Uganda with Special Reference to Study of Packaged Food Industry

Global Country Study Report

College Code: 770

College Name: Shri Jaysukhlala Vadhar Institute of Management Studies (JVIMS)

Master of Business Administration

Year: 2013

Guided by: Nirav Vyas

Guide‘s email address: [email protected]

Designation of guide: Assistant Professor

Table of Content

Sr No Topic Page No 1 Executive Summary 4 2 Acknowledgement 6 Part I- Work Done in Sem III 3 Introduction to Uganda 8 4 Ecological Environment 16 5 Demographic profile and social environment 21 6 General Economic overview 29 7 Overview of Trade and Commerce 35 8 Overview of different economic sector 45 9 PESTEL Analysis of Uganda 52 10 Political Environment 64 11 Investment opportunities for entreprenuers of 74 Gujarat in Uganda 12 Present Trade relations of Uganda with India & 84 Overview of Financial Market Part II- Work Done in Sem IV 13 Introduction & overview of Packaged Food 95 Industry 14 Structure, Activities, Processes of Packaged Food 107 Industry in India 15 Comparative position of Packaged Food Industry in 126 India 16 Potential for exports to Uganda from India 130 17 PESTLE on Packaged food industry of Uganda 136 18 Present position and trend of business 142 19 Future business opportunities in Uganda 153 20 Policies and Norms of export & import in Uganda 165 21 Policies and Norms of export & import in India 174 22 Present Trade Barriers 183 23 Conclusion 190 24 Bibliography 192

Executive Summary

Uganda, the country which has been in existence since very long but still not very well known to most part of the world. The country is still looked as a ―third world country‖ and when it comes to business opportunities world-wide, then absolutely no one or very less entrepreneurs show real interest in Uganda. This is very orthodox and conventional way of looking towards any country for business.

Uganda is ranked among the 20 top fastest development economies of the world and is the 4th fastest developing economy of Africa. It is situated in Western Africa and is improving and strengthening its economical and urbanization position slowly but very steadily.

This project is an attempt to explore the country as a market place and to position a specific Indian industry to do business with it and also it is an attempt to find out opportunities for Gujarati Enterprises to position themselves in that country as entrepreneurs.

The first part of the project enlightens on factors like the overview of economy, demography, topography, prevailing industries and their contribution to GDP of Uganda. In the last section of the first part of the project we have tried to find out certain business in which the Indian enterprises can really look into for business

The second part of the project enlightens the opportunities of doing business and positioning a particular Indian industry in Uganda. The industry that we have selected is dehydrated spices industry. This part enlists the current scenario of this industry in India, its export potential, its acceptability and demand in Uganda, the current trade barriers, norms and policies of export of spices in India as well as norms of imports of spices in Uganda and finally the business opportunities.

Today is the era of globalization. Every country is interested into doing business with the other countries. Everyone looks for the untapped resources lying with the underdeveloped countries. So as a result the new employment, entrepreneurship opportunities are getting emerged in these countries.

But doing trade with different countries is not an easy task. One needs to understand its various environments like cultural, political, natural, and economical and so on. It becomes quite important to analyze and make proper conclusion of what will be profitable in various countries because if this is not done it might lead to a terrible failure of business. So as a manager it would be prime duty to check for the various environments in the country in which business has to be conducted.

Uganda has been a country which is targeted by Indian entrepreneurs for doing business since almost more than 100 years. Indians especially Gujarati entrepreneurs have explored great business opportunities in Uganda.

This project work is an attempt to explore the horizons and opportunities for positioning of ―Packaged Food‖ Industry in Uganda and count its feasibility.

Acknowledgement

We are very grateful first of all to Gujarat Technological University for giving such a project work to us as a full credit subject. This indeed expands our horizons and gives us a feeling that our management course is not just restricted to traditional and conventional studies but it includes such kind of work which can be called as contribution from us towards the economy of India. We express our deepest and sincere gratitude towards our institute, JVIMS- Jamnagar, for being fully supportive and giving us all the access and facilities that we needed to complete this Herculean task. We are finally very thankful to Dr. K J. Thankachan,- Director, JVIMS and Dr. Ajay D. Shah- Dy. Director, JVIMS for being patient and very kind to us, supporting us, correcting our errors and mistakes and also being there always as a information point whereby we could get all the needed information which was difficult for us to collect for completing this project.

Chapter 1.1 Introduction To Country

Uganda, country in East Africa, officially known ―Republic of Uganda‖ is a surrounded by land. The name Uganda comes from the Buganda kingdom, which encompasses a large portion of the south of the country including the capital Kampala. The people of Uganda were hunter-gatherers until 1,700 to 2,300 years ago. Uganda became independent on 9octomber 1962

History & Country Details

First it was a Colonial Uganda. Then it became early independent Uganda. Then Uganda ruled under Idi Amin Dada. The period between 1986-2000 is known as post liberation war.

Capital : - Kampala

Official languages : - English, Swahili

Government : - Presidential republic

President : - Yoweri Museveni

Population : - 24,227,297(2002 census) , 35,873,253(2012 estimate)

Currency : - Ugandan shilling

Uganda’s National Symbols

The flag of Uganda was adopted in 1962. The black color identifies Uganda as a black nation of Africa. The red shows Uganda's brotherhood with the rest of Africa and the world. The coat of arms of Uganda reflects the identity, aspirations and economic activity of Uganda. The sun represents the abundant sunshine found in Uganda.The Crested Crane is the official bird of Uganda. In its plumage, it contains the three colors of Uganda.

Current Government

Yoweri Kaguta Museveni, the president of Uganda is both head of state and head of government. Museveni will be serving Uganda for another 4 years, with the next elections anticipated to be held in 2016.Uganda is perceived as very corrupt country by Transparency International. Uganda is rated 2.4 on a scale from 0 to 10.

Geographical Environment

Uganda deceit almost completely within the Nile basin. The eastern edge of Uganda is exhausted by the Turkwel River. Southern Uganda is wetter with rain throughout the year. Though landlocked, Uganda contains many large lakes: Lake Victoria, Lake Kyoga, Lake Albert, Lake Edward, and Lake George

District counties and kingdoms

Uganda is spread across four administrative regions: Northern, Eastern, Central and Western. Uganda is divided into districts. Each district is divided into sub-districts, counties, sub-counties parishes and villages

Tourism

Tourism in Uganda is paying attention on Uganda's landscape and wildlife. Uganda has a very various culture, landscape, flora, and fauna. By the late 1980s, Uganda's political climate had stabilized and conditions were suitable for reinvestment in Uganda's tourist industry.

Game viewing is the most popular tourist activity in Uganda. Uganda is the third country where it is possible to visit mountain gorillas. Uganda's prime tourist attractions are Mountain gorillas.

Major Religions

The Anglican Church of Uganda has the second largest number of followers. The after that most reported religion of Uganda is Islam. The northern and Western Nile regions are Catholic and eastern Uganda has the highest percentage of Muslims. There were about 80,000 Indians in Uganda, Forty years ago. The church of Uganda is a part of the Anglican Communion. Currently the Church of Uganda comprises 34 dioceses, each headed by a bishop.

Health sector

As a developing country, health indicators in Uganda are far behind than the rest of the world. It was stated that life expectancy at birth in Uganda is around 49 years. Child mortality rate is 14 %. It was stated in 2002 census that total expenditure as a percentage of GDP was 7.4%.

Education Sector

One of the common factors in Uganda is illiteracy. Uganda has mutually private and public universities. The largest university in Uganda is Makerere University, which was located outside of Kampala. The recognized universities in Uganda are into 3 parts:-Government Universities, Religious-Affiliated Universities, Private Secular Universities

Cuisine

Uganda Waragi is one of the common alcoholic beverages in Uganda. Main dishes are usually made up of groundnuts, beans or meat. The starch usually comes from ugali or matoke in the South, or an ugali made from millet in the North. Cassava, yam and African sweet potato are also eaten. The more rich take in white potato and rice in their diets. Soybeans were considered as a healthy food and are also used especially for breakfast. Chapatti is also component of Ugandan cuisine.

Banking Sector

The Bank of Uganda (BOU) is the Central Bank of the Republic of Uganda. It was established in 1966 by act of parliament. BOU is 100% owned by the Government of Uganda, but is not a government department. Emmanuel Tumusiime Mutebile is the governor of Bank of Uganda.

Media

Uganda today has a vivacious media industry. There are a number of news papers today in Uganda. The New Vision is Uganda‘s one of the oldest news paper. The Monitor is Uganda's leading independent newspaper. These two papers lead the print section of media in Uganda.

Fishing Industry

Fishing is an essential economic activity in Uganda. Lakes, rivers, and swamps wrap about 20 percent of Uganda's land surface. The government supported several programs to enlarge fish production and processing. In 1987 a government-sponsored Integrated Fisheries Development Project recognized a boat construction and repair workshop at Jinja; a processing plant, several fish collecting centers, and fish marketing centers in several areas of Uganda. Later than the government established the Sino-Uganda Fisheries Joint Venture Company to take advantage of fishing opportunities in Lake Victoria

Foreign Relations

Uganda is bordered by land and depends on foreign imports for most of its consumer goods and energy requirements. (1)Israel:-Uganda‘s relations with Israel remain fearfully stressed due to the 1976 capturing of a French airliner hijacked by the Palestinian Liberation Organization in an airport in the now-famous city.(2)Kenya:-From 1961 to 1965 the two states, along with Tanzania, were integrated in the East African Common Services Organization, a common market with a loose federal structure.

Human Rights

Uganda experiences difficulties in the achievement of international standards of human rights for all citizens. These difficulties consist of the provision of proper sanitation facilities, internal displacement and development of adequate infrastructure. As per the Relief Web sponsored Humanitarian Profile – 2012 Uganda is making considerable developments in this area.

Languages

Uganda is a multilingual country. Forty of its on hand original languages drop into three main families - Bantu, Nilotic, and Central Sudanic. English and Swahili are official languages. There is also a Ugandan Sign Language.

Music

Ugandan music is as different as the traditions of its people. The country is habitat to over 30 different cultural groups and tribes. The Baganda was the most prominent tribe in the country so they dominated the culture and music of Uganda over the last two centuries. However, the other tribes have their own music styles. Generally two types:-Traditional and Popular Music.

Terrorism

Terrorism in Uganda is mainly located in the north where the Lord's Resistance Army has attacked villages and compulsorily inscripted children into the organization since 1988. Somalia's Al Shabbab has also dramatic attacks in the country because Uganda support to the African Union's AMISOM.In 2002 Anti- Terrorism Act was come out.

Protected Areas

Following are the areas which are protected in Uganda. It includes national park, wildlife reserve, Controlled Hunting Area, Community Wildlife Management Area, Wildlife Sanctuary, Ramsar Site.

Ugandan Sheiling

The shilling is the currency of Uganda. Officially, the shilling is divided into 100 cents but no subdivisions have been issued since the revaluation of the shilling in 1987.Banknotes are 1000, 2000, 5000, 10,000, 20,000, 50,000 shillings. Ugandan Security Exchange

The Uganda Securities Exchange (USE) is the major stock exchange of Uganda. The USE is operated under the authority of Uganda's Capital Markets Authority, which in roll reports to the Bank of Uganda, Uganda's central bank. It was Founded:- June 1997. Headquarters are in Kampala, Uganda.17 companies are listed in the market listening.

Defence Force

The Uganda People‘s Defence Force (UPDF) is the armed forces of Uganda. After Uganda achieved independence in October 1962, British officers retained all high-level armed commands. Defence Minister is Dr. Cryspus Kiyon. A Service branch includes Land Forces, Air Wing, and Paramilitary Forces.

Water Supply

The Ugandan water supply and sanitation sector has made impressive progress in urban areas since the mid-1990s. Sector reforms in the period 1998-2003 included the commercialization and rejuvenation of the National Water and Sewerage Corporation (NWSC) operating in cities and larger towns, as well as devolution and private sector involvement in small towns. Responsibility for policy setting is given to Ministry of Water and Environment.

Chapter 1.2 Ecological Environment

Ecology

Ecology is the study of a group of biota, including the interactions with a biotic factors such as soils, water and meteorological factors.

Marine Ecology

Marine Ecology, a sub-discipline of Ecology, is an integrative science focused on research and judgment of the biotic and a biotic components and processes of Earth's aquatic and marine environments.

Microbiomial Ecology

Microbial ecology is part of discipline of ecology focused on microbes (i.e. bacteria, viruses, some algae and protozoa, and prions), their life cycles, niches and habitats.

Climate

Uganda's atmosphere is tropical. This means it is usually rainy (particularly throughout the months of March to May, September to November), while the remaining months (December to February, June to August) comprise Uganda's two dry seasons. Elevation is a major influence on Uganda's climate. The range is one of only a handful of uplifts on the continent to harbor remnant glaciers, the others being the Rift volcanoes of Mount Kilimanjaro and Mount Kenya.

Geology and Tropology

The two migrant settlements are located in different ecological units. Rhino Camp is Situated entirely in the graben. The altitude varies in that area between 600 and 800 Meters. On either side of the split, the altitude rises sharply to over 900 meters on the East and to 1100 meters on the West.

Soils

Rhino Camp naturally has Ferrisols and Vertisols. IRD has thus analyzed 72 soil samples from Rhino Camp and Adjumani. Such soil analyses are vital in the context of refugee settlements. They should be conducted before settlements are set up.

Vegetation

This category itself includes many vegetational formations with a more or less developed tree cover. Within the category plant associations are separated: Butyrospermum savanna, Combretum savanna, mixed savanna, and dry Acacia savanna.

Mountains

The Ruwenzori Mountains (often called the Mountains of the Moon) form about eighty kilometers of the border between Uganda and Zaire. The highest peaks of Mount Stanley, in the Ruwenzori‘s, are snowcapped. Primary among these are Margherita (5,113 meters) and Alexandra (5,094 meters). Beyond south, the northernmost of the Mufumbiro volcanoes reach 4,132 meters on Mount Muhavura; 3,648 meters on Mount Mgahinga; and 3,477 meters on Mount Sabinio, which marks the border with Rwanda and Zaire.

Rivers and lakes

It includes Lake Victoria, the largest lake in the Africa and second largest lake in the world. It dominates the southeastern of the nation. Lake Victoria fills through Victoria Nile, the shallow Lake Kyoga, and the spectacular Murchison. The Katonga River flows westward from Lake Vitoria to Lake George. Other major river includes the Achwa River.

Forestry

Forests are one of the most important biomes on earth. They provide a large range of ―ecosystem services,‖ from watershed protection and carbon assimilation to renewable energy and timber production.

Environmental Issues

Deforestation:-

Deforestation is the removal of a forest or place of trees where the land is thereafter converted to a non-forest use. Deforestation occurs for many reasons: trees are cut down to be used or sold as fuel or timber, while cleared land is used as ground for livestock, plantations of commodities, and settlements.

Overgrazing:-

Overgrazing occurs when plants are uncovered to exhaustive grazing for absolute periods of time, or without sufficient recovery periods .Overgrazing is also seen as a cause of the spread of insidious kind of non-native plants and of weeds.

Soil Erosion:-

Erosion is the process by which soil and rock are removed from the Earth's surface by natural processes such as wind or water flow, and then elated and deposited in other locations.

Water Hyacinth:-

Water hyacinth is a free-floating perennial native to tropical and sub-tropical. With broad, thick, glossy, ovate leaves, water hyacinth may rise above the surface of the water as much as 1 meter in height.

Chapter 1.3

DEMOGRAPHIC PROFILE AND SOCIAL ENVIRONMENT

Preliminary

Uganda is one of the poorest countries in the world. Republic country Uganda is landlocked country in East Africa. The earliest human inhabitants in Uganda were hunter-gathers. Uganda gained independence from Britain in 1962, maintaining its Commonwealth membership. In 1967, a new constitution proclaimed Uganda a republic and abolished the traditional kingdoms. Amin's reign was ended after the Uganda-Tanzania War in 1979 in which Tanzanian forces aided by Ugandan exiles invaded Uganda. Conflict in northern Uganda has killed thousands and displaced millions.

Language:

Uganda is home to many different ethnic groups, none of whom forms a majority of the population. English became the official language of Uganda after independence. The local language of Uganda is Luganda spoken by ganda people while, southeastern and southwestern parts of Ugandan people‘s language is the Lusoga and Runyankore-Rukiga. Swahili was spoken by throughout eastern and central East Africa and it is the second official national language in 2005.

Population:

Uganda‘s population has grown from 4.8 million people in 1950 to 24.3 million in 2002. The current estimated population of Uganda is 35 million. Uganda has the second highest total fertility rate in the world, at 6.65 children born/woman (2012 estimates).

The population of Uganda is to be increased by 130 million by 2050, nearly fivefold increase. The main reason of less population in Uganda is government‘s lack of commitment to family planning. Women in Uganda have an average of 6.9 children, compared with a global average of 2.7 and an African average of 5.1. There is higher infant mortality, higher death rates lower population growth rates. With an average GDP per capita of US$332 in 1998, Uganda is one of the poorest countries in the world.

Income:

Uganda is one of the poorest nations in the world, with 37.7 percent of the population living on less than $1.25 a day. Despite making enormous progress in reducing the countrywide poverty incidence from 56 percent of the population in 1992 to 31 per cent in 2005, poverty remains deep-rooted in the country‘s rural areas, which are home to more than 85 per cent of Ugandans.

Age:

Birth rate: The average birth rate of Uganda is 47.38 from every 1000 babies born.

Death rate: The average death rate of Uganda is 11.54 from every 1000 population.

Infant mortality rate of Uganda is displayed below of male and female respectively in every 1000 population. Age Structure Population(%) Below 15 Years 48.40% 15-65 years 49.10%

Above 65 years 2.50% Religion:

Religious affiliation:

Religion Percentage Roman Catholic 44,6 - 49,6%; Protestant 28,7- 39,2%; Sunnî Muslim 6,6 -10,5%; other (Animist) 15,1%

Uganda is a predominantly Christian country with a significant (about 12%) Muslim minority. According to census of 2002, 84 % of Uganda‘s population is of Christians. About 41.9% adherents followed Roman Catholic Church, while 35.9% followed Anglican Church of Uganda. The next most reported religion of Uganda is Islam, with 12% of Muslims. Muslims are highest in Iganga, eastern part of Uganda. See also Bahá'í Faith in Uganda.

Forty years ago, there were about 80,000 Indians in Uganda.

Education:

Illiteracy is common in Uganda, particularly amongst females. Uganda has both private and public universities. The largest university in Uganda is Makerere University, located outside of Kampala. There are three tier in education i.e. primary education, secondary education and post- secondary education.

Health:

As a developing country, health indicators in Uganda insulate behind the rest of the world. Uganda was often suffered by the outbreak of the HIV/AIDS epidemic in East Africa. Uganda Virus Research Institute (UVRI) is home to Uganda, measured one of the most advanced viral research facilities in East Africa. The 2006 Uganda Demographic Health Survey indicates that roughly 6,000 women die each year due to pregnancy-related complications.

SOCIAL ENVIRONMENT

Components of the social environment include built infrastructure; industrial and occupational structure; labor markets; social and economic processes; wealth; social, human, and health services; power relations; government; race relations; social inequality; cultural practices; the arts; religious institutions and practices; and beliefs about place and community. Uganda is one of the poorest districts in country and population density is also one of the highest in Uganda. Life expectancy at birth in Uganda is approximately 49 years. Life and death, it seems, are approached a bit differently in Uganda.

Attitudes:

The most of the Ugandan people is rely on agriculture. An ever-increasing population and land scarcity have forced the migration of male labor, in turn often leaving wives and their children to support themselves on the available family land. In Africa when person die it does not make them wide difference as they are saying that ―this is Africa-people die‖. Life and death, it seems, are approached a bit differently in Uganda.

Values:

There is a certain structure religion gives to Ugandan‘s lives. At the birth of a child or death of a loved one, they turn to some sort of faith more often than not. When oaths are sworn in courts of law, it is a holy book on which they swear to remain truthful. And when politicians promise to stand for by the earthly laws they create, they raise a hand and address a god somewhere. There are prayer breakfasts, the prayer of god's name in such places as national anthems and currencies, and also prayers at the start of government meetings and functions.

Infrastructure of Uganda:

Though still relatively young, Uganda's rising financial sector is vibrant and well supported by banking, legal, accounting and insurance support services. The quality and cost of living in Kampala and other major towns in the country compares constructively with what investors may hope to find elsewhere in Africa.

Uganda: Economic and Social Inequality:

Economic and social inequality mixes and matches to complicate the picture. But a lot of social inequality is unnecessary, particularly when it takes the poor form of arrogance. In a third world country like Uganda, inequality gets extended to its limits. At the rich end, we see individuals with amazing pretentious spending power that would turn heads even in the richer first world nations. At the poor end, of course, there is widespread, unremitting, grinding poverty.

