‘Tap into joint ventures with Chinese’

Tuesday February 16 2021
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Ms Sheila Mugyenzi, UIA’s director Investment Promotion and Business Development. PHOTO/courtesy

China still ranks first as a foreign direct investment source for Uganda in terms of planned values of investment, projected employment and number of investment projects. What is the portfolio of Chinese investments so far?

Investment from China is in a wide range of sectors ranging from light manufacturing including textiles, assembly of mobile phones to heavy infrastructure equipment, as well as value addition in fruits and minerals. There is growing interest in large scale agriculture especially grains and aqua-culture.

There is investment in real estate and services like health and education. Most people are aware of the investments in Industrial Park development, where the industrial parks in Mbale (eastern region), Kapeeka and Mbalala-Mukono (central region) and Nshara (western region) which are under implementation are attracting a good number of investments.

There has also been significant investment in infrastructure that is information technology infrastructure, roads and energy under Public Private Partnerships, not forgetting the investment in our oil and gas sector. 

Just before the Covid-19 pandemic, the number of Chinese tourists was steadily increasing and this warrants the need for investment in the hospitality sector in which there are also Chinese investments (hotels and restaurants).

What was the impact of the coronavirus on Chinese investments in Uganda in terms of the appetite by new investors to enter the market but also on existing investments?

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There was a huge impact but there will be fast recovery. First of all, a big number of investment delegations that the country was expecting had to postpone their investment exploratory visits. Companies that Uganda Investment Authority (UIA) had licensed to set up business could not implement their projects because the project owners got stuck back home in China. Some companies stalled because of a lack of vital raw materials or components that could not come into the country timely.

Surprisingly though, it was still during the Covid-19 semi lockdown that a number of investments were commissioned and one of the companies even exported their first batch of mobile phones to North West Africa. Interest in investing in Uganda has not died down. UIA has started receiving indications of new and past interest from companies that want to visit Uganda soon.  

What are your projections for this foreign investment source?

Uganda and Africa will continue to see significant investment in construction and infrastructure due to the growing urbanisation. China is globally renowned for its expertise in this area. China has opened its market to Africa so we are facilitating joint ventures between domestic and Chinese companies so that value addition can be enhanced and contribute to the export base. The joint ventures have been slow in coming, which is expected when two cultures are getting to know each other. We are happy to see joint ventures beginning; for instance, there is a Uganda-China joint venture producing masks in Kampala Industrial Business Park, Namanve and no doubt the product line will increase.

How would you advise local businesses to recover and take advantage of the opportunities offered by the Chinese investment portfolio?

The Chinese companies that have invested in Uganda would prefer to use more of the local supplies and raw materials because it would be cheaper. The perennial issues of concern they have raised for quite some time is on price, quality and consistency of adequate supply. If domestic businesses could recover and improve on those three, then they could viably take advantage of the opportunities, especially in agriculture.

However, there is still need for affordable investment funds for them to inject into the businesses. This is an area that government wants to intervene through development financing and designing affordable finance for smaller businesses.

Another area would be in the adaptation of new technologies from China. We have entities like Uganda Industrial Research Institute and the Ministry of Science, Technology and Innovation that are spearheading innovations and adaption to new technologies. These entities have a working relationship with UIA through the industrial parks. In all the 23 industrial parks planned for the country, UIA is providing space for work spaces and incubation centres where domestic investments can build their competitiveness to engage with the Chinese and wider market. In the longer term, four Science, Technology, and Innovation Industrial Parks are planned along the National Development Plan III growth corridor.

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