infrastructure of uganda
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.A
GLOBAL / COUNTRY STUDY AND REPORTON
INFRASTRUCTURE OF UGANDA
Submitted toSOM LALIT INSTITUTE OF BUSINESS ADMINISTRATION
IN PARTIAL FULFILLMENT OF THEREQUIREMENT OF THE AWARD FOR THE DEGREE OF
MASTER OF BUSINESS ASMINISTRATIONIn
Gujarat Technological UniversityUNDER THE GUIDANCE OF
Professor Kalika Bansal
Submitted by(STUDENT NAME)
[Batch : 2010-12, Enrollment No.:____]
MBA SEMESTER III/IV
SOM LALIT INSTITUTE OF BUSINESS ADMINISTRATION
MBA PROGRAMMEAffiliated to Gujarat Technological University
AhmedabadAPRIL, 2012
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Students Declaration
We, __________________________________, hereby declare that the report forGlobal/ Country Study Report entitled
________________________________________________________in (Name of thecountry) is a result of our own work and our indebtedness to other work
publications, references, if any, have been duly acknowledged.Place : .. (Signature)Date : (Name of Student)
------------------------------------------------------
Institutes Certificate
Certified that this Global /Country Study and Report Titled is the bonafide work of Mr./ Ms .. (Enrollment
No..), who carried out the research under my supervision. I also certifyfurther, that to the best of my knowledge the work reported herein does not formpart of any other project report or dissertation on the basis of which a degree or
award was conferred on an earlier occasion on this or any other candidate.
Signature of the Faculty Guide(Name and Designation of Guide)
(Certificate is to be countersigned by the Director/HoD)
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PREFACE(SEPARATE PAGE)
_______________________________________________________
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ACKNOWLEDGEMENT(SEPARATE PAGE)
________________________________________________________
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TABLE OF CONTENTS
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LIST OF TABLES
Trade of Uganda (in Billion Dollars)
LIST OF FIGURES
$ Currency of United States
% Percentage
List of Abbreviations
NDP National Development Plan
GDP Gross Domestic Product
EIB European Investment Bank
IFI International Financial Institutions
UEB Uganda Electricity Board
IDA International Development Association
USH Uganda Shillings
IMF International Monetary Funds
EU European Union
SARS Severe Acute Respiratory Syndrome
US United States (Of America)
AAI Airport Authority Of India
MW Mega Watts
ICT Information and Communications Technology
HIPC Heavily Indebted Poor Country
BOT Build Operate Transfer
SPV Special Purpose Vehicle
B2B Business 2 Business
UN United Nations
ACP African Caribbean & Pacific
EPA Economic Partnership Agreement
AGOA African Growth & Opportunity ActEBA European Banking Authority
UPTOP Uganda Programme for Trade Opportunities & Policy
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EXECUTIVE SUMMARY
This report has been prepared to analyse the current infrastructure scenario of
Uganda and with its development what are the benefits with the Indian context. Here is
a brief about the report. Uganda is landlocked country with over 27000 Km of Road
Connectivity which is partially paved. The main Airport of the country is Entebbe Airport.
Its capital is Kampala.
The telecom and transport sectors are strong sectors of Uganda, while
Education, Finance & Energy Sectors are relatively young and less developed.
Infrastructure is an emerging sector with huge growth potential. Real Estate is the mostdeveloping Industry in the sector.
Political Dissonance, lack of trained workforce and strong chances of natural
calamities are repulsive factors in the infrastructure industry. Instability in market and
inefficiency in planning are major threats to the Industry. Partnership between Public
and Private Sector in Infrastructure can enhance the growth of the Industry. Developing
and managing a supply chain can enhance the profitability of the sector, and also
reduce the inefficiencies in its planning. Grants by EIBand various private sector banks
have been approved for Wate Management. Uganda is poised to achieve a high GDP
growth. According to a feasibility study it will need $15 Billion for Infrastructuraldevelopment and it must invest this fund heavily in rail, road, transport and telecom
sectors.
According to NDP, Uganda should achieve status of a middle income country by
2030.To achieve this, it requires to train the workforce. Despite political, natural and
economic instabilities, Uganda continues to get financial assistance from outside,
significantly, from the World Bank.
India has strong EXIM ties with India, Indias membership with African
Development Bank is a proof in itself. BHELs intentions to invest in Uganda will further
enhance ties between the two countries. Many JVs have been formed between
companies from Uganda and India. Further, India also provided heavy technical
assistance and foreign trade to Uganda. Several bilateral agreements have also been
concluded in the fields of trade, technical and economic cooperation. Under Focus
Africa programme, India provides financial assistance to various Trade Promotion
Councils of Uganda. UnderIAIFTIndia is providing India is developing and executing
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Pan African Projects , while $5 Billion credit line has also been approved for various
African Nations.