Gender Equality:

Uganda is classed as a low-income country as per the World Bank. In 2011 Uganda ratified the Protocol to the African Charter on Human and Peoples‘ Rights on the Rights of Women in Africa. Domestic violence has wide social acceptance, even by women. Rape is very common in Uganda, and enforcement of existing laws is sporadic. There is no proof to suggest that Uganda is a country of concern in relation to missing women.

There is no proof to suggest that Uganda is a country of concern in relation to missing women. There appears to be an active and engaged women‘s rights movement in Uganda, working particularly on issues relating to violence against women, as well as pushing for legislative changes to protect women‘s rights. Women appear to have the same rights to vote and stand for election as men in Uganda.

Local religion:

Social function of religion is helping people cope with negative aspects of life pain, suffering, and defeat by providing an explanation of their causes. Religious beliefs and practices also serve political aims, especially by bolstering the authority of temporal rulers and at other times by allowing new leaders to mobilize political opposition and implement political change.

Uganda’s Culture and Traditions:

Uganda has a very strong culture heritage. Many regions in Uganda have kingdoms including Buganda, Busoga, Bunyoro and Toro. The famous things in Uganda are Uganda Drum, Kasubi Tombs, The Sezibwa falls and Namugongo Shrine. The Drum being the common instrument in Africa, also dominates Uganda in symbolism to African culture. It is a place worth visiting while in Uganda. This Uganda martyrs‘ shrine is a very vital attraction in Uganda‘s history. Poverty in Uganda:

About 96 per cent of those beyond the poverty line live in rural areas. According to the poor, the quality of natural resources is declining soil fertility and productivity of land, depletion of fish stocks, wetland violation end recovery and pollution of water resources.

The human consequences of degraded natural resources include starvation, bad health and increased absence from educations due to more time spent collecting water and firewood. All of this contributes to make transition out of poverty more difficult, especially for women

Labour Condition of Uganda:

Particulars Men Women

Planting 15% 85%

Weeding 15% 85%

Land Preparation 45% 55%

Food Processing 2% 98%

Decision to Market 70% 30%

According to a 2000 IFAD study under the Gender Strengthening Programme for Eastern and Southern Africa, agriculture is the main source of income for rural households in Uganda. It is also the main occupation of women. Nationwide, 72% of all employed women and 90% of all rural women work in agriculture.

Social Welfare of Uganda:

Housing was an important symbol of development in Uganda under the NRM government. Makerere Institute of Social Research also publishes frequent reports by international researchers in Uganda.

Two compilations of essays assessing Uganda's social and political development in the 1980s are Uganda Now, edited by H. Hansen and M. Twaddle, and Conflict Resolution in Uganda, edited by K. Rupesinghe. Numerous works by N. Kasfir have also contributed an understanding of Uganda's political environment. Works by B. Langlands survey Uganda's social and physical geography.

Chapter 1.4 General Economic Overview of Uganda

Museveni proclaimed the national economic orientation to be toward private enterprise rather than socialist government control. Many government policies were aimed at restoring the confidence of the private sector. In the absence of private initiatives, however, the government took over many abandoned or formerly expropriated companies and formed new parastatal enterprises.

Tourism of Uganda

In the year 1960, Uganda had a successful tourist industry with 100,000 visitors each year. Tourism was the fourth largest earner of foreign exchange. The tourist industry ended in the year 1970 because of political irregularity but in the year 1980, circumstances were appropriate for reinvestment in Uganda's tourist industry as political climate stabilized.

Labor in Uganda

The Labour force; total in Uganda was last reported at 13.43 million in 2010, according to a World Bank report published in 2012. Average monthly income of Uganda was (UGX 306,200) in urban area and (UGX 142,700) in rural area in the year 2005-06 which increased to (UGX 660,000) in urban area and (UGX 222,660) in rural area.

Uganda's Minimum Wage is the lowest that the worker being officially paid for his work. Uganda's minimum wage is 6,000 Ugandan shillings per month for all workers.

Agribusiness of Uganda

Uganda is among leading producers of coffee and bananas. Uganda also produces many things such as cotton, tea, tobacco, sugar etc.

Coffee

Uganda's mainly vital cash crop was coffee throughout the year 1980. The government expected that farmers planted roughly 191,700 hectares of Robusta coffee; majority of this was in southeastern and about 33,000 hectares of Arabica coffee in high-altitude areas of southeastern and southwestern in Uganda.

Several coffee farmers refined cacao plants on land already producing Robusta coffee. Cocoa production declined from 1970s to 1980s and market situation downcast worldwide investors from presenting it as a probable counterbalance to Uganda's trust on coffee exports. However, the management constantly seeks ways to recover the production because locally produced cocoa was of high quality. Production stayed stumpy in the late 1980s that rose from 1,000 tons in 1986 to only 5,000 tons in 1989.

Cotton

In the year 1950, the second most important traditional cash crop in Uganda was cotton, which contributed 25% of total agricultural exports. Government officials were gloomy about refreshing this industry in the near future as this figure had declined to 3%, in the late 1970s.

Moreover, it provided an additional means of diversifying the nation in the late 1980s. The government consequently initiated an urgent situation for cotton production program, tractors, which provided extension services and other inputs for cotton farmers. At the same time, the cotton price was rose from USh32 to USh80 for a kilogram of grade A cotton and from USh18 to USh42 for Grade B cotton by the government in 1989.

Tea

Uganda was able to develop some of the world's best quality tea due to favorable climate and good soil. Several tea farmers also reduced production because of economic upheaval and

30 warfare. Tea production later increased from 1,700 tons of tea produced in the year 1981 to 5,600 tons in the year 1985.

Fishing of Uganda

Fish products are the leading foreign exchange earner for Uganda in the non-traditional exports category with export revenues amounting to USD 127.7 million in 2010. Uganda‘s fish is a delicacy in Europe and has recently penetrated the US market.

Forestry in Uganda

There is a huge opportunities in forestation and reforestation especially of medicinal trees and plants, soft wood plantations for timber, pulp & poles. Uganda possesses abundant potential in areas like timber processing for export.

Infrastructure

With less than 10% of the mainstream capacity of 2,700 megawatts of power exploited, Uganda has the potential to be a major supplier of hydroelectric power to the entire East African region. However, in sectors like transport & logistics and energy Uganda still require further investment.

Manufacturing

Uganda‘s manufacturing sector has grown steadily over the last five years at an estimated average of 7.7% annually. Opportunities exist in virtually all areas ranging from beverages, leather, tobacco based processing, paper, textiles and garments, pharmaceuticals, fabrication, ceramics, glass, fertilizers, plastic / PVC, assembly of electronic goods, hi-tech and medical products.

Mining

Uganda has large under-exploited mineral deposits of gold, oil, high grade tin, tungsten/wolfram, salt, beryllium, cobalt, kaolin, iron-ore, glass sand, vermiculite and phosphates (fertilizer). A discovery of petroleum wells in the Lake Albert region has enhanced the sector‘s joie de vivre. There are also significant quantities of clay and gypsum.

Financial Services

Opportunities for investment exist for international multinational banking groups particularly promoting new or innovative financial products (i.e. Mortgage finance, venture capital, merchant banking and leasing finance) and micro finance saving institutions, which propose to operate in rural areas. Insurance, in particular, is still a relatively young sector and offers several opportunities for investment.

Investment

Uganda has a rapidly growing liberalised economy and a favourable investment climate. The government of Uganda provides the basic physical infrastructure and legal policy for private investment to grow. The government is further privatising parastatals and revising regulations to promote foreign investments. The law permits 100 per cent ownership of investments and, with very few exceptions, investors can invest in any economic activity.

Mineral resources of Uganda

There is wide variety of minerals found in Uganda, which includes:

 METALLIC MINERALS:- copper, cobalt, nickel, gold, chromium, platinum, lead, zinc, iron, tin, manganese etc.  INDUSTRIAL MINERIALS: carbonate rocks, phosphates, feldspars, kaolin, salt, silica sand, gypsum.

Evaluation of Economic Overview based on certain factors:

GDP - Purchasing Power Parity GDP- Real Growth Rate

GDP- Composition by Sector Population below Poverty Line

Labour Force Gini index Household Income or Consumption Distribution of Family Income Budget Taxes and other Revenues

Investment (Gross Fixed) Public Debt

Inflation Rate (Consumer Prices) Central Bank Discount Rate

Commercial Bank Prime Lending Rate Stock of Narrow Money

Stock of Money Stock of Quasi Money

Stock of Broad Money Stock of Domestic Credit

Market value of Publicly Traded Shares Agriculture

Industries Imports-Export

Industrial production growth rate Current Account Balance

Reserves of foreign exchange and gold Exchange rates

Chapter 1.5

Overview of Trade and Commerce

The Uganda National Chamber of Commerce and Industry is a vibrant organization focused on enhancing business opportunity. We are dedicated to ensuring our members take advantage of business opportunities locally, regionally and internationally. The Chamber is over 80 years old as a nation wide umbrella organisation for the private sector.

The Uganda National Chamber of commerce and Industry (UNCCI) was set up in 1933. It is the oldest and largest nation-wide umbrella organization of the private sector in Uganda. UNCCI was formed as a private sector body and has grown to become a vibrant and credible business association, owned by members from the Ugandan business community. It was formally registered in 1978 as a company limited by guarantee without share capital.

It is this diversity that makes UNCCI the preeminent business association dedicated to advancing commerce and industry relations between Uganda and the International business community.

VISION OF THE UGANDA

To be the leading private sector body for the business community in Uganda, providing members with an influential local, regional and global network for business growth.

MISSION OF THE UGANDA

To strengthen the private sector in Uganda, through emphasis of trade promotion, industrial development, effective advocacy for sustainable economic policies, and a conducive climate for economic development.

CORE VALUES OF THE UGANDA

To achieve the above corporate goals, UNCCI requires values that shall define behavior and performance of employees within UNCCI, every day and everywhere.

SERVICES PROVIDED BY UNCCI

• Lobbying and Advocacy

• Maintain structured forms of dialogue to promote public-private partnerships

• Disseminate up-to-date Business Information and Opportunities

• Issuing certificates of Origin

• Business Advisory Services

• Support vocational skills development

• Customized statistical reports

• Facilitate Joint venture and Business matchmaking

• Facilitate inward and outward trade and investment missions

• Provide a platform for Networking for our members

• Arbitration of Business Disputes

• Support young entrepreneurs through the Young Achievers Awards

PARTNERS OF THE UGANDA

 The International Chamber of Commerce (ICC)

• The Association of East African Chambers of Commerce Industry and Agriculture (AEACCIA) and the East African Business Council

• The Islamic Chambers of Commerce and Industry (ICCI),

The Research conducted is very important for the current economy of Uganda is lacking behind the nationalized in one or other manner. The basic motive to carry out the research is to measure the population is estimated at approximately 25.5million with an annual growth rate of 3.7percent. It is also measures the life expectancy and the populations is likely to reach 50million people in 25-30 years there life expectancy is 46 years and then more than that like about 55 percent of the population are under 18 years of the age it is found during the research that the population of Uganda is the fastest growing in comparison of the East African Community, comprising of Kenya, Tanzania and Uganda. In that there is also approximately 87 percent of the population live in rural area so that it would also implement to reach the standard of all the nationalized industry who are traded.

Economy there is also implementing the mainstay of the economy and the country is well endowed with diverse agricultural resources, as well as mineral resources, such as coppers, cobalt, limestone, copper ,iron-ore, gold and tungsten. Uganda also produce many things in a huge quantities like tea, coffee, maize, and also oil seeds. Yearly or in a rainy seasons the growth rate is depended upon that seasons. The yearly data are available through the research upon the growth how rain are come if poor and sporadic rain then low growth rate was recorded. In that Agriculture‘s share in GDP has also declined steadily in recent years, accounting for about 38.5 percent of GDP in 2003/2004 and 37.0 percent in 2004/2005.

An implementing at which they can reach to the working standard of all the nationalized industry who are traded Manufacturing on the other hand accounted for approximately 8 percent of GDP with an average annual growth rate of 5.7 percent in 2003/2004. The post and telecommunication sector is a fast growing sector accounting for 36 percent of GDP in 2004/2005. Although the country has large deposits of a number of minerals, the contribution of mining and quarrying to GDP is small. The country‘s mineral potentials have not been fully assessed and explored.

The manufacturing sector comprises of industries producing processed food, beverages, non- metallic minerals, wood and wood products, chemical products, leather and footwear, textiles,

37 wearing apparels, etc. the over all manufacturing sectors are compared by the level of producing the products or a growth rate of the country.

The manufacturing sector achieved a growth rate of about 96 percent and there prices are influenced by external factors and also under the triggers unfavorable terms of trade. In Uganda country there is also such produces are export like coffee, cotton, tea and tobacco. In that Coffee and Tea both are export in a huge quantities also a beans of coffee are also export in a huge quantities. In Uganda such products are produced in large quantities. The country has taken some major initiatives to reduce raw material commodity exports. In 1992 for example, 96 percent of such commodities were exported compared to 79 percent in 2002/200318. In recent years, both foreign and domestic investments have been attracted to agro-processing. Nevertheless, unfavorable trade balance is still being experienced. In 2002, the highest trade deficit amounting to US$ 606.1 million was recorded. The main reasons were the poor terms of trade, a narrow export production base and heavy reliance on the export of unprocessed produce

The manufacturing sector achieved a growth rate of about 3.7 percent in 2000/2003 with significant increase in production of textiles, clothing and footwear, paper and printing, chemicals and other chemical products. Production continued to increase in 2003/2004 with an estimated growth rate of 5.7 percent. The increase in production was mainly due to strong growth in textiles, beverages and basic metals. The paper and printing sub-sector recorded negative growth rates. Employment in the manufacturing sector also increased quite significantly in the year 2000, slowed down in 2001 but recovered in 2002 as a result of increases in employment in the food processing industry and in industries producing cement and bricks. In 2004, employment continued to increase quite significantly.

Total goods were estimated by that much of things in that tea, cotton, foods, textiles, all are export. In that the total commodity exports increased by 27 percent to US$ 647 million. The increase in commodity exports was a result of the strong growth in most of the commodity export categories. The volume of maize, tobacco, fish, hides and skins all increased in 2003/2004. The export volumes of coffee and cobalt declined at a time when high prices were recorded. Nevertheless, commodities such as tea, cotton and cut flowers registered increases in both volumes of production and export earnings.

Total exports of goods were estimated at US$ 647.2 million in 2003/2004 accounting for approximately 9.7 percent of GDP. However, total imports also rose by about 17 percent to US$1,321.4 million in the same period. Oil imports also increased by about 3.5 percent in 2003/2004, as did non-oil imports which increased by about 19.3 percent to US$1,021.4 million. The trade deficit in 2003/2004 increased to approximately US$ 674.2 million - some US$ 51.2 million more than 2002/2003.

Tea production, mostly is s grown mainly in the Southern and Eastern parts of the country. Both Robusta and Arabia varieties is one of the major crops in Uganda‘s are produced. on the other hand, has increased steadily since 1999 with an increase of about 48 percent during a five-year period - 1999-2003. Many small scale farmers are turning to tea cultivation and large tea estates have improved their management structures resulting in increased output. Export earnings from tea has increased quite significantly since 1994/1995 reaching a peak of US$ 39.3 million in 2003/2004.

Uganda produces large quantities of a variety of fruits and vegetables, including pineapples, mangoes, passion fruit, maize, beans, tomatoes, etc. Fishery is also a thriving activity and fish processing into fillet and other fish meat are produced for the domestic, regional and international market.

Production in the food-processing sub-sector has been increasing since the year 2000, although declines in production were registered in early 2003 and mid 2004. However, the sub-sector

39 grew by about 88 percent in 2003. The main food processing units are those producing coffee, tea, fish, vanilla, maize, meat and meat products, dairy products, vegetable oils, etc

This industrial sub-sector is one of the fastest growing industrial sub-sectors in Uganda. It has been characterised with strong growth since 1999 estimated at a rate of approximately 5 percent annually. The tobacco industry has a very high capacity utilisation level. In 2004, this sub-sector grew by approximately 12.1 percent

Imports into the beverage and tobacco sub-sector increased in 2003/2004. Exports, of beverages and tobacco products continued to increase since 1999, although a slight decrease of about 3.7 percent was experienced in 2003 as a result of a fall in tobacco exports. The main trading partners were Kenya and the Netherlands for exports. Imports were mostly from Kenya and South Africa.

This industrial sub-sector relies on both domestic and foreign sources for its raw material inputs. Production has been rather unstable over the years. Between 1998 and 1999, there was a sharp increase in production to be followed by three years of decline 1991-200119. In 2003, however, there was an increase in production, with a growth rate estimated at 14.4 percent. Textiles and garments accounted for a substantial part of the increases in production. In 2004 the textile, clothing and footwear sub-sector experienced a production increase of 28.7 percent as a result of increase in the demand for ginned cotton, textile and garments.

Employment, which was more or less stable between 1998 and 1999 began to increase in 2000 with a sharp increase in 2001. The increase in employment was short lived and in 2002, the employment numbers fell drastically as a result of the reduction in the number of people employed in the textile finishing enterprises. The increasing growth trends in production were reflected in the employment figures, which also increased significantly in 2004.

40 important trading products. The clothing and footwear industrial units did not perform well. In fact, large quantities of clothing and footwear were imported, between 2001-2003 and in 2004.

In this sub-sector, there are a number of small-scale processing industrial units producing primarily for the domestic market. The main products are cartons, boxes, paper bags, and printed items. A substantial amount of imported pulp and chemicals are used by the industrial units. Production fell between 2001/2002 with definite signs of increase by mid 2002. The increasing trend of production continued in 2004 with an increase of approximately 22.5 percent over the 2003 production levels. Paper production, per se, declined as imported paper dominated the domestic market.

International Trade Trends were not so favourable. Imports rose steadily, thus frustrating any efforts to produce some of the imported items locally. Exports, on the other hand, which were very negligible prior to 2002, increased by about 13 percent in 2003 and about 80 percent of its 2000 levels in 2004.

Production in this sub-sector increased gradually from 1998 right up to early 2000. However, between 2000/2001 there was a slight decline in production of about 4.5 percent20. Since then however, production has increased gradually with short period of decline in any one-production year. In 2004, a decline of about 5.8 percent of production levels was reported. With the exception of foam production, all output levels of all other products were lower than expected. However, the pharmaceutical industries and industries producing plastics all registered remarkable increases in production levels for 2004.

The non-metallic minerals industry consists of large production units producing cement and small and medium enterprises producing lime (from limestone) to be used in agriculture, construction, leather and paint production. Between 1998-2002, the non-metallic minerals industrial sub-sector showed very strong growth of approximately 11 percent per annum. During that same period, Uganda was seriously implementing its reconstruction and development programme21. Production however, declined in 2002 but increased considerably in 2004 by an impressive growth rate of 20.2 percent. The expansion of construction and building material industries in 2004 resulted in similar increases in employment.

The high demand for construction and building materials encouraged further imports into the sub-sector. The country usually imports much more into this sub-sector than it exports from it. Exports over the years were relatively stable and extremely low when compared to imports. In 2004, imports comprising mainly of cement and related products increased by about 10 percent.

The manufactured products in this sub-sector include all those products that cannot be accurately classified in the above-mentioned sub-sectors. Examples are motorcars and motor vehicles, transmission parts, electrical products, etc. Production in this sub-sector which, was normally low in the 1980s right up to the year 2000, began to increase in 2001. In 2004, the high demand for plastic and electrical products accounted for a substantial percentage of the increased production level estimated at 29.2 percent.

The private sector is expected to play an important role in the economic development and industrialisation of Uganda. The private sector in Uganda, however, covers not only the ‗large‘ and medium enterprises, but micro and small enterprises as well. Most of the micro and small enterprises are operating in the informal sector. They are known to utilise more domestic raw materials, labour and other inputs more intensively than the ‗large‘ or medium enterprises in the country. The indigenous entrepreneurs in Uganda are mainly interested in micro and small enterprises which are labour intensive and require less sophisticated technologies, as well as low investments, unskilled and semi-skilled labour. Micro and small enterprises‘ contribution to production and employment in Uganda is therefore quite significant.

Micro and small enterprises are to be found in every district of the country and in the capital Kampala. They vary from small rural enterprises to small urban enterprises employing 1-10 employees, in most cases, and 10 or more employees. The Ministry of Finance, Planning and Economic Development in Uganda has defined micro and small enterprises as follows:

Micro enterprises are those enterprises that are usually owned by a sole operator for income generating purposes. ―They are business undertakings employing less than five people of the family members. The value of assets, excluding land, buildings and working capital is below 2.5 million Uganda Shillings; the annual turnover is below 10 million Uganda Shillings which is the threshold for business related tax‖.

