Doing business in uganda guide


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Doing business in uganda guide

  1. 1. Doing business in Uganda UK Trade & Investment Doing business in Uganda
  2. 2. Are you a member of a UK company wishing to export overseas? Interested in entering or expanding your activity in the Ugandan market? Then this guide is for you! The main objective of this Doing Business Guide is to provide you with basic knowledge about Uganda; an overview of its economy, business culture, potential opportunities and an introduction to other relevant issues. Novice exporters, in particular will find it a useful starting point. Further assistance is available from the UKTI team in Uganda. Full contact details are available at the end of this guide. Important Information - Sanctions and Embargoes Some countries maybe subject to export restrictions due to sanctions and embargoes placed on them by the UN or EU. Exporting companies are responsible for checking that their goods can be exported and that they are using the correct licences. Further information is available on the Department for Business, Innovation & Skills (BIS) The purpose of the Doing Business guides, prepared by UK Trade & Investment (UKTI) is to provide information to help recipients form their own judgments about making business decisions as to whether to invest or operate in a particular country. The Report’s contents were believed (at the time that the Report was prepared) to be reliable, but no representations or warranties, express or implied, are made or given by UKTI or its parent Departments (the Foreign and Commonwealth Office (FCO) and the Department for Business, Innovation and Skills (BIS)) as to the accuracy of the Report, its completeness or its suitability for any purpose. In particular, none of the Report’s contents should be construed as advice or solicitation to purchase or sell securities, commodities or any other form of financial instrument. No liability is accepted by UKTI, the FCO or BIS for any loss or damage (whether consequential or otherwise) which may arise out of or in connection with the Report. UK Trade & Investment Doing business in Uganda
  3. 3. Content Introduction 4 Preparing to Export to Uganda 9 How to do business in Uganda 10 Business Etiquette, Language and Culture 14 What are the challenges? 15 How to Invest in Uganda 16 Contacts 17 Resources/Useful Links 18 UK Trade & Investment Doing business in Uganda
  4. 4. Introduction Uganda is a landlocked independent republic with a democratic government. It lies between the Democratic Republic of Congo (formerly Zaire), Sudan and Kenya and forms part of the East African Region. It also shares a border with Rwanda. The capital city is Kampala and other major towns are Jinja, Mbale, and Masaka. Uganda has a year-round agricultural season and a location in the centre of a regional trading network. The official language is English but Swahili is widely spoken. The local currency is the Ugandan shilling. In 2009 Uganda’s GDP was $14.5bn. The UK is Uganda’s largest Foreign Direct Investor with investments worth $1.1bn. Uganda’s GDP has grown by more than 6% on average for the last decade, and by 7.4% in the 2008/9 financial year. Major investments were made in mobile communications, petroleum exploration, banking, construction, agro-processing and manufacturing. Strengths of the market 1. 2. 3. 4. 5. 6. Stable, liberalised economy Strong Natural Resource Base Government commitment to private sector Low-cost and trainable workforce Investment Incentives and security with total repatriation of profits Re-export Support Schemes Opportunities in Uganda With new stability in Southern Sudan and demand increasing in the DRC and Rwanda, Uganda has seen its regional trade grow strongly. Uganda’s traditional agricultural exports continue to present opportunities. Coffee, tea and cotton, Uganda’s largest exports have increased both by quantity and value over the past several years. Non traditional goods such as fish, flowers and vanilla now account for significant shares of Uganda’s Exports. Uganda’s agricultural potential and untapped mineral resources have also attracted foreign investment. The banking industry has also seen strong growth recently. Financial services are becoming more efficient with the presence of major banks and an increasing number of new commercial banks. Opportunities by Sector: Oil & Gas: New but fast growing - commercial viability of reserves is confirmed and reserves are estimated at 2bn barrels. Production will begin in late 2010 or early 2011 with an early production scheme of 3000 – 5000 bpd, building up to 150,000 bpd in 5 – 10 years. The government is in talks to build a refinery and pipeline to the Indian Ocean coast. Important opportunities lie in both upstream and downstream activities including exploration, refinery, engineering consultancy and services, construction and civil works and training Non Oil & Gas Energy: Comprising of hydro-electric power, new and renewable energy sources. Important areas are the design and construction of hydro electric power stations, consultancy and engineering, and generators Education: The education sector has undergone rapid transformation from government funding to private investment. With this development Uganda is becoming a regional hub for education UK Trade & Investment Doing business in Uganda