Thus the bottom line is that Uganda is a developing country with booming
infrastructure, but Political & Financial instabilities, lack of planning and financial
assistance come in its way. India is providing full support and co-operation to Ugandathrough various ways of Financial and Technical Assistance to help Uganda achieve its
target by 2030.
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PARTI ECONOMIC OVERVIEW
OF THE SELECTED COUNTRY
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Demographic Profile
As of 2012 the polulation of Uganda is 34,612,250.The major population of Uganda is
youth and children considering the facts that 49.1 % of the population is 0-14 years old ,48.1 % is 15-64 years old and the rest 2.1 % is 65-100 years old.
Men consist of 17367389 i.e -% of polulation whereas women consist of 17244861 ie -
% of population. The median age for men is 15 years whereas it is 15.1 years for
women.The estimated polulation growth rate is 3.58 %.Roughly 13% of polulation are
located in cities and urban centers whereas remaining 87% of polulation lives in
villages.
The birth rate is 47.49 Births/ 1000 men and the death rate is 11.71 Deaths / 1000
men.The sex ratio of Uganda is 1.01 Males/ 1 Female
Other details are as under
Infant mortality rate
total: 62.47 deaths/1,000 live birthsmale: 66.05 deaths/1,000 live birthsfemale: 58.77 deaths/1,000 live births (2011 est.)
Life expectancy at birth
total population: 53.24 yearsmale: 52.17 yearsfemale: 54.33 years (2011 est.)
Total fertility rate:6.69 children born/woman
HIV/AIDS Prevalence Rate:6.5%
People living with HIV/AIDS:1.2 million
HIV/AIDS Deaths caused by AIDS:64,000
Ethnic groups
Baganda 16.9%, Banyakole 9.5%, Basoga 8.4%, Bakiga 6.9%, Iteso 6.4%, Langi 6.1%,Acholi 4.7%, Bagisu 4.6%, Lugbara 4.2%, Bunyoro 2.7%, other 29.6% (2002 census)
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Religions
Roman Catholic 41.9%, Protestant 42% (Anglican 35.9%, Pentecostal 4.6%, Seventh-
Day Adventist 1.5%), Muslim 12.1%, other 3.1%, none 0.9% (2002 census)
Literacy
total population: 66.8%male: 76.8%
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Economic Overview
Peasant agricultural production has been the predominant economic activity since
precolonial times. Despite an active trade in ivory and animal hides linking Uganda withthe east coast of Africa long before the arrival of Europeans, most Ugandans weresubsistence farmers. Cotton cultivation increased in importance after 1904, By 1910cotton had become Uganda's leading export. After cotton the government encouragedthe growth of sugar and tea plantations.Uganda enjoyed a strong and stable economyin the years approaching independence. Agriculture was the dominant activity, but theexpanding manufacturing sector appeared capable of increasing its contribution toGDP, especially through the production of foodstuffs and textiles. Some valuableminerals, notably copper, had been discovered, and water power resources weresubstantial. The economy deteriorated under the rule of President Idi Amin Dada. In1972 he expelled holders of British passports, including approximately 70,000 Asians of
Indian and Pakistani descent and such a mass expulsion and undermined investorconfidence in Uganda.Succesive governments attempted to restore internationalconfidence in the economy through a mixture of development plans and austeregovernment budgets. The manifesto also set out specific goals for achieving this self-sufficiency: diversifying agricultural exports and developing industries that used localraw materials to manufacture products necessary for development. In 1989, Ugandafaced devastating losses in export earnings and sought increased internationalassistance to stave off economic collapse.
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Overview of Industries in Trade and Commerce
Peasant agricultural production has been the predominant economic activity since
precolonial times. Despite an active trade in ivory and animal hides linking Uganda withthe east coast of Africa long before the arrival of Europeans, most Ugandans weresubsistence farmers. By 1910 cotton had become Uganda's leading export. In thefollowing decades, the government encouraged the growth of sugar and tea plantations.Following World War II, officials introduced coffee cultivation to bolster declining exportrevenues, and coffee soon earned more than half of Uganda's export earnings.