―Small enterprises are enterprises employing a maximum of 50 people in terms of value of assets excluding land and building and working capital is less than 50 million Uganda Shillings; annual income turnover is between 10- 50 million Uganda Shillings24. These enterprises are formally registered and operate fully the whole year and are managed by educated/skilled/trained managers.

It is estimated that there are more than 800,000 micro and small enterprises (MSEs) in Uganda, employing about 1.5 million workers25. It is also estimated that micro and small enterprises account for about 20 percent of the GDP. An annual growth rate of about 20 percent is also recorded for MSEs in Uganda. It should be noted that not all of the 800,000 MSEs are in industry or industry related activities. A good number of them are in trade, both wholesale and retail, hotels, bars and related services. The Uganda Bureau of statistics conducted an MSME survey in 2001/2002highlighting the number of business.

Chapter 1.6 Overview of Different Economic Sector of Uganda

Contribution of different sector in GDP of Uganda (2012)

Agriculture - 22%

Service sector -53%

Industry sector -25%

SECTOR CONTRIBUTION

Agriculture Service Industry

24% 22%

54%

Uganda is agriculture base economy and 80% of the people are employed in agriculture activity although contribution of agriculture in GDP is less compare to other sector of the country, service sector is contributing more to the GDP, 53% contribution is coming from service sector and 22% agriculture contributing to GDP, industry sector‘s contribution is 25% in GDP.

GDP of Uganda:

Real GDP measures overall performance of country. GDP of the Uganda decreased to 3.2% from 6.7% in 2011. Decreased in GDP was caused by high global oil and commodity prices, power shortages, exchange rate volatility, weak external demand, high level of inflation.

Purchasing Power Parity of Uganda:

PPP is obtained by dividing the country‘s gross domestic product, adjusted by purchasing power parity, by the total population. The gross domestic product per capita in Uganda was last reported at 1354 USD in 2011. Agriculture Sector

Agriculture is a key sector for food security and wealth creation. Uganda's favorable soil conditions and climate have contributed to the country's agricultural success Food Crops, Forestry, and Fishing. The sector accounts for 48 percent of exports revenue and provides a significant proportion of the raw materials for industry and employs 73 percent of the population. The government of Uganda and banks are given credit to local farmer. Agriculture’s contribution in GDP:

Particular 2011-2012 2011/2010 2010/2009

Sector growth 3% 0.7% 2.4%

Cash crops(coffee, cotton, tea) 16.2% -6.5% -1.1%

Food crops 1% 0.7% 2.7%

Live stocks 3% 3% 3%

Forestry 3.6% 2.8% 2.9%

Fishing 2% 1.8% 2.6%

SERVICE SECTOR

Contribution of service sector in GDP of Uganda is remarkably high; it contributes 53% in GDP. Service sector includes many services emerged in economy of Uganda but service sector growth is decreased to 3.1% in 2011/12 from 8.4% in 2010/11. Service sector include,

Service sector of Uganda include following services

• WholeSale And Retail Trade • Hotels And Restaurant • Transport And Communication • Road Rail And Water Transport • Air Transport • Post And Tele Communication • Financial Service • Education • Real Estate Service • Tourism

Wholesale and retail trade:

Because of exchange rate fluctuation and high interest rate, wholesale and retail trade sector is declined by 0.7% in 2011/12. The wholesale trade sector rendering services incidental to the sale of mercantile.

Transportation and communication:

Transportation and communication sector is growing at 8.9% in 2011/12 as compared to 14.1% in 2010/11. The telecommunication sector shows the strong growth of 15% in 2011/12 and is mainly attributed to strong performance in cellular subscription.

Industry Sector

Water Supply : Uganda made spectacular progress in water supply and sanitation sector after the commercialization and modernization of National Water and Sewerage Corporation.

But still 40 % of population had no access to an improved water source and 57% had no improved sanitation. The (PEAP)Poverty Eradication Action Plan estimates that from 2001 to 2015, about US$1.4 billion, or US$92 million per year, are needed to increase water supply coverage up to 95%.

Mining :

Uganda‘s mineral potential has been increasing substantially due to huge efforts made in improving mining. Minerals like gold, tantalite, copper and cobalt are found in Uganda. The government has induced $42 million in restructuring and development of the mineral sector which will generate revenue of sh145 billion in future.

Construction: Various Government policies have been developed to enhance the Construction sector by weeding out bogus constructors who were responsible for collapsing of buildings and weaker road constructions. Uganda‘s Building sector is growing rapidly. Although growth in the industry has resulted from a number of factors, the high population growth of 3.2 per cent has played a major role in its progress. Electricity :

There is a huge shortage of electricity supply in Uganda currently. Its main power generation is through hydro power plant which is 380 MW latest. About 97% of Uganda's population does not have access to electricity. Due to the lack of power supply the GDP of Uganda is also adversely affected. Within 20 years from now the countrymust generate an additional 1700MW to meet its demand capacity. To achieve this, more than $3.5 billion will have to be sourced for the energy sector

Manufacturing industry : The manufacturing industry comprises of industries producing textiles, leather, footwear, chemicals, wooden products, no-metallic minerals, beverages, processed food etc. By 2003/2004 this industry grew with a growth rate of 5.7 percent. This growth was mainly due to growth in textiles, beverages and basic metals. But since last five years all sectors in this industry has recorded trade deficit. Imports were 13 percent, on account petroleum oils, of total manufacturing whereas exports were 48 percent which included coffee and fish products. Food Processing Industry : Uganda produces large quantities of a variety of fruits and vegetables, including pineapples, mangoes, passion fruit, maize, beans, tomatoes, etc. Fishery is also a huge industry and fish processing into fillet and other fish meat are produced on large scale. Production in the food- processing sub-sector increased since the year 2000, although declines in production were registered in early 2003 and mid 2004. However, the sub-sector grew by about 88 percent in 2003. Paper And Printing Industry : There are number of small scale industries producing mainly cartons, boxes, paper bags, and printed items for the domestic market. Paper production declined as imported paper dominated the domestic market. Other Manufacturing : Other products like production of Motorcars and Motor vehicles, transmission parts, electrical products etc. are included in this sector. Since 2004, the high demand for plastic and electrical products accounted for a substantial percentage of the increased production level estimated at 29.2 percent. Leather And Leather Products : Uganda has 5.7 million cattle, over 4.2 million goats and 1.3 million sheep whose hides and skins when slaughtered provide huge amount of raw material for leather industries. The leather being produced in Uganda is of high quality and the texture of the leather is also considered to be very good. Hence nearly 90 percent of the leather produced in the country is exported. Metallurgical Industries :

The metallurgical industry in Uganda is not well developed. It comprises of steel rolling mills, metal and metal working industries such as galvanizing plants producing roofing and fencing materials, foundries, forging and machine shops and the manufacture of domestic appliances, spare parts, equipment and tools. The metallurgical sector is faced with a number of problems including inadequate raw materials and inaccessibility to raw materials located in the interior of the country. Engineering Industries : In Uganda, the engineering industries include industries producing transport equipment, agricultural equipment; machinery used in the textiles industries in the metal working industries and in the electric and electrical equipment industries. The types of technology selected for most of the industries are highly dependent on the importation of certain inputs, as the raw materials expected from the metallurgical industries are not always available. As a result, engineering industries in Uganda tend to produce well below installed manufacturing capacity.

Non-Metallic Industries : For Uganda the development of non-metallic industries, in particular, the building material industry is the powerful catalyst for economic development. In Uganda the existence of cement and ceramic production facilities has made it possible for it to initiate nationwide building schemes including housing. The main non-metallic industries are also capital intensive and the ability of industries to compete would depend on the technological process selected and the quality of the products. Uganda is competitive in a few non-metallic mineral products. Real Estate The real estate sector in Uganda has seen Property developers who have recently entered the market and have innovatively teamed up with a number of local and international banks present in Uganda to extend mortgage services to a number of Ugandans. Companies like the Government owned National Housing and Construction Corporation and Private Property Developers like Akright Projects, Kensington Real Estate Company, Turipati Developments, Pearl Real Estate Developers and Jomayi Property Consultants have worked out schemes through which middle income earners can access loans for the purchase of real estate through banks.

Chapter 1.7 PESTEL analysis

There are many factors in the environment that will affect the decisions of the government of any country. Tax changes, new laws, trade barriers, demographic change and government policy changes are all examples of macro change. The stability and structure of a country‘s government gives a basis for interpreting future changes in the region‘s political environment. Following are the detailed of the PESTEL analysis. The stability and structure of a country‘s government gives a basis for interpreting future changes in the region‘s political environment. Policy at the local or federal level can differ dramatically. Learn the decision makers that are relevant to your venture, subsidies available in your industry, and time lines necessary for processing requests. The conventional long form of country name is Republic of Uganda and the type of government in Uganda is Republic. The name of capital is Kampala. Uganda got independent on 9 October 1962 from the UK. For most countries, this entry gives the date that sovereignty was achieved and from which nation, empire, or trusteeship. For the other countries, the date given may not represent "independence" in the strict sense, but rather some significant nationhood event such as the traditional founding date or the date of unification, federation, confederation, establishment, fundamental change in the form of government, or state succession. Elections include the nature of election process or accession to power, date of the last election, and date of the next election. The Chief of state, President Lt. Gen. Yoweri Kaguta MUSEVENI (since seizing power on 26 January 1986); Vice President Edward SSEKANDI (since 24 May 2011) the president is both chief of state and head of government. And the Head of government was President Lt. Gen. Yoweri Kaguta MUSEVENI (since seizing power on 26 January 1986); Prime Minister Amama MBABAZI (since 24 May 2011); the prime minister assists the president in the supervision of the cabinet. President reelected by popular vote for a five-year term; election last held on 18 February 2011 (next

52 to be held in 2016). The Election results was Lt. Gen. Yoweri Kaguta MUSEVENI elected president; percent of vote - Lt. Gen. Yoweri Kaguta MUSEVENI 68.4%, Kizza BESIGYE 26.0%, other 5.6%. The main political party and leaders of Uganda are Conservative Party or CP [Ken LUKYAMUZI]; Democratic Party or DP [Norbert MAO]; Forum for Democratic Change or FDC [Kizza BESIGYE]; Inter-Party Co-operation or IPC (a coalition of opposition groups); Justice Forum or JEEMA [Asuman BASALIRWA]; National Resistance Movement or NRM [Yoweri MUSEVENI]; Peoples Progressive Party or PPP [Bidandi SSALI]; Ugandan People's Congress or UPC [Olara OTUNNU]. The National anthem of Uganda is‖Oh Uganda, Land of Beauty!” Agriculture is the most important sector of the economy, employing over 80% of the work force. Coffee accounts for the bulk of export revenues. Uganda has never conducted a national minerals survey. GDP of agriculture sector is 22%, GDP of Industry sector is 25.4% and GDP of Service sector is 52.6% in Uganda. Labor force in Industry is 5% and labor force in services is 13% in Uganda. There is an Unemployment rate NA% in Uganda. Lowest 10% of the house holds income or consumption in Uganda was 2.4% and highest 10% the house hold income or consumption in Uganda was 36.1% in the year of 2009. The inflation rate of Uganda was 14% in the year of 31 December 2010 and 9.65% in the year of 31 December 2009 on the consumer price. The prime lending rate of commercial bank was 20.5% in the year of 2011 and 20.17% in the year of 2010. In the year of 2008, the stock of money was $1.483 billion and in the year of 2007, was $1.347 billion. The market value of publicly traded share was $116.3 million in the year of 2006. The agriculture products of Uganda are coffee, tea, cotton, tobacco, cassava (tapioca), potatoes, corn, millet, pulses, cut flowers; beef, goat meat, milk, poultry. These are the main industrial products like Sugar, brewing, tobacco, cotton

53 textiles, cement and steel in Uganda. The growth rate of industrial product was 2% in the year of 2011. The export in 2011 was $2.582 billion and the export in 2010 was $2.164 billion. The export commodity includes coffee, fish and fish products, tea, cotton, flowers, horticultural products, and gold. The import of Uganda was $4.771 billion in 2011 year and $4.264 billion in 2010 year. The exchange rates of Ugandan shillings (UGX) per US dollar were 2,567.1 in 2011 and 2,178 in 2010. Understanding the social dynamics of the region that you decide to enter will enable you to more efficiently communicate with the native people, target markets, build a labour force and successfully manage teams. Your knowledge of the social aspects and cross-cultural communications is paramount in small gatherings where certain dignitaries and diplomats may be asked to attend. The total population of Uganda is 35,873,253 in the year 2012. The age structure of Uganda for 0-14 years is 49.9% (male 8,692,239/female 8,564,571) and the age structure of Uganda for 15-64 years is 48.1% (male 8,383,548/female 8,255,473). The population rate of Uganda was 3.582% in the year of 2011. The birth rate was 47.38 births per 1,000 populations in the year of 2011. The death rate was 11.54 deaths per 1,000 populations in the year of 2011. Total infant mortality rate was 61.22 deaths per 1,000 live births, for male it was 64.78 deaths per 1,000 live births and for female it was 57.56 deaths per 1,000 live births in the year of 2011. The official languages are English and Swahili of Uganda. These are the main religion like Roman Catholic 41.9%, Protestant 42% (Anglican 35.9%, Pentecostal 4.6%, Seventh- Day Adventist 1.5%), Muslim 12.1%, other 3.1%, none 0.9% (2002 census) of Uganda. The literacy rate is 66.8% of the total population can read and write in Uganda. The government of Uganda was spending 8.2% of GDP for health expenditures in the year of 2009.

The level of technological advancement in a region can positively or negatively affect the opportunities available for a business. The proliferation of mobile technology, wireless internet, access to electricity, internet access and transportation networks all influence the ease of doing business. The numbers of telephone users were 327,100 in the year of 2009 in Uganda. The numbers of mobile users were 12.828 million in the year of 2009 in Uganda. The telephone system includes Domestic intercity traffic by wire, microwave radio relay, and radiotelephone communication stations, fixed and mobile-cellular systems for short-range traffic; mobile cellular teledensity about 40 per 100 persons in 2010. International country code – 256, satellite earth stations - 1 Intelsat (Atlantic Ocean) and 1 Inmarsat, analog links to Kenya and Tanzania. Arabsat means Arab Satellite Communications Organization (Riyadh, Saudi Arabia) CB means citizen's band mobile radio communications. Central American Microwave System a trunk microwave radio relay system that links the countries of Central America and Mexico with each other. Comsat means Communications Satellite Corporation (US). DSN means Defense Switched Network (formerly Automatic Voice Network or Autovon); basic general-purpose, switched voice network of the Defense Communications System (US Department of Defense). Eutelsat means European Telecommunications Satellite Organization (Paris). HF means high frequency; any radio frequency in the 3,000- to 30,000-kHz range. Inmarsat means International Maritime Satellite Organization (London); provider of global mobile satellite communications for commercial, distress, and safety applications at sea, in the air, and on land. Intelsat means International Telecommunications Satellite Organization (Washington, DC). Intersputnik means International Organization of Space Communications (Moscow); first established in the former Soviet Union and the East European countries, it is now marketing its services worldwide with earth stations in North America, Africa, and East Asia. NMT

55 means Nordic Mobile Telephone; an analog cellular telephone system that was developed jointly by the national telecommunications authorities of the Nordic countries (Denmark, Finland, Iceland, Norway, and Sweden). SAFE means South African Far East Cable. Satellite communication system consisting of two or more earth stations and at least one satellite that provide long distance transmission of voice, data, and television; the system usually serves as a trunk connection between telephone exchanges; if the earth stations are in the same country, it is a domestic system. Submarine cable designed for service under water. TAT means Trans-Atlantic Telephone; any of a number of high-capacity submarine coaxial telephone cables linking Europe with North America. Telefax is facsimile service between subscriber stations via the public switched telephone network or the international Datel network. Telex is a communication service involving teletypewriters connected by wire through automatic exchanges. Trunk network is a network of switching centers, connected by multichannel trunk lines. UHF means ultra high frequency; any radio frequency in the 300- to 3,000-MHz range. VHF means very high frequency; any radio frequency in the 30- to 300-MHz range. The broadcast media of Uganda includes Public broadcaster, Uganda Broadcasting Corporation (UBC), operates radio and TV networks; Uganda first began licensing privately- owned stations in the 1990s; by 2007 there were nearly 150 radio and 35 TV stations, mostly based in and around Kampala; transmissions of multiple international broadcasters are available in Kampala (2007). The internet country code of Uganda is UG. The internet host was 33,082 in 2010 this entry lists the number of Internet hosts available within a country. The numbers of internet users were 3.2 million in the year of 2009.

Environmental analysis involves aggregating and analyzing weather patterns and climate cycles. In the wake of the heated discussion about global warming, environmental analysis has been brought to the forefront of the media, a place it usually only occupies in times of disaster, like the tsunami in South East Asia or the Haitian Earthquake. Environments vary drastically in different areas of the globe depending on the biome or ecosystem of the region. While not a comprehensive list, some examples are tundra, forests, deserts, grasslands, and wetlands. The location of Uganda situated near East-Central Africa, west of Kenya, east of the Democratic Republic of the Congo. The land area includes 197,100 sq km, the water area includes 43,938 sq km and total area of Uganda is 241,038 sq km. The total land boundary of Uganda is 2,698 km. The border countries of Uganda are Democratic Republic of the Congo 765 km, Kenya 933 km, Rwanda 169 km, South Sudan 435 km and Tanzania 396 km. Copper, cobalt, hydropower, limestone, salt, arable land and gold these all are the natural resources of Uganda. From the total land, 21.57% Arable land is use; in this land 8.92% Permanent crops are grown and others are 69.51% Uganda made a international agreements for environment with Biodiversity, Climate Change, Climate Change- Kyoto Protocol, Desertification, Endangered Species, Hazardous Wastes, Law of the Sea, Marine Life Conservation, Ozone Layer Protection, Wetlands. Legal environments change between the district, city, state/province and national levels. Complexities within certain industries can have a strong influence on the ease of doing business, complicating administrative, financial, and regulatory processes, among others. The constitution of Uganda includes the dates of adoption, revisions, and major amendments. It was amended in 2005 the amendments in 2005 removed presidential term limits and legalized multiparty political system. The legal system of Uganda is mixed legal system of English common law and customary law. International law organization participation of

Uganda includes information on a country's acceptance of jurisdiction of the International Court of Justice (ICJ) and of the International Criminal Court (ICCt); 55 countries have accepted ICJ jurisdiction with reservations and 11 have accepted ICJ jurisdiction without reservations; 114 countries have accepted ICCt jurisdiction. The judicial branch contains the name(s) of the highest court(s) and a brief description of the selection process for members. The Court of Appeal (judges are appointed by the president and approved by the legislature); High Court (judges are appointed by the president).

SWOT Analysis

SWOT Analysis is the most renowned tool for audit and analysis of the overall strategic position of the country and its environment. Its key purpose is to identify the strategies that will create a firm specific business model that will best align country‘s resources and capabilities to the requirements of the environment in which the firm operates.

STRENGTH

Strengths are the qualities that enable us to accomplish the organization‘s mission. These are the basis on which continued success can be made and continued/sustained. Strengths can be either tangible or intangible. These are what you are well-versed in or what you have expertise in, the traits and qualities your employees possess (individually and as a team) and the distinct features that give your organization its consistency. Strengths are the beneficial aspects of the organization or the capabilities of an organization, which includes human competencies, process capabilities, financial resources, products and services,

58 customer goodwill and brand loyalty. Examples of organizational strengths are huge financial resources, broad product line, no debt, committed employees, etc.

 Low employment rigidity.  Low costs for purchasing farm land.  Organized producer groups hence organized collection systems.  Potential of high production (climate, soil fertility, existing skilled government technocrats).  Government acknowledgement of the importance of the tourism sector.  Rich cultural heritage and diversity.  Rich natural resource base – mountain gorillas, ornithological destination with more than 1,000 species recorded.  Positive shift of trade competitiveness in recent years.  Easy availability of local component inputs.  Ease of sourcing local raw material.  Ease of finding workers with a good command of the official language.

 Good availability of technical workers. WEAKNESS

Weaknesses are the qualities that prevent us from accomplishing our mission and achieving our full potential. These weaknesses deteriorate influences on the organizational success and growth. Weaknesses are the factors which do not meet the standards we feel they should meet. Weaknesses in an organization may be depreciating machinery, insufficient research and development facilities, narrow product range, poor decision-making, etc. Weaknesses are controllable. They must be minimized and eliminated. For instance - to overcome obsolete machinery, new machinery can be purchased. Other examples of organizational weaknesses are

59 huge debts, high employee turnover, complex decision making process, narrow product range, large wastage of raw materials, etc.

