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Doing business in Uganda

 

Doing business in Uganda

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Given the high number of attempted frauds against Italian companies registered in recent years, it is suggested to consult with the Embassy (commerciale.kampala@esteri.it) on any proposals received, especially if as a result of contacts on the Internet.

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TOOLS FOR ENTERPRISES

Amongst the tools for doing business in Uganda, the most important ones are those offered by:

Desk ICE / ITA (Italian Trade Agency):

Mr. Zephline Muhangi; Tel: +256 700174400; +256 772163938
Email: z.muhangi.contr@ice.it; deskuganda@ice.it; muhangizephile@gmail.com

 

SIMEST S.p.a.
    - subsidized loans for entering foreign markets, by subsidizing the cost of structure, for promotion of various interventions (opening offices, showrooms, etc.).  The company must implement the  initiative within two years following the sign of the loan, while repayment must occur within five years
    - subsidized loan up to €500.000 to strengthen the financial structure of the PMI established in the form of SpA that in the last three years have registered a foreign sales of at least 20% of the total; 
    - funding for feasibility studies up to 100% of the amount (and not exceeding € 100.000 for studies related to commercial investments, € 200.000 for productive investments, € 300.000 for technical assistance) at a rate equal to 15% rate reference (and not lower than 0,50%).For further information: www.simest.it

SACE S.p.a.
Owned by the Ministry of Economy, SACE offers a range of insurance services for medium and long/short term to invest abroad. The services also extend to foreign companies linked to Italian companies or products they import from Italy. For information, contact the SACE Office in Nairobi (Riccardo Vianello Simoli - Head of East Africa International Network; SACE SpA at Africa Trade Insurance, Kenya Re Towers, 5th Floor, Off Ragati Road, Upperhill, P.O. Box 10620, G.P.O. 00100, Nairobi, Kenya; DL: +254 719014257 M:+254 717737763 / +39 3311728810; email: R.VianelloSimoli@sace.it).  

ATI-African Trade Insurance
This is an insurance company which is present in many African countries. This company is jointly held by SACE Spa and it ensure the risk of default by the local importer (including governments) or the Italian importer from the risk of non-delivery of goods. It also ensures the political risk.For more information: www.ati-aca.org (Direttore in Uganda Sig. Allan Mafabi, allan.mafabi@ati-aca.org funzionario di collegamento SACE-ATI in Nairobi riccardo.fanelli@ati-aca.org).  

GENERAL FRAMEWORK
The image of Italy as a supplier of luxury goods and specialized manufacturing equipment is very high, although the average consumers and small businesses do not have the capacity income that allows them to be able to systematically address the market segments which provide “made in Italy” products. The market is strongly dominated by the Asian low-cost /low-quality products and the Asian population, after the forced exodus during the Amin’s government, handles the main channels of commercial distribution, and different units of manufacturing. From the point of view of exports, there are market opportunities for agri-food, building materials, equipment for telecommunication and electricity generation and distribution, farm machinery and earth moving equipment for hydro and hydro-dynamics, as well as for the mass consumer durable goods (household appliances, household items) and non-durable goods (clothing and footwear), for light engineering equipment, products and equipment for medical and chemical products pharmaceuticals, supplies to the mining industry and the fishing industry. Obviously, these opportunities are connected to a careful selection of local partners and business objectives, as well as to an accurate optimization of logistics and distribution processes and to the establishment of competitive prices. It should be emphasized that, in order to effectively penetrate the market, there should be peculiar organizational and operational conditions which allow to overcome the objective difficulties that a country like Uganda may present for potential Italian traders, in terms of development of markets, obstacles in the transport network, lack of development and modernization of infrastructures, heavy bureaucracy, corruption in public and customs administration, high incidence of counterfeit products and so on. These barriers may affect the competitiveness and the convenience of the market.

For the Italian companies, Uganda offers interesting opportunities especially for direct investment operations which can deliver significant returns in a medium/ long term. In particular, the Country is extremely attractive in the agro-food sector. Uganda offers opportunities in organic agriculture which is favored by optimal climate conditions and availability of water. For these reasons, Uganda also qualifies to be an important strategic partner in import transactions of agricultural products.

In addition to the agro-industrial sector, Uganda offers important opportunities in the tourism sector, given its endowment of unique nature and biodiversity. Uganda needs infrastructures and hosting services to support the development of the sector. It should be noted that a significant boost to the sector came from the organization of the Meeting of Heads of State of the Commonwealth, in 2007. In that occasion important investments for infrastructures, both private and public, were decided. The potential for development is still very high, and it is linked to a more effective information for the Italian public about the naturalistic beauties offered by the Country defined by Winston Churchill “the Pearl of Africa”.

Other opportunities for Italian investors can be found in the tanning and leather industries. Moreover, the process of growth of the Country requires investments in infrastructure, particularly in energy, transportation networks, telecommunications, while the necessary development of a local manufacturing sector opens up interesting opportunities for investment in the light engineering (textile, wood, machinery and packaging), in building materials and metallurgical industry. Finally, we quote the opportunity associated with the procurement competitions financed by international financial institutions and donors.

The Uganda Investment Act (Investment Code), which dates back to 1991, had the objective of creating a climate conducive to foreign investments in the Country. Foreign investors may form companies 100% owned and joint ventures with majority or minority local investors, with no restrictions. However, the law places foreign investors in a situation of relative disadvantage in respect of those premises. For example, in order to obtain an investment license, they are required a minimum capital of $ 100,000, while local investors are only required a minimum of $ 50,000. Local investors do not need a license for the investment, while foreign investors must obtain permission from the Uganda Investment Authority. The authorities of the Country, in addition, may impose performance requirements for the foreign investors. Foreign banks and insurance companies are subjected to upper limits of paid-up capital. Some foreign companies have difficulties in obtaining land because of poorly transparent laws.


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