Growth structure of economy
When coffee replaced cotton as Uganda's principal export in the 1950s, it was stillproduced in the pattern of small peasant holdings and local marketing associations thathad arisen early in the century. The economy registered substantial growth, but almostall real growth was in agriculture, centered in the southern provinces. The fledglingindustrial sector, which emphasized food processing for export, also increased itscontribution as a result of the expansion of agriculture.
Direct Economic Involvement
By 1987 the Ugandan government was directly involved in the economy through fourinstitutions. First, it owned a number of parastatals that had operated as privatecompanies before being abandoned by their owners or expropriated by the government.Second, the government operated marketing boards to monitor sales and regulateprices for agricultural producers. Third, the government owned the country's majorbanks, including the Bank of Uganda and Uganda Commercial Bank. And fourth, thegovernment controlled all imports and exports through licensing procedures.
In July 1988, officials announced that they would sell twenty-two companies that were
entirely or partially government owned. These parastatals included the electric powercompany, railroads and airlines, and cement and steel manufacturers. Banking andexportimport licensing would remain in government hands, along with a substantialnumber of the nation's hotels. By late 1989, however, efforts to privatize parastatalorganizations had just begun, as personal and political rivalries delayed the sale ofseveral lucrative corporations. The International Development Association (IDA)awarded Uganda US$16 million to help improve the efficiency of government-ownedenterprises. Funds allocated through this Public Enterprise Project would be used to
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pay for consultancy services and supplies, and to commission a study of ways to reformpublic-sector administration.
Budgets
Uganda registered a substantial budget deficit for every year of the 1970s except 1977,when world coffee price increases provided the basis for a surplus. Deficits equivalentto 50 to 60 percent of revenues were not unusual, and the deficit reached 100 percentin 1974.
Government expenditures increased during the early 1980s, and the rate of increaserose after 1984. In 1985 civil service salaries were tripled, but in general, the Ministriesof Defense, Education, and Finance, and the Office of the President were the biggestspenders.
The government implemented measures to reform the tax system in FY 1988 and FY
1989. A graduated tax rate, with twenty-five grades, rose from a USH300 minimum to aUSH5,000 maximum to account for all classes of income earners.
Uganda operated under a separate development budget during the 1980s. This budgetconsisted of domestic revenues and expenditures on development projects, but itexcluded revenues from foreign donors. The development budget increased from FY1981 to FY 1988, primarily because of inflation, but was trimmed slightly in FY 1989.The Ministry of Finance and Ministry of Defense consumed most of the developmentbudget, however, in part because agricultural and livestock projects were often fundedby foreign donors. The Ministry of Housing also received nearly 17.3 percent of FY 1988development allocations, and much of this amount was earmarked for renovations on
government-owned tourist hotels.
Rehabilitation and Development Plan
In June 1987, the government launched a four-yearRDPfor fiscal years 1988-91. Itaimed to restore the nation's productive capacity, especially in industry and commercialagriculture; to rehabilitate the social and economic infrastructure; to reduce inflation by
10 percent each year; and to stabilize the balance of payments. The plan targetedindustrial and agricultural production, transportation, and electricity and water servicesfor particular improvements Throughout the decade, official wages failed to keep up withthe rising cost of living, and most wage earners were able to survive only because theyhad access to land and raised food crops. By the mid-1980s, typical average wages atthe official exchange rate were only US$10 a month for factory workers, US$20 a monthfor lower-level civil servants, and US$40 a month for university lecturers. In the late1980s, the converted value of these wages declined even further as the value of the
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shilling dropped. In addition, the decline in industrial production in the 1970s and 1980shad reduced the proportion of high-paying jobs. As a result, more industrial workerspursued black market activities in order to support themselves.
But the Museveni government tried to improve the status of wage laborers. The 1987
RDP aimed to enhance the country's self-sufficiency by increasing the number of skilledworkers in industry. During the late 1980s, the government initiated a number ofprograms to improve working conditions in industry and provide training for industrialworkers as well as government administrators. The Occupational Health and HygieneDepartment implemented several projects to minimize occupational hazards in industryand to improve workers' health care.. Makerere University also established severaltraining programs in surveying skills, agriculture, environmental studies, pharmacy, andcomputer science. By the late 1980s, the government, which had become the singlemajor employer in the country, experienced significant problems as a result of almosttwo decades of economic decline and lax accounting procedures. A major problem wasthe lack of an accurate count of public wage earners, and to meet this urgent need, the
government conducted a census of civil servants in 1987.Low wage scales led to thesecond serious problem confronting the government--i.e., corruption and inefficiency inthe public sector. Both in government departments and parastatals, charges ofcorruption were widespread and were often attributed to low earnings..
