Cabinet at its sitting on Friday 25th August 2017 approved the National Exports Development Strategy (NEDS). It means this strategy is no longer a document for My Ministry alone, it is now a Government of Uganda strategy for promoting Export and must be supported by all relevant Government MDAs.
I thank my colleagues in Cabinet, for overwhelmingly supporting the approval of this strategy.
Trade is one fundamental sector in driving the growth of any economy, and history has proved that for any economy to grow, it must trade. My Ministry is consistently working to enhance the Trade environment so as to enable the private sector take advantage of the market opportunities foremost in the domestic market, because it is the domestic market that should be our number one market. It is also in the domestic market that enterprises build their capacities and competitiveness to enter into export market.
You all recall that Cabinet approved the Buy Uganda Build Uganda Policy which was launched by the Rt. Hon. Prime Minister in March 2017. This Policy is yielding positive results. Karuma Bridge construction is using nearly 90% of all its cement needs from the local cement factories. Hima Cement signed an MoU with Chinese Communication Construction Company (CCCC) to supply 120,000 tonnes of cement for three major projects: expansion of Entebbe Airport, Mubende-Kakumiro-Kagadi road project and Soroti-Moroto highway. The Standard Gauge Railways has ring-fenced US$ 700 million of transport requirements for the local transporters. These are very good initiatives that will enable the local firms build their capacities.
Buy Uganda Build Uganda and the National Export Development Strategy are not contradictory, but complementary. Domestic market enables enterprises to harness competitiveness and build capacity, which then makes them competitive enough to export. Domestic market therefore, provides the spring board into export markets.
In this respect, I would like to update you on key mile stones my Ministry has so far registered in this direction;
Uganda is strategically placed in the middle of the Great Lakes Region, with huge surrounding markets that have been opened up through negotiated preferential trade arrangements. We are members of the EAC, a market of about 150 million people, now at a Common Market Implementation stage. We are also a member to the COMESA Free Trade Area, a market of nearly 450 million people. A few weeks ago Cabinet approved the ratification of the EAC, COMESA SADC Tripartite agreement. There are 26 African Member Countries belonging to the Free Trade Area, and has approximately 632, million people, constituting 57% of Africa’s total population. This is a significant initiative providing huge trade and investment opportunities.
The challenge we have right now is that our penetration of those markets remains wanting. This is mainly on account of limited production, low levels of value addition, poor post-harvest handling, financing that is skewed towards importation, information asymmetry, and inadequate infrastructure for export development, among others.
In order to effective benefit from these markets, my Ministry developed the National Export Development Strategy, to deliberately guide the country towards tapping the opportunities in these markets. Allow me briefly present to you the NEDS
1. National Exports Development STRATEGY (NEDS)
The NEDS in brief
1.1Vision and Objectives of the Strategy
The vision is a focused and dynamic export sector fully responsive to available export opportunities, especially in preferential markets.
The overriding objective is to increase the value of Uganda’s exports of the specified products and services to the targeted markets over the next five years,
While thespecific objectives are:
i. To narrow the trade deficit that currently stands at US$ 3,462.8 million
ii. To control exchange rate volatility through increased and sustained export earnings
iii. To increase the value of priority products exported to the negotiated preferential markets by an average of 25% for the regional markets (EAC & COMESA) and 40% for the EU annually over the next five years
iv. To increase the value of priority products exported to the selected unilateral preferential markets (US, India and China) by an average of 40% annually over the next five years
v. To increase the value of priority products exported to the selected non preferential markets (Singapore, UAE and Hong Kong) by an average of 35% annually over the next five years
vi. To provide a two-way communication mechanism between the productive sectors and export markets with a view to fostering export oriented investment and production.