  5. 5. and knowledge ranks as the best in the region (UNDP Education Index). Important opportunities lie in setting up institutions, construction, educational materials, security printing of certificates and ICT. Health: The government spends 7.4% of GDP on health and works closely with international organisations and donor agencies to ensure the development of the health sector. A Ugandan company as now been certified by the WHO to produce HIV and malaria drugs. Important opportunities lie in supply of medical equipment and consumables, production of drugs, consultancy services, building of private hospitals, provision of e-health services and other related opportunities. Foods – processed and foods processing/packing: Agricultural processing is growing and there are investment opportunities in processing and packaging coffee, edible oils, tropical fruits, fruit juices and non traditional crops. Sales opportunities exist for food processing equipment, storage facilities, chemicals and additives, preservatives, canning, bottling and other packaging equipment and related materials. Infrastructure: There is a pressing need for road and power improvements and international financial institutions are interested in these projects. Also with an estimated 300,000 housing units needed per year, commercial construction and residential construction are growing. Products to consider include; infrastructure design, construction and operation – particularly energy related, environmental consultancy and analysis, architecture, construction equipment, generators and transformers. Telecommunications: The telecommunications sector boasts five internationally owned operators. Important products to consider include; cellular telephone systems, data transmission equipment, fibre optic equipment, truncated mobile phone systems and paging systems, switchers and routers, wireless access equipment, voice over internet telephony, VSAT; computers and peripherals. Travel/ tourism services: The tourism sector is growing at 20%. Uganda boasts several national parks, for game and gorilla watching. There are opportunities for tourism management, travel agencies, hotel design, construction and management. Light Manufacturing: Manufacturing has increased significantly in Uganda over the past 5 years with a focus on exports to regional markets of products such as plastic goods and consumer products. Important opportunities exist in cosmetics, used clothing, footwear and beverages. Mining: Uganda is endowed with a diversity of geological formations and structures. Mining activities may offer good investment opportunities for experienced firms. Important products to consider are mining equipment, power generation equipment, civil engineering services, pumps, valves and related materials. Fisheries: Uganda has stocks of Nile perch and tilapia which is locally processed and exported. However, the industry has been hit by diminishing sources of fish in Lake Victoria. Important products to consider are fishing equipment, processing equipment, materials related to construction and operation of fish processing facilities and chemicals used for value added fish products. Agriculture: Uganda’s land is considered among the best in Africa, with low temperatures and two seasons of good rainfall for the Southern half of the country. Important products to consider are processing equipment, bio fuels, fruit and vegetable processing, edible oil production, staple food crops processing, flowers, livestock and food products. UK Trade & Investment Doing business in Uganda
  6. 6. Trade between the UK and Uganda Bilateral trade between the UK and Uganda in 2009 was: UK exports to Uganda £50m (goods) and £59m (services) while imports were at £12m (goods) and £42m (services). Bilateral trade in goods: (£ million) 2005 2006 2007 2008 2009 UK Exports 37 39 47 50 50 UK Imports Balance 12 25 13 26 16 31 19 31 12 38 Bilateral trade in services: (£ million) 2005 2006 2007 2008 2009 Source: HMRC UK Exports 41 33 36 52 59 UK Imports Balance 33 8 39 -6 31 5 25 27 42 17 Source: ONS UK Balance of Payments Top exports of goods from the UK to Uganda in 2009 are: Specialized machinery Road Vehicles General Industrial Machinery Power generating Machinery Miscellaneous manufactured articles £6m £6m £5m £4m £4m Top imports of goods to UK from Uganda in 2009 are: Vegetables and fruit Electrical Machinery Coffee, tea & Spices £4m £3m £1m Politics and the Economy Economic: Uganda is one of the fastest growing economies in Africa, with GDP growth averaging 6% per annum over the past decade. The World Economic Forum ranked Uganda 4.5 (on a 7-point scale) in macroeconomic performance, well above the average of Sub-Saharan Africa (average rank 3.7). In recent years agriculture hás played a decreasing role in the economy with industry increasing, to the current 22% and 29% respectively. Services accounts for 49% of GDP. Agriculture employs 80% of the population. Government policy promotes and supports private sector-led development. The main industry sectors in the country are agro-processing oriented, made up mostly of fish processing, sugar, tea, cooking oil, dairy processing, breweries and soft drinks. The manufacturing of textiles, paper products and tobacco also takes place. UK Trade & Investment Doing business in Uganda
