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					UGANDA B2B
BUSINESS DEVELOPMENT PROFILE




SEPTEMBER 2006




Prepared by the Danida B2B Programme
Royal Danish Embassy
Kampala
                                     TABLE OF CONTENTS

1.0    EXECUTIVE SUMMARY                                              1
2.0    OVERVIEW OF THE UGANDAN ECONOMY                                3
      2.1 Government policy framework                                 3
      2.2 Challenges to be overcome                                   3

3.0    LESSONS FROM UGANDAN - DANISH PARTNERSHIPS                     4
      3.1. What has worked and why?                                   4
      3.1. What has not worked and why?                               4

4.0    SECTORS HIGHLIGHTED FOR ACTIVE PARTNER SEARCH                  5
      4.1 Agro                                                        7
      4.2. Industry                                                  11
      4.3. Services                                                  12

5.0    SECTORS WITH LOW RESPONSE FROM DANISH FIRMS                   13

Annex 1: Summary of key figures on Uganda’s population and economy   17
      A.1.1 Natural resource base                                    17
      A.1.2 Key sectors and performance                              17
      A.1.3 Performance indicators                                   17

Annex 2: Examples of Ugandan – Danish partnerships                   18




                                                                      i
                           UGANDA AND HER NEIGHBOURS, 2006




1.0             EXECUTIVE SUMMARY
This B2B Business Profile is intended to:
      o   Give interested Danish and Ugandan firms an introduction to Uganda and the opportunities for
          collaboration, as well as challenges to be overcome.
      o   Guide the B2B Unit in its active search for potential sectors and enterprises for B2B partnerships.
More detailed information may be found at the websites listed at the end of this profile, or by contacting the
B2B office at the Embassy in Kampala. Annex 1 shows key figures on the Ugandan population and economy.
Uganda is predominantly an agricultural based economy, with a small although growing manufacturing sector. It
has a population of 28 million, about 85% of whom live in rural areas. The main exports are agricultural
commodities: Coffee, tea, tobacco, cotton, horticulture and fish. Donor funding contributes to over 40% of the
national budget. To form a robust economy value addition across all sectors is needed.
Uganda is located in Eastern Africa with no direct ocean access. The country however has direct access to the
markets of Southern Sudan, Rwanda, Eastern DRC-Congo, Western Kenya and Northern Tanzania. Uganda is
a member of the 90 million people of the East African Customs Union, formed January 2005 (Kenya, Tanzania
and Uganda) and of the 385 million people of the Common Market for Eastern and Southern African States,
COMESA.
There are a few foreign owned enterprises, particularly in the services and manufacturing sectors, while Ugandan
small holders dominate agriculture.




UGANDA BUSINESS PROFILE                                                                                       1
Based on the B2B activities in Uganda since 1996, this Business Profile highlights the following key sectors to be
of interest to Danish companies:


SECTORS HIGHLIGHTED FOR ACTIVE PARTNER SEARCH


      AGRO                         INDUSTRY                                    SERVICES

      Processing                   Energy                                      ICT

      Livestock                    Construction and building materials         Printing and publishing

      Crops                        Metal                                       Tourism and hospitality

      Fisheries                    Wood

      Implements and inputs

      Forests

This list is not exclusive - those with interest in other sectors should approach the B2B Programme for more
details. But the list forms the base for the more detailed description in Section 3 on sectors actively searched for
by the B2B Programme in Uganda for new partnerships.


Annex 2 lists examples of Ugandan - Danish partnerships.