1.2 Priority Products
The following products are to be prioritized over the next five years:
i. High priority: coffee, iron/steel products, fish, cement, tobacco, sugar, flowers and tea
ii. Medium priority: Hides & skins, cocoa, sim sim, maize, plastics, rice, cotton, fruits & vegetables
iii. Low priority: beans
1.3Markets to be given special focus over the next five years:
i. European Union – Belgium, France, Germany, Italy, Spain, the Netherlands and the United Kingdom
ii. COMESA – Sudan, the Democratic Republic of the Congo
iii. EAC- Kenya, Rwanda, Tanzania and Burundi
iv. Middle East – United Arab Emirates
v. Asia – China, India, Hong Kong and Singapore
vi. Other Africa: South Sudan and
vii. The Americas – the USA
1.4 Strategic interventions for implementation under the NEDS
To unlock these strategic constraints and enable Uganda earn more from exports, the NEDS 2017/18 – 2021/22 outlines several strategic interventions for implementation:
i. Product and market focusing; Uganda will avoid attempting to ‘export everything everywhere’ and target her interventions on increasing her exports of specific products in specific markets.
ii. Increase and sustain production; The NEDS proposes that more land should be converted to agricultural production; increase productivity through research, free distribution of quality seeds, seedlings and fertilizers; engage armed forces in large scale production, and streamlining and timely provision of agricultural extension services.
iii. Value Addition, Quality Assurance and Product Competitiveness;.
iv. Financing for Export Development; to address challenges related to financing for export development, NEDS proposes setting up an Export Development Fund (EDF), to be managed by the Uganda Development Bank Ltd. The Fund shall focus on financing export oriented initiatives at sector and enterprise level for the priority products and services, with all activities along entire value chains eligible for financing.
v. Export Enterprises Development and Incentives; encourage SMEs to formalize their operations; train enterprises, especially SMEs, in various business management practices so as to improve corporate governance and skilling of labour necessary for their efficient operations; etc
vi. Import Substitution: Through ensuring effective implementation of the ‘Buy Uganda Build Uganda’ (BUBU) Policy;
vii. Trade in Services: to consolidate the country’s services sector and increase service exports,
viii. Developing/Strengthening Institutions for Export Development and Promotion:eg Uganda Export Promotion Board (UEPB); Uganda Development Corporation (UDC) Uganda Free Zones Authority (UFZA); NARO, Commercial Attaches in the priority/target markets
ix. Dedicated Export Promotion Initiatives: such as generating and disseminating export information (available markets and entry conditions such as tariffs and standards and food/feed safety requirements) to exporters and potential exporters, organizing and facilitating private sector participation in outward export/trade missions/fairs; and raising the political profile of export promotion initiatives.
1.5 NEDS Execution and Implementation Plan
Implementation will be under the overall leadership of the Ministry of Trade, Industry and Cooperatives, which will coordinate very closely with the Ministry responsible for Agriculture, Animal Industry and Fisheries, and the Ministry of Finance, Planning and Economic Development; as well as other relevant Ministries.
The National Export Development Strategy Implementation Plan (NEDSIP) has been developed to guide implementation of the Strategy.
1.6 Financing Implementationof the NEDS
Implementation of the Strategy is estimated to cost a total of Ushs 2,756.78 billion spread over five years as follows:
This investment is projected to increase the country’s (merchandise) annual export earnings from the current US$ 2.262b to US$ 8.3571b in 2022.
2. PROGRESS MADE IN THE IMPLEMENTATION OF THE BUY UGANDA BUILD UGANDA POLICY
The Policy, Strategy and Framework for the implementation of the Buy Uganda Build Uganda (BUBU) were officially launched by the Right Honorable Prime Minister of Uganda on 2nd March 2017. The Policy aims at increasing the consumption of locally made products through Government procurement and private sector. Increased consumption of locally made products is expected to enhance the market share of local firms in domestic trade.
The implementation of the Policy is focusing on producers and service suppliers in the following priority sectors: construction materials and services, stationery, textiles, furniture, footwear, leather and leather products, plastics, electric cables, foods and beverages, pharmaceutical products, accounting, auditing, legal services, printing, transport services, consultancy services, education services, insurance services hotel services and air-ticketing services.
