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Section 1: Industrial Manufacturing Focus in Uganda

Manufacturing in Uganda consists predominantly of last-stage (end-product) assembly and raw materials processing, a high share of which is food processing. Both of these are low value-added activities. Agri-processing firms account for about 39% of manufacturing establishments in Uganda.

In addition, Ugandan manufacturing firms are high-cost producers that are characterised by high excess capacity, with utilisation of the installed capacity averaging 50%. This is a reason for the absence of manufactured products in the export basket. Food processing makes up 40% of all manufacturing value, drinks and tobacco make up 20%, and chemicals, paint, soap and foam products make up 10%.

Industrial Clusters: Parks and Zones

Large industrial corporations that are present in Uganda include Madhvani and Mehta sugar factories, Uganda Breweries, Nile Breweries and Hima Cement. Families or individuals own the majority of these companies. Multinational companies in Uganda's manufacturing sector include British American Tobacco (tobacco), SAB Miller and Diageo (drinks) and Lafarge (cement and aggregates).

The government has established over 20 industrial parks in the country, which enjoy various investment incentives. The majority of these zones focus on agri-processing rather than manufacturing.

Table: Industrial Districts or Parks in Uganda
Table: Industrial Districts or Parks in Uganda

Manufacturing Prospects

Uganda has a small but diverse manufacturing landscape. Electronics, autos and machinery were traditionally some of the largest manufacturing export categories. However, these sectors have all since seen exports fall significantly. Electronics, autos and machinery exports were only 13%, 60% and 45% of their 2011 levels in 2018 respectively. In contrast, small but fast-growing manufacturing export sectors include pharmaceuticals, plastics, paper and iron and steel.

Suitable Industries

Autos: Although autos exports have fared poorly in recent years, the government is supporting investment in domestic production. As part of the Ugandan government's 2018-19 budget, it committed to invest UGX24 billion (US$6.5 million) in the initial construction works of KMC's vehicle assembly plant in Jinja. This forms part of a UGX140 billion (US$37.7 million) financing plan by the government geared towards KMC's vehicle manufacturing project over the next four years. Construction of the assembly plant, which will have an annual production capacity of 5,000 vehicles, is expected to be concluded by the end of 2019. KMC expects to assemble sedans, pickups, compact SUVs, light and medium duty trucks and buses in partnership with international original equipment manufacturers at this new facility.

Pharmaceuticals: Pharmaceutical exports grew at an annual average of 27% over 2014-2018. Generic drug manufacturers operate in Uganda, including Cipla Quality Chemical Industries, which operates a WHO-approved facility that is the largest in East Africa. The company supplies the Ugandan market and exports to East Africa, Cameroon and various markets in Southern Africa. Meanwhile, Uganda is set to become a medical cannabis exporter to global markets over the next few years. While at least 13 companies are waiting for approval of their medical cannabis operations in Uganda, Industrial Hemp Uganda is in the process of exporting medical cannabis to Canada and Germany valued at UGX600 billion (US$158.7 million).

Iron and Steel: Iron and steel is the largest non-food manufacturing export sector in Uganda, accounting for 2.8% of total goods exports. Almost all of these exports are regional, with Tanzania receiving almost one-third of exports in 2018. Flat-rolled products, bars, rods and semi-finished products of iron or non-alloy steel account for the vast majority of these shipments.

 

Manufacturing in East Africa: Uganda

Section 1: Industrial Manufacturing Focus
Section 2: Labour & Land Resources
Section 3: Infrastructure
Section 4: Regulations & Tax Incentives
Appendix: Relevant Government Bodies

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Content provided by Picture: Fitch Solutions – BMI Research
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