UFZEPA was created to bring together Uganda’s export promotion and Free Zones functions under a single institution. What is your vision for the Authority, and how will this integrated approach strengthen Uganda’s position in regional and global trade?
Under the government policy on rationalization of government agencies and public expenditure, the Uganda Free Zones Authority and the Uganda Export Promotion Board were matched into one institution through the amendment of the Free Zones Act 2024.
What that merger meant was that the two functions are brought together into one institution called the Uganda Free Zones and Export Promotions Authority. The other effect of that amendment was the movement of the Free Zones function from Ministry of Finance, Planning and Economic Development to the Ministry of Trade, Industry and Cooperatives. UFZEPA is now an institution created by that amendment act under the supervision of the Ministry responsible for trade.
When you look at the benefits of this reform, Free Zones are one form of industrial policies that drives export-oriented manufacturing. In the global market, we look at quality, we look at the price of the product, we also look at the sustainability of supply. Therefore, by government incentivizing Free Zones, it intends to support the pricing policy of the enterprises in the Free Zones, the Special Economic Zones, so they can be more competitive on price.
The big agenda is to export. We contribute to that agenda because the Free Zones are gazetted geographical areas within a customer’s territory which operate with different laws, different regulations, different incentive frameworks and so on. That is one form of supporting the manufacturing, processing and creating of services that can be exported.
Of course, the export agenda of the country is much bigger and it covers the entire country. Whether in the Special Economic Zones, whether outside the Free Zones, what is important is to produce and export.
The Free Zones function in the last one or two years has been contributing on average about 11% to total exports. What that means is that the other 89% does not come from the Free Zones. It comes from the rest of the country, the customer’s territory. And it was only natural that an institution that was established to promote export-oriented investments merges with an institution that was formed to promote exports. They complement each other.
The Export Development and Promotion function covers quite a number of areas. Export development is about producing with a specific market in mind. We know that a certain market requires our vanilla, so we produce vanilla for that market. Post-harvest handling, packaging, branding, certification, sanitary and phytosanitary protocols, capacity building; all of that is export development.
Our job includes developing policies and informing government so they can adopt them. We contribute to the national export development strategy, to tax policies, to specific sector and industry incentive frameworks. We advise government on all export related matters.
When it comes to exports, you have the supply side, and you also have the demand side. The supply side generates the exports. The demand side sells and consumes the exports. So, it is on the demand side where we have export promotion. It is an effort to sell what we have generated.
Those are synergies that are being created, complementarities that are breaking down silos in government. That is how we concentrate efforts for greater impact, to achieve our single most important objective, which is to support industrialization for export.
We are guided by the overarching policies of the government and the region. Under the 2022-2032 East African Community Industrialization Strategy, we expect as a region to hit 25% manufacturing value added.
Under the Tenfold Growth Strategy, manufacturing value added is supposed to be 50% of total exports by 2040. And, of course, our work and our strategic plan is aligned to the National Development Plan.
For us as an institution under the trade sector, our entry point is on what we call the 50-50-50 triplet of export development and promotion. We aim to ensure that exports contribute 50% of GDP by the year 2040, that manufactured exports contribute 50% of total exports, and that medium to high technology exports contribute 50% of merchandise exports.
The entire spectrum of the work that we do as an institution is enumerated under about ten strands of work. We support the establishment, development, management, marketing, maintenance, supervision and control of free zones, as well as the development, promotion and coordination of all export-related activities in Uganda. This space is quite large.
Everybody who can contribute to this effort is welcome on board. And we have partners that we work with, some put in place by government, and others are private sector associations. For example, the Private Sector Foundation, the Uganda Manufacturers Association, the Uganda Small Scale Industries Association, the Uganda Fish Exporters Association, the Uganda Flower Exporters Association.
And other supporting groups, such as the Enterprise Uganda for Business Development Services, the Export-Led Growth Unit of State House, the Presidential Advisory Committee on Exports and Industrial Development, the Green Council, and the Uganda Chamber of Commerce and Industry.
How is UFZEPA supporting Uganda’s industrialization agenda, value addition and the development of competitive exports?
Our industrialization is still growing. We are an agro-economy, but we process about 20% of our exports. Since that’s one of the ATMS, the government is already working on strengthening the sector. And it is our role to ensure that we move in that direction.
Export development is about producing with a specific market in mind. We know that a certain market requires our vanilla, so we produce vanilla for that market. Post-harvest handling, packaging, branding, certification, sanitary and phytosanitary protocols, capacity building; all of that is export development.
When it comes to exports, you have the supply side, and you also have the demand side. The supply side generates the exports. The demand side sells and consumes the exports. So, it is on the demand side where we have export promotion. It is an effort to sell what we have generated.