UGANDA BUSINESS PROFILE                                                                                           2
2.0             OVERVIEW OF THE UGANDAN ECONOMY
Uganda has substantial natural resources, including fertile soils, regular rainfall, and some minerals. The country
is currently testing the viability of oil deposits found in a recent exploration in Western Uganda. Agriculture is
the most important sector of the economy, employing over 80% of the work force. Coffee, fish and fish
products, tea, cotton, and horticulture account for the bulk of export revenues.
The government follows a liberal economic policy with a stabilized economy over the last ten years: Controlled
inflation, rather stable foreign exchange rates, a liberal financial market with free capital transfer, a free trade
approach and privatisation of state owned enterprises. As one of the HIPC countries (Highly Indebted Poor
Countries), Uganda has recently seen the bulk of its entire debt (US $ 4 billion), written off. Growth rates for the
last 10 years have been over 5% per annum, while inflation has remained at an average of 7% per annum.
The years 2002 up to 2006 have been challenging, amidst falling commodity prices and the unrest in Northern
Uganda and the staging of multi party elections. There is, however, a lot of optimism that the country is going
to rebound again. Northern Uganda is opening up, as are DR Congo, Southern Sudan and Rwanda. It gives a
positive outlook for the country in the aftermath of a democratic election in early 2006.
Uganda enjoys special trading relations with the EU. Fish and fish products, coffee, tea, cut flowers, cotton, as
well as organic and non-organic fresh and dried fruits are major exports into the region. The challenge for the
country is to continue to increase production efficiency, improve on the packaging of products, and target niche
markets.
Danish partners have been known to add value to this process, by bringing their knowledge of the EU market,
and using their technology and manpower skills to help Ugandan products to reach an exportable quality.

 2.1    Government policy framework
       o Government has put in place policies that support private sector led growth and they are enshrined in
         the Medium Term Competitiveness Strategy, MTCS, and Plan for the Modernization of Agriculture,
         PMA, as well as the Poverty Eradication Action Plan, PEAP.
       o Privatisation is an on-going exercise by a government keen to remain active in the provision of basic
         infrastructure and supporting environment, while leaving the local and international private sector to
         run business.
       o Uganda Investment Authority, UIA, is spear-heading investor facilitation, and provides selected
         investment incentives for projects in the country.
       o Tax policy has emphasized relative stability over the years, with generous depreciation and capital
         allowances to projects.
       o Industrial estates are being set up, to accelerate the provision of infrastructure and utilities to investors.
       o Uganda is a signatory to many international trade agreements, including the WTO, EU-ACP Cotonou
         Trade Agreements, the African Growth Opportunities Act, AGOA, of the USA. In addition, the
         country belongs to a number of regional groupings such as the East African Customs Union, EAC, the
         Common Market for Eastern and Southern African states, COMESA, all of which give the country
         reduced tariff and quota free access to these important markets.

 2.2    Challenges to be overcome
       o A major challenge facing the country is that of inadequate, expensive and unreliable electric power,
         which has resulted in major load shedding that, is expected to continue for at least 4 years.
       o Although there is no shortage of trainable labour, efficiency and skills levels are behind major
         competitor nations.
       o Despite a growing middle class the bulk of the population lacks critical effective buying power, thereby
         limiting the size of the domestic market.
       o Uganda is land locked and has poor and costly rail and road infrastructure to the Port of Mombasa
         (Kenya).

UGANDA BUSINESS PROFILE                                                                                              3
3.0            LESSONS FROM UGANDAN-DANISH PARTNERSHIPS

 3.1    What has worked and why?
       o Where both partners were strong, had well defined expectations in the short and long term and
         worked as a team for mutual benefit, their projects tended to be successful.
       o Where the parties followed a defined path, and focused on one or two lines of business or activities,
         instead of attempting to do too many different projects simultaneously.
       o Where there was openness and mutual trust, and the parties freely exchanged ideas and lessons.
       o Where the parties had a clear business idea with a defined strategy for implementation in the short and
         long term.
       o Where the Ugandan project is at the same level where the Danish firm was some years ago, hence
         making it easier for the Danish firm to recommend and implement strategies and technologies that
         they had to adapt themselves.
 3.1 What has not worked and why?
       o Where there was inadequate preparation or no market research before implementation
       o Where one party had only short term goals out of the collaboration
       o Where one or both parties entered into the partnership primarily to get funding, equity or capital
         goods, as opposed to access to training, technology transfer, improved working conditions and
         management techniques.
       o Where one party over dominated the other or expectations and activities were not thoroughly
         discussed and agreed upon.
       o Where the local partner did not have or did not put in significant resources and expected the Danish
         partner to shoulder the project.
       o Where there was lack of transparency or mutual mistrust among the partners.
       o Where one or more of the partners are involved in many other ventures.