 Decreased trade competiveness.  Low productivity of milk in North and Eastern Uganda (lack of organized groups, lack milk collection centres).  Inefficient information flow e.g. market information, regulatory.  Scarce vacancy for industrial building and sites.  High cost of finance.  Poor infrastructure.  Weak country rating.  Business starts up procedures are numerous.  High electricity usage charges.  Poor airline connectivity.  Low marketing spends, advertising.  Limited facilitation of regulatory and enforcing agencies. OPPORTUNITIES

Opportunities are presented by the environment within which our organization operates. These arise when an organization can take benefit of conditions in its environment to plan and execute strategies that enable it to become more profitable. Organizations can gain competitive advantage by making use of opportunities. Organization should be careful and recognize the opportunities and grasp them whenever they arise. Selecting the targets that will best serve the clients while getting desired results is a difficult task. Opportunities may arise from market, competition, industry/government and technology. Increasing demand for

60 telecommunications accompanied by deregulation is a great opportunity for new firms to enter telecom sector and compete with existing firms for revenue.

 An opportunity also exits in serving the goods and services to regional market. Taking advantage of Uganda’s strategic central location in East and South Africa.  Competitive tourism investment climate.  Improve infrastructure and facility development  The great opportunity of expansion tourism product diversification e.g. conference tourism  Technology- modern facilities for competitiveness.  Export Market availability mainly in milk product, services, manufacturing goods and agriculture products deficient neighbouring countries (DRC, Burundi, Kenya, Rwanda, Tanzania and Southern Sudan).  Improve marketing and advertising field for become a global competitor. THREATS Threats arise when conditions in external environment jeopardize the reliability and profitability of the organization‘s business. They compound the vulnerability when they relate to the weaknesses. Threats are uncontrollable. When a threat comes, the stability and survival can be at stake. Examples of threats are - unrest among employees; ever changing technology; increasing competition leading to excess capacity, price wars and reducing industry profits; etc.

 Uganda does not have a good reputation for intellectual property protections therefore; foreign companies may be averse to trusting secure financial and corporate data to firms located there.

 Threats of competition from country like Ethiopia, Tanzania, Zambia, Ghana and Kenya have growing and vibrant vegetables, fruits and floriculture industry.  Major threats of textile industry in Uganda are the mass inflow of second hand clothes, a large amount of coming from USA.  Internal and regional wars.

Chapter 1.8

Political Environment

Uganda was, in effect, governed from a gathering of military base spread across the country, where battalion commanders, acting like local warlords, represented the coercive arm of the government. The Ugandan General Service Unit (GSU), an intelligence agency formed by the preceding government, was disbanded and replaced by the Ugandan State Research Bureau (SRB). In 1966, well prior to the Amin era, northerners in the army had beaten and harassed soldiers from the south. Amin came to rely on Nubians and on earlier Anyanya rebels from southern Sudan.

The army, which had been gradually stretched under Obote, was stretched thrice further under Amin. Amin always remembered the basis of his power. Early in 1972, he upturned foreign policy — by no means a major issue for Amin — to make safe monetary and military support from Muammar Gaddafi of Libya. Amin debarred the remaining Israeli advisers, to whom he was much owing a favor, and became anti-Israel. East Germany helped to build Amin's underground police. In August 1972, Amin disqualified almost all of Uganda's 80,000 Asians and detained their belongings. Uganda's export crops were sold by government parastatals, but the majority of the foreign money they earned went for purchasing imports for the armed forces

The fall of Idi Amin, the UNLF and Obote II

In April 1979, a joint force of Ugandan exiles, under the umbrella of Uganda National Liberation Army (UNLF), and the Tanzania Peoples Defense Force (TPDF) overthrew Amin's rule.

It brought together a dissimilar group of Ugandan organizations and individuals with a general goal of ousting the Amin rule. The first UNLF government was led by Prof. Yusuf Lule as President and though well liked only lasted 68 days.

President Lule was followed by President Godfrey Binaisa, and then Paulo Muwanga whochaired the ruling Military Commission which prepared the December 1980 general elections. For a second time, Obote became President of Uganda.

Current Political Position of Uganda

Uganda is a presidential republic, in which the President of Uganda is both head of state and head of government; there is a multi-party system. Executive power is exercised by the government. Legislative power is vested in both the government and the National Assembly. In the non-party "Movement" system instituted by the current president Yoweri Museveni, political parties persistent to exist but could not campaign in elections or field candidates directly (although electoral candidates could belong to political parties). The Supreme Court of Uganda ruled that the election was marred by coercion, violence, voter disenfranchisement, and other irregularities.

Judicial System of Uganda

The Government of the Republic of Uganda is a Democracy made up of three arms:

The Executive – comprising of president, vice president, prime minister, cabinet.

The Legislative – parliament.

The Judiciary - Magistrates' Courts, High Court, Court of Appeals (Constitutional Court), Supreme Court.

Authority & Power of Local Government in Uganda

The scheme of Local Government in Uganda is based on the District as a Unit under which there are junior Local Governments and Administrative Unit Councils. Selected Local Government

Councils which are accountable to the people are made up of persons directly selected to represent electoral areas, persons with disabilities, the youth and women councilors forming one third of the council. The Local Government Council is the principal political power in its area of authority.

The Local Government Act, 1997 gives effect to the decentralization of functions, powers, and services to all levels of Local Government to develop good governance and democratic participation in and control of decision-making by the people. The law also provides revenue, political and administrative set up of Local Governments as well as election of Local Councils.

The powers which are assigned to the Local Governments include powers of making local policy and amendable delivery of services; formulation of development plans based on locally determined priorities; receive, raise, manage and allocate revenue through approval and execution of own budgets; alter or create new boundaries; appoint statutory commissions, boards and committees for personnel, land, procurement and accountability; as well as establish or abolish offices in Public Service of a District or Urban Council.

The central Government is responsible for national affairs and services; formulation of national policies and national standards and monitoring the implementation of national polices and services to ensure compliance with standards and regulations.

Overview the Local Government Association

STRATEGIC OBJECTIVES

1.To support a strong ULGA uniting and representing the interests of members and providing them with efficient and effective services

2.Trusted Local Governments performing their mandated functions in an accountable and transparent manner

Every District and Lower Local Government Council is entitled to become a member of the Association upon passing a council resolution, adopting the constitution and payment of membership and subscription fees.

STRUCTURE AND MANAGEMENT

The Association is able to achieve its objectives through a number of organs. These include: the Annual General Meeting, the Executive Committee, the Ethics and Accountability Committee and the National Secretariat.

Uganda's National Development Plan

DFID Uganda commissioned a civil society organization, SPW, to lead and classify a two-day national youth consultation at the application of the National Planning Authority in June 2009.

Problems addressed:

The discussion was designed to deal with the lack of youth input and participation in the development of Uganda‘s Five-Year National Development Plan (2009 to 2014), particularly concerning the key issues affecting young people, such as unemployment, education, health and poverty.

Objectives

•To ensure young people across Uganda have the opportunity to learn about and feed into the NDP process;

•To provide an opportunity for face-to-face discussion between young people and decision- makers; so decision-makers can better understand the barriers to employment and prosperity facing young people across Uganda;

Youth as partners

Fifty-two young people (provided that national representation for Uganda‘s districts and youth- led organizations), were recruited from youth NGOs, student associations and youth disability groups. This group discussed the key thematic areas of the NDP and formulated recommendations for the government.

Process

•National newspaper advertisement attracting help via SMS;

•Four groups formed strategies in the key areas of education, employment, health and population, and gender and social development;

•Two young people presented the recommendations to the National Planning Authority and Ministry of Children and Youth;

•Consultation outcomes disseminated across all key ministries and decision- makers in Uganda.

Results

•Government considering follow-up regional consultations, and youth participation in M&E of the plan.

•World Bank Uganda seeking young people to participate in Country Assistance Strategy (2010).

Political View on Foreign Investment

Strong financial growth, open markets, and plentiful natural resources provide good opportunities for knowledgeable investors in Uganda, though significant challenges such as poor infrastructure, high energy and production costs, and corruption can make Uganda a difficult investment climate. The Government of Uganda practices sound macroeconomic management, and is revising a range of laws and regulations to improve government liability, open markets, develop infrastructure, and build a more attractive environment for foreign Direct investment.

Uganda‘s prospective for larger amounts of Foreign Direct Investment (FDI), is tempered by weak infrastructure, insufficient electricity and high energy costs, the lack of skilled workforce, political interference, and high levels of corruption. With an installed total capacity of just 415 megawatts , Uganda's electricity network reaches only 10% of the population, and load shedding across the country is common. A two-lane highway from Kenya remains the primary route for 80% of Uganda's trade and election-related violence in Kenya in 2007-2008 virtually halt imports into Uganda for more than two months, causing a close impale in commodity prices. Uganda has increased public sector investment in roads, telecoms, and energy and is actively seeking private sector partners to overcome these deficits.

Corruption and government interference in the private sector are regional. In commercial disputes, Government agencies and politically-connected insiders may ignore court rulings against them, leaving foreign investors with no official means of recourse. A recent tax dispute over the sale of oil rights has held up oil production in Uganda for over a year and has led some investors to question the government‘s commitment to contract divineness.

Uganda's social services systems are lagging behind the demand generated by economic expansion and population growth. Uganda's population growth rate is 3.2 % per year, which is one of the highest in the world and Uganda's current population of 31 million is expected to triple in the next 30 years. While creating potential markets for products, the country's

69 population growth is already increasing the burden on social services, infrastructure, and land resources.

Openness to, and Restrictions Upon, Foreign Investment

Uganda is open to foreign investment and provides attractive incentives for medium and long- term foreign investors. The Heritage Foundation's 2010 Index of Economic Freedom ranked Uganda's economy 76 of 179 countries, and as the fifth freest economy of 46 countries in sub- Saharan Africa based on the ease of doing business, openness to trade, property rights, and fiscal and monetary policy.

Since coming to power in 1986, President Yoweri Museveni established relative political stability and economic growth. He encourages foreign businesses to set up operations in Uganda, particularly in value-added manufacturing and agro-processing. In 2001, Uganda created the Uganda Investment Authority (UIA) to assist foreign and domestic investors. Once adopted, this code will turn the Uganda Investment Authority into a one-stop shop for investors by granting the UIA new powers to obtain secondary permit for investor operations, allocate government resources for investment, and provide government incentives for rural investment.

Uganda now offers investment incentives and is implementing reforms to ease business transactions. Uganda Investment Authority is implementing a plan to construct industrial parks in the country's largest population centers. The government is financing the project with $27 million World Bank loan and $10 million budget allocation. The first park is located eight miles east of Kampala in Namanve, with electricity, mess systems, roads, and telecommunications infrastructure jointly funded by the World Bank and the government. According to Uganda Investment Authority , Uganda attracts many investors from the Middle East and Asia. Firms from traditional investor countries such as Kenya, South Africa and the United Kingdom (UK) also obtained licenses. According to the UIA, India was the largest foreign investor in 2010 with 47 future projects worth $173 million. Firms invested primarily in the manufacturing, finance, agriculture, and mining sectors. In total, Uganda Investment Authority granted licenses to 323 projects worth $1.67 billion in 2010. U.S. foreign investment in Uganda remains relatively small.

In 2010, Uganda Investment Authority approved six new U.S. investments worth $2.2 million, making the U.S. the 22nd largest investor in Uganda.

Ugandan policies, laws, and regulations are generally positive towards foreign investors, though revised legislation is needed. Uganda is revising more than 20 commercial and insolvency laws to reduce managerial delays and the cost of doing business. This includes plans to revise the Companies Law, update and speed up insolvency procedures, toughen intellectual property rights protections, expand and clarify provisions on mortgages, inform commercial contract law, and modernize provisions for e-commerce and electronic signatures. A draft Companies Bill, pending in Parliament since 2009, is designed to replace the outdated Companies Act, which remains the legal basis for the regulation of companies in Uganda. Under both the current and draft law, foreign investors may form 100% foreign-owned limited or unlimited legal responsibility companies and majority or minority joint ventures with Ugandan partners without restrictions. Licensing from Uganda Investment Authority requires a promise to invest over $100,000 over three years. Most foreign investors establish themselves as limited liability companies. Ugandan law also permits foreign investors to obtain domestic enterprises or establish Greenfield ventures. Ugandan courts generally support the purity of contracts, though judicial fraud and technical delays caused by well-connected defendants are a serious challenge. At times, Ugandan government agencies are unenthusiastic to honor legal remedies issued by the courts. Courts apply the principles of English common law. In recent years, the Uganda Revenue Authority has better its efficiency, boosted simplicity, and increased tax fulfillment. Part of this success is due to an internal reorganization, though the Uganda Revenue Authority has also grown more aggressive in collection by targeting large, often foreign-owned businesses. Despite these improvements, the Uganda Revenue Authority is still visible as a damage institution. Transparency International‘s 2010 East African incentive Index listed the Uganda Revenue Authority as the 4th most corrupt institution in East Africa and the most corrupt institution in Uganda. The Uganda Revenue Authority has offices throughout Uganda to provide restricted points of contact to address taxpayer concerns. Trade entities are taxed at 30%, though mining companies are taxed at rates between 25% and 45%.

The asset Code allows foreign contribution in any industrial sector except those touching on national security or requiring the possession of land. The Investment Code also allows licensing

71 authorities to impose performance obligations on foreign investors to which nationals are not subject. While the Code does not specify these obligations, Uganda Investment Authority imposes requirements based on the size of asset, staff training, limited employment, local procurement and environmental protection.

In 2006, the World Bank provided $70 million recognition for the Private Sector Competitiveness Project. This program improves Uganda‘s basic infrastructure for business expansion. The funds are distributed through the Private Sector Foundation (PSF) – a private businees support group founded with funds from the United States Agency for International Development (USAID) – to do up the entire land registry system. listed for completion in 2012, the project also aims to update Uganda's business registration service, hold up the Uganda Law

Foreign investors in Uganda should be attentive that projects that could shock the environment. The responsibility for Environmental impact Assesments applies to both local and foreign investors. Uganda's require of sufficient electricity supply and poor road infrastructure are major impediments for investors as road blockages, load shedding, and unforeseen power outages generate unexpected costs for all businesses. Uganda currently has just 415 MW of operational electricity capacity, removal some 90% of Ugandans with no entry to electricity. Uganda is ongoing its obligation to invest in roads, with plans to spend $483 million in 2010-2011. The telecom sector is booming after the Government Of Uganda lifted a suspension on new mobile telephone operative licenses. Further, Uganda is investing $117 million on a national fiber-optic network to take benefit of the arrival of marine fiber-optic cables in East Africa.

Chapter 1.9

Investment Opportunities for Entrepreneurs of Gujarat and in Uganda

Uganda is not stranger for investment and it has attracted the highest levels of foreign direct investment in the East Africa Community region over the past five years. In 2010 only, Uganda attracted FDI of up to US$ 848 million because of several reasons which included a predictable investment environment, a fully liberalised economy, good market access, a strong natural resource base and a commitment to the private sector by the government. Strategic location at the heart of Africa that guarantees ready access to regional markets

Uganda attracted FDI of up to US$ 848 million because of several reasons

1. Predictable Environment 2. Fully Liberalized Country 3. Market Access 4. Natural Resource Base 5. Government Commitment to Private Sector 6. Security to investors

Uganda's economy remains small, with a gross domestic product (GDP) of about $16 billion in 2009 ($490 per capita), and 31% of the population living on less than $1 per day. It is also highly dependent on foreign aid. Direct budgetary assistance from donor governments made up 31% of the Ugandan budget in the 2009/2010 fiscal year and commitments for 2010/2011 were 24%, though this number has decreased from above 50% earlier in the decade. This shows an opportunity for Gujart Entrepreneurs to invest in different sectors of Ugadna.

Uganda also provides investment incentives to attract investment from foreign. The uniform tax rate is 30%, initial allowance on plant and machinery 50-75%, scientific research expenses 100% and depreciation on Plant at 20-40%. It also provides the export incentives like ten year tax holiday and stamp duty exemption.

Uganda also provide certain incentive for export promotion such as Duty exemption on plant and machinery and other inputs, Stamp duty exemption, Duty draws back – a refund of all or part of any duty paid on materials, inputs imported to produce for export, Withholding tax exemptions

74 on plant & machinery, scholastic materials, human & animal drugs and raw materials.,Ten year tax holiday, Duty remission scheme for exporters involved in value addition.

In Uganda foreign investment is regulated by Uganda Investment Authority and it a autonomous body to boost national economic growth and development. Its objectives are Attract value adding investment that brings technology, skills & jobs, Contribute to the image of Uganda as a leading African Investment destination, and support to Small and Medium Scale businesses.

The procedure to invest in Uganda is easy. Foreign investors can apply for loans from the local banking sector. A number of financial support initiatives exist to support investors in given sectors. UIA can advise potential investors on the how and where to access existing financing options for their planned investments.

Foreign investors require a minimum of US$100,000 in planned investment in order to secure an investment license from the Uganda Investment Authority, whereas for local investors, the minimum planned investment requirement is US$50,000.

Prominent Sectors to Invest in Uganda

Agribusiness Uganda is one of the leading producers of coffee and bananas. It is also a major producer of tea, cotton (including organic cotton), tobacco, cereals, oilseeds (simsim, soya, sunflower, etc), fresh and preserved fruit, vegetables and nuts, essential oils, orchids, flowers and sericulture (silk).

Fisheries Uganda‘s fish processing sector has expanded vastly in present years and current export earnings for the year 2006 were close to US$146 million. Large fresh water expanses are home to a wide variety of fish products.

Forestry Uganda has over 4.9 million hectares of rich forest plants. Uganda possesses plentiful opportunity in areas like timber processing for export, manufacture of high quality furniture/wood products and various packaging materials.

Manufacturing Uganda‘s manufacturing output has been increasing by more than 10% annually over the last eight years. Opportunities are available in virtually all areas such as beverages, leather, tobacco based processing, paper,

Mining Uganda has large under-exploited mineral deposits of gold, oil, high grade tin, tungsten/wolfram, salt, beryllium, cobalt, kaolin, iron-ore, glass sand, vermiculite and phosphates (fertilizer). A discovery of petroleum wells in the Lake Albert region has enhanced the energy sector.

Infrastructure Uganda has made hard efforts to develop the current infrastructure of the country but still there is a lot more opportunity. Particularly, transport & logistics and energy sectors still require additional investment. With less than 10% of the normal capacity of 2,700 megawatts of power generated.

Financial Services The country also has opportunities for investment exist for international multinational banking groups particularly promoting new or innovative financial products and also micro finance saving institutions, which propose to operate in rural areas. Insurance, in particular, is still a relatively young sector and offers several opportunities for investment.

Tourism The distinctive attraction of Uganda as a tourist destination is due to the variety of its game stock and its unspoiled beauty. Within a relatively limited space of just over 240,000 square kilometres, Uganda offers an interesting contrast ranging from the wide East African plains and expansive savanna grasslands to the thich mountain rain forests and snow peaked mountains in the south western parts of the country.

Education Uganda runs high quality courses at a comparatively cheaper cost than other education destinations and is dedicated to making investment in the country‘s knowledge hub, a unique experience and a win-win situation for both investors and students.

Information Communication Technology Uganda‘s Information and Communication Technology (ICT) sector is one of the most attractive sectors within the region. This attractive partnership largely depends upon the good legal and regulatory frameworks. The supportive investment climate therein has shown many opportunities in ICT innovation services leading to maximum utilization of the current youthful human resource base which is suitable for the ICT work.

Printing and Publishing In the printing and publishing sub-sector, opportunities exist for the printing of textbooks for schools. Currently, imports 90% of Uganda‘s textbook requirement So, Investment opportunities exist in the various type of printing including flexography, screen printing, off-set printing and digital printing.

Opportunity for Gujarat Entrepreneurs in Uganda Dairy Sector

The dairy sector is one of the sectors that had been under government control for some time with the Uganda Dairy Corporation (UDC) dominating most of the buying of milk from farmers. The liberalization of the diary industry in the mid 1990s broke the monopoly of the Diary Corporation and opened up opportunities for private investment. Subsequently, the proportion of the national milk production that is processed before marketing has increased to an estimated 283,800 liters per day in 2007 where currently, 13 companies are involved in processing.

The current activities in dairy sector are 1. Milk production 2. Dairy Processing and marketing

According to Dairy Development Authority, it is estimated that 70% (i.e. 1.05 billion liters) of the milk produced is marketed commercially and the other 30% is consumed on the farm. There are two marketing channels for milk: informal and formal marketing channels. 80-90% of the marketed milk is sold through the informal marketing channel as raw milk.

In urban areas, the per capita consumption is higher and estimated at 48 liters per year per person, while in rural it is estimated at 22 liters per year per person. The K-2 survey indicates that consumption in the Central Region (including Kampala) is highest with 91 liters per year; Western region is the second highest in the Country averaging 51.7 liters per person per year. Consumption is lowest in the North at 15.6 liters per year due to limited supply. Overall milk consumption is growing at an average rate estimated at 8% per annum.

The entrepreneurs of Gujarat are having opportunity in dairy sector at Uganda. The dairy sector of the Uganda has high production potential. There exist a good regulatory frame work and strengthen dairy association.

