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Uganda Uganda Leather Value Chain Investment Profile Uganda

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Uganda Uganda Leather Value Chain Investment Profile Uganda LEATHER VALUE CHAIN INVESTMENT PROFILE UGANDA UGANDA LEATHER VALUE CHAIN INVESTMENT PROFILE UGANDA 2018 Basil Ajer AG EXECUTIVE DIRECTOR FOREWORD Information is arguably the most powerful tool available to individuals, companies and even countries to achieve their aspirations. However, on its own, information may not achieve much, unless it is used appropriately, which in turn can only be used appropriately, if packaged properly. It is indeed my honour, on behalf of Uganda Investment Authority (UIA), to endorse this well packaged profile on Uganda’s Leather Sector. The information in the profile has been put together by SITA International Trade Centre with whom UIA has forged a very fruitful relationship in the area of building the capacity of Ugandan companies; especially SMEs and Women owned companies, to increase their productivity and competitiveness in trade with India. UIA is Uganda’s investment promotion agency and works under the Ministry of Finance, Planning and Economic Development to provide investment information and facilitate investors to set up their businesses. UIA also provides aftercare services to ensure sustained investment growth. Investment opportunities in Uganda are vast; ranging from value addition of natural resources, services to hi- technology. The main opportunities are in mineral beneficiation, manufacturing, tourism, ICT and agro processing, as well the nascent oil and gas sector. The other areas are detailed in this profile. Agro processing in Uganda is considered to be a major driver of economic growth because if its viability and ability to create jobs for the majorly young population. The National Development Plan II identifies leather as one of the sectors that can play a major role to achieving the goals of job creation, income generation and alleviation of poverty by 2040. Uganda is among the highest exporters of hides and skins in Africa. Approximately 95% of processed hides and skins are being exported as semi-processed leather (wet blue). One the flip side, the country imports more than half of its processed leather needs. There is therefore profitable investment potential in the huge demand gap. For instance, footwear from Uganda can be exported at zero duty into the EAC market. Uganda is also eligible for the USA’s African Growth and Opportunity Act (AGOA), European Union’s Everything but Arms (EBA) and provides access to the Tripartite Free Trade Area of EAC, COMESA and SADC, where it is signatory. Setting up business in Uganda has been made easy through UIA, which is a One Stop Centre for investors, both physically and online through the eBiz portal www.ebiz.go.ug. Information is a powerful tool that informs investment decisions. It is my pleasure to now invite you to read this profile on Uganda’s leather sector. Your investment is truly our Business. UGANDA LEATHER VALUE CHAIN INVESTMENT PROFILE VALUE LEATHER 4 ACKNOWLEDGEMENTS This profile has been produced under the framework of the Supporting Indian Trade and Investment for Africa ( SITA ) project, funded by the Department for International Development, Government of the United Kingdom, and implemented by International Trade Centre. SITA is a South-South trade and investment project aimed at improving the competitiveness of