We are also liaising with the Minister of Agriculture, Animal Industry and Fisheries to ensure that we anticipate situations before they arise in those markets, especially targeted markets after doing the product market linkage. We need to move very fast and ensure that these protocols are worked on, submissions are made and clearances are obtained, so that we don’t wait for the first container to reach the border post, only to be told that there is a market access challenge.
How is Uganda’s Free Zones function evolving, and how is UFZEPA using Free Zones and Special Economic Zones to support industrialization, investment and export-oriented growth?
We used to have only two types of free zones. That is the export processing zones and the free ports. Under Article 32 of the East African Community Customs Union Protocol, we have adopted the special economic zones policy in February of 2023, which means that another 13 schemes were added to the original two of free zones and free ports. So, now UFZEPA is the competent authority on special economic zones and also the industrial parks.
We support all efforts to industrialize and we support all efforts to export Ugandan products, whether they are from the free zones or from the industrial parks. The difference between these two is that one is regulated and the other is not. One has a greater set of incentives than the other.
Entrepreneurs can choose because there are rules where things are regulated, meaning that 80% of whatever you produce in the free zones must be exported. However, in the industrial parks you can export 20%, 30%, you can export 100%. It’s up to the entrepreneur to decide depending on their market segmentation and market analysis.
On the free zones side, we have a grand strategy of establishing seven regional and border export zones. We believe that we need to decentralize export manufacturing, which at the moment is largely concentrated in Kampala.
We need to decentralize opportunities, job creation, economic development. Major border points need to have border export processing zones, which will have very strong backward demand linkages, so that we link the household to the exports.
If you don’t do that, then you have a situation where you’re importing intermediate goods to add value and export. And that creates a dichotomized economic arrangement where the households are detached from the export success of the country, which is not necessarily a very good situation.
When the export numbers are growing, the bottom of the pyramid needs to fill it. It needs to see increased income. The health of an economy is determined by the level of consumer spending. Consumers cannot spend if they don’t have money.
The other reason why we are actually trying to establish these regional and broad export zones is because we are creating nodes of organized growth and urbanization based on productivity, which are master planned and developed for the future. We want to eliminate what I call jobless urbanization.
In every urban center, big or small, there must be a central economic activity taking place. And that’s the reason why the urbanization is growing, so that we can harness the demographic dividend of our country.
The population of our country is currently growing at 2.8 percent; therefore, we need to plan. A population is a two-edged sword. When it’s productive, it accelerates economic growth. When it’s not productive, it creates challenges and a lot of unnecessary expenses for the government.
So, our aim as a government is to make sure that the population continues to grow. We want a big population, but a population that is productive.
Efficient trade systems are essential for export competitiveness. How is UFZEPA improving market intelligence, digital systems, product traceability and market access to make it easier for Ugandan businesses to participate in international trade?
The Electronic Trade Facilitation System is a database along with an interactive platform that we are building. The aim is to digitalize trade information for easy reach by people all around the world.
We are also working alongside the Uganda Investment Authority, our investment promotion agency, which has a one-stop shop for all investors, from industry, manufacturing, processing, BPOs, IT and attainable services, education, health, any sector in the economy. We also work on investment promotion, ours largely focused on export-oriented investors.
Under the different functions, a lot of effort is going on in order to help contribute to the achievement and realization of the aspiration of the ten-fold growth strategy.
On the export side, we are looking at increasing our participation in international engagements. Especially trade and investment forums and targeted export markets. We intend to do the product market analysis and linkages.
We are enhancing our efforts in market intelligence, especially from price determining centers, to know exactly what is moving the prices and, therefore, where they are likely to go next. We need to know how to take advantage of those markets and prices, so we are working to develop a policy on exports. There is a strategy, but there is no policy.
We keep on making improvements because there are areas that are being left behind and yet the world is moving forward, especially in areas related to trade in services.
Trade in services is provided under various protocols, especially under the Africa Continental Free Trade Area. As a country, we are working on mechanisms of aligning our policies, our laws and regulations, especially the fiscal incentives, to support accelerated trade and export of services.
A lot of effort is going on in that area.
We are also working on the digital passport systems for products, the barcodes, to ensure that these products can be traced to where they come from and they can be trusted. That is on the export side.
How is UFZEPA strengthening trade relationships across regional and international markets, and what role do partnerships and international engagements play in expanding market access for Ugandan exporters?
We are members of the Global Alliance of Special Economic Zones. We are members of the World Free Zones Organization and the Africa Economic Zones Organization. We are members of the Bureau of International Expositions in France. We have collaborations with the Osaka Chamber of Commerce and Industry, with our sister company in Congo.