  7. 7. With the discovery of commercially viable quantities of oil and their subsequent development, the oil and gas sector is expected to become a leading driving force for economic development both through direct revenue and spill-over effects. Oil production in Uganda is expected in late 2010/ early 2011. Growing impact of East African regional integration: The East African Community comprises a market of over 130m consumers and total GDP of $40bn. Intra community tariffs are gradually being reduced: 1. Common external Tariff on all goods imported into the region. 2. Zero duty on most goods originating and traded within East Africa. 3. Zero duty on most capital goods, agricultural inputs, medicines and medical equipment, raw materials and chemicals. 4. Tax incentives for producers of goods for exports through various export schemes covering export processing zones, manufacturing under bond, duty drawback for manufacturers of goods for export, inward processing. Uganda’s socioeconomic profile: Population: Population growth rate: GDP per capita: 31m (2009) 3.3% $453 Political: Uganda is a democratic presidential republic. It is a multi-party parliamentary system with universal suffrage of all citizens over the age of 18 years. The ruling party, the National Resistance Movement (NRM) has been in power since 1986. The President, HE Mr Y K Museveni has been in office throughout this time. The next presidential and parliamentary elections are due in March 2011. The government with a relatively stable polity and a pro-business oriented president continues to attract foreign investment and promote both regional and international trade. Getting here and advice about your stay FCO Travel Advice The FCO website has travel advice to help you prepare for your visits overseas and to stay safe and secure while you are there. For advice please visit the FCO Travel section Getting here By air There are direct flights between London and Entebbe by British Airways and international flights to and from Entebbe leave daily. SN Brussels and KLM offer non-stop flights to other destinations in Europe 3 or 4 times weekly. UK Trade & Investment Doing business in Uganda
  8. 8. At the airport Taxis from Entebbe Airport to Kampala cost about £25. The journey may take up between 45 and 90 minutes depending on traffic. By Road Nearly all major towns are connected by tarmac roads. Driving is on the left-hand side of the road, as in the UK. Buses connect the entire country. Visas British Nationals require a visa to enter Uganda. Passports should be valid for at least three months beyond the date of the end of your visit. Visas may be obtained on arrival by air with a cash payment of US$50 but it is recommended that visas are obtained in advance through a travel agent or from a Uganda High Commission or Embassy. Your visa allows re-entry to Uganda after visits to Kenya or Tanzania. Your stay The Uganda Tourist Board ( is a good source of information and can help you plan your trip. UKTI Uganda can help you plan your business visit to Uganda. UK Trade & Investment Doing business in Uganda
  9. 9. Preparing to Export to Uganda In the first instance, most companies do business in Uganda through an agent or distributor, as an initial step to establishment. Regular visits to the market are important, especially during the early phases to establish links and networks. British companies wanting to enter the Ugandan market are advised to research the market prior to engaging in business so as to understand the opportunities and competitiveness of the market for their products and services. The UKTI team in Uganda provides a range of services to British-based companies wishing to grow their business in the Ugandan and larger East African market. Our services include the provision of market information, validated and/or warmed up lists of agents, distributors or potential partners, key market players or potential customers. We also establish the interest of such contacts in working with the UK Company and arrange appointments where necessary. In addition, UKTI can also organize and host events for UK companies so as to network and/or promote products/services. You can commission our Overseas Market Introduction Services to assist your company to enter or expand your business in Uganda. Under this service, the Embassy’s Trade & Investment Advisers, who have wide local experience and knowledge, can identify business partners and provide the support and advice most relevant to your company's specific needs in the market. To find out more about commissioning work, please contact your local UKTI office. See also: Companies wishing to set up a local base may also benefit from support and advice by the UKTI Section of the British High Commission in Kampala. The Uganda Investment Authority ( can also help. UK Trade & Investment Doing business in Uganda
