Entebbe, Uganda | THE INDEPENDENT | The contribution of Uganda’s free zones to total exports increased sevenfold to $ 1.247 billion in 2020/2021 compared to the previous year’s exports.
This represents about a quarter of the country’s total exports for the year.
The Uganda Free Zones Authority (UFZA) was created to stimulate production for export, first by creating or supporting free zones across the country.
The mandate of UFZA is to oversee the establishment, development, management, marketing, maintenance, supervision and control of free zones in Uganda and to provide for all other related matters.
Currently, there are 23 export processing zones at different growth levels, including Entebbe, which is currently under construction as the country’s first public free zone.
An investor can set up in a free zone when at least 80 percent of the expected production will be exported.
They then receive incentives such as easy access to land and electricity as well as tax clearances, in order to reduce their production costs, make their products more competitive in the export market and encourage also more investors to join.
During the year, the Authority managed a budget of 8.965 billion shillings. It is implementing its second Strategic Plan 2020 / 21-22024 / 25 which is part of the third National Development Plan.
According to the performance report, export earnings from free zones reached $ 1.247 billion, compared to just $ 154 million recorded in 2019/20.
These were topped by semi-processed gold followed by cocoa beans, flowers and horticultural products, sandalwood essential oils, tobacco, natural calcium phosphates and wheat flour, among others. .
The United Arab Emirates (UAE) also leads the export market for free zone products, with $ 1.16 billion compared to $ 106.4 million, recorded in 2019/20.
The Middle Eastern country is the market for almost all of Uganda’s semi-refined gold. It was followed by the Netherlands which contributed $ 39.5 million.
The other main markets were Belgium, Turkey, Germany, Italy, United States of America, Russia and South Sudan, among others.
“The development of free zones offers the Ugandan government an opportunity to target resources to meet the challenges of low value-added agricultural production and manufacturing activities, in order to create new employment and market opportunities,” Hez said. Kimoomi Alinda, Managing Director. .
Unfortunately, most investments in the industry are made by foreigners or companies with foreign capital.
Alinda said the promotion of domestic industry, although domestic resources are more important today than before, as foreign direct investment is declining in most parts of the world.
Alinda says that over the next year they will speed up the issuance of sanitary and phytosanitary certificates to exporters of fresh produce for export to ensure faster standardization of exports.
In accordance with this, the Authority is also to develop and install a Gama radiation facility at Entebbe International Airport, which will also improve the ability to test the products before they leave the country.
The challenge faced by the authority is mainly the lack of knowledge of Ugandans about free zones, the lack of large spaces for the establishment of the zones, as well as the interpretation of the laws.
He says the terrain and infrastructure development for investors in the free zones is made worse by the fact that the factories are scattered.
In some cases, investors in these areas have clashed with other agencies over taxes, but Alinda says discussions are underway with the relevant authorities to resolve this issue.
Once completed, the Entebbe Free Zone will house seven production units and a trading house that will house the offices of UFZA, URA and other government offices to facilitate the flow of business in the area.
The facility will include companies engaged in high-value mineral processing, light manufacturing and agribusiness activities for export through the airport.
It is expected to generate an additional $ 13.4 million in capital investment, create more than 200 direct jobs and achieve export earnings of more than $ 4.02 million per year.
One sector expected to benefit from UFZA’s plans for next year is the textile industry, which will be the flagship production line in the Jinja free zone, according to Alinda.