Then in an attempt to streamline the civil service, the government announced plans toeliminate 30 percent of the nation's civil service jobs, leaving about 200,000 peopleemployed by the government. This plan was not implemented, however. A labor surveyin 1989 revealed that more than 244,000 people still worked for the nationalgovernment, in addition to those in parastatal organizations.
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Overview of different economic sectors/Industries
Manufacturing industries, based primarily on processing agricultural productsunavailable in Uganda. The mining industry had almost come to a standstill. The
rudiments of industrial production existed in the form of power stations, factories, mines,and hotels, but these facilities needed repairs and improved maintenance, andgovernment budgets generally assigned these needs lower priority than security andcommercial agricultural development..
Industrial growth was a high priority in the late 1980s, however. The government's initialgoal was to decrease. Engineers and repair people ,in particular, were in demand, andgovernment planners sought ways to gear vocational training toward these needs.
Energy Mining
Manufacturing
Energy
In the 1980s, local officials estimated that charcoal and fuel wood met more than 95percent of Uganda's total energy requirements. So, the government sought alternateenergy sources to reduce the nation's reliance on forestry resources for fuelwood.
Alternative technologies were sought for the tobacco-curing and brick and tilemanufacturing industries, in particular, because they both consumed substantialquantities of fuelwood. More than 80 percent of fuelwood consumption was still in thehome-- primarily for cooking--and to reduce this dependence, the governmentattempted to promote the manufacture and use of more fuel-efficient stoves. Even thismodest effort was difficult and expensive to implement on a nationwide basis, in partbecause cooking methods were established by long-standing tradition
In the 1980s Uganda imported all its petroleum products. The transportation sector
consumed about 69 percent of the available supply, while the aviation and industrialsectors required 9 percent and 5 percent, respectively. Roughly 17 percent of Uganda'spetroleum imports were for domestic use. Uganda relied on Kenyan road and railsystems to transport oil imports. Several international companies were also exploring foroil in western Uganda in 1989.
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Manufacturing
In the late 1980s, most manufacturing industries relied on agricultural products for raw
materials and machinery, and as a result, the problems plaguing the agriculture sectorhampered both production and marketing in manufacturing. Processing cotton, coffee,sugar, and food crops were major industries, but Uganda also produced textiles,tobacco, beverages, wood and paper products, construction materials, and chemicals.
Construction Material
Eight companies produced steel products in Uganda, Their most widely used productswere gardening hoes and galvanized corrugated sheets of steel. The production of steelsheets declined dramatically in 1987, leaving some factories operating at only 5 percentof capacity.The government attempted to rejuvenate the industry in 1987 by assessingthe availability of scrap iron and the demand for steel products and by providing US$2.7million in machinery and equipment for use by the government-operated East AfricanSteel Corporation.The nation's two cement-producing plants at Hoima and Tororo,both operated by the Uganda Cement Industry, also reduced production sharply, frommore than 76,000 tons of cement in 1986 to less than 16,000 tons in 1988.
Consumer Goods
The production of beverages, including alcoholic beverages and soft drinks, increasedin the late 1980s, and officials believed Uganda could achieve self-sufficiency in thisarea in the 1990s. In 1987 three breweries increased their production by an average of100 percent, to more than 16 million liters. In the same year, five soft drink producersincreased output by 15 percent to nearly 6 million liters. In addition, Lake VictoriaBottling Company, producers of Pepsi Cola, completed construction of a new plant at
Nakawa.
Sugar production was vital to the soft drink industry, so rehabilitating the sugar industrypromised to assist in attaining self-sufficiency in beverage production.
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Uganda's dairy industry relied on imports of dried milk powder and butter to producemilk for sale to the general public. Processed milk registered an increase of 29.5percent, from 13 million liters in 1986 to 16.9 million liters in 1987. To improve the localdairy industry, the government rehabilitated milk cooling and collection centers, milkprocessing plants, and the industry's vehicles. And in the late 1980s, the Ministry of
Agriculture, Animal Husbandry, and Fisheries imported 1,500 in-calfreisian heifers toform the nucleus of a restocking effort on private and government farms. Production ofwheat and corn flour increased in 1987.
Mining
Although the government recognized the existence of several commercially important
mineral deposits, it had not conducted comprehensive exploration surveys for non-oilminerals and, therefore, lacked estimates of their size. In the early 1970s, copper, tin,bismuth, tungsten, rare earths, phosphates, limestone, and beryl were being mined bycommercial companies. The mining sector employed 8,000 people and accounted for 9percent of exports. By 1979 almost all mineral production had ceased, and in 1987 onlythe mining and quarrying sector recorded any growth. Mining output increased anestimated 20 percent, largely because of the rapid growth in demand for road andhousing construction materials, such as sand and gravel. In 1988 the governmentestablished a National Mining Commission, intended to encourage investment in themining sector through joint ventures with the government.
