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Country Commercial Guides for FY 2000: Uganda Report prepared by U.S. Embassy Kampala, released July 1999   Note*

V. LEADING SECTORS FOR U.S. EXPORTS AND INVESTMENT

Best Prospects for Non-Agricultural Goods and Services

Sector Rank: 1
Sector Name: Foods - Processed and Food Processing/Packing Equipment
ITA Industry Code(s): FOD/FPP

Uganda derives most of its production and the vast majority of its exports from agriculture. Agricultural processing is only beginning. There are investment opportunities in processing and packaging coffee, tropical fruits and fruit juices, and nontraditional crops such as vanilla.

Sector Rank: 2
Sector Name: Infrastructure: Construction Equipment, Electrical Power Systems, Pumps-Valves-Compressors
ITA Industry Code(s): CON/ELP/PVC

Uganda has a pressing need for roads and power. Moreover, international financial institutions and donors are interested in participating in these projects. Uganda lacks the feeder roads essential to bringing crops to market and is also improving its primary road network. Hydroelectric power projects will occupy Uganda well into the next century as an Italian firm completes an extension of Owen Falls dam. An American firm, AES, is anticipating parliamentary approval of a 270 megawatt, $500 million hydroelectric project further up the Nile River.

Sector Rank: 3
Sector Name: Telecommunications Equipment/Telecommunications Services
ITA Industry Code(s): TEL/TES

The GOU established a second national operator (SNO) in late 1997, won by a consortium led by MTN of South Africa. The GOU is attempting to sell 51 percent of the state operator, UTL, to a private investor. There may be room for smaller projects such as wireless local loops. Uganda currently has only 50,000 lines for a nation of 21 million people. Currently, MTN has about 40,000 GSM customers and Celtel has about 8000 GSM customers. As the SNO, MTN will be required to install between 60,000 and 90,000 fixed lines throughout the country. A similar build-out requirement will probably be negotiated with the purchaser of UTL.

Sector Rank: 4
Sector Name: Travel/Tourism Services
ITA Industry Code: TRA

The March 1999 attack on gorilla trekking tourists at Bwindi National Park damaged what had been a small but growing tourism industry. Insurgencies in the North and West of Uganda, bombings in Kampala, and the conflict with neighboring DROC have also discouraged potential visitors. Nonetheless, Uganda is one of only three countries with rare mountain gorillas in Bwindi and Mgahinga National Parks, and security has been increased. In addition, Uganda boasts two significant game parks, Queen Elizabeth and Murchison Falls, and a few smaller parks. The country needs upgraded tourist facilities and an improved transportation network.

Sector Rank: 5
Sector Name: Light Manufacturing (Import Substitution and Exports): Household Consumer Goods, Cosmetics/Toiletries, Footwear, Furniture, Textile Fabrics
ITA Industry Code(s): HCG/COS/FOT/FUR/TXF

Manufacturing has increased significantly in Uganda over the past five years. Most production has centered on import substitutes in less complex products such as plastic goods and textiles. A small but growing middle class in Uganda forms a ready market for these items. However, tariffs in the East African Community (Kenya, Tanzania, and Uganda) are due to be reduced or eliminated by 2001. Therefore, goods will need to be competitive with those from neighboring countries. Thee has been significant foreign investment in the past two years in the beverage industry with Coca-Cola, Pepsi, SAB, and Guinness leading the way.

Sector Rank: 6
Sector Name: Mining: Mining Industry Equipment, Non-Ferrous Metals
ITA Industry Code(s): MIN/NFM

Mining: Uganda is endowed with a great diversity of geological formations and structures. While mining used to contribute 30 percent of Uganda's foreign exchange earnings in the 1960s, it now contributes a negligible amount. Many minerals and metals can be found in Uganda including: copper, cobalt, gold, tin, tungsten, and oil. Exploration, research and development, and eventual mining may be good investment opportunities. European mining firms are involved in a $100 million cobalt-reprocessing project at Kilembe.

Sector Rank 7:
Sector Name: Marine Fisheries Products (Seafood)
ITA Industry Code: MFI

Uganda has an abundance of Nile perch and tilapia which are processed locally and exported. However, the EU currently bans fish from Uganda due to quality control issues. Lake Victoria, the source of these fish, is the second largest fresh water lake in the world.

Best Prospects for Agricultural Products

Uganda's agricultural land is considered among the best in Africa, with two seasons of good rainfall for the Southern half of the country and low temperature variability. Agriculture accounts for a large percentage of GDP and an even larger percentage of export earnings. Agricultural production and processing will remain the main stay of Uganda's economy for the foreseeable future. The country produces a wide range of food, most of which is grown organically. Some of the bottlenecks to the expansion of agricultural investment include the lack of high quality packaging capabilities, storage facilities, high freight costs, lack of feeder roads in rural areas, and untrained manpower. Most crops are grown on small plots with few or no inputs. Nonetheless, the following offer good investment opportunities:

Traditional crops such as coffee, cotton, tea and tobacco: rehabilitation and production of these once large exports/foreign exchange earners is ongoing.

Fruit and vegetable processing: particularly for canning pineapple and producing frozen or pulps or juice concentrates from various tropical fruits, including passion fruit, mango, pineapple and papaya.

Edible oil production: Uganda's current needs for edible oil are being met by imports. Production of oil seed crops has been established on a small scale but could be readily increased.

Staple food crops processing: staple food crops grown in Uganda include plantains, millet, sorghum, maize, beans, cassava, sweet potatoes, groundnuts (peanuts), rice, wheat and Irish potatoes.

Flowers: roses and carnations are currently grown in Uganda and exported to Europe. Given Uganda's climate, both seeded annuals and perennials are suitable for commercial development.

Fisheries: roughly 20 percent of Uganda is covered by water. Nile perch and Nile tilapia are in abundance. River and lake fishing, fish farming and fish processing are possibilities.

Livestock: Uganda boasts a growing livestock industry centered on Ankole cattle. There is a demand for better breeding techniques, as well as feed and veterinary care.