BUSINESS OPPORTUNITIES IN UGANDA

BUSINESS OPPORTUNITIES IN UGANDA FACT PACK 2017 Business Sweden in Nairobi

UGANDA BRIEF FACTS BASIC FACTS Population: 39 million (2015) MAP OF UGANDA AND SURROUNDING TERRITORIES Area: 241,038 sq. km (km 2 ) Capital: Kampala Languages: Currency: English (official), numerous indigenous languages Uganda Shilling (UGX) GDP: USD 27.5 billion (2015) GDP growth: 5.1% (2015) Inflation: 5.2% (2015) Exports: USD 2.3 billion (2015) Imports: USD 5.5 billion (2015) Swedish Export: SEK 102 million (2015) Swedish Import: SEK 62 million (2015) DR CONGO SOUTH SUDAN UGANDA KENYA Kampala RW BUR TANZANIA SOURCES: WORLD BANK, UN COMTRADE, NATIONAL BOARD OF TRADE KOMMERSKOLLEGIUM BUSINESS SWEDEN 3 MARCH, 2017 2

UGANDA S POLITICAL AND ECONOMICAL ENVIRONMENT HAS BEEN EVENTFUL THE PAST FIFTY YEARS Independence Uganda becomes independent from United Kingdom Deportations Idi Amin orders approx. 60,000 Asians who are not citizens to leave the country Establishment of EAC East African Community is established and Uganda becomes part of it Oil discovery Commercial oil reserves discovered estimated at 6,5 billion barrels Election President Museveni was re-elected in February, 2016, for another five-year term 1962 1971 1972 1979 1986 2000 2006 2009 2014 2016 2040 Military coup Milton Obote loses his leadership in coup led by Army chief Idi Amin Regional conflicts Idi Amin declares himself president for life and claims parts of Kenya Uganda engages in border clashes with Tanzania Tanzania invasion Tanzania invades Uganda leading to Idi Amin s fall New president National Resistance Army rebels take Kampala and install Yoweri Museveni as president Oil discovery Discovery of additional commercially viable deposits of 2.5 billion barrels of oil Rapid growth GDP expands by 13% after the state rebased its calculations to incorporate new sectors in the economy Vision realised Uganda s 2040 vision is expected to have transformed Uganda to a middle income economy THE DISCOVERY OF LARGE OIL DEPOSITS IS EXPECTED TO STIMULATE UGANDA'S GROWTH THE COMING YEARS SOURCE: BUSINESS SWEDEN ANALYSIS, UGANDA BUREAU OF STATISTICS, EAST AFRICA COMMUNITY SECRETARIAT, BBC BUSINESS SWEDEN 3 MARCH, 2017 3

UGANDA S VISION AIMS TO TRANSFORM THE COUNTRY TO A MIDDLE INCOME COUNTRY BY 2040 OVERVIEW OF UGANDA S 2040 VISION Business Approach Continuous institutional restructuring will be implemented and new public management techniques will be adopted New reforms such as deregulation of bureaucratic government rules and procedures will be implemented, enabling efficient and effective service delivery while harnessing synergies Quasi-Market Approach Government will make investments in strategic areas and take private sector market driven actions Public-private partnerships will be promoted and encouraged for investments in strategic areas and areas of national interest Socio-Economic Transformation Approach Government will make investments in better urban systems that enhance productivity, liveability and sustainability Government also aims to strengthen urban infrastructure and public service facilities to enable better service delivery such as basic physical infrastructure, housing and social amenities THE MULTI-DIMENSIONAL APPROACH AIMS TO TRANSFORM THE COUNTRY TO A MODERN AND PROSPEROUS SOCIETY SOURCE: UGANDA VISION 2040 BUSINESS SWEDEN 3 MARCH, 2017 4