UGANDA BUSINESS PROFILE                                                                                       4
4.0               SECTORS HIGHLIGHTED FOR ACTIVE PARTNER SEARCH
The sectors listed below have been selected because of their strategic interest for Uganda and because they may
be of interest to Danish firms:



      AGRO                        INDUSTRY                                   SERVICES

      Processing                  Energy                                     ICT

      Livestock                   Construction and building materials        Printing and publishing

      Crops                       Metal                                      Tourism and hospitality

      Fisheries                   Wood

      Implements and inputs

      Forests

Opportunities exist for Danish firms to enter into collaboration with firms in these sectors, to add value,
improve production methods, cut costs, transfer technology and know how, to train staff and enhance access to
lucrative markets.
Major challenges to be overcome include size and technological gaps between potential partners; lower
productivity levels for labour, expensive and unreliable power sources, competition from imported products, as
well as costly land and air transport.
In spite of these challenges, the Embassy has seen and supported a number of partnerships to take advantage of
the opportunities for collaboration in different sectors, and to make profits, share experiences, train and expose
staff, and to identify sources of raw materials and markets for their products.


Annex 2 lists examples of Ugandan - Danish partnerships.




UGANDA BUSINESS PROFILE                                                                                         5
4.1.1 AGRO - Processing

    Sector brief                                           Drivers and commercial business opportunities                Challenges to be overcome

   The country has a small, mainly import                Uganda is a net importer of processed goods; hence          Large informal sector.
    substitution agro-processing sector.                   opportunities for import substitution.
                                                                                                                       Low disposable incomes limit the size
   A few small to medium agro-processing plants          A wide range of low cost raw materials form the base for     of the effective market.
    exist, adding value to crops, livestock, fish and      agro processing plants e.g.: Meat processing; dairy
                                                                                                                       Lower productivity levels.
    wood.                                                  processing, fish processing and wood processing.
                                                                                                                       Long-term sustainability     of   raw
   The sector is small with little value addition and    A growing local and regional market.
                                                                                                                        material base.
    is not competitive in the export market.
                                                          Limited use of herbicides and pesticides appeal to
                                                                                                                       Uganda is landlocked and incurs high
   Larger organisations - in sugar, dairy, animal         customers of organic foods.
                                                                                                                        transportation costs.
    husbandry, and tea – recently privatised.
                                                          Investment incentives exist to support champions of
                                                                                                                       Stiff competition from regional and
   The local industry mainly services the lower to        supply chains.
                                                                                                                        international players.
    middle segments of the market while imports
    dominate the upper segments.




UGANDA BUSINESS PROFILE                                                                                                                                   6
4.1.2 AGRO - Livestock

    Sector brief                                             Drivers and commercial business opportunities                    Challenges to be overcome

   A wide range of farm animals, reared mainly in          Good and growing domestic and regional market.                  Lack of fully developed and enforced
    Western, Northern and Eastern Uganda.                                                                                     quality standards reduces export
                                                            Extensive grasslands and good soils support good pastures.
                                                                                                                              opportunities.
   23 million poultry, 6.6 million heads of cattle, 1.2
                                                            Large quantities of raw milk and beef, at low farm gate
    million pigs; 1.6 million sheep and 7.8 million                                                                          Inadequate      cooling     chain     and
                                                             prices, which can support value-adding industries.
    goats. Mainly smallholder subsistence farms, and                                                                          processing facilities.
    a few large farms.                                      The country is undergoing supermarketization, and many
                                                                                                                             Low    disposable       incomes      limit
                                                             quality hotels and restaurants have sprung up, fuelling
   Livestock production contributes 5.2% to total                                                                            opportunities to sell at quality prices in
                                                             demand for quality meat.
    GDP, which is 12.7% of agricultural GDP.                                                                                  the domestic market.
                                                            Local authorities can facilitate investors with access to
                                                                                                                             Foot and mouth disease limits export
                                                             good land as well as investment incentives.
                                                                                                                              possibilities.