  10. 10. How to do business in Uganda Market Entry Strategy Uganda has signed a Common Market Protocol with other members of East African Community which are Kenya, Tanzania, Rwanda and Burundi and will see the free movement of goods and services within this region and further expanding trade activities. British companies can approach the Ugandan market in several ways: (a) Direct Export A number of international firms export directly to customers. With regard to the UK, this system is mainly for machinery and highly technical equipment. For consumer goods other methods are used. (b) Using an agent or distributor This involves entering contractual agreements with local agents and distributors. A good local agent may play an important role in bids on tenders, which often require detailed knowledge of the local conditions and bureaucracy. (c) Establishing an office The Uganda Investment Authority facilitates the registration and licensing of foreign firms and advises on registry, licensing, immigration, tax, customs matters, sub-licences and permits. With a large number of new office buildings in Kampala, quality office space is available. (d) Franchising A number of UK companies have established franchises, ranging from electrical equipment, machinery, cosmetics and food. A recent expansion in the establishments of large supermarkets and convenience stores has increased the use of this for consumer goods. (e) Direct Marketing In spite of the rapid expansion in use of cellular telephones and computers, Uganda currently does not present strong opportunities for telephone or internet marketing. However, this is increasingly becoming important. Most foreign products are marketed through an experienced local company. (f) Joint Ventures / Licensing There are no restrictions on joint ventures with local investors. (g) Selling to Government The government conducts most of its purchases through public tendering, controlled by the Central Tender Board (CTB). The CTB advertises tenders in local newspapers. The Public Procurement and Disposal of Assets authority (PPDA) audits government tenders. Other Start up Considerations (a) Distribution and Sales Channels UK Trade & Investment Doing business in Uganda
  11. 11. Consumer products in Uganda are generally distributed through regional wholesalers, who in turn supply small and rural shops. With entry of large retailers, suppliers can now deal directly with major purchasers. (b) Selling Factors / Techniques Companies commonly market through billboards, road signage, newspapers, radio and television advertising. Companies have also promoted themselves through music concerts and by supporting sports and other community events. (c) Electronic Commerce E-commerce is still undeveloped in Uganda. Few Ugandan companies sell their products through the internet, although many do have websites. Mobile phone banking and trade is increasing both in-country and within the East African region. (d) Pricing Price competition from Asian producers means UK products are generally considered expensive, albeit of high quality. It is common for experienced buyers to favour products from the UK and other European producers based on quality. (e) Sales Service / Customer Support Customer support can be a major boost for UK companies. It is therefore important that they should carefully select, train and monitor service providers for their products. (f) Protecting Intellectual Property Uganda has started to improve the protection of intellectual property rights, although police and courts are slow in prosecution. The Uganda Revenue Authority and the Uganda National Bureau of Standards regularly seize counterfeit goods, although many are readily available. (g) Due Diligence Credit reporting is in its infancy in Uganda and due diligence is difficult to perform. Sellers are advised to deal in cash transactions or use a letter of credit from a reputable bank, especially when dealing with new clients. Companies should check document accuracy with financial institutions or through a commercial law firm. Support on most of the above issues can be attained from the UKTI team at the British High Commission Kampala. Gateways/Locations – Key Areas of Business Kampala is the financial, political and business capital for Uganda. Other large towns of significant importance include Jinja, Masaka, Mbarara and Mbale. Uganda’s location in the heart of East Africa makes it an important linkage to the East African Community region, Sudan and the DRC. Imports into Uganda are mainly from the port of Mombasa in Kenya and then by road to Malaba or Busia and finally to Kampala or onward transit to Sudan, DRC, Rwanda and Burundi. UK Trade & Investment Doing business in Uganda
