• Software development

• Software testing & assurance

• Data Storage area networks

• Integrated Solution Planning

• Hardware Assembly

• Multimedia Development

• Internet Applications

• Translation Services

• Film Industry and Graphics

• Rural Communications

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Gas & Energy Generation

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Uganda’s electricity demand is growing at 10% per year. Currentpeak demand is 484MW, while installed capacity is 814MW. Thecurrent firm supply is 501MW.

Site Location Capacity Status

Kalagala Jinja/Mukono 450 Feasibility Done

Karuma Masindi/Apac 600 Government looking

for investor

Ayago South Gulu/Masindi 600 Preliminary Studies

Ayago North Gulu/Masindi 304 Preliminary studies

Murchison Gulu/Masini 642 Preliminary studies

Source: Electricity Regulatory Authority

Opportunities in Smaller Energy Projects

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Site River Estimated

Capacity (MW)

Muzizi Musizi 10

Bogoye Mubuku 7.5

Nengo Bridge Ntungu 12.0

Various Joint Venture opportunities existsto partner with Ugandan Companies.

Other Renewable Energy Projects

Power generation Location

1. Small and large Hydro 1,400MW Countrywide

2. Peat power development 30 MW Kabale, SW Uganda

3. Waste to Energy Unlimited Country wide

4. Charcoal Production 600,000 tons Land available under NFA for tree planting

5. Improved household stoves 4,300,000 Country wide

Solar Energy Unlimited Eastern & Northern Uganda

6. Biogas technology cookingAnd power generation

>100,000 units Huge potential

7. Gasification technology for power generation and heat

Country wide

8. Wind power generation

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Infrastructure and Construction

Public Private Partnership Opportunities:

1. Construction of the Kampala – JinjaExpressway (75 Kms at US$850 M)

2. Construction of new standard gaugerailway line from Kampala to Malaba(300 Kms at US$500 M)

3. Reconstruction (on existing alignment /right of way) of the Kampala – Kaseserailway (334 Kms at US$366M)

4. Construction of new railway line fromPakwach in the North to Kasese in theSouth East

5. Others include the upgrading of thenational airport, air strips, as well asroads and airstrips in the tourist and oilareas

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Other Major Opportunities

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- Services (Health, Education, Financial Services)

- Manufacturing, Cars, Light Bulbs, Ceramics

- Large Scale Commercial Agriculture

- Private Hospitals for specialized treatment (Heart Surgery, Kidney transplant, cancer treatment).

- Pharmaceticals and Plastics – Refinery of Oil

Constraints to Investment in Uganda1. Infrastructure – dysfunctional railway system in Uganda and

from the sea port. Road interconnectivity from rural tourban areas, slow implementation of major infstr. Projects.

2. Electricity supply though sufficient at this time, demandgrowth of 10% is likely to outstrip generation very soon.

3. Land fragmentation, limited land for commercial agricultureland tenure system, and insufficient model farms.

4. Access to Finance - interest rates are still high, lowcapitalisation of UDB. With good fiscal and monetarypolicies, increase of financial services in the liberalisedfinancial sector, we expect rates come down.

5. A few Administrative barriers. Efforts to reduce bureaucracyare underway through Team Uganda and the PIRT.

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Why Invest in Uganda?

Ranked 12th

in Africa

In ‘DoingBusiness’

Pearl of Africa

2nd In attracting FDI in East Africa

Resource rich economy

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Thank You

Invest in Uganda