The export universe is quite big. And because it is so big, we are getting everybody on board. We are also working as the intelligence unit of Uganda’s export agenda, which means finding out and establishing why certain parts of the system are not moving as efficiently as they should.
We are also working to increase our participation in international engagements. Especially trade and investment forums and targeted export markets.
We are part of the regional economic community of East Africa. We are producing a lot of things. We are part of the common market for eastern and southern Africa. We are part of the Africa Continental Free Trade Area. The continent has a market of about 3.4 trillion dollars and growing.
How is UFZEPA helping Ugandan businesses strengthen their capabilities, meet international requirements and ensure that production is ready for export?
We are liaising with the Minister of Agriculture, Animal Industry and Fisheries to ensure that we anticipate situations before they arise in those markets, especially targeted markets after doing the product market linkage.
We need to move very fast and ensure that these protocols are worked on, submissions are made and clearances are obtained, so that we don’t wait for the first container to reach the border post, only to be told that there is a market access challenge. A lot of effort is going on in that area.
We are working with districts through the Minister of Local Economic Development to ensure that the Chairpersons, the Chief Administrative Officers, the District Agricultural Officers, the District Production Officers, and the District Commercial Officers are aware of the information and requirements that will enable the producers, the farmers, the processors in their locations to structure their production systems, to augment their efforts on quality and quantity, as well as supply, irrigation and extension services.
Basically, to be ready to be exported. And to get the OK by the Bureau of Standards.
The government is doing a great job in ensuring that social services are provided. Maternal health has improved. Life expectancies have improved because of government programs of immunization. Education literacy has improved. Internet penetration has grown.
We have all the stars aligned for us to move forward. But that is still now potential which we need to turn into real results, and we can only do that if the workforce is engaged in productive activities that lead to creation of goods and services that can be consumed at home and exported abroad.
Driving export-led growth requires close collaboration between government, investors and the private sector. How is UFZEPA building the partnerships and institutional coordination needed to support Uganda’s long-term economic transformation?
Everybody who can contribute to this effort is welcome on board. And we have partners that we work with, some put in place by government, and others are private sector associations.
For example, the Private Sector Foundation, the Uganda Manufacturers Association, the Uganda Small Scale Industries Association, the Uganda Fish Exporters Association, the Uganda Flower Exporters Association.
And other supporting groups, such as the Enterprise Uganda for Business Development Services, the Export-Led Growth Unit of State House, the Presidential Advisory Committee on Exports and Industrial Development, the Green Council, and the Uganda Chamber of Commerce and Industry.
We support all efforts to industrialize and we support all efforts to export Ugandan products, whether they are from the free zones or from the industrial parks.
The whole government is functioning as a unit to advance the agenda of the tenfold.
As Uganda seeks to establish itself as a competitive manufacturing and export hub, what is your outlook for the country’s export sector, and what message would you share with Fortune readers about the opportunities Uganda offers to international investors and exporters?
Uganda is the best place in the world to live. Our weather is very good. Our people are hospitable.
Uganda is advantaged by its location. We are on the African plateau between the Indian Ocean and the Atlantic Ocean. Our soils are rich. Very rich volcanic soils, very rich dark loam soils, red fertile soils.
We’ve done research and we’ve established that our Arabica coffee is the best coffee you will ever find of Arabica type in the world. Our vanilla is the best vanilla in the world.
We also have peace in this country. The country is well connected in terms of the road network from the border in the east to the border in the west, the border in the southwest to the border in the north. We have good roads. We have excess electricity. We have manpower, educated human beings ready and willing to work. And our labor is not very expensive. That gives an investor some competitive advantage.
We have made laws in this country that protect private sector investments. Our legal systems are working. We have got institutions that support and hand-hold entrepreneurs, like the Uganda Free Zones and Export Promotions Authority, like the Uganda Investment Authority, and other institutions of government.
The whole government is functioning as a unit to advance the agenda of the tenfold.
We invite all those entrepreneurs out there who want to make money, because this is the only place where you are guaranteed a return of at least 14 percent on investment.
We are part of the regional economic community of East Africa. We are producing a lot of things. We are part of the common market for eastern and southern Africa. We are part of the Africa Continental Free Trade Area.
The continent has a market of about 3.4 trillion dollars and growing. The market is also growing, as the population of Africa, which has the highest rate of population growth in the world. That means a market.
Africa is also the most resourced country in terms of natural resources. Whoever is not coming to Africa, whoever is not coming to Uganda, is missing the bus. They lose the first mover advantage.
I understand there is the second mover advantage, but in most cases, it is less than the first mover advantage. So, there is everything in Uganda to make money.