THE BUSINESS SITUATION IS IMPROVING, BUT POOR INFRASTRUCTURE IS STILL A CHALLENGE OPPORTUNITIES AND CHALLENGES IN THE UGANDAN MARKET Government is investing in infrastructure upgrade and provides incentives for investments, including tax deductions and exemptions + Uganda is part of the East African Community, which gives access to a large market and additional the community together works on regional upgrades Labour costs are low and the working-age population is growing. Labour force is in general low-skilled but the country is open for foreign workers + + - - - Tax levels are high and there is red tape for bureaucratic procedures Electrification is low, only 20% have access to electricity and energy cost is high and supply is unreliable Transport network is of poor quality and transporting goods across the country is expensive. Additionally, Uganda does not have access to any seaports THE MEMBERSHIP IN EAST AFRICAN COMMUNITY GIVES ACCESS TO A MARKET OF AROUND 140 MILLION PEOPLE SOURCE: BMI UGANDA OPERATIONAL RISK REPORT, BUSINESS SWEDEN ANALYSIS BUSINESS SWEDEN 3 MARCH, 2017 5

UGANDA S ECONOMY IS GROWING FASTER THAN THE AVERAGE OF SUB-SAHARAN ECONOMIES NOMINAL GDP 2015-2020E USD BILLION 37,4 35,4 33,4 31,6 29,9 28,3 2015 2016e 2017e 2018e 2019e 2020e MAIN DRIVERS OF THE ECONOMY Large public sector infrastructure projects, together with growth in the industry and service sectors are expected to be the main growth drivers for Uganda s economy the coming years Strong regional demand and regulatory integration within the East African Community are also expected to support Uganda s growth the coming years Uganda's medium-term economic outlook is expected to be significantly boosted by the discovery of commercially viable oil wells on Lake Albert. The government and involved oil companies are expecting initial production during 2017 18 Foreign-financed construction of the Karuma and Isimba hydropower plants and the Mombasa-Kampala standard gauge railway are expected to support construction sector growth CAGR* SOURCES: BUSINESS SWEDEN ANALYSIS, WORLD BANK COUNTRY PAGE UGANDA AND WORLD BANK DATA GDP TABLE, NEW VISION, IHS Inc. * COMPOUND ANNUAL GROWTH RATE BUSINESS SWEDEN 3 MARCH, 2017 6

AGRICULTURE IS STILL A MAIN CONTRIBUTOR TO UGANDA S ECONOMY CONTRIBUTION TO GDP BY SECTOR (2015) 6% 26% 7% 16% 24% 21% Agriculture, Hunting, Forestry & Fishing Manufacturing, Mining & Utilities Wholesale, Retail, Restaurants & Hotels Construction Transport, Storage & Communication Other activities CHARACTERISTICS The agriculture sector is still strong in Uganda and the country is among the leading producers of coffee, bananas and oil seed crops. The agricultural sector is also strong in other products such as tea, cotton, tobacco, essential oils and flowers The manufacturing, mining and utilities sector is also a large contributor to the economy Oil production is expected to be a key driver for growth the coming years Manufacturing is still relatively small and dominated by smaller companies and low value added goods or basic consumer goods The ICT sector, although relatively small, is the fastest growing sector in the economy. The Ugandan government has invested in improved network and digitalisation of government institutions which opens up for further growth THE ICT SECTOR IS THE FASTEST GROWING SECTOR AND THE GOVERNMENT IS FOCUSING EFFORTS IN DIGITALISATION SOURCES: BUSINESS SWEDEN ANALYSIS; UGANDA BUREAU OF STATISTICS, UGANDA COMMUNICATIONS COMMISSION (UCC), UGANDA INVEST, PWC UGANDA BUSINESS SWEDEN 3 MARCH, 2017 7

EXPORTS TO UGANDA ARE DECLINING BUT IMPORTS ARE ON THE RISE SWEDISH EXPORTS TO UGANDA, 2011-2015 MSEK SWEDISH IMPORTS FROM UGANDA, 2011-2015 MSEK 682 172 148 109 102 27 50 50 31 62 2011 2012 2013 2014 2015 SWEDISH EXPORTS TO UGANDA, 2015 2011 2012 2013 2014 2015 SWEDISH IMPORTS FROM UGANDA, 2015 Chemicals & related products 11% Paper and pulp 8% Manufactured goods 40% Crude materials and fuels 1% Devices and other equipment for telecoms 40% Miscellaneous manufactur ed goods 1% Food & live animals* 99% SOURCE: UN COMTRADE * MAINLY COFFEE, TEA, FRUITS AND CUT FLOWERS BUSINESS SWEDEN 3 MARCH, 2017 8