UGANDA BUSINESS PROFILE                                                                                                                                              7
4.1.3 AGRO - Crops


    Sector brief                                         Drivers and commercial business opportunities                   Challenges to be overcome

   Uganda is predominantly an agricultural country     Good tropical climate.                                         Competition from efficient and low
    and can grow a wide range of crops.                                                                                  cost countries.
                                                        Plenty of rainfall in most parts of the country throughout
   Exportable quantities of coffee, tea, and cotton     the year                                                       Competition from cheap, imported
    primarily grown on smallholder farms.                                                                                processed fruits/juices.
                                                        Limited use of pesticides.
   A wide range of food crops are grown, e.g.                                                                          Low level of mechanisation.
                                                        Possibility for out growers to supplement organised farm
    maize, rice, potatoes, cassava, millet, sorghum,
                                                         production.                                                    Inefficient and smallholder farmers.
    sunflower, beans, ground nuts etc.
                                                        Big opportunities for import substitution and for export       Difficulty   of    enforcing     quality
   A wide range of organic fruits, e.g. mangoes,
                                                         into the region.                                                standards.
    papaya, pineapple, bananas, avocado, and
    passion fruits.                                     Export possibilities to the Middle East and Europe.            Dumping of cheap corn and cooking
                                                                                                                         oil from overseas.
   Some fruits are currently exported fresh and        Organisations such as the World Food Programme are big
    some dried. Only a few are processed.                buyers, particularly of grain to feed refugees and schools.    High cost of packaging materials and
                                                                                                                         equipment.
                                                        Opportunities exist to set up specialised organic fruit
                                                         processing facilities for exporting overseas.                  Low value addition, poor branding and
                                                                                                                         marketing.




UGANDA BUSINESS PROFILE                                                                                                                                         8
4.1.4 AGRO - Fish

    Sector brief                                         Drivers and commercial business opportunities               Challenges to be overcome

   Uganda has no access to the sea but has many        Large fresh water bodies occupy over 36,000 square         The threat of over fishing could reduce
    fresh water lakes and rivers.                        kilometres out of the total 236,000 square kilometres of    the catch in the future unless
                                                         landmass.                                                   controlled.
   The fish sector is growing very fast.
                                                        The water bodies include Lake Victoria, the 2nd largest    Unreliable and expensive power
   The country exported fish worth US $ 170 in
                                                         fresh water lake in the World.                              increases the cost of production and
    2005/6 and projects growth of 13% in the
                                                                                                                     leads to higher spoilage.
    following year.                                     The EU gives Uganda tariff and quota-free access for its
                                                         fish and EU countries have a good and reliable market for
   The dominant species include Tilapia and Nile
                                                         fresh water fish.
    Perch.
                                                        Fish is considered a healthy food and is picking up among
   Fish farming has now been introduced to
                                                         the middle to upper income customers.
    supplement the catch from the lakes.



4.1.5 AGRO - Implements and inputs

    Sector brief – Implements and inputs                 Drivers and commercial business opportunities               Challenges to be overcome

   The economy is dominated by small operators         Given the wide range of agricultural activities – crop,    Low disposable incomes of many
    who use hand tools and simple implements.            animal husbandry, fisheries and forestry – there is wide    potential customers, who then opt for
                                                         scope for the manufacture of implements and inputs.         cheaper but less effective substitutes.
   There are a few industries that make agricultural
    implements and inputs, to service the local         Examples of implements and inputs include herbicides,
    market.                                              improved seeds, fertilizers, fishing gear, saws, and farm
                                                         implements such as hoes, knives/pangas, and
   The bulk of inputs and implements are imported
                                                         wheelbarrows.
    from Kenya, China, India and South Africa.




UGANDA BUSINESS PROFILE                                                                                                                                  9
4.1.6 AGRO - Forestry

    Sector brief                                         Drivers and commercial business opportunities                  Challenges to be overcome