  12. 12. Trade Regulations and Standards Import Tariffs: Uganda, Kenya and Tanzania have adopted a three-band duty structure for imports from outside the customs union under the East African Customs Union (EACU) agreement. Finished products are subject to a 25% duty, intermediate products 10% and raw materials may still enter duty free. The bloc aims to have a common market by 2011. Donor funded projects in agriculture, education and health sectors, housing sales are exempted from Value Added Tax (VAT), which is currently at 18%. Trade Barriers: Uganda has few formal trade barriers; however, bureaucratic inefficiencies, high transport costs and an influx of counterfeit consumer products are the primary reasons for increased costs for foreign businesses. Import requirements and documentation: Import certificates, issued by the Ministry of Tourism, Trade and Industry are required for goods on a ‘negative list’, including used tires and certain types of batteries. These certificates have a six-month validity. Temporary Entry: Many products are shipped through Uganda on their way to the DRC, Southern Sudan and Rwanda. Transit time is 7 days and goods require a transit permit from the Uganda Revenue Authority. Labelling and Marking Requirements: Importer/Exporter name, consignee, flight/vehicles details, place of discharge, number of packages, container identity, description of goods, airway bill number/bill of lading and county of origin/destination are required markings. Additional labelling requirements have been adopted for used clothing. Responding to Tenders All major tenders are mainly published in the major daily newspapers, or on the website of the organisation issuing the tender. Government tenders may be issued through an open tender or through pre-qualified tendering. Prequalification is usually done and reviewed once a year by various government bodies. Projects which are considered an opportunity for UK companies will be published on the UKTI website under the ‘Business Opportunities’ section. You may contact UKTI Uganda for guidance in applying for a publicised tender. Documentation Companies need a number of documents to set up in Uganda, including: Certificate of registration; Company PIN Number; VAT Number. UKTI Uganda can advise on this. It is also essential to obtain/issue receipts and invoices whenever transacting to avoid potential disputes. Getting your Goods to the Market Being a landlocked country, the main options for getting goods to Uganda are road, airfreight and to a limited extent rail. The main seaport used by Uganda is Mombasa (Kenya), however Dar es Salaam is becoming increasingly important. There are a number of clearing and forwarding UK Trade & Investment Doing business in Uganda
  13. 13. agents who have offices in the UK and Uganda. Please contact the UKTI office in Uganda if you need a list of recommended freight forwarders. UK Trade & Investment Doing business in Uganda
  14. 14. Business Etiquette, Language and Culture Social customs vary according to race, tribe and religion. However, British social habits are acceptable everywhere and people are generally friendly. The usual modes of address are as used in the UK. There are no special factors for women business travellers. Language Most business is conducted in English, though many local languages exist in Uganda. Swahili is often understood but not frequently used in Kampala where Luganda is largely used as a second language. Business Customs Ugandan business decisions are often made by a group within the company and there is a premium on consensus. Many Ugandans like to discuss business extensively, and usually seek external advice, before making decisions. Ugandans want to get to know people with whom they are dealing and begin most meetings with introductory conversation about people’s backgrounds and families. Ugandans are generally conservative and formal when making speeches to a group. Greetings and acknowledgements invariably precede formal speeches in strict accordance with protocol. Negotiations When negotiating, companies will respond to your approach in an equal manner. Therefore, if a potential partner demonstrates flexibility and willingness to commit, they will gladly put the same effort into the partnership. Personal contact with potential and existing partners/clients and regular visits to the market therefore of the utmost importance and it is natural for the business relationship to be built with time. UK Trade & Investment Doing business in Uganda
  15. 15. What are the challenges? A number of challenges exist for UK companies intending to do business with/in Uganda. These include: Infrastructure Uganda’s infrastructure, particularly its systems of roads, rail, electricity and water is relatively poor. However, in recent years the government has committed relatively large funds to their development in preparation both for the East African Common market and the production of oil. Cost of Energy Both the cost and availability of electricity remains a challenge. Over 80% of the country does not have access to grid electricity. Measures to reduce this are underway with the construction of new hydro-electric dams and power stations. Affordable financing Lack of affordable financing is another impediment to business. Loans are generally short-term with interest rates ranging from 15-24%. In addition to high rates, little liquidity exists for loans over three years. Counterfeits The sale of counterfeit goods smuggled into Uganda is a real challenge to legitimate companies. The sophistication of counterfeits is growing and public awareness is not strong. In addition, enforcement authorities are ill equipped to fight this. Getting Paid - Terms of Payment Credit is an important feature of the market. All the common forms of arranging payment are in use in Uganda. The most common payment cycle is 90 or 120 days. Extended credit terms for large items of capital equipment are often critical to the success of a project. The best method of payment is a confirmed irrevocable letter of credit drawn on a reputable bank. In case of payment with order beware of cheque scams. It is advisable to quote amounts in Uganda Shillings so as to avoid losses that may occur through exchange rate fluctuations. Nevertheless, providing quotes in dollars for foreign products is also used. Payment and accounting systems are more advanced in the financial sector and in large businesses. Lists of local lawyers and chartered accountants are available on request from UKTI Uganda UK Trade & Investment Doing business in Uganda
