Uganda Manufacturers Association

The manufacturing sector in Uganda

During the 1990s and early 2000s, Uganda made the transition from a predominantly agricultural to increasingly industrialised country, and was praised for its economic policies of government divesture, privatization and currency reform. With the return of political stability to the country, foreign companies and lending institutions began investing in the manufacturing sector, in businesses such as cement factories, drinks manufacturing plants and textiles and steel mills.

However, agriculture is still the largest contributor to the country’s GDP. Uganda’s manufacturing industries are primarily based on processing these agricultural products including tea, tobacco, sugar, coffee, cotton, dairy products and more. Other goods produced in the country include fertiliser, beer, matches, shoes, steel and textiles.

Challenges in the sector

Undeniably, Uganda’s manufacturing sector faces many challenges, not least the slowdown of production and subsequent loss of income brought about by COVID-19. More long-term challenges include high costs of infrastructure – especially electricity – limited availability of technical and

managerial skills, as well as difficulty in accessing affordable long-term finance. While Uganda’s government has focused upon creating a stable macroeconomic environment for manufacturers, it has yet to fully determine these priorities.

Improving the sector is further inhibited by limited financial resources. For example, Uganda Investment Authority – mandated to attract and facilitate foreign and domestic investment – and the Uganda Free Zones Authority, in charge of regulating investments in the free zones, both have limited resources for promotion activities.

Suggestions for improvement

Despite its limited resources, the Ugandan government is invested in helping the manufacturing sector expand and develop, while private sector organisation Uganda Manufacturers Association represents the interests of private stakeholders.

The BUBU policy – ‘Buy Uganda Build Uganda’ – was approved in 2014. It is a policy aiming to promote locally manufactured goods and services, as well as providing capacity building programmes to the sector. The BUBU Expo is a well-attended annual events that seeks to encourage networking and coordination around the BUBU policy. It is hoped that the improvement in quality and promotion of local goods will help reduce the country’s import bill.

The international development organisation, SET (Supporting Economic Transformation) believes that there are other opportunities to promote investment in the manufacturing sector. It believes any potential programmes must be aligned along four main themes: improving infrastructure for manufacturing; developing a strategic and targeted approach to investment promotion; supporting manufacturing firms’ access to finance; and building the capacity of the private sector, specifically SMEs.