select value chains and increasing investment in five East African countries through partnerships with institutions and businesses from India. Special contributions to writing this report have been provided by: Quality Assurance: International Trade Centre ( ITC ), Supporting Indian Trade and Investment for Africa ( SITA ) – T.C.A. Ranganathan, External Consultant; Jarmila Sarda, Investment Expert ( SITA ); Authors: Aristide Djimgou Tchakounte, Nicholas Mudungwe Layout: Jesús Alés Editor: Vanessa Finaughty The views expressed in this report are those of the authors and do not represent the official position of International Trade Centre, Tanzania Investment Centre or the Government of the United Kingdom. The images used in this profile may not always accurately reflect the country context. © International Trade Centre 2018 ITC encourages reprints and translations for wider dissemination. Short extracts may be freely reproduced, with due UGANDA acknowledgement, using the suggestion citation. For more extensive reprints or translations, please contact ITC, using the online permission request form: http://www.intracen.org/Reproduction-Permission-Request/ LEATHER VALUE CHAIN INVESTMENT PROFILE VALUE LEATHER 5 Table of Contents WHY UGANDA? 10 Labour and wage rates 40 Land availability 40 geographical overview 10 Land acquisition by foreigners 41 Political overview 11 1. Application 42 Economic and financial overview 12 2. Land allocation procedure 43 GLOBAL AND REGIONAL 3. Terms and conditions of land allocation 43 IMPORTANCE OF LEATHER 18 4. Important notes 44 Overview 20 USEFUL CONTACTS 45 UGANDAN LEATHER INDUSTRY 20 selected support agencies 45 Ugandan leather value chain: Overview and Some leather goods (shoes) manufacturers 47 investment opportunities 24 Financial institutions 47 Animal husbandry 24 Selected licences in Ugandan trade Slaughter slabs, slaughterhouses and manufacturing sector 50 and abattoirs 24 Tanning 26 REFERENCES 52 Leather footwear manufacturing 27 Leather goods manufacturing 28 Trade 30 TRADE AND INVESTMENT CLIMATE 30 Taxation 32 Investment incentives 34 Fiscal and financial incentives 34 Export incentives 35 Security of investment 36 UGANDA Visas and work permits 37 Registration procedures for companies 38 Industrial utilities 39 Electricity 39 Water 39 LEATHER VALUE CHAIN INVESTMENT PROFILE VALUE LEATHER 6 List of Tables TABLE 1: ANNUALIZED AVERAGE INTEREST RATES, 2012–2016 16 TABLE 2: ESTIMATED ANNUAL LOSSES OF UGANDAN LEATHER VALUE CHAIN 20 TABLE 3: RELATIONSHIP BETWEEN THE LEATHER VALUE CHAIN STRATEGY AND NATIONAL INDUSTRIAL POLICY 21 TABLE 4: RELATIONSHIP BETWEEN THE LEATHER VALUE CHAIN STRATEGY AND EXPORT STRATEGY 21 TABLE 5: LOSS ESTIMATION OF SLAUGHTER DEFECTS ON H&S IN THE REPUBLIC OF UGANDA 25 TABLE 6: SELECTED TANNERY CAPACITIES IN 2018 26 TABLE 7: INDIVIDUAL INCOME TAX FOR RESIDENTS (MONTHLY PAYE TAX RATES) 33 TABLE 8: INDIVIDUAL INCOME TAX FOR NON-RESIDENTS (MONTHLY PAYE TAX RATES) 33 TABLE 9: BUSINESS TAXES 33 TABLE 10: SELECTED TAX INCENTIVES AND EXEMPTIONS AVAILABLE TO INVESTORS IN THE REPUBLIC OF UGANDA 34 TABLE 11: OTHER TAX INCENTIVES 35 TABLE 12: EXPORT INCENTIVES 35 TABLE 13: SELECTED INCENTIVES FOR FREE ZONE INVESTORS 36 TABLE 14: SELECTED WORK PERMIT CLASSES AND THEIR RESPECTIVE REQUIREMENTS 37 TABLE 15: VISA AND WORK PERMIT FEES 37 TABLE 16: REGISTERING A NEW COMPANY IN THE REPUBLIC OF UGANDA 38 TABLE 17: ANNUAL AVERAGE WEIGHTED LARGE INDUSTRIAL TARIFFS (UGX*/KWH), 2012–2015 39 TABLE 18: NWSC TARIFF