   Over 5 million hectares of forest covering close    Industries in the world are looking for precious hard         Over exploitation of Ugandan hard
    to 20% of the total land area.                       woods                                                          woods, leading to over reliance on
                                                                                                                        imported logs.
   The forested area consists of woodland- 80%,        DR Congo and Southern Sudan have vast hard wood
    moist high forest- 19% and commercial                forests that are easily accessed from Uganda.                 Wide use of pitsaws and rudimentary
    plantations covering 1%.                                                                                            harvesting techniques, resulting in
                                                        A number of forest concessions in these countries have
                                                                                                                        waste.
   The country grows some of the world’s finest         been granted to Ugandans hence a steady flow of quality
    hard wood species, such as Mahogany, Musizi          timber, such as Mahogany, Teak, Musizi (Maesopsis             Poor enforcement of regulations
    (Maesopsis eminii) and Mvule (Chrolaphora            eminii), Mvule (Chrolaphora excelsa), Ebony, and               governing harvesting of trees.
    excelsa).                                            Ironwood into the country.
                                                                                                                       Limited subscription to international
   About 225,000 m3 of sawn timber was harvested       There is an on-going reforestation programme, driven by        certification for timber.
    legally in 2000 by pitsaw millers and other saw      the National Forestry Authority, under which private firms
    millers and an unspecified volume was imported       are planting soft woods across the country, to ensure
    from DR Congo and Southern Sudan.                    sustainability.




UGANDA BUSINESS PROFILE                                                                                                                                  10
4.2.1 INDUSTRY - Energy

    Sector brief                                             Drivers and commercial business Opportunities                       Challenges to be overcome

   Provision of cost effective and reliable power to       Uganda has huge untapped energy resources, the                     The tendering process is sometimes
    the nation is critical to enhancing production           hydroelectric power potential is estimated at over                  beset by indecision, bureaucracy and
    competitiveness and incomes.                             2,000MW mainly along River Nile.                                    lack of transparency.
   It plays an important role in rural development.        Current demand is 340MW and growing while supply                   Need for incentives and concessions
                                                             meets about half of the demand.                                     to ensure viability.
   Less than 3% of Ugandan households in rural
    areas have access to grid electricity; the rest rely    Opportunities include investing in renewable energy and            Shortage of long-term finance is a
    on biomass energy resources, a scenario which            rural electrification as well as investing in the manufacture       problem.
    should be reversed, given the adverse effects on         or assembly of energy efficient products and systems.
    the environment.



4.2.2 INDUSTRY - Construction, building materials.

    Sector brief                                             Drivers and commercial business Opportunities                       Challenges to be overcome

   High growth, of over 10% per annum over the             Investing in the production of quality and cost effective          Tendering processes are bureaucratic
    last 10 years.                                           building materials.                                                 and sometimes not transparent.
   The key activities include road works, residential,     The construction of housing and support infrastructure             The market is not using innovative
    office and commercial blocks.                            projects is growing.                                                and low cost building materials.
   A dozen larger scale operators in the sector,           Reconstruction of Northern Uganda after civil strife.              Long lead time and high cost of
    supported by several small and more specialised                                                                              spare parts, construction equipment,
                                                            Ugandan construction firms are getting good contracts in
    subcontractors.                                                                                                              diesel and electricity.
                                                             Rwanda, Southern Sudan and DR Congo.
   A number of industries that make construction
                                                            Most building materials are locally available, while the bulk
    materials, ranging from pavers, building blocks,
                                                             of the materials for finishing are imported from South
    iron sheets, roof tiles, and paint.
                                                             Africa, China and Europe.




UGANDA BUSINESS PROFILE                                                                                                                                            11
4.2.3 INDUSTRY - Metal

    Sector brief                                          Drivers and commercial business Opportunities                   Challenges to be overcome

   A number of import substitution firms exist,         Materials for recycling are readily available.                 Erratic power supplies.
    mainly using recycled metal scrap materials.
                                                         High cost of imported items coupled with long lead times.      Bad working environment.
   A few firms have metal and foundry workshops
                                                         Low cost trainable labour.                                     Untrained workforce.
    from which they make utensils and implements
    and fabricate spare parts for the local industry.    Growing local and regional markets.
                                                         Maintenance sector has good opportunities.