LARGE ONGOING INFRASTRUCTURE PROJECTS ARE AN INTEGRAL PART OF UGANDA S GROWTH PLANS Airports Upgrade and Development 2014 TBD The USD 386 million project to upgrade the Entebbe International Airport in Entebbe and develop regional airports with the latter expected to improve upcountry infrastructure and boost tourism. The overall vision is to make the Ugandan aviation industry the safest, most efficient and affordable in Africa and beyond Gulu Kampala Malaba Oil Refinery Project 2018 2020 The discovery of commercially viable oil reserves in the country is intended to initially increase electricity supply. When completed in 2020, the USD 3 billion oil refinery is expected to have a capacity of 60,000 barrels a day. The facility will be located in the Western part of the country, not far from Lake Albert Bus Rapid Transit 2014 TBD Uganda s BRT project which is part of a larger mass rapid transit project is being implemented in the greater Kampala metropolitan area The project s estimated budget is USD ~650 million Kasese Standard Gauge Railway 2013 2017 Construction has already started in Mombasa, Kenya and once complete, the new line will connect Mombasa to Malaba, then onward to Kampala then Kigali. The construction that will join Kampala through Malaba to Nimule in South Sudan is at an estimated cost of USD 3.3 billion SOURCES: BUSINESS SWEDEN ANALYSIS, UGANDA CIVIL AVIATION AUTHORITY, NEW VISION, UGANDA MINISTRY OF ENERGY & MINERAL DEVELOPMENT BUSINESS SWEDEN 3 MARCH, 2017 9

THERE ARE A NUMBER OF BUSINESS OPPORTUNITIES FOR SWEDISH COMPANIES IN UGANDA Energy Infrastructure ICT Power generation stations to increase electricity supply Oil, natural gas and petroleum exploration in other potential regions of the country Rural Electrification projects Generation of energy using renewable sources and solar power Construction of new hydro power plants Expansion and upgrade of the International airport and development of regional airports countrywide Supply of buses, operation and maintenance of fleet, stations and terminals Consultancy and service providers for BRT Establishment of information and communication infrastructure and broadband services Business Process Outsourcing and Information Technology Virtual Zones (ITVZ) ICT business services incubation and training facilities Establishment of Internet Service Provider facilities in additional areas Real Estate Business with the United Nations Healthcare Construction of office buildings Building shopping malls and complexes Construction of residential villas, apartment complexes and housing estates Construction of hotels, resorts and lodges UN is annually procuring goods and services worth 28 BN SEK in Africa One of UN s two main procurement hubs in Africa is located in Entebbe. Swedish companies has successfully supplied solutions in healthcare, prefabricated shelter solutions, civil security and water and sanitation The government increases investments in healthcare E-health facilities will be upgraded to enable teleconsultation An advanced telemedicine project is being piloted Disease burden is increasing and pharmaceutical demand is unmet SOURCE: BUSINESS SWEDEN ANALYSIS, UGANDA INVESTMENT AUTHORITY, UGANDA CHAMBER OF COMMERCE & INDUSTRY, BMI UGANDA OPERATIONAL RISK REPORT BUSINESS SWEDEN 3 MARCH, 2017 10

BUSINESS SWEDEN IN EA CAN ASSIST YOU FURTHER FROM STRATEGIC ADVICE TO HANDS-ON ESTABLISHMENT SUPPORT Our team in Eastern Africa Robin Theresa Julia Brenda Anna-Paula Juliet Niclas Meshack Business Sweden s assignment is to facilitate for Swedish companies to grow internationally and for foreign investors to invest in Sweden We promote Sweden as an attractive, innovative and competitive business partner. An important part is to support Swedish companies in reaching export markets with their products and services We are jointly owned by the Swedish government and the private sector, represented by the Ministry for Foreign Affairs and the Swedish Foreign Trade Association Business Sweden offers a variety of consultancy services, for example the following: Olive NAIROBI Market Analysis Business Support Visiting Programme Recruitment Deepen your knowledge on local market dynamics in your sector We offer office space and administrative support on the ground Searching and visiting relevant partners, e.g. distributors We support in finding and recruiting the right local representatives BUSINESS SWEDEN 3 MARCH, 2017 11

CONTACT US BUSINESS SWEDEN IN KENYA Business Sweden Eden Square, 3rd floor, off Westlands road Box 13799, 00800 Nairobi T +254 20 3749760 kenya@business-sweden.se www.business-sweden.se/kenya