STRUCTURE 40 TABLE 19: LAND TENURE SYSTEM IN THE REPUBLIC OF UGANDA 40 INSTITUTION 45 CONTACT 45 ISSUING AUTHORITY 50 LICENCES 50 UGANDA LEATHER VALUE CHAIN INVESTMENT PROFILE VALUE LEATHER 7 List of Figures FIGURE 1: KEY MACROECONOMIC ASSUMPTIONS 12 FIGURE 2: TOTAL VALUE OF PRODUCTS EXPORTED BY THE REPUBLIC OF UGANDA (2002–2017) 13 FIGURE 3: MAIN IMPORTERS OF UGANDAN PRODUCTS IN 2017 13 FIGURE 4: DISTRIBUTION OF IMPORTING MARKETS FOR UGANDAN EXPORTS 14 FIGURE 5: TOTAL VALUE OF PRODUCTS IMPORTED BY THE REPUBLIC OF UGANDA (2002–2017) 15 FIGURE 6: MAIN SUPPLYING MARKETS FOR PRODUCTS IMPORTED BY THE REPUBLIC OF UGANDA IN 2017 15 FIGURE 7: DISTRIBUTION OF SUPPLYING MARKETS FOR PRODUCTS IMPORTED BY THE REPUBLIC OF UGANDA IN 2017 16 FIGURE 8: FDI INFLOW, THE REPUBLIC OF UGANDA (2002–2017) 17 FIGURE 9: STATUS OF FDI INFLOWS IN THE EAST AFRICAN COMMUNITY (EAC) (2018) 17 FIGURE 10: LEATHER VALUE CHAIN 18 FIGURE 11: PRODUCTION TREND OF HIDES AND SKINS IN AFRICA (2003–2014) 19 FIGURE 12: UGANDAN LEATHER EXPORTS (2010–2017) 22 FIGURE 14: IMPORTING MARKETS FOR UGANDAN RAW HIDES AND SKINS (OTHER THAN FURSKINS) AND LEATHER (2002–2017) 23 FIGURE 13: MAJOR AFRICAN EXPORTERS OF HIDES AND SKINS AND LEATHER (HS 41) 23 FIGURE 15: LIVESTOCK NUMBERS IN THE REPUBLIC OF UGANDA (2014–2016) 24 FIGURE 16: UGANDAN VALUE CHAIN MAP 25 FIGURE 17: SUPPLYING MARKETS FOR LEATHER FOOTWEAR (HS 6403) IMPORTED BY THE REPUBLIC OF UGANDA 27 FIGURE 18: SUPPLYING MARKETS FOR LEATHER ARTICLES (HS 42) IMPORTED BY THE REPUBLIC OF UGANDA 28 FIGURE 19: TRIPARTITE FREE TRADE AREA MAP 31 FIGURE 20: UGANDAN MULTILATERAL TRADE AGREEMENTS 32 FIGURE 21: INVESTMENT REGISTRATION AND FACILITATION FLOWCHART 39 UGANDA LEATHER VALUE CHAIN INVESTMENT PROFILE VALUE LEATHER 8 Abbreviations & Acronyms BUBU Buy Uganda Build Uganda CIBO Compendium of Investment and Business Opportunities COMESA Common Market for Eastern and Southern Africa EAC East African Community FDI Foreign direct investment GDP Gross domestic product H&S Hides and skins LVCS Leather Value Chain Strategy PAYE Pay-as-you-earn UBOS Uganda Bureau of Statistics UFZA Uganda Free Zones Authority UIA Uganda Investment Authority URA Ugandan Revenue Authority URSB Uganda Registration Services Bureau UGANDA LEATHER VALUE CHAIN INVESTMENT PROFILE VALUE LEATHER 9 Why Uganda? Key facts Capital: Kampala GEOGRAPHICAL OVERVIEW Area: 241 550.7 km2 Population: 37 673 800 (2017) Known as the Pearl of Africa, the Republic of 0–14 years: 46.7% (2017) Uganda is located in the heart of East Africa. It 15–64 years: 50.8% (2017) is bordered by the Republic of South Sudan in Active population: 19 103 900 (2017) the north, the Republic of Kenya in the east, the Democratic Republic of the Congo in the west, the Population growth: 3.2% (2017) United Republic of Tanzania in the south, and the Literacy rate: 72.2% (2014) Republic of Rwanda and the Republic of Burundi in Youth literacy rate (15–24 years): 83.6% (2012) the south-west. The Republic of Uganda’s position Urban population: 16.8% (2017) is advantageous to trade and investment due to GDP (nominal): $25.89 billion (2017) its direct access to a regional market of 170 million GDP growth: 3.96% (2017) potential customers (EAC Secretariat 2016 statistics). GDP per capita (nominal): $604.04 (2017) The land-linked country has rich soils, favourable FDI inflow: $541 million (2016) temperatures, plentiful rainfall and many lakes and Exports: $2 901 million (2017) rivers.
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