Free Zones Authority to push for high-value exports, create jobs

It appears your role, Uganda Export promotion Board (UEPB) and Uganda Investment Authority is the same. Isn’t that duplication of work?
No. There is no duplication of roles. As much as these roles might seem similar, our distinct mandate is to facilitate, license and regulate entities operating in Free Zones in Uganda.
However, in aspects to do with investment promotion, customs control, trade and market promotional services, quality assurance and standards, we work closely with the other government departments and agencies including UEPB.

What kind of licences do you issue?
We issue the developer’s licence - a licence which is given to an entity or a corporation which is undertaking the infrastructural development of the Free Zones. This may include construction of industrial buildings and warehouses, development of internal roads, landscaping and fencing, and providing utilities such as power, water, sewerage systems and telecommunications.
We also issue licences for operators. This falls into two categories: manager’s licence, which is offered to an entity, or corporation which will undertake management of a Free Zone and Free Zone Operator’s licence which is given to an entity or a corporation which is carrying out business activities in the Free Zone.
Operations may include manufacturing or processing commercial activities such as breaking bulk, repackaging, re-labelling and trading; export-oriented services.

How can the country’s exports be maximised?
Exports can be maximised when there is added value to what a country exports. As such, Uganda’s exports can be maximised through: processing (where applicable), branding, packaging, labelling products to ensure they generate more per unit.
In addition, exports can be maximised through promoting (media, embassies, PR) and trade agreements with target countries to assure the market for products originating from Uganda.
Furthermore, export efforts need to focus on the high value exports and those that maximise Uganda’s competitive advantage.

Should our focus be on the export market or we should first satisfy the local demand before thinking of exporting?
Growth of an economy is directly related to exports. If exports increase compared to imports, there is guaranteed economic growth. On the other hand, the instability in exports can adversely affect the process of economic development.
Uganda’s export performance is still among the lowest in the world, even though there has been a marked increase in the growth of exports over the last decade.
Our overall balance of payments position has been negatively affected by the poor performance of exports. This has led to the Ugandan Shilling weakening against the US Dollar because we import more than we export.
Lower exports mean low foreign exchange and this, in turn, means low purchasing capacity of a nation in the international market and uncertainties in an economy.
The Free Zones scheme is a deliberate effort by Government to contribute to addressing the above shortfalls.
However, the domestic market is covered in the provision of 80/20 threshold where an operator is free to sell 20 per cent of the products on the domestic market.

What are Free Zones?
Free Zones are designated areas that are outside the customs control. They are geographic areas where raw materials and goods may be handled, manufactured or reconfigured for export without being subject to import duties. They can also be single factory companies.

How important are they for the country?
Government adopted Free Zones as complementary economic development tools to accelerate export-oriented manufacturing, boost Direct Domestic Investment (DDI) and attract Foreign Direct Investment (FDI). It also has the potential to create employment and increase forex earnings, in addition to enhancing technology transfer, creating backward and forward linkages and spurring economic growth.

How relevant is UFZA in dealing with challenges facing export sector?
The major challenges facing the export sector include: standards, supply chain constraints, lack of market information, lack of export infrastructure and global competition. The Free Zones programme aims at creating infrastructure (Free Zones) for private sector to operate with a relaxed tax regime and potentially subsidised utilities aimed at cutting the cost of doing business.
UFZA has signed a Memorandum of Understanding (MoU) with Uganda National Bureau of Standards to ensure companies in Free Zones are supported to meet quality standards.
In addition, we want to partner with UEPB in export promotion especially in obtaining market information.
To circumvent global competition, UFZA is focusing on sectors where Uganda has a competitive advantage such as agro-processing; minerals, oil and Gas; services such as logistics and pharmaceuticals.

Where do you see the country’s export performance in the next five to 10 years?
With Uganda’s current negative balance of payment, there is a call for all efforts to promote export value and volume. Uganda’s Free Zones aim at attracting export-oriented investments and in our strategic plan, we predict that Free Zones will facilitate growth in actual investment to the tune of $1 billion (Shs3.6 trillion); increasing export earnings by about $ 100 million (Shs361 billion).

What is your role in the trade exhibition being organised by Private Sector Foundation Uganda (PSFU) and how do you stand to gain from it?
The PSFU Trade Facilitation Expo 2017 provides a platform where UFZA will interact with the public and potential developers and operators in Free Zones. The Free Zones scheme recognises that Uganda is largely a private sector led economy, hence the need to reach out to them at such a forum to enlighten them on the business opportunities in Free Zones.

What are the achievements of the Authority?
The Private Sector is already embracing the incentives in Free Zones. The Authority has so far licensed five companies and will be issuing four more licences in the near future.
We have also launched our first five-year Strategic Plan 2015/16 - 2019/20 on December last year and we are looking at promoting development of 10 Free Zones, license at least 100 operators, increase export earnings by about $100 million and create 2,500 new direct jobs and 500,000 indirect jobs.