  16. 16. How to Invest in Uganda The principal types of business enterprises in Uganda are: • • • • • Registered Companies (Private and Public) Branch offices of companies registered outside Uganda Partnerships Sole Proprietorships Co-operatives Companies are registered as limited liability companies as in 1 and 2 above, and regulated by the Companies Act. Uganda’s legal system is based on English law and practice. A wide range of legal services are locally available. Considerable investments continue to be made throughout Uganda especially in infrastructure and energy. The road networks are being upgraded and expanded to improve connections between major centres while tenders for the port and rail system have been issued so as to expand trade capacity. Privatisation of various institutions has also been ongoing. Getting Paid In Uganda, retailers normally receive payment for consumer goods in cash. However, exporters of capital goods or other equipment, machinery and services normally seek payment through wire transfers. Ugandans may attempt to pay by cheque, but increasing cheque fraud makes this a highly risky proposition. The banking system The banking system has steadily improved and is stable and well capitalised. The system includes the Bank of Uganda, 25 commercial banks and many micro deposit institutions and development banks. Foreign exchange controls There are no foreign exchange controls affecting legitimate trade. Project Financing Multilateral institutions active in Uganda include the International Monetary Fund (IMF), the World Bank, the African Development Bank as well as several European institutions. Major development projects in health, education, agriculture and infrastructure are financed by bilateral donors and/or international organisations. UK Trade & Investment Doing business in Uganda
  17. 17. Contacts Fax: +256 414 334419 If you have a specific export enquiry about the Ugandan market which is not answered by the information on this report please contact: Uganda National Bureau of Standards (UNBS) P O Box 7279, Kampala Tel: +256 414 222367 Fax: +256 414 286123 UK Trade & Investment Enquiry Service Tel: +44 (0)20 7215 8000 Fax: +44 (0)141 228 3693 Email: British High Commission - Kampala Although these lists are not comprehensive, and inclusion does not constitute an endorsement or recommendation by UKTI Section, they are a useful starting point for firms that need professional services in Uganda. 4 Windsor Loop PO Box 7070 Kampala, Uganda Tel: +256 312 312 000 Fax: +256 414 257 304 Email: We have 2 staff working at the British High Commission in Kampala dedicated to helping British businesses to trade with Uganda: Mrs Margaret Magera Trade Development Manager Tel: +256 312 312 213 Email: Mr Eric Olanya Trade Officer Tel: +256 312 312 222 Email: UKTI Uganda is a part of UKTI East Africa, a regional team with trade experts located at the British High Commissions and Embassies in Kenya, Tanzania, Uganda and Ethiopia. UKTI East Africa offers coordinated services for those wishing to explore similar business opportunities in the wider region. Please ask the contacts above for more information. Others Uganda Investment Authority (UIA) P O Box 7418, Kampala Tel: +256 414 301000 Fax: +256 414 342903 Uganda Revenue Authority (URA) P O Box 7279, Kampala Tel: +256 417 442001 UK Trade & Investment Doing business in Uganda
  18. 18. Resources/Useful Links Business Link: International Trade Business Link’s International Trade pages provide an overview of export basics including licensing, customs procedures, classifying and movement of goods, other regulatory information and export paperwork issues. It also introduces exporters to the UK Trade Tariff. Essential reading for exporters! Find out more at: Country Information: BBC Website: FCO Country Profile: Customs & Regulations: HM Revenue & Customs: Import Controls and documentation (SITPRO): Economic Information: Economist: Export Control Export Control Organization: Export Finance and Insurance: ECGD: Intellectual Property Intellectual Property Office: Market Access Market Access Database for Tariffs (for non-EU markets only): SOLVIT – Overcoming Trade Barriers (EU Markets only) UK Trade & Investment Doing business in Uganda
  19. 19. Standard and Technical Regulations: British Standards Institution (BSI): National Physical Laboratory: Intellectual Property: Trade Statistics: National Statistics Information: UK Trade Info: Travel Advice: FCO Travel: NHS: Travel health: UK Trade & Investment Doing business in Uganda