What you need to know:
- Free Zones are designed to ensure production of export competitive goods to address growing trade deficit, employment needs and promote export led industrialisation.
Export earnings from free zones grew to a record high of $1.2b (Shs4.2t) in 2020-2021 from $154m (Shs542b) in 2019-2020, a new report has revealed.
The report, issued by Uganda Free Zones Authority shows that for two years in a row, semi processed gold was the driver of exports in the free zone accounting for 93 percent of total export earnings at $1.1b (Shs3.8t.)
A free zone is a gazzeted geographical area exempted from customs duties and related internal levies applicable on exports in customs territory.
Free Zones are designed to ensure production of export competitive goods to address growing trade deficit, employment needs and promote export led industrialisation.
Flower and horticulture exports ranked second to gold, accounting for 3.7 percent of exports at $46m (Shs162b) as tobacco which is partly or wholly stemmed ranked third accounting for 3.1 percent of exports at $38m (Shs133b), the report shows.
It, however, shows that wheat flour exports recorded a 65 percent decline to $1 m (Shs3.6b) in 2020-21 from $4m (Shs14b) registered in the financial year 2019-20.
Sandalwood essential oils earned $730,000 (Shs2.6b) in 2020-21 an increase from $299,000 (Shs1.07b) registered in 2019-20 while cocoa beans exports earned $160,000 (Shs 576m) in 2020-21.
The exports that earned the least were underground natural calcium phosphates which brought in $5,000 (Shs17m).
Mr Hez Kimoomi Alinda, executive director of Uganda Free Zones Authority, while releasing the report said positive performance in free zones in 2020-21 was driven by increased in mineral and tobacco processing activities and exports.
The big players
“Simba Gold Refinery Limited, M/s Metal Testing and Smelting Limited and Aurnish Trading Limited were leading exporters during financial year 2020-21 accounting for 93 percent of all total export earnings generated from free zones,” he said.
According to Mr Alinda, other major exporters during 2020-21 included M/s Alliance One Tobacco Uganda Limited which grows and processes tobacco leaf at Nilus free zone and exports through Mombasa port.
He noted that the free zone generated $32m, approximately Shs112b in flower export earnings with M/s Wagagai and M/s Rosebud Limited the leading flower exporters during 2020-21 with the two free zones collectively generating $20m (Shs70b) in export earnings.
According to the same report, the United Arab Emirates (UAE) has remained the major destination for free zones exports, with significant increase to $1.16 billion in financial year 2020-21 from $106.4 million in 2019-20.
The share of exports to UAE as a percentage of total free zones exports was 93 percent with Netherlands ranked second contributing $39 million in 2020-21 up from $32 million in 2019-20.
Mr Alinda attributed this to gold exports to UAE and flower to the Netherlands.
“Other major destinations for the free zones originating exports were Kenya $19 million, Belgium $6 million, Turkey $2 million, Germany $2 million, Italy $2 million, USA $1.9 million, Russia $1.5 million and South Sudan $1.2 million,” he said.
The other export destinations include Indonesia, South Africa, Tunisia, Egypt, South Korea, India, Ukraine, Bulgaria, Japan, France, Hungary, Canada, Sudan, Norway, Ethiopia, Romania, Uzbekistan, Luxemburg, Croatia, Singapore, United Kingdom, Pakistan, Bhutan, Spain, Qatar, Greece, Australia, Iraq, Kuwait, Ghana and Poland.
In a related development, the government has announced that in the next five years it will establish 128 free zones at Shs1trillionin the country an addition to the already the existing 27 zones.
“By establishing these free zones in the country we are targeting to improve exports levels in the global world from the current 0.02 percent to 0.05 percent,” Alinda said.
United Arab Emirates (UAE) has remained the major destination for free zone exports with significant increase to $1.16 billion in financial year 2020-21 from $106.4 million in 2019-20.
Other major destinations for the free zones originating exports were Kenya $19 million, Belgium $6 million, Turkey $2 million, Germany $2 million, Italy $2 million, USA $1.9 million, Russia $1.5 million and South Sudan $1.2 million.