Taking Uganda-South Africa trade and investment forward

COMMENT  | PAUL AMORU | Uganda and South African governments have enjoyed a momentous, warm and friendly relations since the signing of a formal diplomatic relation in 1994. This bilateral relation has deepened not only social and political ties but also helped promote trade and investment between the two countries.

Latest data from the Bank of Uganda shows that the East African nation and South Africa’s trade volumes increased from merely US $76million in 1999 to US $334million in 2019 before slowing down to US $148.8million in 2022 owing to the effects of coronavirus pandemic.

However, most of these trade volumes are in favour of South Africa because it exports mostly high-value products such as machinery, vehicles, plastics, chemicals, electronics, parts and accessories, petroleum, live animals, books and newsprint, textiles, footwear, aircraft, and household goods.

On the other hand, Uganda exports low-value products such as cotton, gold, fish fillets, tobacco, coffee, and fresh flowers.

It is on this basis that Uganda and South African governments have organized for a second leg of trade and investment summit to be held in Kampala next month to actualize deals and initiatives that started during the first summit held in Pretoria, South Africa, in February this year.

The first summit registered numerous successes for the two countries including signing three agreements in the areas of promotion and protection of investments, bilateral trade, and the establishment of a Joint Permanent Commission.

Some local entrepreneurs like Andrew Mukiibi, have since set up businesses in South Africa to import Ugandan products. Mukiibi has established Federal Foods Company in South Africa and awarded a permit to import 700,000 tonnes of pineapple and 1.5 million tonnes of avocado from Uganda following the inaugural summit. He has also been granted permission to export South African products including apples to Uganda.

We are looking forward to more Ugandan entrepreneurs such as Mukiibi producing and exporting products to the South African market, and thus help minimize trade imbalance, boost trade and investment and improve the livelihood of our people.

However, we shall be happier to see more South African businesses invest here in agri and agro-processing, ICT, energy, tourism, electronics, infrastructure, pharmaceutical and mineral value addition to boost production, backward and forward linkages and foreign exchange.

Now employing approximately 72% of the population and contributing about 32% to the Gross Domestic Product, Uganda’s agricultural productivity remains low due to reliance on natural weather conditions and the widespread of traditional methods and equipment. It is therefore a sector that is thirsty for commercial farming in both crops and animal industries as well as aquaculture, value addition (agro-industries, agro food industries), manufacturing of inputs such as improved seeds, fertilizers and pesticides, cold storage facilities and logistics as well as farm machinery manufacturing and assembly, irrigation and packaging.

Uganda’s ICT sector is also one of the most vibrant within the region and a fast-growing sector in the economy, offering many opportunities. Growth in this sector is supported by solid legal and regulatory frameworks. The country is connected to the three marine fibre optic cables off Africa’s east coast in the Indian Ocean and is currently positioning itself as a hub for business processing and management outsourcing in East Africa.

This implies huge opportunities for business process outsourcing and ICT services in numerous sectors such as agriculture, health, tourism, banks, insurance and public administration. Moreover, the East African nation has a large youthful population that is so much tech-savvy.

Looking at the mineral sub-sector, Uganda has large underexploited mineral deposits of gold, oil, high-grade tin, wolfram, salt, beryllium, cobalt, kaolin, iron ore, glass sand, vermiculite, phosphates (agricultural fertiliser), uranium, clay, gypsum and rare earth elements. There’s therefore a huge investment opportunity in mining and mineral processing with special incentives provided to the mining sector, including writing off capital expenditures in full.

Tourism is another sector that presents huge opportunities for South African companies, especially in the construction of high-quality accommodation facilities, operating tour and travel circuits (bicycle tours, air balloon travel, marine activities on Lake Victoria and river rafting on the Nile River) and development of specialised eco and community tourism facilities. The tourist arrivals in the country have been on the increase over the years signaling a huge growth potential.

Furthermore, Uganda has a conducive environment to enable businesses to thrive, and this explains the success of South African investments across the country in various sectors – telecommunication, banking, insurance, beverages, energy and among others.

Thus, the second leg of the Uganda-South Africa trade and investment provides an opportunity for trade and investment policy makers, key business communities, trade support institutions, regional and multilateral organizations from Uganda and South Africa to once again network, exchange experiences, eliminate all the non-tariff barriers, and explore win-win investment and trade opportunities for the development of the two countries.

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Amb. Paul Amoru is the High Commissioner of the Republic of Uganda to the Republic of South Africa.