4.2.4 INDUSTRY - Wood
    Sector brief                                          Drivers and commercial business Opportunities                   Challenges to be overcome

   The wood sector is dominated by informal             High cost of imported items.                                   Many local marts use precious hard
    operators.                                                                                                            woods to make substandard products
                                                         Low cost trainable labour.
                                                                                                                          while the country imports expensive
   Some medium sized firms exist that make value
                                                         Growing local and regional markets.                             furniture.
    added wood products mainly for the local
    market.                                                                                                              High waste by many small and
                                                                                                                          inefficient operators.
                                                                                                                         Erratic power supplies.
                                                                                                                         Bad working environment.
                                                                                                                         Risk of shortage of raw materials in
                                                                                                                          the long term.
                                                                                                                         Untrained workforce.




UGANDA BUSINESS PROFILE                                                                                                                                     12
4.3.1 SERVICES - ICT

    Sector brief                                         Drivers and commercial business Opportunities             Challenges to be overcome

   ICT sector is one of the fastest growing sectors    Duty free importation of computers and accessories.      Low computer literacy and high
    of the economy – telecommunications grew by                                                                    concentration of IT infrastructures in
                                                        There is political will and support from government,
    37% in 2005/6 and 50% during 2003/4.                                                                           urban area especially in Kampala.
                                                         including a fully-fledged ICT Ministry and a
   Products from a number of large international        Communications Commission.                               Erratic and sparsely distributed
    players are available in Uganda.                                                                               electric power supply limits scope for
                                                        Wide application to most sectors in Uganda.
                                                                                                                   ICT coverage.
   These large firms work hand in hand with
                                                        These opportunities are also opening up in Southern
    smaller services firms that handle consultancy,                                                               Small effective market.
                                                         Sudan and DR Congo where communication systems are
    web design, hosting of ICT infrastructure,
                                                         very basic.                                              Competition from India and the
    installation and maintenance as well as vending
                                                                                                                   Asian continent for lucrative ICT
    and servicing.                                      Opportunities to invest in Uganda and regional ICT
                                                                                                                   business.
                                                         infrastructure.
   From a very low base 10 years ago, the country is
    experiencing a rapid proliferation in the use of
    mobile phones, computers and fixed telephony.
   No ICT manufacturing companies in Uganda
    today.




UGANDA BUSINESS PROFILE                                                                                                                                13
4.3.2 SERVICES – Printing and publishing

    Sector brief                                        Drivers and commercial business Opportunities                  Challenges to be overcome

   The printing sector in Uganda is young and         Many local firms in this sector have expressed interest in    Expensive, inefficient, and slow
    comprises of many small printers and few            teaming up with foreign firms to add value to their            technology, coupled with shortage of
    medium sized printing companies.                    operations, and to manage the competition from overseas        skilled manpower.
                                                        firms.                                                        Fierce competition for large orders
   Set up and mainly run by Ugandan Asians in the
    1960s, then run down in the 1970s and 1980s.       Uganda spends an estimated US $ 20 million on imported         from foreign printers, and from
                                                                                                                       informal operators for the smaller
                                                        textbooks.
   The sector handles commercial and office                                                                           orders.
    stationery, printing work, using largely second    There is significant growth in demand for quality printing    Low level of workmanship, in a dusty
    hand equipment. - A few medium sized /larger        and publishing services.
                                                                                                                       and humid environment.
    printing houses with modern equipment have         This demand for quality products is an opportunity to add
    been set up to handle news papers, selected text    value through training, quality control, production           All raw materials, such as paper and
    books and advanced commercial and industrial        planning and management, costing and servicing as well as      ink, are imported.
    colour printing works.                              provision of better performing equipment.                     Power shortages reduce the working
                                                                                                                       time for smaller firms and impose
                                                                                                                       high fuel costs for large ones with
                                                                                                                       generators.




UGANDA BUSINESS PROFILE                                                                                                                                  14
4.3.3 SERVICES – Tourism and hospitality

    Sector brief                                          Drivers and commercial business Opportunities                   Challenges to be overcome