Pharmaceutical Sector

Uganda is a land locked country with a total area of 241,551 km.. The total population (mid- 2009) was estimated at 30.7 million. From which 15.65 million or 51 per cent were female, with 23.8 million (87 per cent) living in rural areas. The census also showed that the population of Uganda is getting progressively younger, with the proportion of children under 18 years having increased from 51 per cent in 1969 to 56 per cent in 2002. In contrast, the proportion of elderly persons (60 years and above) have decreased from 5.9 per cent in 1969 to 4.6 per cent in 2002.

Uganda has a total of 11 licensed local pharmaceutical manufacturers, 477 registered pharmacies and over 4,370 chemist shops.8 As of 2006, the country had 114 hospitals, 60 of which were public, 46 private not for profit or FBO, and eight private. The National Medical Stores (NMS) are responsible for the procurement, storage and distribution of medicines and health supplies for the public sector, while the private sector is served through a chain of wholesale and/or retail pharmacies, chemist shops, and private clinics.

According to the Uganda Pharmaceutical Manufacturers Association (UPMA), Uganda‘s pharmaceutical market has an estimated value of US$ 276 million, out of which 90 per cent of the medicines are imported. They are imported mainly from India and China, and the remaining 10 per cent produced by local manufacturers. The imported medicines and health supplies account for 5.4 per cent of Uganda‘s total imports.

With a population currently estimated at around 31 million and an annual average population growth rate of 3.2 per cent, Uganda will have an estimated population of more than 36 million by 2015. This represents a prominent market segment for local manufacturers. Moreover, the total East African Countires population will be just over 127 million and with that of the Common Market for Eastern and Southern Africa (COMESA) results in more than 450 million potential pharmaceutical consumers in 20 countries. This high need of import of Medicines shows an opportunity for the entrepreneurs of Gujarat to produce Human Liquid formulationsHuman

80 vaccines, Human Parenteral Drugs, Manufacturing of Diagnostic material and equipment, Manufacture of Medical Equipment

Energy Sector

Uganda‘s overall national development objectives are fast economic growth, through increased productivity and improved agricultural and industrial production. Biomass as a source of generating electricity at small scale has not been explored in the African region except in South Africa [Dasappa, 2007]. A centralized plant that generates biogas from organic wastes will help manage the ever increasing organic waste in the country. Feasibility studies have been carried out in many areas along the various rivers in Uganda to estimate the capacity of the sites under review. The studies depict potential Micro Hydro power Sites.

Investment opportunities exist for developing renewable energy sources to provide electricity. The potential for private sector participation in the provision of these services is quite significant in both rural and urban electrification. And there is a large potential market for micro hydropower and solar energy in Uganda and the region which can help the household electricity consumption.

Opportunities also abound in the manufacture and marketing of charcoal briquettes. The briquettes are best for the institutional markets, because they can directly replace wood without changes made to the stoves. Schools, restaurants, hospitals, etc are potential markets and future opportunities will be there especially if the Government and local authorities decide to further impose the restriction on cutting down trees.

The proposed investment opportunities in the Energy sector include dedicating resources in one or a combination of the following:

1. Design, construction, sales and service support of biomass plants 2. Assembly and Marketing of solar units in Uganda 3. Manufacture and Marketing of Charcoal Briquettes 4. Acquisition, Installation & Services of Micro Hydro Dams in Uganda.

Mining Sector

Interest in Uganda‘s mineral potential has been increasing substantially since the country has made efforts to improve its mining and investment code. The mining industry in Uganda reached a peak in the 1950's when mining accounted for up to 30% of the country's exports. Revenues from mining increased 48% between 1995 and 1997. Uganda mineral potential remains untested due to very little exploration to date - the country has the potential to host gold, tantalite, copper and cobalt potential.

The mining industry in Uganda reached peak levels in the 1950‘s and 1960‘s when the sector accounted for up to 30% of Uganda‘s export earnings. However, political and economic instability experienced in the country in the 1970‘s and the recent global economic slowdown led the sector to decline drastically. Currently, the energy sector‘s contribution to total GDP, at current prices, was the lowest in (Financial Year) FY2009/2010 with a share of only 0.3 percent. It should be noted therefore that the decline is not a result of resource depletion but rather due to the bad governance at one time but recently due to poor world prices of cobalt and copper, among others.

The competitive factors are as follows:

 Strategic location

 General investment incentives

 Other incentives

 Availability of skills

The Government of Uganda has identified the development of the country‘s mineral resources as a major economic priority and has in place an extensive plan to bring this to fruition. Investment in mineral exploration is projected to increase from the current US$3 million to over US$50 million annually over the next five years.

Chapter 1.10 Present trade relation of Uganda with India/Gujarat import export & Overview of financial market of Uganda

Exports made by Uganda to India :

There are various products that are exported by Uganda. Some of these may be tea, coffee, spices, electronic equipments, sugar, iron and steel, glass and glass ware, vehicles, cereal, flour, milk preparations and products, matches, lead, pharmaceutical products etc.

Exports made by India to Uganda:

Similar to the exports there are various imports made by Uganda. Some of the imports done by Uganda are mineral fuels, oils, distillation products, nuclear reactors, boilers, machinery, rubber and articles, plastics and articles thereto, paper and paperboard, articles of pulp, etc.

Bilateral trade and investment:

With reference to the year 2010-11 and year 2009-2010 it has been found that the bilateral trade has increased from US $ 220.31 million to US $ 306.44 million that is there is an increase of 30.09. India is the second largest foreign direct investment in Uganda in 2011.

There is a fluctuating trend seen in the exports from year 2006-07 to 2010-11. However, India‘s export has been continuously increasing. Similar to the exports there has been a fluctuating trend in the imports also.

Uganda trade :

The country has sufficient copper, gold, and oil deposits. Coffee is the main export made by Uganda. There has been an economic growth continuously and this may be economic reforms in the past and efficient management during low periods.

The countries that Uganda trade :

The countries to which Uganda exports are Sudan, Kenya, Switzerland, Rwanda, UAE, Demographic republic of Congo, UK, Netherland, Germany.While Uganda import partners are UAE, Kenya, India, China, South Africa, Japan.

Financial markets:

Under the financial markets comes the money market and capital market. The money market is for short term instruments and the capital market is for long term instruments. The money market includes t-bills, commercial papers, certificate of deposits, repo market. In the capital market come the primary market and the secondary market. Further in primary market comes the initial public offering and private placements and in the secondary market comes the stock exchanges for further trading in the all ready traded securities.

CAPITAL MARKET

In the Uganda capital market the real competition has not occurred between the public and private issuers. The bond market has been tapped by two institutions namely East African Development Bank and Eastern Southern Africa Trade and Development Bank with a share of 25.78% and 23.68% respectively. The main role of this CMA is to alternative means for raising the long term finance. The government is also encouraging the development of this capital market for promoting sustainable growth, for mobilizing savings, increases the availability of the funds for the investment purpose.

Capital market deals with company shares, bonds of the government, private companies, debentures, commercial papers and notes. These financial products are termed as securities and are traded on stock exchange. The stock exchange that is operating in Uganda is the Uganda Securities Exchange. Capital markets enhance the inflow of international capital when international investors participate in debt and equity instruments.

CAPITAL MARKET AUTHORITY (CMA)

The Capital Market Authority (CMA) was established in the year 1996. It was formed under the Capital Market Authority Act. It is body which is responsible for promoting, developing and regulating the capital market industry in Uganda. The main objective of this market is to have market efficiency along with protection of the interest of the investors.

CMA is working for protecting the interest of the investors by setting the rules and regulations for the issue of any shares and debt instrument moreover before the listing is granted in the exchange. It critically examines the prospectus and the memorandum of the companies before listing. It also see to it that the company discloses all the material and core information including the risk factor also.

The functions of the CMA are:

 The development of the capital market for longer term investment in productive enterprise.  Create, maintain and regulate the market in which the securities can be issued and traded in fair, orderly, and efficient manner.  The protection of the interest of the investors.  The operation of a compensation fund.

This CMA is governed by the board of directors. This board deals with the important aspects such as legal, policy and compliance, finance, research and development, audit, etc. the rules and regulations of this CMA are covering the prospectus, stock exchange, conduct of business, accounting and financial requirements, licencing of market operators etc. The CMA licensing policy considers the following three criteria:  Investor protection  Financial viability  Potential to develop the security market.

The Capital Market Authority has approved Uganda Securities Market as the only stock market established in the year 1997. In the Uganda Stock Exchange the method of open outcry system has been adopted for trading.

In the area of regional cooperation the significant progress has been made due to East African Member State Securities Regulatory Authorities (EASRA). This brings together the securities regulators and stock exchanges in Kenya, Uganda, and Tanzania. To have awareness in the securities the CMA has developed the mass education programs whose main aim is to have all Ugandans benefit from participation in the capital market. An investor compensation fund has been developed by CMA in order to grant compensation to all those investors who has suffered loss due to failure of licensed broker or dealer to meet his contractual obligations.

PRIMARY MARKET

For issuing prospectus in Uganda there are various content require in the prospectus.

1. A caution statement 2. The purpose of the issue 3. Statements on legal status and affairs of the issuer 4. Rights of shareholders 5. Directors and employees 6. Financial statements 7. Accountant‘s report 8. Loan / debt profile 9. Information on bankers 10. Company policy on dividends and future developments 11. Professional advisor details 12. Risk factors

SECONDARY MARKET

Uganda stock exchange (USE)

Use was developed Uganda merchant finance & stockbroker association ltd. (UMFSA) , which is founded in 1996 by five banks. Now USE is owned by the licensed brokerage company in the country and licensed by the CMA to operate as approved stock exchange and perform self regulatory functions in its operation.

In USE open outcry system is also used. The USE rules & regulation is approved by the CMA and published in May 1997, it is provide a professionally set –up for allowing trade in fair and efficient security market. The USE was get licensed to run their services as an approved stock exchange in June 1997by the capital market authority (CMA) of Uganda.

CHRONOLOGICAL HISTORY OF THE EXCHANGE

1997:- USE get the license as approved stock authority of Uganda in June 1997.

2002:- the first financial institute of USE is bank of Baroda Uganda (BOBU) is listing on USE on 14th November 2002.

2005:- The listing of the 8 year East African Development Bank (EADB) Bond in December 2005

2009:- equity bank ltd. Is cross listed on USE on18th June2009.

2011:-CENTUM investment ltd. was cross listed on USW on10th February 2011.

FUNCTION OF USE

1) USE easily mobilizes the saving of investor. 2) They access the finance to new & small industries. 3) USE can easily create liquidity through acquiring & selling shares. 4) USE facilitates equity finance as oppose to debt finance. 5) They also provide price discovery to the company through open market operation.

THE CAPITAL MARKETS INDUSTRY

The current state of Uganda‘s financial markets can be described as an emerging market, which is at an early stage of development. Due to establishment of CMA & USE it is now easier to facilitate a vibrant secondary market for issued securities.

MARKET INFORMATION ABOUT USE

TRADING HOURS Official working hours of Monday to Friday is 8-30 a.m. to 5-30 p.m. it stays close on every national holidays. Trading is start on 10am to 12 noon.

TRADING SYSTEM

 In the USE two type of trading system is there  Over –the –counter (OTC) & security central depository (SCD)system.

TRADABLE SECURITIES

In the USE both primary & secondary market‘s securities are traded, like, Preference share, corporate bonds, equity shares, commercial paper, treasury bills, government bonds.

USE OPERATIONS Trading – T Delivery – T+3 Settlement –T+5

LIST OF EQUITY SECURITIES

On the USE there are several company‘s shares are traded like,

ALSI,,BOBU, BATU, DFCU,JHL ,NVL,EABL, KA, UCV, SBU, NIC, CENT, KCB, EBL, NMG, USE LCI.

THE STOCK MARKET

In 1994 Bank of Uganda developed the Capital Markets Development Committee (CMDC), which was comprised of stakeholders of capital market from financial markets, industry and government.

The CMDC made provision for the licensing of the Uganda Securities Exchange. There are a total of 10 listed companies and one company which will soon be privatized. It is expected that the trading platform will be automated and integrated with the other African Stock exchanges, facilitated by the passage of the Securities Central Depository Bill. The Central Depository System (CDS) will automate the current manual market into an electronic one where share certificates will be 'deposited' in book entry form (like a bank account) into the system to ease the transfer and ownership of shares and each entry will be given a CDS Account.

The different companies that are listed on the stock market are Bank of Baroda, DFCU Limited, New Version Ltd., Stanbic Bank, Uganda Clays Ltd., Kenya Airways etc. With regards to the tax structure the mining companies are charged with 25%–45%, depending upon the profitability of the mine. Uganda has fully liberalized the foreign-exchange market, allowing the free transfer of foreign exchange to and from the country. Tax slabs for individuals range between 0% and 30%, depending upon their annual income.

MONEY MARKET

After 1987 Uganda‘s monetary and financial sector has gone through major changes as government adapted free market reforms. Two of the most important reforms were the devaluation of the Uganda shilling (USh) and the liberalization of the exchange rate system.

Money market instrument

Government Securities Uganda‘s securities market includes trade in Treasury bills and Treasury Bonds. These are the following market for treasury bills and treasury bonds.  The Treasury Bill primary market  The Treasury Bill secondary market  The Treasury Bond primary market  The Treasury Bond secondary market

The primary function of the securities market is to support monetary policy implementation by providing an instrument of liquidity management.

Central Depository System (CDS)

To counteract the safety concerns regarding the bearer treasury bill certificates, the Bank introduced the electronic registry of investors in government securities called the book‐entry Central Depository System or CDS in 1999. The CDS solved problems of transferring ownership of securities, but introduced new problems

The Treasury Bond Market

Treasury Bonds are auctioned every 28 days. The bonds support monetary policy implementation by improving liquidity management and promoting market development. These

92 securities also assist in providing a framework for pricing of securities in the secondary market. Bonds have also provided an additional saving instrument and have deepened the capital market.

The Repurchase Agreements (Repo) Market

Repo market was mainly introducing intra auction liquidity variation. The vertical repo market shows the repo transactions occurring between primary dealer commercial banks and the central bank. This market was introduced in 2002 by the Bank of Uganda as a mechanism to deal with Managing liquidity in the banking system.

Non Central Bank Bond Issues

Currently, there are 4 corporate bond issues and traded on the Ugandan Stock Exchange. Private sector issuers comprise of banks and telecommunication companies.

Chapter 2.1 INTRODUCTION AND OVERVIEW OF THE PACKAGED FOOD INDUSTRY OF UGANDA

As a part of MBA program the global study report helps to understand the environment of one country.

Uganda

Uganda officially the Republic of Uganda, is a landlocked country in East Africa. The southern part of the country includes a substantial portion of Lake Victoria, shared with Kenya and Tanzania.

Uganda takes its name from the Buganda kingdom, which encompasses a large portion of the south of the country including the capital Kampala. The people of Uganda were hunter-gatherers until 1,700 to 2,300 years ago, when Bantu-speaking populations migrated to the southern parts of the country. Uganda gained independence from Britain on 9 October 1962. The current President of Uganda is Yoweri Kaguta Museveni.Uganda gained its independence on October 9th 1962. Dr. Milton Apollo Obote, leader of the Uganda People's Congress (UPC) became the first Prime Minister and head of the government.

Uganda was declared a Republic. This culminated in the 24th May 1966 attacking of Kabaka's palace by the Uganda army under the authority of General Idi Amin but on the commands of Obote. In a move to the left, Uganda became a one-party-state. The Ugandan economy was distressed by Amin's policies, with the removal of Asians, the nationalization of businesses and industry, and the development of the public sector.

Milton Obote's rule had terrorized, stressed, and grief-stricken people during Uganda's independence from Great Britain in 1962 to early 1971. By January 1971, Milton Obote, then President of Uganda, was prepared to rid himself of the possible danger posed by Idi Amin. Uganda was, in effect, governed from a gathering of military base spread across the country, where battalion commanders, acting like local warlords, represented the coercive arm of the government. The Ugandan General Service Unit (GSU), an intelligence agency formed by the preceding government, was disbanded and replaced by the Ugandan State Research Bureau (SRB). Amin always remembered the basis of his power. East Germany helped to build Amin's underground police. In August 1972, Amin disqualified almost all of Uganda's 80,000 Asians and detained their belongings. Uganda's export crops were sold by government parastatals, but the majority of the foreign money they earned went for purchasing imports for the armed forces.

Government

Amin's government, conducted by often unpredictable personal public statement, continued on. Amin accused Nyerere of waging war against Uganda, and, hoping to divert concentration from his in-house troubles and rally Uganda against the foreign opponent, Amin invaded Tanzanian territory and officially annexed a section across the Kagera River boundary on November 1, 1978.

In April 1979, a joint force of Ugandan exiles, under the umbrella of Uganda National Liberation Army (UNLF), and the Tanzania Peoples Defense Force (TPDF) overthrew Amin's rule.

For a second time, Obote became President of Uganda.

The Military Junta of Generals Bazilio and Tito Okello replaced Obote II's government. Yoweri Kaguta Museveni was under oath in as the President of the Republic of Uganda. To enable this task, political parties were perched and Uganda was governed by an all-inclusive Movement system.

Current Political Position of Uganda

Economy of Uganda

The Bank of Uganda is the Central bank of Uganda and handles monetary policy along with the printing of the Ugandan shilling.

For decades, Uganda's economy suffered from devastating economic policies and instability, leaving Uganda as one of the world's poorest countries. The country has commenced economic reforms and growth has been robust. In 2008, Uganda recorded 7% growth despite the global downturn and regional instability.

Uganda has substantial natural resources, including fertile soils, regular rainfall, and sizable mineral deposits of copper and cobalt. Since 1986, the government (with the support of foreign countries and international agencies) has acted to rehabilitate an economy devastated during the regime of Idi Amin and the subsequent civil war. Between 1990 and 2001, the economy grew because of continued investment in the rehabilitation of infrastructure, improved incentives for production and exports, reduced inflation and gradually improved domestic security. In 2000, Uganda was included in the Heavily Indebted Poor Countries (HIPC) debt relief initiative worth $1.3 billion and Paris Club debt relief worth $145 million. Growth for 2001–2002 was solid despite continued decline in the price of coffee, Uganda's principal export. This has highlighted the importance of avoiding jobless growth and is part of the rising awareness in development circles of the need for equitable growth not just in Uganda, but across the developing world.

With the Uganda securities exchanges established in 1996, several equities have been listed. The Government has used the stock market as an avenue for privatization. All Government treasury issues are listed on the securities exchange. The Capital Markets Authority has licensed 18 brokers, asset managers and investment advisors including names like: African Alliance

Investment Bank, Baroda Capital Markets Uganda Limited, Crane Financial Services Uganda Limited, Crested Stocks and Securities Limited, Dyer & Blair Investment Bank, Equity Stock Brokers Uganda Limited, Renaissance Capital Investment Bank and UAP Financial Services Limited. Uganda traditionally depends on Kenya for access to the Indian Ocean port of Mombasa. Uganda is a member of the East African Community and a potential member of the planned East African Federation.

International Trade policy of Uganda

The main import commodities include chemical products, clothing, machinery metal & metal products, various petroleum products and pharmaceuticals.

The Bank of Uganda administers exchange control on behalf of the Minister of Finance and private sector importers may purchase foreign exchange in the inter-bank market or in foreign exchange burcaus to pay for imports without restriction.

Uganda utilises the "Harmonised System" of customs tariffs. As of 2005, Uganda's main trading partners have been Kenya, Belgium, the Netherlands, France, Germany, United Arab Emirates, South Africa, India, China, United Kingdom and the United States.

SWOT Analysis of Uganda

A. Strengths:

Fertile soils: Uganda‘s soils are reputed to be extremely fertile and capable of supporting most crops especially if rains in the main growing areas are steady. Therefore even without use of chemical fertilisers, sorghum production can thrive.

Guaranteed market: For non-food sorghum there is a guaranteed market at a reasonable price by Nile Breweries Ltd. for its contracted farmers. This should provide some prospects for continued production albeit for a market that is limited and dependent on the breweries plans over which the farmers have little say.

Political Stability and favourable business environment: For the past 20 years or so, the country has experienced a remarkable level of political stability and favourable economic policies which

98 have engendered steady growth in the economy and confidence in the country‟s nascent private sector. This augurs well for the continued expansion in production and also in regional and international trade in sorghum.

B. Weaknesses

An unclear agricultural policy: Although the GOU has been implementing private sector friendly policies, its specific policy on agriculture remains unclear. There are no known incentives for farmers to increase production and no attempts to ensure they receive an economic return for their efforts. This results in wildly fluctuating prices and exploitation by unscrupulous traders and middlemen. These phenomena can be a disincentive to expand production. Moreover, many smallholders do not own their land outright and cannot use it to secure production credits from banks. Although a new land law has been passed recently that would confer some rights to tenants on land, there is still opposition to the law by land owners and its effective implementation is in the balance.