2.1 Progress made since the launch
The Ministry has implemented the following key activities since the launch:
a) The Ministry developed and launched an Action Plan to fast track the implementation of the BUBU Policy. The plan is important in guiding the implementation of the policy by the Ministry.
b) Profiled producers and service suppliers in the BUBU priority sectors. These include;
i. 12 Licensed local pharmaceutical manufacturers
ii. 8 Leather tanneries
iii. 24 steel manufacturers
iv. 3 cement manufacturers
v. 27 Plastics manufacturers
vi. 2 Textile manufacturers
vii. 213 Accounting firms and 344 practicing accountants that have been licensed for the year 2017.
viii. 3500 hotels
ix. 31 Insurance companies profiled of which 4 qualify as local companies.
x. 97 contractors from Uganda National Association of Building and Civil Engineering Contractors (UNABCEC)
xi. 28 Consulting engineers from UACE were profiled
c) Held capacity building meetings with members of private sector associations on reservation schemes guidelines, preference schemes, standards and certification, business registration and Government supply procedures. Meetings held included members of associations of manufacturers like UMA, Insurers, Accountants, Transporters, Engineers etc
d) Ministry has so far identified 1,512 informal MSMEs in the Sectors of: Leather, Maize Milling, Furniture, Metal Fabrication and Textile & Garments.
e) The Ministry has identified Micro, Small and Medium Enterprises (MSMEs) that are going to be clustered to improve reliability of supply
f) The Ministry has identified areas in which to establish common user facilities for MSMEs. Such common user facilities shall be used for drying, sorting, grading, processing and packaging
g) The Ministry in collaboration with Management Training Advisory Centre (MTAC) has designed tailor made specialized hands-on technical skill training for small enterprises. These trainings shall be conducted by MTAC in the respective branches
h) The Ministry has identified 150 MSMEs that are ready for product and process certification
i) The Ministry has adopted Zimba Uganda as the BUBU Brand name and developed a logo that will be used on all Ugandan brands. The Ministry will launch the Zimba Uganda brand name in October this year.
j) Ministry has engaged 756 stockists (Supermarkets, Wholesalers and Produce/Grain Stores/Agro processors) to lobby them to provide more shelf space for Ugandan products. The Ministry has a target of having 40% of the products in the super markets as local products by 2022
k) The Ministry has circulated the Policy, Framework and Implementation Strategy for BUBU to all Accounting Officers of MDAs and to all local Governments to ensure compliance to BUBU.
l) The Ministry has engaged PPDA to prioritize local firms in public procurement and disposal processes
m) The Ministry has developed a customized/BUBU Compliant bidding document for consideration by Public Procurement and Disposal of Public Assets Authority. This is expected to increase the opportunities for local firms in public procurement.
n) The Ministry has continuously publicized BUBU on various communication platforms like radio, Television, newspapers and social media. This has created awareness about the Policy to all stakeholders.
o) The Ministry has organized consultative meeting on the draft Local Content Bill. The Bill is expected to give force of law to the BUBU Policy implementation
To realize the policy objectives of BUBU, there is need to change the mindset of our people towards locally originating products.
Other Ministry Initiatives to Promote both Domestic, Regional and International Trade
1. The National Services Trade Policy
The NEDS focuses on merchandise trade, but the one sector that we often overlook is the services sector. It is the new frontier of growth. I must also thank my colleagues in Cabinet for approving the National Services Trade Policy for implementation. Uganda’s export of services over the last five years on average US$ 2199 million, and the highest was US$ 2,498 Million in 2013.
The National Services Policy when fully implemented is expected to contribute significantly and will reach USD 5,000 million in exports by 2020, incrementally growing by US$ 500 annually over the next five years.
This growth is expected to come from the following key sectors: tourism services, distribution services, education services, business services, construction and related engineering services among others.
2. Development of Border Export Zones
The Government of Uganda, in 2010, developed and adopted a Border Export Zones/Market Program (BMP) to position the country and help in harnessing regional market opportunities. The Border Export Zone Program is being implemented under the auspices of the COMESA/Regional Integrated Implementation Program and co-financed by the Government of Uganda and the European Union.
