Alexander Luyima: Ugandans Shut Out of Value-Added Infrastructure as Foreign Investors Dominate

In a recent statement, renowned governance expert Godber Tumushabe argued that President Museveni’s administration has failed to create an environment where Ugandans can establish infrastructure for value addition. Tumushabe’s comment has reignited concerns over Uganda’s industrial policies, with many now questioning if local businesses are receiving the support they need to thrive.

The government’s flagship policy, Buy Uganda, Build Uganda (BUBU), was introduced with the aim of boosting local production and encouraging Ugandans to produce and consume homegrown products. However, the reality on the ground paints a different picture, with foreign investors, particularly Chinese companies, dominating Uganda’s industrial parks and manufacturing zones. These companies benefit from tax breaks and incentives meant for local businesses, assembling imported parts and selling finished products at international prices. This raises pressing questions: Who is BUBU really helping?

Agriculture Sector Lacks Value Addition Support

Agriculture, which employs nearly 70% of Uganda’s population, has seen limited support in terms of infrastructure for value addition. Uganda is one of the largest coffee producers in Africa, yet most of its coffee is exported as raw beans. Without adequate processing facilities, farmers and small businesses lose out on the higher profits associated with roasted and packaged products. Instead, foreign companies benefit by purchasing raw beans cheaply, processing them, and then selling them at a premium in global markets.

This gap in value addition is not limited to coffee alone. Other crops such as cotton, tea, and maize also suffer from the absence of processing facilities, resulting in lost revenue for Ugandan farmers and limited job creation in rural areas.

Industrial Parks Dominated by Foreign Firms

When Uganda established industrial parks, they were intended to be hubs of local innovation and production. Yet, these parks are largely occupied by foreign companies, especially Chinese firms, which benefit from favorable terms while Ugandan businesses struggle to secure space or receive similar incentives. These foreign-owned factories assemble imported parts within Ugandan borders, taking advantage of BUBU’s “local” label and then selling products at high prices both locally and internationally. This practice has raised significant concerns among local entrepreneurs, who feel that they are competing on an uneven playing field.

Uganda Development Corporation (UDC) Lacks Funding and Autonomy

The Uganda Development Corporation (UDC) was established to support the industrialization agenda by providing funding, resources, and partnerships for Ugandan businesses. However, UDC has been criticized for its limited funding and restricted autonomy, which have stifled its effectiveness. Entrepreneurs seeking financial support to establish manufacturing plants face high-interest rates from commercial banks, bureaucratic red tape, and limited government support. Observers argue that if UDC were given the independence and resources it needs, it could play a crucial role in promoting value addition among Ugandan-owned businesses.

Young Entrepreneurs and Startups Stifled

Uganda’s young population is brimming with innovative entrepreneurs who are eager to launch and scale businesses, particularly in the tech and agricultural sectors. Yet, youth-led startups are confronted with various barriers, including high loan interest rates, limited access to affordable financing, and a lack of support for business incubation and acceleration. Without a comprehensive framework to nurture these young innovators, Uganda risks losing out on the economic potential of its youth, with many choosing to leave the country in search of opportunities abroad.

Foreign Dominance in the Oil Industry

Uganda’s emerging oil industry was initially viewed as a transformative opportunity for local economic growth and skill development. However, foreign firms control the majority of Uganda’s oil extraction and processing activities, sidelining Ugandan involvement in the sector. Partnerships with foreign oil companies, while beneficial in terms of technical expertise, have sparked criticism over the lack of opportunities for Ugandans in their own oil industry. This situation has left many questioning whether Uganda’s natural resources are being exploited for the benefit of foreign investors rather than Ugandan citizens.

Urgent Reforms Needed to Prioritize Ugandan Businesses

As Uganda faces these challenges, experts and industry stakeholders are calling for urgent reforms. Several key recommendations have emerged to ensure that Ugandan businesses can actively participate in value addition:

1. Strengthen and Enforce BUBU Policies: The government should enforce policies that genuinely prioritize local businesses, ensuring that industrial zones are accessible to Ugandan manufacturers and that foreign companies do not exploit BUBU incentives at the expense of local entrepreneurs.

2. Increase Funding for UDC: To make a tangible impact, UDC should receive adequate funding and greater independence. This would allow it to provide grants, loans, and partnerships for local businesses, especially those focused on value addition.

3. Empower Ugandans in Strategic Sectors: The government should introduce policies that mandate minimum levels of Ugandan ownership and involvement in strategic industries, such as oil and gas. This would enable Ugandans to benefit from their country’s natural resources.

4. Invest in Agro-Processing: The government should prioritize agro-processing facilities across the country to help farmers add value to their crops before exporting them. This would boost farmer earnings and make Uganda a stronger competitor in global markets.

5. Support Youth Entrepreneurship: Uganda’s youth are the country’s greatest asset, and the government should prioritize them by creating funds specifically for young entrepreneurs, setting up innovation hubs, and offering tax incentives to encourage innovation and local production.

Uganda’s Future Depends on Local Empowerment

With these reforms, Uganda could create an environment where local businesses thrive, jobs are created, and the country’s economic growth is sustained by its own citizens. Tumushabe’s comments serve as a reminder that Uganda’s potential lies in the hands of Ugandans. The government’s responsibility is to provide the framework and support needed to turn that potential into tangible development.

As it stands, the current system benefits foreign investors more than Ugandan businesses, risking a future where Ugandans remain consumers rather than producers. It’s time for the government to fulfill the promise of Buy Uganda, Build Uganda by genuinely supporting Ugandan-owned enterprises and fostering a self-sustaining economy.