Low level technologies: Uganda continues to produce sorghum using mostly low level technologies. Further, because agricultural chemicals are expensive, they are not used enough by smallholders. This low technology leads to low yields, high losses to pests and disease and to poor post-harvest handling.

Poor marketing and transport infrastructure: When commodity marketing was liberalised in the 1990s, an inexperienced and poorly resourced private sector stepped in to try and cope. These new entrants into the sector (excepting the Nile Breweries Ltd. and its contract farmers) have yet to establish the kind of infrastructure that would encourage efficient marketing. There are no adequate on-farm stores, and there are no rural warehouses. The road net work especially off the main central government maintained highways are in a bad state and render produce that more costly.

C. Opportunities

Deepening regional integration: The countries of the EAC are moving toward the establishment of a common market thus creating a market of over 100 million consumers. Uganda is well placed to supply this market with beer made out of sorghum thus providing opportunities for expansion in the production of the crop.

Other breweries emulating Nile Breweries Ltd.: Uganda has two other breweries that could in the short term emulate Nile Breweries Ltd and manufacture a lower market beer using sorghum. In that case, there are prospects for more farmers in the eastern part of the country and elsewhere being contracted to produce sorghum for that purpose.

D. Threats

Discontinuation of production of low market beer by Nile Breweries Ltd.: Uganda has a history of failed brands in the beer industry. Both the big breweries have in the past introduced new brands that did not survive for long on the market. If that should happen to these new ventures, the production of sorghum will suffer.

Production based in drought prone districts: Although rainfall in Uganda is generally abundant and stable, nevertheless some areas have recently been prone to long periods of drought. The main sorghum growing districts in eastern Uganda are among such areas that have experienced periods of drought in recent years.

Scepticism about the EAC: Some people in the private sector in Uganda and in Tanzania are reportedly not as enthusiastic about deepening EAC integration as the political leadership. They have been calling for a slow down in that process. If these voices succeed in persuading their respective leaderships to slow down then one of the positive attributes of Uganda as an investment destination will be jeopardised and opportunities to expand production of sorghum and beer will be less.

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Major Industries in Uganda

Industry is very restricted in Uganda. The most important sectors are the manufacture of light consumer goods, the processing of agricultural products (such as coffee curing), and textiles, and the production of beverages, electricity, and cement. The production of beer in Uganda has increased spectacularly in recent years, increasing from 215,000 hectoliters in 1988 to 896,000 in 1997. A key block to the development of Uganda's industrial and commercial sector is bribery. Due to improved domestic security, market reform, and tax breaks, Uganda's manufacturing sector is rising. This disparity indicates a serious problem with Uganda's economy because, in order to carry on the present rate of import of manufactured goods, the government is indebted to borrow ever greater amounts of money from foreign donors which makes the country increasingly indebted.

The following are the sectors of Uganda:

1. Manufacturing

2. Infrastructure

3. Printing and Publishing

4. Building, Construction and Civil Engineering Industry

5. Computers and Communications Industry

6. Electrical Power Industry

7. Financial Services Industry

8. Food, Beverages and Tobacco Industry

9. Health Services Industry

10. Mining Industry

11. Oil and Gas Industry

12. Trading Industry

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Introduction To The Sector:

Despite Uganda's abundance of natural resources; incidents of food scarcity and famine still persist in parts of tile country. While a national food crisis may not be imminent, food insecurity and famine have existed, in various parts of Uganda partly due to insurgencies, natural disasters, adverse weather phenomena El-Nino and adequate policy interventions.

The Ministry of Agriculture and other international bodies, both government and non- Governmental, charged with the responsibilities of ensuring food security, sufficiency and Surplus are yet to come out with a coordinated and coherent strategy for increased and Sustainable food production. Moreover, contemporary emphasis on private sector-led economic development implies a leading role for (lie private sector in agricultural modernization. mechanization and commercialization. Through the development of Uganda‘s Grain Belt for food security, sufficiency and surplus predicated on tile urgent need on agricultural revolution, Divinity Union would be a key actor in Uganda's economic policy with its similar strategy for coffee rehabilitation.

GRAIN BEST PRIORITY

As part of Salim Saleh's commitment to help disadvantaged and marginalised groups, Divinity Union Limited will initially target Northern Uganda and parts of Luwero Triangle as a priority, to be followed by other parts of the country. Hence this preliminary proposal for the development of the Uganda Grain Belt will be initiated along, the northern axis, comprising of Nebbi, Gulu, Kitgum through Masindi to Luwero districts. This is justified by available grain production output - both potential and actual.

In the production strategy, modernization and large-scale commercial farming in conjunction with smallholder agriculture will, be put in place and the following grains will be a priority: maize (corn), rice, sorghum, and related oil seeds and pulses such as sunflower, beans and soybeans. Divinity Union Limited would thus invest in grain production simultaneous with clearing, drying, bulk - storage, processing and marketing in order to sustain the local as well as regional market.

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SWOT ANALYSIS OF THE SECTOR:

STRENGTHS:

1. Agriculture product as raw material: Uganda produces plenty of fruit and vegetables. For producing packaged food, potato is the raw material which is highly produced there only so it gives rise to increase in potato demand and cultivation for that will increase.

2. Employment will be generated so solution for poverty will be reduced. Traditionally marginalized groups like women youth can actively participate in producing packaged food.

3. Life style of Ugandan people is developing now so use of packaged food, taking lunch or dinner at restaurant has increase which will give boom to packaged food industry.

4. Uganda is best for Tourism so our target customers will not only be Ugandan people but also foreigners also.

5. Indigenous knowledge: the sector has been in existence since time immemorial and hence there is rich indigenous knowledge and skill that can be easily developed through training.

6. Capital investment: Packaged food can be prepared on a small scale and hence the start- up capital requirement is generally low.

WEAKNESS:

1. Export: Ugandan people are doing export of agriculture product so high export will make the raw material for packaged food makes costly.

2. Cost of equipment: For the production of packaged food, certain technology is required which is costlier.

3. Cost of Packaging: The product like Samosa, chips, etc, requires good packaging which creates cost for packaging.

4. Inadequate Financing: Financing is the core part for each and every business and like that with packaged food industry. It also require finance which is not easy to get.

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5. Infrastructure development: Lack of physical resources like access to containers and packaging materials, roads, transport and communication is also a hindrance to sector development.

OPPORTUNITY:

1. New Entrants: The threat of new entrants is fairly high at the production level because of the low technology requirements, and low investment capital requirement.

2. Wide Acceptance: The packaged foods are widely accepted product so there is an opportunity of wide acceptance over the country.

3. Poverty alleviation: With appropriate training, people can derive livelihoods from packaged food towards helping themselves out of poverty. The industry is a significant source of income for rural people especially those with few financial resources.

4. International market: Global demand for packaged food is rising because of people‘s perception and demand for time consuming and fast food products.

5. Market development: There is scope for increasing product quality and diversity. The experts and projects could be assisted towards making their interventions much more effective.

THREAT:

1. Taxes: High prohibitive taxes imposed on the imported processing and packaging equipment/ materials is a huge setback towards private sector involvement and investment in apiculture in Uganda.

2. Environmental Issues: As packaged food require use of plastic material for packing and other wastage which create environment pollution.

3. Easy Entrance: Packaged food industry is low capital incentive and less costly so there is a chance of increasing competition.

4. Substitute Threat: If there is entrance of any health conscious product in the market which may create threat to packaged food industry.

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Major Packaged foods in Uganda

1. 500g Roasted Robusta Coffee Beans

2. 250g Arabica Coffee Powder Roasted And Ground Coffee Gold

3. 50g Coffee Roasted And Ground Powder

4. 50g Tin Star Cafe Premium In Powder Form

5. Flavoured Matooke (Banana) Crisps

6. Flavoured Potato Crinkle Cut Crisps

7. Flavoured Potato Stix

8. Kruncher Potatoes Crisps Food

9. Kruncher Matoke Crisps Food

10. Kruncher Casava Crisps Food

11. Non GMO White Corn/Maize

12. Green Robusta And Arabica Coffee Beans

13. 2g Instant Star Cafe Powder In Sacket

14. 100g Instant Star Coffee Powder In Tin

15. 20g Coffee In Foil Paper

16. 250g Instant Star Cafe Coffee Powder

17. 100g Instant Star Cafe Coffee Powder

18. Dry Packed Tea Leaves

19. 500g Arabica Coffee Beans

20. Chicken Feet

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Chapter 2.2 Structure, activities, processes of the packaged food business in India

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Structure

India‘s food packaged food industry contributes 6.3% to the GDP by Employing over 1.6 million people and 16% to exports and 6 per cent of total industrial speculation. Food retail accounts for 26 per cent of India‘s GDP and is growing at a compounded annual growth rate of 7-8 per cent. At in attendance, the food packaged segment holds a 32% share of India‘s booming food industry. Exports of packaged food have grown at over 190% between 2002-03 and 2006-07, increasing from $6.98 billion in 2002-03 to $20.51 billion in 2006-07. FDI inflows in the food sector have been high and according to estimates, they are likely to touch $325 million by 2009. The market size for packaged foods is pegged at $102 billion, with the potential to grow by 10% to $330 billion by 2015. India, with the second prevalent arable land area, is one of the key food producers in the world. The Indian packaged food industry ranks 5th in size in the country. It ranks 1st in the world in production of cereals and milk, 2nd in production of fruits, 3rd in vegetable production, 7th largest producer of fish in the world, rank 2nd in inland fish production and is among the top five producers of rice, wheat, groundnuts, tea, coffee, tobacco, spices, sugar, and oilseeds. It is the 2nd major exporter of rice and 5th largest exporter of wheat in the world.

The country produces over 500 million tones of agricultural, horticultural and dairy produce annually, thus making it one of the world's largest food producers. However, the country‘s food processing industry is in a nascent stage. Only around 2% of fruits and vegetables are processed, and the figure stands at 15 % for milk, 26% for marine, 6% for poultry and 20% for buffalo meat, as against 60-70% of the overall food production in developed countries. Milk and milk products contribute to nearly 17% of the country‘s total expenditure on food. India has 53% of world‘s buffalo, 23% of sheep and 842 million poultry (6th largest in the world) India is a largely unused domestic market of over one billion consumers of whom 300 million consume processed and packaged foods while an additional 200 million are expected to shift to processed food utilization by 2010. Moreover, the packaged food industry has been declared as important sector in India.

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In 2007-08, food grain production in India had registered a 4.6 per cent increase with 227.32 million tones as against 217.28 million tons in 2006-07, according to estimates by the agriculture ministry. The output of coarse cereals in 2007-08 was 39.67 million tones, 17 per cent higher than the 33.92 million tons in the previous fiscal. The total output of oilseeds is estimated to have risen to a record 28.2 million tones, about 16 per cent higher than the 24.29 million tons in 2006- 07. The production of pulses has risen to 15.19 million tones, registering a year-on year growth of 7 per cent, and moving a new high. In the Financial Year '08, Indian food processing industry logged an remarkable growth rate of 18%. India currently produces about 50 million tones of fruit (about 9% of the world's production) and about 90 million tones of vegetables (11% of the world's production).

The earnings of the total food market is just about Rs.250, 000 crores (US $ 69.4 billion) out of which value-added food products include Rs.80, 000 crores (US $ 22.2 billion).

Sector-wise Breakup:

Snacks and Confectionery

The Indian market for snack food is estimated to be a market worth US$ 3 billion. The controlled sector of the snack food market is growing at 15% to 20% per year while the growth rate of the US$ 1.56 billion unorganized sector is 7% to 8 %.

Dairy and Proboscis

Indian dairy sector has US$ 62.67 billion current market size. And it has been growing at of 5 % per year. The dairy exports in 2007-08 rose to US$ 210.50 million against US$ 113.57 million in the equivalent period, in the last economic The market of neutraceuticals and probiotics has earned revenues of over US$ 185 million in 2007 and is projected to touch an estimated US$ 1,161 million in 2012.

Beverages

All the drinks (Alcoholic, non-alcoholic, carbonated, fruit based and health drinks) The market for carbonated drinks in India is worth US$ 1.5 billion even as the juice and juice-based drinks market accounts for US$ 0.25 billion. Growing at a rate of 25 %, the fruit-drinks category is one

108 of the fastest growing in the beverages market. The market for wine in India is also growing at over 25 % per year. The state of Maharashtra recorded an impressive 59.84 % growth of wine Production.

Marine Food

Indian seafood exports rose to US$ 1.55 billion during 2007-08. Frozen shrimp accounted for 52 % of total marine exports at US$ 980 million follow by frozen fish at US$ 326 million.

Poultry and Processed Meat: The country's poultry market is expected to grow at 12% to 15% per Year. At the same time, fuel by a thriving retail sector, the market for packaged meat is also growing at an estimated 15% to 20% per year.

Retail Landscape

In India the food and grocery market is currently valued at US$ 236 billion and is the 6th largest in the world. Food and grocery retail contribute to 70 % of the total retail sales. According to industry estimates, the segment is growing at a rate of 104 % and is expected to grow to US$ 482 billion by 2020. 99% of this part is unorganized, and therefore, there is massive scope for growth forth organized sector.

Activities

Packaged foods industry value chain

PRIMARY ACTIVITIES

 Inbound logistics

 Operations (production)

 Outbound logistics

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 Marketing and sales (demand)

 Services (maintenance)

SUPPORT ACTIVITIES

 Administrative infrastructure management

 Human resource management

 Technology (R&D)

 Procurement

PRIMARY ACTIVITIES

Inbound logistics

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Inputs are (according to the way they are dealt with): severely perishable raw materials and not strictly perishable raw materials.

 Strictly perishable goods. he hardest to manage are strictly perishable goods (dairy, fisheries, meats), which have very short transport times. Even if suppliers are concentrated in few regions, the receipt of goods is composite because deliveries take place all over the day

 Not strictly perishable goods. For not strictly perishable goods delivery time is easier to deal with, but cannot be neglected as well: if product lasts 1 month firms cannot have enough money to waste one week for the travel.

On a macro scale, suppliers for different kind of products are resolute in few regions. Therefore production amenities are built in their proximity in order to manage better inbound operations.

Transversal activities. A way to cut costs is to use 3PL (third parties logistics): they are companies whose business is to deliver goods from one point to another. Since they have scale,

111 they can exploit economies of scale (for example they can avoid backhaul or increase load factor) and offer lower prices. In this way costs are also kept under control.

To keep quality certification of the goods through the whole farmers-customers chain, traceability programs are enacted. Raw materials incoming factories have to be supervised to preserve data about their origin.

Inbound logistics are important for margins creations in the way they influence operations.

Operations (production)

The operations perform in food processing plants are:

 Cleaning the food

 Cooking the food

 Packaging the food

The most pertinent issues for this activity are:

 competence in processes

 Hygiene of the factory

 Water, energy and greenhouse gas emission

 Wastes production

Efficiency in processes. To improve the way operations are perform, food companies are investing in new processes and technologies such as:

 numerous temperature monitoring

 inspections

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 global positioning system

 RFID

These upgrades of the factory involve positively the quality of the product and (especially the first two) help keep the factory unpolluted

Hygiene of the factories. In addition to the above mention, to assure hygiene, protocols such as Hazard Analysis and Critical Control Point (HACCP) are enacted. Firms regularly carry out in- depth audits in order to get better quality standards

High standards within the factory have to be sustained by safe products delivered from producers (see later in procurement)

Water, energy and greenhouse gas emission To run a plant, energy necessary is high and in many areas not much consistent. Firms that implemented another ways of having electricity (for example using wind or solar power) have improvement over competition in terms of money saved and quality of service. To deal with water usage, companies implement Wastewater Reduction Program and built Waste Water Treatment Plants. Greenhouse emissions are not directly accounted as a cost, but many companies reduce them in order to get better their image.

Transversal activities. Product quality is essential for food companies. Individual customers mind much about product quality in food and are not keen to trade it off for lower price. To assurance a high level of service, firms must pay cautious attention to all the operations steps.

For the above mentioned reason, operations are important for the making of margins.

Outbound logistics

Management issues are the equal for inbound logistics. If warehouses are used, the network is a little more concentrated, but travel distance is much larger. Using 3PL is a good option for outbound operations as well.

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Marketing and sales (demand)

Marketing and sales are analyzed through 4 major aspects:

 Product

 Price

 Place

 Promotion

Product

Product is not important in terms of margin formation because products are not much differentiating one another.

Price

Producers have some authority on price if they force manufacturer suggested retail price (MSRP) over retailers, but in packaged food this is not a extensive practice.

On the other hand, if prices are set by retailers, producers risk losing brand equity if the price is too low or trailing market share if the price is too high

Place

Retailers have high bargain power concerning positioning of products (place on the shelves, banners to advertise products, etc). This aspect is very important to ―convince‖ customers, so food packagers can give up some limits to assure retailers support them regarding place.

Promotion

Promotion is very imperative in terms of brand building because of the low products differentiation in the industry. Advertising is where firms have the most influence on.

Marketing is important for margin creation chiefly regarding promotion and then regarding place.

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Services (maintenance)

This activity is not very applicable for margin creation. The only kind of after sales service comes from product recalls, which are not very recurrent

SUPPORT ACTIVITIES

Administrative infrastructure management

The most vital activity of this kind is related to the integration of new businesses (and ultimately the separation of the ones that has to be divested).

M&As are very risky because different cultures not always integrate well; for this reason it is key to margin creation an excellent functioning of the infrastructure.

Human resource management

This activity is not relevant for margin design

Technology

Still if R&D expenditures are low, technology is important to organize distant locations. The system has to be regular and reliable on the sites spread all over the world in order to cut wastes and to coordinate logistics and operation (especially for perishable goods) in order to diminish the wastes.

Strategies to proffer high quality need a strong IT infrastructure: for example to promise raw materials quality, traceability programmes need constant exchange of data for the goods processed from one activity to the following.

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Procurement

Procurement is significant in terms of sustainable producers: in an industry like this with a severe contact with customers and their constant scrutiny on quality and practices, low price is not the only feature to look for when choosing suppliers. Probing for price only brings the risk of future standing damages because supply chain is not sustainable: raw materials like palm oil have to be delivered by certified farmers (responsible sourcing). in addition products deliver by suppliers have to meet minimum hygiene standards in order to facilitate operations (some contaminated raw materials means trash the whole freight, with the consequent cost for the firm) and offer soaring standards to final customers.

Procurement often promotes instructions for suppliers in order to improve their practices (Agricultural Practices, Storage Practices, etc)

Procurement department has to force these standards above suppliers to improve margins.

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Structure of Packaged food in India

Business structure

Dry snacks Dairy product

Raw material procurement Raw material procurement

process process

channel of distrubution channel of distrubution

domsetic sales export domsetic sales export

Nepal Singapour Japan, Singapore, Thailand, Malaysi a and Korea USA Australia saudi arabia

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Dry snacks 1. Raw material procurement

Dry food ingredients come in many different forms, but are normally either milled to a final Size or created to be a certain size via a process such as spray drying. Bread loaf volumes are affected by the size and shape of flour. Ingredient for dry foods is Noodles, potatoes, Garlic, Garam masala power etc.

2. Process

Any process solutions transform the efficiency of particulate processing operations across a diverse range of industrial sectors. The common factor is that timely, automated particle size analysis is the key to:

 Greater product consistency.  Lower variables costs.  Higher equipment utilization.  Automated process control.

The basic operation of noodles wheat flour is the main ingredient for making Asian noodles. The dough is compress between set of two rolls to form a dough sheet. The sheeted dough is then slitting to produce noodles. The noodles are now ready for sale. Or are further processes to prolong shelf life, to modify eating characteristics or to facilitate preparation by the consumer. In the preparation of instant fried dry food, the steaming process causes the starch to swell and gelatinize. The addition of alkaline salts (kan sui, a mixture of sodium and potassium carbonates) on some Chinese type noodles gives them a yellow colour and a firmer, more elastic texture.



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Flow diagram of dry foods process

Mixing

sheeting and compounding

sheeting, slitting and waving

Drying noodles

Length sizing of dry noodle

Packing

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3. Channels of distribution

There is a large divide between urban and rural consumers in India. Urban residents consumed 76.7% of all packaged food in 2009, while rural residents consumed just over 23.6%. Basically there are two channels for distribution which are given below:

 Domestic sales  export

Domestic sale

Packaged food sales in India increased 16% in 2008, reaching US $15 billion in value terms; however, in 2009 sales grew only 14.4% to a total of US $17 billion. In 2009, the Indian food sector experienced constant increases in the price of food products. However, for 2010 to date, the food market has seen a steady drop in the prices of essential commodities. Products highlighting health, such as energy bars and drinks, digestive biscuits, and healthier edible oils have grown in popularity, as have private label products.

