On June 11, 2015 the minister of Finance and Economic Planning, Mr Matia Kasaija, while presenting the budget for the Financial Year 2015/2016 announced that the government would be setting up an Export Processing Zone (EPZ) in Nakaseke District in the famous Luweero Triangle.
“Government has identified land in Kaweweta to set up an Export Processing Zone. Government is completing the procedures to secure ownership of the land and also concluding negotiations with prospective investors for its development,” he said.
The minister said the zone would be set up in line with the Free Zones Act, which President Museveni assented to in February 2014. The Act provides the legal framework for the establishment and maintenance EPZ and also provides for the establishment of a Free Zones Authority to take charge of the EPZs. The Free Zones Authority became operational on September 1, 2014.
Minister Kasaija who described EPZs as important tools for industrial and export promotion said that the Kaweweta zone will consist of, among other things a manufacturing plant, a refinery for local medicines and herbs, an ultramodern abattoir and milk and fruit processing plants.
The promise to establish the EPZ was presented as one of the ways through which government aimed to address some of the economic challenges such as youth unemployment and the imbalance between growing imports and poor performance in the export sector, which left the Shilling performing so badly against the dollar.
Poor performance in the export sector was partially blamed on lack of competitiveness on the part of private sector.
One of the arguments had been that the lack of competitiveness was largely on account of poor or lack of infrastructure, a scenario which would be mitigated by establishment of an EPZ.
It is however important to note that this was not the first time that government had talked of setting up EPZs.
On June 28, 2002, President Museveni while addressing a public rally at the Busoga Square in Jinja where he had earlier presided over the official opening of Nile Broadcasting Services (NBS) radio and studios, promised to turn parts of the town’s industrial area into an EPZ, but the promise has never materialised.
Again in November 2004 it was announced that the World Bank had made available to the government, $24 million to help Uganda set up EPZs under the Second Private Sector Competitive Project, which was to be implemented in two phases.
The first phase dabbled, “Developing Infrastructure and Financial Services,” would focus on providing adequate infrastructure and other services, while the second phase would entail development of serviced industrial land by way of, among others making access roads and service lanes for water and electricity.
It also focused on the development of financial services’ packages that would help small scale and medium scale entrepreneurs increase production and be able to play in the same league with the big cats.
The planned EPZs had at the time been planned to be located in the Kampala Industrial and Business Park (KIBP) in Namanve, but while the park has come up, the EPZ never really materialised.
And now, as was with the previous two promises, the most recent promise has also not materialised and nothing seems to be going on despite the creation and operationalisation of the Uganda Free Zones Authority.
Failure to open the EPZ as had been promised has meant that the unemployment especially among the youths remains a major problem and potential sources of insecurity and political unrest.
Whileuniversities and other institutions of higher learning off load at least 500,000 graduates into the job market every year, information from the Uganda Investment Authority (UIA) indicates that new projects that come on stream cannot generate more than 150,000 jobs per year. Unemployment among the youth is believed to be within the region of 62 per cent. Out of the 7.2 million youths 4.5 million are unemployment.
If figures on the website www.tradingeconomics.com are anything to go by, the future is bleak. While unemployment is expected to have risen to 3.72 per cent by the end of September, it is not expected to fall below the 3.3 percent mark by 2020.
The disequilibrium between imports and exports has also persisted. According to the website www.tradingeconomics.com, Uganda had by the end of May this year registered a balance of trade of -$210.7 million. Exports had at the time earned the country a paltry $309.6 million yet the country had spent at least $520.3 million on imports.
The failure also means that Uganda continues to lag behind East African Community member states such as Kenya and Tanzania which are have strategically placed themselves as favourable destinations for investments by not only providing cheaper electricity, but also providing potential investors with serviced industrial land and setting up EPZs. Kenya has had EPZs since the 1990s, Tanzania since about 2002 and Rwanda since 2010.
The spokesperson of Uganda Free Zones Authority (UFZA), Ms Doreen Kembabazi, told Daily Monitor last week that the Kaweweta EPZ project is on course.
“Government had some good on its promise by acquiring the land. It is also committed to ensuring that it provides basic infrastructure like roads, running water and electricity up to the gates of the EPZ. The developers will then take up the provision of those services inside the EPZ,” she said.
She pointed out that the Kaweweta EPZ which is to be developed by a Turkey based firm, AFB Group of Companies, had been pegged back by events of July 15, 2016 when sections of the Turkish army attempted to topple the government of President Recep Tayyip Erdogan.
“The investors are now putting their house in order and we expect them to be on the ground by the beginning of September. Once they have developed it, they are the same people who will carry out the marketing in order to attract those who will be operating within it,” she added.
Giving a heads up on what has so far been achieved by UFZA, she said that it has since licensed seven other EPZs. She named them as Arua Special Economic Zone (SEZ) which is to be run by a Ugandan national; China Africa International Industrial Corporation Company which will be operating in Tororo; and Nilus which will be based in Jinja.
Others are Fiduga which is based in Mpigi, Royal Van Zanten which will be based in Mukono, Wagagayi which will be based in Wakiso, and Uganda Wood Impex which will be based in Kalungu District.
The economies of most of Africa are not doing well. Growth has slumped to less than 10 per cent largely due to the major droughts that have ravaged the continent in the last few years.
Back home the situation is not any better. Foreign debt is on the rise and the Uganda Revenue Authority (URA) has for the last several years been failing to meet its collection targets. This cannot be by accident. One cannot expect to levy all sorts of taxes on the same small pool of taxpayers.
It is often said that it is with great effort that one extricates himself from a tricky situation and we are in a very tricky situation here. This calls for great effort and deliberate action to stimulate the economy and bring about conditions that will create jobs and improve the livelihoods of our people. We could begin by getting our priorities right. That means deliberately investing in ventures such as the establishment of an EPZ.
We should also consider investing in agriculture by providing funding to especially the small holder farmers and putting in place a subsidy regime to enable them not only access implements and inputs on a cheap, but also to cushion them when produce prices drop.
“We have been talking about creation of these EPZs, Industrial and ICT parks for over 10 years, but nothing much ever comes about. I hope this time round it happens because it is a great concept which has done miracles in other parts of the world. If we handle it well, it will create an environment that will no doubt boost both the agricultural and industrial sectors.”
Edward Kafufu Baliddawa, former MP Kigulu North and Founder Uganda Home Pages
“This is something that we have been calling for over the last 15 years and now that it is coming we need to fully support it. An EPZ will create a beehive of activity in Jinja town and those activities will definitely have a multiplier effect on the economy of the town, the rest of Busoga. It will boost agriculture and create many jobs.”
Osman Ahmed Noor, 2nd Deputy Prime Minister of Busoga Kingdom.
“Having an EPZ in Jinja will obviously help. We need it. We’ve not been able to add value to our produce as a country and we have therefore not been able to export goods that are competitive on the foreign market. That has been affecting the jobs market. Once we have an EPZ around, the problem of unemployment will have been partially addressed.”
Majid Batambuze, Mayor of Jinja Municipality