The objectives of the program are:
(a)Increase competitiveness and penetration into regional markets;
(b) Enhance capacity of SMEs to benefit from existing and potential regional markets;
(c) Enhance value addition and export of high value added products to the regional market;
(d) Create employment and promote entrepreneurial growth.
2.2 Beneficiaries of the Border Export Zones
(i) Cross border traders (wholesalers, retailers, processors, manufacturers, exporters)
(ii) Market vendors mainly for agricultural and processed products
(iii) Business support service providers: Banks, Forex Bureau, Hotels and restaurants, Petrol Stations, Education Centres and Health Centres.
(iv) Storage and warehouse users and providers
(v) Clearing and forwarding agents, and recreation facilities
(vi) Border agencies- trade facilitating agencies (URA UNBS, MAAIF, Police, Immigration etc.)
2.3Government Strategy under the BMP
Government plans to establish at least 18 border markets at strategic border points to promote exporting with limited crossing the borders:
(i) Uganda – Kenya: Busia, Lwahkahka and Malaba,
(ii) Uganda- S.Sudan: Elegu and Oraba
(iii) Uganda-Rwanda: Katuna
(iv) Uganda-Tanzania: Kikagati-Isingiro and Mutukula etc
(v) Uganda-DRC: Mpondwe
Each Border Export Zone would be comprised of a nuclear border market for sale and purchase of commodities and household items surrounded by other trade and value addition enabling infrastructure including;
(i) Warehouses and storage facilities
(ii) Wholesale and retail shops,
(iii) Value addition ( both primary and secondary)processing centres and
(iv) Services centres including banks, forex Bureaus, hotels and restaurants and petrol stations, among others.
For each Border Export Zone, Government will open the land, supply utilities (water electricity and access roads) and construct a nuclear market around which investments will be attracted.
All other investments are expected to be realized through a Public Private Partnership and in this regard, investments and resources required will be generated by the private sector
2.4 Progress so far
a) Land has been secured from 7 border districts as follows:
i. Amuru District – 247.1 Acres
ii. Kabale District – 138.8 Acre (first allocation)100 Acres (Second allocation)
iii. Busia District – 52.3 hectares
iv. Manafwa District – 8.9370 hectares
v. Koboko District
b) Government has finalized the development of feasibility studies for Katuna, Elegu, Busia, Lwakhakha, Oraba and Kikagati. For each of these, the Ministry has developed a Master Plan, an Environmental Impact Assessments, Documentation and Designs, Bills of Quantities and bidding documents.
c) Government has secured about 1m Euro from COMESA under the RIIP Project to begin construction for at least one border marketin 2017/2018 financial year.
d) Government has also secured USD $2m from the World Bank under the GLTF to develop a border market at Mpondwe. Ground breaking for the Mpondwe market will take place on 26th September 2017.
e) Government is in the process of mobilizing funds to ensure that construction of the other border export zone sites is done within the next five target is to have all the eighteen borders developed over the period of 10 years.
2. Ratification of the Tripartite Free Trade Area Agreement:
Cabinet has approved the ratification of the EAC-COMESA-SADC Tripartite Free Area Agreement (FTA), paving way for the implementation of the Agreement. In a Cabinet meeting that took place on Friday 4th August 2017, members unanimously agreed that Uganda was ready to start the implementation of the Tripartite FTA which will open up a wider market for Uganda’s products and services in 26 African countries. The products for export will include agricultural products, sugar, tea, coffee and livestock products.
The Tripartite FTA represents an integrated market of 26 countries with a combined population of 632 million people which is 57% of Africa’s population; and with a total Gross Domestic Product (GDP) of USD$ 1.3 Trillion, contributing 58% of Africa’s GDP. This is a large area that provides expanded trade opportunities to Uganda’s Private Sector.
In conclusion, implementation of the National Export Development Strategy alongside the Buy Uganda Build Uganda Policy is top on Government priorities. BUBU is the springboard for increased export trade. My Ministry will continue to work with other Government MDAs, the Private Sector and other stakeholders to ensure increased production in the priority sectors and compliance to the required standards of products and services.