Based on current data, the top five fastest-growing sub-sectors from 2005 to 2009 are: soup, with a CAGR of 21.6%; ice cream, with a CAGR of 21.2%; noodles, with a CAGR of 19.4%; ready- meals, with a CAGR of 17.3%; and confectionery, with a CAGR of 15.6%. For 2009, soup sales equalled US$24.2 million, ice cream sales totalled US$416 million, noodle sales reached US$377.4 million, ready-meal sales equalled US$14.4 million, and confectionery sales reached US$1,203.3 million. Urbanization has become a major trend in India and this has increased demand for this segment, as people become accustomed to faster-paced lifestyles and have less time for traditional Indian home-cooked meals. Packaged food, therefore, is replacing loose staples in the Indian diet.

India's rise in income has turned it into one of the largest consumer markets in the world. Food is the biggest consumption category in India, and accounts for 31% of the average consumer's budget. The exception is Delhi, where consumers spend 37% of their monthly budget on food.

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By 2013, Indian consumers are expected to spend almost US$357 billion on food. The Indian food industry is expected to reach US$258 billion by 2015.

East and Northeast India are the least developed areas of the country. Most of these consumers are highly price-sensitive, and the least likely to purchase packaged food. North India is the most populated and prosperous region. Consumers are well aware of fashions, trendy foods and brands. South India is also a well-developed region, but most consumers are conservative about shifting to packaged food and prefer traditional foods.

The end of 2009 saw Wal-Mart initiating a development program with 65 farmers in Punjab, which could be the precursor to contract farming in the country. These farmers currently supply 16 vegetables to the company's stores on a daily basis.To curb losses of agricultural food items from farm-to-table, the Indian Government has taken steps in 2010 to improve the food processing industry, strengthen the post-harvest infrastructure and fill the gaps in the supply chain.

Expand: Description

Source: Euromonitor International NOTE: 2010 data estimate

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India Top 5 Packaged Food Category Leaders by Value—US $Billions in 2009

Item Value Variance from 2008

Nutrition Staples 11.82 +1.48

Dairy 6.57 +0.95

Impulse and Indulgent 4.42 +0.59

Bakery 3.21 +0.34

Oils and fats 2.5 +0.23

Source: Packaged Food, Euro monitor International

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India Packaged Food Company Market Share - % breakdown 2005-2009

2005 2006 2007 2008 2009

Gujarat Co- operative Milk 6.5 7.3 7.7 8 8 Marketing Federation Ltd

National Dairy Development 3.5 3.8 4.2 4.6 4.9 Board

Nestlé SA 4.5 4.7 4.8 4.9 4.8

Britannia 4.7 4.6 4.6 4.6 4.4 Industries Ltd

Parle Products 4.7 4.4 4.2 4.2 4.2 Pvt Ltd

Cadbury 0 0 0 2.7 3 Schweppes Plc

Karnataka Cooperative 2.2 2.4 2.7 3 2.9 Milk Producers Federation Ltd

GlaxoSmithKline 2.9 2.9 2.8 2.6 2.6 Plc

Ruchi Group 2.5 2.4 2.4 2.4 2.4

Tamil Nadu Cooperative 1.8 2 2.2 2.3 2.3 Milk Producers Federation Ltd

ITC Group 0.9 1.2 1.7 2 1.9

PepsiCo Inc. 1.8 1.9 1.8 1.7 1.8

Adani Wilmar 1.92 1.7 1.6 1.5 1.5

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Ltd

Andhra Pradesh Dairy Development 1.6 1.5 1.6 1.6 1.5 Cooperative Federation Ltd

Marico Ltd. 1.6 1.6 1.5 1.3 1.3

Unilever Group 1.1 1.1 1.3 1.3 1.3

Perfetti Van 1 1.1 1.2 1 1.1 Melle Group

Source: Packaged Food in India, Euro monitor International

Exports From India

Value in Rs. Lacs Quantity in MT 2011-12

Sr No. Country Qty Value 1 U Arab Emts 4,036.00 9,365.00 2 Nepal 12,003.00 3,503.00 3 Singapore 3,063.00 2,597.00 4 Oman 673.00 1,777.00 5 Egypt A Rp 807.00 1,636.00 6 Australia 759.00 1,570.00 7 Saudi Arab 466.00 1,159.00 8 U S A 525.00 1,111.00 9 Qatar 455.00 1,066.00 10 Kuwait 408.00 942.00 Page Total 23,195.00 24,726.00

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Chapter 2.3 COMPARATIVE POSITION OF THE PACKAGED FOOD INDUSTRY OF INDIA

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COMPETITIVE LANDSCAPE

 Indian brands are set to continue leading ready meals during 2012. The key brands in the category are MTR, Kitchens of India, Haldiram‘s, Al Kabeer, Sumeru and Kohinoor. MTR is set to maintain its leading position in canned/preserved ready meals with a value share of 52%, followed by ITC with a value share of 27% and Kohinoor Foods Ltd with a value share of 8%. In frozen ready meals, meanwhile, Al Kabeer Exports Pvt Ltd is expected to maintain its leadership in 2012 with a value share of 31%, while Innovative Foods Ltd is set to retain its second leading position with a value share of 23%.

PROSPECTS

 Ready meals are expected to continue recording strong growth during the forecast period, increasing in constant value at a projected CAGR of 9%. The key factors which have so far contributed to the strong growth recorded in ready meals during the review period included the rapid development of modern chained grocery retail outlets, the rising number of working Indians who now have less time to spend on preparing meals from scratch at home, which has significantly boosted the popularity of packaged food items which offer the convenience of being able to prepare delicious vegetarian and non-vegetarian dishes in just a few minutes.  Growing at a compound annual growth rate (CAGR) of about 15 to 20% annually, Indian packaged food industry is likely to touch $30 billion by 2015 from the current level of $15 billion including snacks food, ready-to-eat food, healthy and functional food, said ASSOCHAM today.

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Main categories of packaged food

The main categories of packaged food are bakery products, canned/dried processed food, frozen processed food, meal replacement products and condiments. Some emerging new categories in this segment are processed dairy products, frozen ready-to-eat foods, diet snacks, processed meat and probiotic drinks. Some key players in this industry are Hindustan Unilever (tea, instant coffee, biscuits, pulses, and instant beverages), Nestle (instant coffee, milk and milk products, ready-to-eat foods), PepsiCo (aerated drinks, fruit juices, cereals, snacks) and Haldirams (sweets, nankeen‘s, syrups, crushes etc.

The growth in the economy, coupled with a strong desire among consumers to maintain a healthy lifestyle and the growing awareness of functional ingredients such as herbs, minerals, vitamins, omega fatty acids and probiotics is driving the functional foods and beverages market, highlight the paper.

Mr. D S Rawat, Secretary General, ASSOCHAM said that the food ingredients market is also increasing with a rapid growth rate, as consumers increasingly demand bigger, bolder tastes, foods that are healthy, and ingredients that are natural or sustainable.

Mr. Rawat further said that consumers are becoming more sophisticated and want more upscale flavors and ingredients. The Indian food processing market is one of the largest in terms of production, consumption, and export and import prospects.

The paper also points out that there is a large divide between urban and rural consumers in India. Urban residents consumed 78% of all packaged food in 2011, while rural residents consumed just over 22%.

India Sales of Packaged Food by Region in 2011

East and Northeast 21%

North 38%

South 28%

West 36%

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Key drivers for packaged food market in India are:

• Changing demographics: Youth is driving the consumption of the packaged food such as ready meals, packaged soups, etc.

• Increase in income: Rise in disposable income has increased the affordability of buying packaged food

• Urbanization: Urbanization has led to increase in nuclear families and also led to more and more women moving out for work

• Growth in organized retail: The penetration of organized retail is expected to 15% by 2016.

• Improvement in packaging: Advancement and development of variety of packaging has led to increase in shelf life and also satisfying various needs of customers.

• Increase in freezer facilities: Cold storage / freezer space plays an important part in growth of packaged food. Freezer space in India is expected to grow at a CAGR of 16% during 2008-14 which is expected to plan an important part in growth of packaged food storage.

Opportunities in packaged food market

• Focus on health:

• Ready to eat segment will increase

• Private labels

• Customized products

• Demand of Non-vegetarian packaged food

• Ready-to-eat foods market in India to reach Rs 2900 Cr by 2015. Tata Strategic recommends focusing on affordability, acceptability and availability of ready-to-eat foods.

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CHAPTER 2.4

Potential for Export from India/Gujarat market to Uganda

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Uganda has a great demand for packed foods. India can turn out to be a leading exporter for packed foods to Uganda. Packed food include ,Baked goods, Cookies, Crackers (and other savoury biscuits), Breakfast cereals, Cakes Chips/corn snacks/nuts, sugar Confectionery , Dairy (and other fat spreads), Dips and spreads, Export/wholesale/catering trade, Frozen foods, Hot food brands, Horseradish, Ice cream and chilled dessert, Jam, honey (and other spreads), Pickles, vinegar, sauces, 'Ready meals, Seafood, Soft drinks, Soup and noodles,, Tinned pulses, beans, vegetable and fruits, Miscellaneous

There is a deficit for Sugar and sugar confectionary products in Uganda. So our main focus is on exporting sugar and sugar confectionary item to Uganda. Various Sugar Confectionary items have a great demand in Uganda.

We would be exporting various products like:

. Cookies

Cookies have a great demand in Uganda locals. A possible, locally available, ingredient that can be used in cookie production is the addition of peanut meal. Peanuts are high in protein and fat, and, therefore, in combination with carbohydrate ingredients can make cookies a nutritionally balanced food.

An extension of the study of household cookie consumption is the possibility of utilizing cookies as a source of protein for children and population at large by adding groundnut meal as an ingredient. The results are useful for policymakers because the improvement of school children nutrition is possible using domestically supplied ingredients.

. Sugar and sugar confectionery

Various sugar confectionary like stated below are exported and have great demand in Uganda:

• Caramels

Derived from a mixture of sucrose, glucose syrup, and milk products. The mixture does not crystallize, thus remains tacky.

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• Chocolates

Bite-sized confectioneries generally made with chocolate.

• Divinity

A nougat-like confectionery based on egg whites with chopped nuts.

• Dodol

A toffee-like food delicacy popular in Indonesia, Malaysia, and the Philippines

• Dragée

Sugar-coated almonds and other types of sugar panned candy.

• Fondant

Prepared from a warm mixture of glucose syrup and sucrose, which is partially crystallized. The fineness of the crystallites results in a creamy texture.

• Fudge

Made by boiling milk and sugar to the soft-ball stage. In the US, it tends to be chocolate- flavored.

• Halvah

Confectionery based on tahini, a paste made from ground sesame seeds.

• Hard sweets

Based on sugars cooked to the hard-crack stage. Examples include suckers (known as boiled sweets in British English), lollipops, jawbreakers (or gobstoppers), lemon drops, peppermint drops and disks, candy canes, rock candy, etc. Also included are types often mixed with nuts such as brittle. Others contain flavorings including coffee such as Kopiko.

• Ice cream

Frozen, flavoured cream, often containing small pieces of chocolate, fruits and/or nuts.

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• Jelly candies

Including those based on sugar and starch, pectin, gum, or gelatin such as Turkish delight (lokum), jelly beans, gumdrops, jujubes, gummies, etc.

• Liquorice

Containing extract of the liquorice root. Chewier and more resilient than gum/gelatin candies, but still designed for swallowing. For example, Liquorice allsorts. Has a similar taste to star anise.

• Marshmallow

"Peeps" (a trade name), circus peanuts, fluffy puff, etc.

• Marzipan

An almond-based confection, doughy in consistency, served in several different ways.

• Mithai

A generic term for confectionery in India, typically made from dairy products and/or some form of flour. Sugar or molases are used as sweeteners.

• Tablet

A crumbly milk-based soft and hard candy, based on sugars cooked to the soft-ball stage. Comes in several forms, such as wafers and heart shapes. Not to be confused with tableting, a method of candy production.

• Taffy or chews

A candy that is folded many times above 50 °C, incorporating air bubbles thus reducing its density and making it opaque

. Jam and honey

One thing we know for sure from visitors to Uganda is that the Pineapples of Uganda are simply the best they had ever tasted anywhere. Pineapples may have originated in Paraguay but they

132 were perfected in Uganda – the Pearl of Africa. There is nothing like the aroma of a freshly cut Ugandan Golden Pineapple, the fruit is filled with juice, the center so soft that you can even eat it. It is simply an amazing and yet simple fruit dessert after most any meal, a delight to your palate. So pineapple Jam has the biggest demand in Uganda.

. Cereals

Clextral was indeed the pioneer for using the twin screw extrusion technology to produce first crispy flat bread (crackers) and extended its use to breakfast cereals, snacks and other cereal based products like croutons. Breakfast Cereals are of great demand in Uganda.

. Drinks and Refreshments

Below are some of the drinks one will find having great demand in Uganda:

• Bottled Water

• Soft Drinks

• Juices

• Beer

• Wine

• Liquor

. Milk Products

Uganda produces a variety of milk products. A substantial amount of milk and milk products is also imported indicating that the domestic production is not sufficient to meet market demands.

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Out of all the above mentioned items past export data of India suggest that there has been a great demand of sugar and sugar confectionary items in Uganda. Even though sugar confectionaries are produced in Uganda, they have a deficit as compared to the demand for it. Hence Sugar confectionaries is a great export opportunity looking at the rising demand for it in Uganda.

Hence our main focus in this project has been exploring opportunities for exporting sugar confectionaries to Uganda from India.

Business in Uganda:

Uganda is the most conducive business destination in East Africa, according to a survey report released by the East African Business Council.The report shows that Uganda is the best country to invest in the region with 55 points followed by Rwanda and Kenya with 45 points each.Most business people interviewed think getting a business permit in Ugandans simpler than in other EAC member countries, and that Uganda‘s communications is more efficient than her peers. The report commends the government of Uganda for many efforts creating a more conducive business environment but warns that a lot still needs to be done to encourage more investors into Uganda.

Uganda is blessed with a good climate all year round. The produce from this country is considered to be of a quality higher than most. Most exports however are in raw bulky materials like coffee, tea, cotton, maize (corn) and fish, which are more cumbersome to transport and have lower value than their finished products. There is therefore a need to move from the exportation of raw produce to products with added value. Products with added value come with more stringent standards since most of them are ready to eat, requiring no further processing. Uganda‘s food safety system therefore comes into question. Failing to meet the requirements of prospective trade partners (in this case the US) from the very beginning would result in the failure to develop trade partnerships. In section I a brief comparison of the food safety systems in the US and Uganda shall be covered. Section II will highlight the advantages and disadvantages of these systems while section III will focus on the benefits of having harmonised systems.

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CHAPTER 2.5

PESTLE ANALYSIS ON PACKAGED FOOD INDUSTRY OF UGANDA

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POLITICAL ANALYSIS

Uganda was one of a few African countries with a thriving industrial sector prior to independence. There were small and medium industries, as well as large-scale industries. With the establishment of the Uganda Development Corporation (UDC) in 1952, industry was accorded priority in the country‘s development efforts. The UDC was charged with the responsibility of promoting the establishment of industries, including joint ventures, of negotiating finance and attracting direct foreign investment, as well as promoting the establishment of industrial research institutions and related support services.\

The food processing, beverage and tobacco industries, accounted for approximately 45 percent of employment in the manufacturing sector. Textiles, leather and footwear industries, as well as the wood and wood products industry accounted for 16 percent of employment in the manufacturing sector.

Uganda was one of a few African countries with a thriving industrial sector prior to independence. There were small and medium industries, as well as large-scale industries. With the establishment of the Uganda Development Corporation (UDC) in 1952, industry was accorded priority in the country‘s development efforts. The approved policy measures aimed specifically at foreign investments. Some of the products such as sugar were also exported to neighbouring countries.

The ultimate objective was to improve the efficiency and performance of industrial enterprises through, inter alia, the privatisation of public enterprises, strengthening industry support institutions such as the National Bureau of Standards and the Export Promotion Council, establishing capacities for the creation of industrial designs, etc. Although it is acknowledged those firms compete and not countries, the role of government is crucial for industrial development and competitiveness. In Uganda, the Government, in particular the Ministry of Finance, Planning and Economic Development, has been responsible for defining macro-

136 economic policies, poverty eradication plans and competitiveness strategies in consultation with other ministries and institutions - both public and private.

ECONOMIC ANALYSIS

These include interest rates, taxation changes, economic growth, inflation and exchange rates. Inflation may provoke higher wage demands from employees and raise cost. Higher national income growth may boost demand for a firm's products.

Uganda‘s population is estimated at approximately 25.5 million with an annual growth rate of 3.7 percent. Uganda produces large quantities of a variety of food crops including tea, coffee, maize and oil seeds. The post and telecommunication sector is a fast growing sector accounting for 36 percent of GDP in 2004/2005. In the 1960s, considerable efforts were make to diversify the economy through the establishment of basic industries producing such goods as textiles, tea, sugar, beverages, edible oil, wood, paper and paper products, iron and steel, non metallic and metallic products, etc. Although some of the industries utilised local agricultural resources, most of them were excessively dependent on imported raw materials and other factor inputs. Industry contributed as much as 12 percent to GDP, and Regrettably, the country‘s import substitutions industries were unable to generate the high level of employment envisaged and did not adequately integrate the agricultural sector. The export promotion industries that were established had some drawbacks as most of the factor inputs were imported.

The industries were capital intensive and the country did not have the requisite human resource capabilities to efficiently and effectively operate and maintain the industrial plants and machinery. Industry was in a deplorable state by 1980.

Although manufacturing now accounts for about 10 percent of GDP, industrial development in Uganda is, however, faced with, inter alia, the following constraints.

Inappropriate policies for increased competitiveness and sustainable industrial development (similarly, assistance is being provided by UNIDO in analysing competitiveness and in defining appropriate policies for sustainable industrial development.

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In 2005, the Ministry of Tourism, Trade and Industry in cooperation with the Ministry of Finance, Planning and Economic Development, the Public Service Commission, the organised private sector and UNIDO organised a consultative forum/training workshop for high level decision makers, aimed at strengthening competitiveness for governance and economic management in Uganda.

 Inadequate technologies for the processing of agricultural and mineral products.

 Lack of entrepreneurship development and SME support institutions;

 Inadequate industrial institutional support services for the development of a competitive industrial sector.

 Limited scope for forward and backward integration of industries and of industry in relation to other sectors, in particular, the agriculture – industry linkage, which is currently extremely narrow.

 Inadequate skilled industrial human resources, including entrepreneurial capabilities, managerial capabilities, industrial planners, engineers, technologists, technicians, etc.

 Weak technological capacities and capabilities, including information and communication technological capacities and corresponding capabilities.

 The food processing industry is characterised by relatively small economies of scale, low to medium capacity utilisation, high labour productivity and relatively low capital investments. There are a number of problems and constraints impeding the development of the food processing industries.

 Inadequate raw materials.

 Lack of research and development facilities which offer opportunities for raw materials testing and improvements in process technology and product quality.

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 Poor and indiscriminate location of industrial plants with wide ranging problems relating to the collection of raw materials and the marketing and distribution of finished products.

 High cost of production, poor quality products and high prices.

The survey reveals that 25 percent of enterprises in the food processing industrial sub-sector plan to expand existing capacities within twelve months; another 10 percent would expand production capacity within 1-3 years. Twenty percent of food-processing industries indicate that expansion of capacities could be between 3-5 years. These figures are encouraging as they represent renewed interest in the food processing industrial sub-sector.

SOCIAL ANALYSIS

Changes in social trends can impact on the demand for a firm's products and the availability and willingness of individuals to work.

The Elderly:

As people age, they often encounter difficulty in getting various food packages open. Food suppliers want the elderly to be able to open their food with ease, but they can't make packaging too easy to open, either. Many times, elderly people who consistently struggle with opening their food packaging are in need of more assistance than they are currently receiving.

Children:

Food is, of course, safe to eat; unlike medicines and cleaning agents, it's usually not an issue for a small child to open up food packaging and eat the contents within. Also, strong packaging is necessary for many types of food, in order to keep it from going bad.

Theft:

Thieves often attempt to circumvent store security systems by slipping food out of its packaging; this is why packaging has to be reasonably hard to open.

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Litter:

One of the most significant social issues surrounding food packaging is litter. It must be noted, however, that packaging suppliers aren't the ones who strew litter about; consumers are responsible for properly disposing of their used packaging. Between recycling efforts and increasing awareness about saving the planet, litter due to packaging is likely to decrease as time goes by.

Serving Size:

Packaging suppliers are increasingly addressing this trend in an effort to keep food and other products from being wasted.

TECHNOLOGICAL ANALYSIS

New technologies create new products and new processes. Technology can reduce costs, improve quality and lead to innovation. These developments can benefit consumers as well as the organizations providing the products.