   Tourism has been an area of high growth for          Uganda is re-emerging on the world holiday and leisure         Sustainability of the visitors /
    Uganda’s economy for the recent years.                map.                                                            tourism       boom   after    the
                                                                                                                          Commonwealth        Heads      of
   Attractions include wild animals and birds,          There is a big upgrading of hotels mainly in Kampala,
                                                                                                                          Government Meeting (CHOGM) in
    beautiful scenery, and natural resources like lakes   which will improve services and result in healthy
                                                                                                                          November 2007.
    and water falls.                                      competition.
                                                                                                                         Competition from the better-
   Tourists to the country increased from 190,000       Opportunities exist in setting up tourist infrastructure.
                                                                                                                          developed Kenyan and Tanzanian
    in 1999 to 254,000 in 2002 and 400,000 in 2004.
                                                         Concessions are available for the rehabilitation and            tourism industry.
                                                          operation of hotels, lodges, and national parks.
                                                                                                                         The quality of service is below
                                                                                                                          international standards yet the rates
                                                                                                                          charged comparatively higher.
                                                                                                                         Inadequate investment in upgrading
                                                                                                                          of tourism infrastructure beyond
                                                                                                                          Kampala.




UGANDA BUSINESS PROFILE                                                                                                                                      15
5.0 SECTORS WITH LOW RESPONSE FROM DANISH FIRMS
While some considerable effort has been put in promoting a wide range of sectors (with the exception of those
involving alcohol, cigarettes or employing child labour), the following sectors have been found to be difficult to
market to Danish firms:


                                                                                 Possible reasons for low
Local firms seeking Danish partners                                              response from Danish firms

Textiles and garments: Uganda produces quality long staple cotton that is o Danish      interest   is    in
largely exported unprocessed, but opportunities exist for local processing    outsourcing of production.
units, to add value. The country has a number of small and medium sized o Competition from Asia.
firms that currently use imported fabrics to make all kinds of textiles and o Lower labour productivity in
garments mainly for the local market.                                         Uganda.

Pharmaceuticals: There are a few firms that manufacture basic drugs, o Danish firms mainly looking
sometimes under license from international firms or as copy products, for the   for markets.
local and regional markets.                                                   o Competition from cheap
                                                                                imports.

Cosmetics, soap and detergents: Several firms produce lotions, beauty creams, o Limited market for high value
hair products, laundry and bath soaps, liquid and powdered detergents, etc      products, competition from
and require international partners who can introduce higher value brands and    cheap        and    imported
improved production and packaging techniques.                                   substitutes.

Construction: Northern Uganda, Southern Sudan, DR Congo and Rwanda all o Many Danish / Scandinavian
have big rehabilitation and reconstruction projects for government, private    companies in the sector have
and civil society players. Local firms are seeking international partners to   shifted their strategic focus to
improve costing, staff productivity, and innovative building materials to      other regions.
enable them exploit these opportunities.                                     o Bureaucracy and lack of
                                                                               transparency in the tendering
                                                                               process.

Cut flowers: A number of large cut flower growers exist, targeting export to o There are None or few
Holland and the rest of Europe. An international partner can help to improve   Danish players, as Dutch
productivity, quality control across the supply chain, as well as access to    firms dominate this sector.
international markets.


In spite of the challenges in the above sectors, there are Ugandan firms of varying size and sophistication, which
are keen to get partners. The Embassy has kept a number of profiles in the above sectors. We encourage
interested Danish firms to approach the B2B Programme for more information.




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ANNEX 1: KEY FIGURES ON UGANDA’S POPULATION AND ECONOMY

A. Natural resource base
     o People. 28 million people, growing by 1 million per annum. Less than 15% live in urban areas.
       Trainable English speaking labour force.
     o Climate. The country enjoys tropical climate and experiences rain much of the year, particularly
       during the period March-May and September-November. Temperatures are in the region of 22-26c for
       most of the year.
     o Land. Total: 236,040 sq km, of which land: 199,710 sq km water: 36,330 sq km. The bulk of the arable
       land is unutilized while smallholder farmers dominate land use.
     o Forests. Uganda is home to some of the world’s finest hard woods, such as Mahogany, Musizi
       (Maesopsis eminii) and Mvule (Chrolaphora excelsa). Forests occupy 5 million ha, or close to 20% of
       the land surface. Natural tropical forests are being supplemented by a countrywide soft wood tree
       planting exercise to ensure sustainability.
     o Water resources. Lakes Victoria, Albert and George and River Nile are the main sources of water
       resources in the country, and the basis for the country’s fisheries, tourism and energy resources.

