Investors reject two-year licence for free zone areas

Trucks carry goods headed for Uganda at the Kenyan border. FILE PHOTO

Kampala- Investors looking to establish facilities in Uganda’s free zones have raised concerns over the licensing regime being proposed by the government.

The Uganda Free Zones Authority (UFZA) had proposed that an investor will be required to have a licence renewal after every two years.
An investor can apply for developers, operator or managers licence.

However, investors attending the free zones forum last week said this was a short period that would not attract investment.

“The two-year period of licence renewal does not work in favour of the investor. If after every two years I have to walk to the authority to get a licence renewed, then it defeats the essence of a free zone,” Ms Florence Kata, the managing director of Canaan Flower Farms Uganda, said.
Free zones are custom controlled areas where new materials and goods may be landed, handled and manufactured or reconfigured for export without being subject to import and export duties.

In order to attract investment, the incentive regime is often flexible. The Nordic Business Association – Uganda secretariat also raised the red flag on the fact that the licensing regime appears to be more short-term.

“What assurances have you put in place to ensure that the licences are renewed? Two years is a short time for an investor to have recovered their investment,” Mr Rikke Adamsen, the chairperson of the Nordic Business Association Uganda, said.

While responding to the concerns by the investors, Mr Richard Jabo, the UFZA chief executive officer, said the short term licence regime was mainly to ensure that investors were following the criterion on which the licence was issued.

He said the renewal process for an investor adhering to the contractual obligation will be fast.

“When we attract investment, we need you to be efficient. What value are you going to add to us? That is a very big concern for us at UFZA. We know that it is not easy to attract investment, but it is even harder to retain it, especially in an environment we operate in like Uganda,” he said.
Mr Jabo added that there would be a review of the licensing regime to ensure the renewal process is faster.

Other concerns by the Uganda Flower Exporters Association was the lack of a national airline to help in the exportation. It requested for a free zone to be established around Entebbe International Airport.