Packaging machines:

A choice of packaging machinery includes technical capabilities, labour requirements, worker safety, maintainability, serviceability, reliability, ability to integrate into the packaging line, capital cost, floor space, flexibility (change-over, materials, etc.), energy usage, quality of outgoing packages, qualifications (for food, pharmaceuticals, etc.), throughput, efficiency, productivity, ergonomics, etc. Packaging machines may be of the following general types:

 Blister, Skin and Vacuum Packaging Machines

 Cartooning machines

 Case and Tray Forming, Packing, Unpacking, Closing and Sealing Machines

 Check weighing machines

 Filling Machines: handling liquid and powdered products

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CHAPTER 2. 6

PRESENT POSITION AND TREND OF BUSINESS

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The manufacturing sector comprises of industries producing processed food, beverages, non- metallic minerals, wood and wood products, chemical products, leather and footwear, textiles, wearing apparels, etc. the over all manufacturing sectors are compared by the level of producing the products or a growth rate of the country.

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2003/2004, as did non-oil imports which increased by about 19.3 percent to US$1,021.4 million. The trade deficit in 2003/2004 increased to approximately US$ 674.2 million - some US$ 51.2 million more than 2002/2003.

In the early 1990s, tobacco production was extremely low. A major break through in production was experienced in 1997/1998. Since then, tobacco production has increased steadily. In 2002/2003 for example, production increased by about 52 percent of its 2000/2001 levels. Several reasons for the increases have been put forward but it is now generally acknowledged that the main reason was the abolition of the old corporative system and the liberalisation of the tobacco industry. However, in 2003/2004, there was a slight decline of about 1.8 percent in production. Export earnings also declined in 2003/2004 to approximately US$ 36.0 million compared to about US$ 44 million in 2002/2003.Uganda produces large quantities of a variety of fruits and vegetables, including pineapples, mangoes, passion fruit, maize, beans, tomatoes, etc. Fishery is also a thriving activity and fish processing into fillet and other fish meat are produced for the domestic, regional and international market.

Production in the food-processing sub-sector has been increasing since the year 2000, although declines in production were registered in early 2003 and mid 2004. However, the sub-sector grew by about 88 percent in 2003. The main food processing units are those producing coffee, tea, fish, vanilla, maize, meat and meat products, dairy products, vegetable oils, etc

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Exports from the textiles, clothing and footwear sub-sector increased between 2002 and 2003 after a period of decline in 2001. The increasing trend continued into 2004. Export earnings more than doubled in 2004 to about US$ 62.5 million. Textiles accounted for a substantial part of the 15.4 percent increase in export for 2003 and in 2004 with corded and combed textiles as the important trading products. The clothing and footwear industrial units did not perform well. In fact, large quantities of clothing and footwear were imported, between 2001-2003 and in 2004.

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2003 production levels. Paper production, per se, declined as imported paper dominated the domestic market.

146 for plastic and electrical products accounted for a substantial percentage of the increased production level estimated at 29.2 percent.

 Micro enterprises are those enterprises that are usually owned by a sole operator for income generating purposes. ―They are business undertakings employing less than five people of the family members. The value of assets, excluding land, buildings and working capital is below 2.5 million Uganda Shillings; the annual turnover is below 10 million Uganda Shillings which is the threshold for business related tax‖.

 ―Small enterprises are enterprises employing a maximum of 50 people in terms of value of assets excluding land and building and working capital is less than 50 million Uganda Shillings; annual income turnover is between 10- 50 million Uganda Shillings24. These enterprises are formally registered and operate fully the whole year and are managed by educated/skilled/trained managers.

147 recorded for MSEs in Uganda. It should be noted that not all of the 800,000 MSEs are in industry or industry related activities.

HERE IN THE PACKAGED FOOD INDUSTRY FOR THE EXPORT AND IMPORT IN INDIA WE HAVE FOUND THAT

India is the world‘s second largest producer of food next to China, and has the potential of being the biggest with the food and agricultural sector. The food processing industry is one of the largest industries in India-it is ranked fifth in terms of production, consumption, export and expected growth. The food industry is on a high as Indians continue to have a feast. Fuelled by what can be termed as a perfect ingredient for any industry - large disposable incomes - the food sector has been witnessing a marked change in consumption patterns, especially in terms of food.

A large part of this shift in consumption is driven by the processed food market, which accounts for 32 per cent of the total food market. It accounts for US$ 29.4 billion, in a total estimated market of US$ 91.66 billion.

• The Indian packaging industry, growing at an annual rate of more than 15 per cent, is valued at $ 15.6 billion (inr 85,000 corer).

• In the next five years, the sector is expected to triple to around $ 60 bn.

• The net profit of the packaging industry spurted 104.5 percent during q3 fy08, against a growth of 29.5 percent in the December '06 quarter.

• The large growing middle class, liberalization and organized retail sector are the catalysts to growth in packaging.

• More than 80 percent of the total packaging in India constitutes rigid packaging. the remaining 20 percent comprises flexible packaging.

• There are about 600-700 packaging machinery manufacturers, 95percent of which are in the small and medium sector located all over India.

• Indian packaging machinery imports are $ 125 million.

• The import (customs) duty for packaging machinery is 25.58 percent for 2007-08.

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Export trend

India‘s trade in various segments in the Food Processing Sector has seen a good growth driven by the Mango Pulp, Dried and Preserved vegetables, Pickles and Chutney in F&V, Buffalo Meat in the Meat and Poultry, Basmati Rice in Grains and Shrimp in the Fisheries segments. India‘s exports, as is the case globally, are to the proximate geographies led by South Asia at 34 percent and USA & Canada a poor 1 percent of total exports

Poor quality and grading mechanisms for raw material leading to loss of consistency in variety of raw material High level of wastage across the value chain Presence of too many intermediaries implying a high cost of raw material High costs of packaging Low technology equipment and knowledge High costs and poor quality of distribution Stringent Food Safety and Traceability norms from importing (developed) countries

Fruits and vegetables export

Exports of fruits and vegetables with are the growing day by day with good revenue generation of the food and more popular with the all over the world .people are now dependante on this type of packaged food because of the job and working schedule and easy availability of the product with the affordable cost

Geography wise export

The prominent export products are Fruit pulp & juices, Canned F&V, Jams, Squashes, Dehydrated vegetables, Frozen pulps and vegetables, Frozen dried fruits, Vegetable curries, Pickles and chutneys, Mushroom products etc

Fisheries

The basic tenet on which the sea food industry is presently working is that there is no demand for value added products in the domestic market as consumers prefer fresh fish. Also, the infrastructure for handling, distribution and storage is not well developed in the domestic market and hence the segment focuses heavily on exports.

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Packaged food details

Here in packaged food industry graph shows the increment year to year has been in a progress so people are now days more pereffered to eat packaged food because in working time its hard to prepare food so they are use to purchase this food starting from 2005 up to 2013 it is shown in graph there is a booming market are available for the indai and with other country also.

Challenges and apportunities

The future of the Indian farmer depends on the success of the food industry as India's prosperity is predominantly linked to the growth of incomes in the agrarian sector of the economy. Increasing liberalization of the economy has tried to lift the protection that the food and agriculture sector once enjoyed in the country. This has exposed the sector both to the opportunities and challenges of the global food economy.

The market forces are compelling the Indian agriculture producers to increase the quality of their farm produce while continuing to maintain their cost competitiveness in order to be able to compete effectively in the global food market. Even in the domestic market, rising per capita incomes and changing demographic profile of the population has ensured the growing demand for processed and convenience foods. Increasing consumer awareness about health and hygiene has shifted the focus of the market to "safe" foods. The Indian food-processing sector is undergoing a veritable revolution - all the way from the plate to the plough.

Indian food processing industry has seen significant growth and changes over the past few years, driven by changing trends in markets, consumer segments and regulations. These trends, such as changing demographics, growing population and rapid urbanization are expected to continue in the future and, therefore, will shape the demand for value added products and thus for food processing industry in India. The Government of India‘s focus towards food processing industry as a priority sector is expected to ensure policies to support investment in this sector and attract more FDI. India, having access to vast pool of natural resources and growing technical knowledge base, has strong comparative advantages over other nations in this industry. The food processing sector in India is clearly an attractive sector for investment and offers significant growth potential to investors.

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Segmentation of different sectors in food processing industry:

Sectors Products Diary Whole Milk Powder, Skimmed milk powder, Condensed milk, Ice cream, Butter and Ghee, Cheese Fruits & Vegetables Beverages, Juices, Concentrates, Pulps, Slices, Frozen & Dehydrated products, Potato Wafers/Chips, etc Grains & Cereals Flour, Bakeries, Starch Glucose, Cornflakes, Malted Foods, Vermicelli, Beer and Malt extracts, Grain based Alcohol Fisheries Frozen & Canned products mainly in fresh form Meat & Poultry Frozen and packed - mainly in fresh form, Egg Powder Consumer Foods Snack food, Namkeens, Biscuits, Ready to eat food, Alcoholic

Source: Ministry of food processing India, Annual Report 2004

Food processing units in organized sector

Flour mills 516 Fish processing units 568(+ 482 cold storage units) Fruits and vegetables processing units 5,293 Meat processing units 171 Sweetened and aerated water units 656 Milk product units 266 Sugar mills 429 Solvent extract units 725 Rice mills 139,208 Modernized rice mills 35,088 Source: Ministry of food processing India, Annual Report 2004

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CHAPTER 2. 7

FUTURE BUSINESS OPPORTUNITIES IN UGANDA

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Doing Business measures the ease of starting a business in an economy by recording all procedures officially required or commonly done in practice by an entrepreneur to start up and formally operate an industrial or commercial business—as well as the time and cost required to complete these procedures. It also records the paid-in minimum capital that companies must deposit before registration (or within 3 months).

According to data collected by Doing Business, starting a business there requires 15 procedures, takes 33 days, costs 76.7% of income per capita.

Agricultural processing is growing and there are investment opportunities in processing and packaging coffee, edible oils, tropical fruits, fruit juices and nontraditional crops. Sales opportunities exist for food processing equipment, storage facilities, chemicals and additives, preservatives, canning, bottling and other packaging equipment and related materials.

Steps to start a business in Uganda

 Investors must have and its name registered(Duration: 2-14 days)  Investors can obtain investment license (optional) (Duration: 3-5 days )  Investors may have to obtain sector specific secondary licences  Access to Utilities (with Telephone Uganda Telecom Ltd., Uganda Electricity Board, National Water and Sewerage Corporation)  Tax registration (Duration: 2-3 days)

 INFRASTRUCTURE AND UTILITIES :  Power supply and energy  Telecommunication  Water, sewerage and health services  Road transport  Air transport  Railways  Waterways and access to sea ports

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Despite poor facilities of Infrastructure Uganda has made significant progress in others, namely power supply and telecommunications. The development of the infrastructure reflects the development of Uganda as a whole.

TAXATION IN UGANDA  DIRECT TAXES  Corporate and income tax  Rental Income Tax  Withholding Tax

 INDIRECT TAXES

FOOD PROCESS IN UGANDA

The role of commercial food processing in the economies of Uganda Food processing for the market is carried out by enterprises in the formal, visible sector, and also by a large number of small and micro-enterprises which do not feature in the statistics. In terms of contribution to the overall GDP, the significance of food processing in the formal sector is relatively small. However both countries are largely agrarian, with manufacturing in its infancy, contributing only around 15%to GDP. Nearly a quarter of all registered enterprises are engaged in food processing, providing employment to around 20% of people working in the manufacturing sector.

Characteristics of enterprises in the sector Only a few enterprises in the formal sector can be referred to as large-scale: they include the breweries and soft drink manufacturers, and a few of the large parastatals such as flour and oil mills which have (so far) survived the changing role of the state.

A total of around 1000 small- and medium-scale enterprises (SMEs)are registered in Tanzania; in Uganda the number comes to approximately 1700. These figures can surely be no more than an indication, as many are not registered.

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MARKET OVERVIEW

Strong macroeconomic management and general political stability have helped this fast-growing country of 31 million improve its business environment over the past decade. However, high levels of corruption, poor infrastructure, a shortage of human capital and a dearth of affordable financing remain significant hurdles for businesses in all sectors.

In general, Uganda's economy remains small, with a gross domestic product (GDP) of $12.3 billion in 2007 ($400 per capita), and 31% of the population living on less than $1 per day.

Uganda‘s private sector has expanded significantly in recent years, and Uganda's GDP, trade, and foreign direct investment have all increased.

 GDP rose by more than 6% on average for the last decade and rose 7% in the 2008/2009 fiscal year. Forecasted growth in 2009-2010 is 6%.  Trade rose to $2.4 billion in the 2007-2008 fiscal year, up from $2 billion in 2006-2007.  Major investments were made in mobile phone communications, petroleum exploration, banking, construction, agro-processing and manufacturing.

In recent years, the Ugandan government has worked to pass and implement a range of laws and regulations to create greater government accountability, open markets, and build a more attractive environment for trade and investment. Uganda hopes to pass more than 20 commercial laws in 2010 to strengthen intellectual property rights, and clarify laws on mortgages, e- commerce, and electronic signatures.

Uganda‘s major trading partners are its regional neighbours, including Kenya, the Democratic Republic of Congo (DRC), and southern Sudan. The European Union, the United Arab Emirates, South Africa, India and China follow behind Uganda's regional partners.

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MARKETS FOR PACKAGED FOODS IN UGANDA

In the light of trade liberalization, market orientation is playing a crucial role in the economic success of farmers and entrepreneurs. Market orientation may be expressed by the level of market knowledge, market skill and commercial attitude of the decision- makers in the business. In this chapter, the demand for processed foods and the existing supplies in Tanzania and Uganda are presented.

Demand for processed food products

From the experience of the consultants, it is helpful to categorize the market into consumer groups:

 Well-off urban population (plus the small number of wealthy rural people).  People in cities and rural towns with average incomes.  People living in rural areas with low-to-average incomes.  Tourists and expatriates.  Restaurants and snack bars.  Other food processing companies.

There are categories like Snack foods, Bakery Products, Confectionaries etc…

Issues/Problems faced by Small-Scale Food Processing Enterprises

Problems can be divided in two categories- External and Internal

Examples of external problems include:

 Government policies towards small enterprises.  Availability and cost of finance from commercial lenders.  Availability of equipment, packaging materials, essential ingredients and maintenance services.  Competition from imported products.

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Internal problems include:

 Selection of inappropriate technologies.

Government policies towards small enterprises

The business registration, regulatory and reporting environment in Uganda is one of the worst in the whole of Africa and, more than any other factor, has driven the bulk of small- and medium- scale enterprises (SMEs) to operate in the informal sector. The Uganda Investor showed that procedures for registration and licensing in Uganda amount to four or five times the number of documents and forms needed to complete the process, compared with other African nations.

From the viewpoint of the entrepreneur, there is no coherent and perceivable support coming from government institutions. The degree to which entrepreneurs are organized in Uganda is very low: there are no manufacturing associations that effectively lobby government on issues that are of importance and interest to small and medium entrepreneurs.

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

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MARKET CHALLENGES

The barriers to doing business in Uganda include high levels of corruption, poor infrastructure, a lack of access to affordable loan financing, low levels of human capacity, and inefficient government services. A lack of government policies and regulatory consistency toward investment further impedes business predictability and efficiency.

Uganda's infrastructure, particularly its systems of roads, rail, electricity, and water, is poor. An estimated 80% of Ugandans receive no electricity at all and load shedding in Kampala remains common.

MARKET OPPORTUNITIES

Firms interested in exporting goods to Uganda have also been able to take advantage of its location in the heart of East Africa. With new stability in southern Sudan, and demand increasing in the DRC and Rwanda, Uganda has seen its regional trade growing strongly.

Uganda's traditional agricultural exports continue to represent opportunities. Coffee, tea and cotton, Uganda's largest exports by value, have increased substantially in quantity and dollar value over the past several years.

MARKET ENTRY STRATEGY

ENTRY AND EXIT

 Screening, registration and authorization  Incorporation and related requirements  Establishing a company of limited liability  Exit

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This can be done by using following:

(a) Direct Export (b) Using an agent or distributor (c) Establishing an office (d) Franchising (e) Direct Marketing (f) Joint Ventures / Licensing (g) Selling to Government

Other Start up Considerations

 Distribution and Sales Channels  Selling Factors / Techniques  Electronic Commerce  Pricing  Sales Service / Customer Support  Protecting Intellectual Property  Due Diligence

COMPETITION AND PRICE POLICIES

Uganda takes a liberal stance with respect to competition and price-setting. Open competition is generally encouraged and market forces allowed to determine who enters or exits any given business and what prices are charged. There are virtually no Government monopolies, and the Government does not interfere directly with the prices of commercial goods or services. Availability and choice of equipment, maintenance services and packaging Materials Local manufacture and import of processing equipment Technical maintenance

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PERFORMANCE REQUIREMENTS

Foreign investors may be subject to a number of performance obligations which are not imposed on national investors. These obligations may include requirements as to investment size, staff training and localization, local procurement and environmental protection.

 Local-content requirements  Technology-transfer requirements  Environment-related requirements  Expatriate employees

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. 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.

 Trade Regulations and Standards

 Import Tariffs:  Trade Barriers:  Import requirements and documentation:  Temporary Entry:  Labeling and Marking Requirements:  Responding to Tenders

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 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. There are a number of clearing and forwarding agents in Uganda.

 The exhibitor profile under the Packaged foods & Beverages category includes :

 Coffee  Energy Drinks  Fruit Beverages  Mineral Water  Ready to Eat Food  Soft and Aerated Drinks  Soups, Sauces, Fats & Cocoa Products  Sweets, Snacks & Savories  Tea

SMALL-SCALE FOOD PROCESSING IN UGANDA

 ECONOMIES

The importance of food processing in developing agrarian economies Agricultural produce, such as cereals, tubers and oilseeds, is generally not palatable immediately after harvest. Tubers, fruits and vegetables may be processed to extend their shelf-life; cereals are milled; and oilseeds are pressed to ease household-based food preparation. Some produce is fermented or mixed with other ingredients to improve palatability or turn it into an inviting snack. Market demand for

161 processed foods has developed in all cultures and societies as division of labour progresses and people specializing in particular skills have increasing levels of disposable income. Today a wide spectrum of food processing enterprises can be found in Africa, ranging from very small entrepreneurs extracting oil in laborious, manual operations, through small expeller mills providing services to customers and also selling some oil, up to large-scale enterprises processing food for national and international markets.

OPPORTUNITIES IN UGANDA

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. Nontraditional 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.

 Opportunity in food sector :

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PRIVATIZATION, LIMITATION AND EXCLUSION

 Privatization

The Government is either divesting completely from the commercial sector or liberalizing it to let private-sector operators compete on an equal footing. Foreign direct investment is basically permitted in all industries. In some, however, investors may not be entitled to investment incentives.

General rules and regulations governing private sector mergers and acquisitions have not been formulated. Acquisitions of Government companies are regulated by the Public Enterprise Reform and Divestiture Statute. In practice, the mode of privatization depends on the public enterprise involved. Foreign as well as local investors may participate in the privatization process without discrimination.

 Regional or zonal restrictions

Regional or zonal restrictions do not exist. Investors are free to invest in any part of the country. They are, however, required to observe environmental laws and not construct factories in protected areas. Some special incentives do exist for investors operating in up-country locations.

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CHAPTER 2. 8

POLICIES AND NORMS OF UGANDA FOR IMPORT/EXPORT TO INDIA INCLUDING LICENSING, PERMISSION, TAXATION

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Import restrictions of Uganda

• 200 cigarettes or 50 cigars or 100 cigarillos or 500g of tobacco, 1L of spirits, 2L of lighter alcohol beverages, Non-commercial amount of gifts and other items for personal use are import free.

• Narcotics , Pornography, Counterfeit items, Cultural artifacts and other objects of cultural importance, Henna, Palm tree and any products thereof, Explosive material are prohibited in Uganda.

• Live animals, endangered species, Medication, Hunting weapons are restricted.

The country ranks 118 in terms of total import volumes. Uganda‘s import partners are: UAE , Kenya ,India, China ,South Africa , Japan .

Export restrictions of Uganda

• Narcotics, Pornography, Counterfeit items, Cultural artifacts and other objects of cultural importance, Henna, Palm tree and any products thereof, Explosive material are restricted.

• Foreign currency – up to the amount, endangered species are restricted in Uganda.

• The country ranks 121 in terms of total export volumes Uganda‘s Export Partners are: Sudan ,Kenya, Switzerland ,Rwanda ,UAE ,Democratic Republic of Congo ,UK ,Netherlands , Germany

Top Food Products Imported By Uganda:-

Wheat , Cane Sugar , Food Preparations , Palm Oil , Grain Sorghum , Natural Vegetable Fats & Oils , Non Crude Oil , Rice , Malt , Cereal Grouts , Pasta , Yeasts , Wine , Seeds , Prepared Vegetables are top food products.

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