B. Key sectors and performance
     o Agriculture accounts for 34% of the GDP and employs over 80% of workforce involved mainly in
       smallholder agriculture, primarily for home consumption. Coffee, tea, cotton, tobacco, maize, fruits
       and vegetables are grown and are a major raw material for the agro processing sector. Livestock,
       including cattle, poultry, goats, sheep and pigs are also reared and service mainly the local market.
     o Services are emerging as the biggest contributor to GDP, rising from 41.5% in 2001/2 to 45.5% in
       2005/6. The main services include banking, insurance, telecommunications, hotel and catering as well
       as transport. Although dominated by local enterprises, the market leaders in each of the main service
       sectors are mainly foreign, with linkages to the global economy.
     o Industry has contributed an average of 20% per annum over the last 4 years. The sector includes
       companies in beverages (beer and soft drinks), pharmaceuticals, cement, plastics, textiles, animal feeds,
       coffee, and tea processing as well as health and beauty products.

C. Performance indicators
     o Per Capita Income US $ 280 in 2005
     o GDP Growth, 5.3% in 2005/6
     o Inflation Average of 7% per annum over last 10 years
     o Exports statistics and destinations US $ 1 billion - coffee, fish, cotton, tea, hides and skins, maize,
       flowers, cobalt and gold. Key destinations are the UK, Kenya, Belgium, Holland and USA
     o Imports Statistics and origin US $ 1.8 billion – oil, machinery, pharmaceutical drugs, motor vehicles,
       textiles and industrial raw materials. Main origin is Kenya, UAE, UK, South Africa, USA, Japan
     o Trade with Denmark In 2004 Uganda exported goods to Denmark worth DKK 25,6 Million.
       Uganda imported products from Denmark worth DKK 43,7 million.




                                                                                                             17
ANNEX 2: EXAMPLES OF UGANDAN - DANISH PARTNERSHIPS


AGRO:
        o Pig farms in Central Uganda
        o Dairy farms in Central and South West Uganda
        o Commercial beef ranches in the mid-North and West Uganda
        o Mechanized agricultural project for upland rice and machine service in the North
        o Production and processing of organic fresh and dried fruits in Central Uganda
        o Bio control in Central Uganda
        o Poultry farming and slaughter house in Central Uganda
        o Dairy plants and farm dairies in Central and Mid-West Uganda

INDUSTRY:
        o Production of quality paints and improvement in working environment
        o Sign printing and manufacturing
        o Printing and publishing
        o Building material: Pavers, building blocks and roof tiles
        o Cutting gear wheels and manufacturing spare parts plant
        o Aluminum manufacturing*
        o Manufacturing of electrical appliances
        o Stainless steel work and training
        o Steel works*
        o Battery manufacturing*
        o Wood processing
        o Galvanizing plant


SERVICES:
        o Waste management
        o ICT system and training centre
        o Car workshop; internal and external environment improvement*
        o Project management system & training
        o Procurement system
        o Energy saving system


All partnerships within the industry and services sectors are located in Central Uganda

For all partnerships, internal and external environment is an important issue and component. The partnerships marked with * have
environmental issues as main project objectives




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CONTACT:

Danida B2B Programme
Royal Danish Embassy
Plot 3 Lumumba Avenue
P.O. Box 11243, Kampala
Tel: +256 (0) 31 2263211
Fax: +256 (0) 31 2264624
E-mail: kmtamb@um.dk




Websites:
   o   www.b2bprogramme.com - B2B homepage
   o   www.ambkampala.um.dk/en - Danish Embassy in Kampala
   o   www.um.dk/da/menu/Udenrigspolitik/Landefakta/LandefaktaAfrika/Uganda.htm - Facts
   o   www.ugandainvest.com - Uganda Investment Authority
   o   www.ugrevenue.com - Uganda Revenue Authority
   o   www.bou.or.ug - Bank of Uganda
   o   www.ubos.org - Uganda Bureau of Statistics
   o   www.newvision.co.ug - The New Vision News paper
   o   www.ambkampala.um.dk/en/menu/DevelopmentPolicy/Business-to-
       Business%28B2B%29Programme/ - Danida’s Investors’ Guide to Uganda




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