TOURISM
Revenue from tourism, including restaurants, hotels, and related services, is more thanany other sector of the economy. Recognizing the role tourism could play in economicdevelopment, the government assigned high priority to restoring the tourisminfrastructure in its RDP.
BANKING AND CURRENCY
Uganda's years of political turmoil left the country with substantial loan repayments, aweak currency, and soaring inflation. During the 1970s and early 1980s, numerous
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foreign loans were for nonproductive uses, especially military purchases. Debts climbedwhile the productive capacity of the country deteriorated. To resolve these problems,the government tapped both external creditors and domestic sources, crowding outprivate-sector borrowers..
Banking
Government-owned institutions dominated most banking in Uganda. In 1966 the Bankof Uganda, which controlled currency issue and managed foreign exchange reserves,became the Central Bank. The Uganda Commercial Bank, which had fifty branchesthroughout the country, dominated commercial banking and was wholly owned by thegovernment. The Uganda Development Bank was a state-owned development financeinstitution, During the 1970s and early 1980s, the number of commercial bank branchesand services contracted significantly. Whereas Uganda had 290 commercial bankbranches in 1970, by 1987 there were only 84, of which 58 branches were operated bygovernmentowned banks. This number began to increase slowly the following year, and
in 1989 the gradual increase in banking activity signaled growing confidence inUganda's economic recovery.
AGRICULTURE
Uganda's favorable soil conditions and climate have contributed to the country'sagricultural success. But technological improvements had been delayed by economic
stagnation, and agricultural production still used primarily unimproved methods ofproduction on small, widely scattered farms, with low levels of capital outlay. Otherproblems facing farmers included the disrepair of the nation's roads, the nearlydestroyed marketing system, increasing inflation, and low producer prices. Thesefactors contributed to low volumes of export commodity production and a decline in percapita food production and consumption in the late 1980s.
The decline in agricultural production posed major problems in terms of maintainingexport revenues and feeding Uganda's expanding population. Despite these seriousproblems, agriculture continued to dominate the economy. Agricultural output wasgenerated by about 2.2 million small-scale producers on farms with an average of 2.5
hectares of land. The 1987 RDP called for efforts both to increase production oftraditional cash crops, including coffee, cotton, tea, and tobacco, and to promote theproduction of nontraditional agricultural exports, such as corn, beans, groundnuts(peanuts), soybeans, sesame seeds, and a variety of fruit and fruit products.
Crop Livestock Fishing
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Forestry
Coffee
Coffee continued to be Uganda's most important cash crop throughout the 1980s. Thegovernment estimated that farmers planted approximately 191,700 hectares of robustacoffee, most of this in southeastern Uganda, and about 33,000 hectares of arabicacoffee in high-altitude areas of southeastern and southwestern Uganda.
When the NRM seized power in 1986, Museveni set high priorities on improving coffeeproduction, reducing the amount of coffee smuggled into neighboring countries, anddiversifying export crops to reduce Uganda's dependence on world coffee prices.
Cotton
Cotton provided the raw materials for several local industries, such as textile mills, oiland soap factories, and animal feed factories. And in the late 1980s, it provided anothermeans of diversifying the economy. The government accordingly initiated an emergencycotton production program, which provided extension services, tractors, and otherinputs for cotton farmers. At the same time, the government raised cotton prices fromUSh32 to USh80 for a kilogram of grade A cotton and from USh18 to USh42 for Grade
B cotton in 1989. However, prospects for the cotton industry in the 1990s were stilluncertain.
Tea
Favorable climate and soil conditions enabled Uganda to develop some of the world'sbest quality tea. Production almost ceased in the 1970s, however, when the
government expelled many owners of tea estates--mostly Asians. Many tea farmersalso reduced production as a result of warfare and economic upheaval. Successivegovernments after Amin encouraged owners of tea estates to intensify their cultivationof existing hectarage. Mitchell Cotts (British) returned to Uganda in the early 1980s andformed the Toro and Mityana Tea Company (Tamteco) in a joint venture with thegovernment. Tea production subsequently increased from 1,700 tons of tea produced in1981 to 5,600 tons in 1985. These yields did not approach the high of 22,000 tons that
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had been produced in the peak year of 1974, however, and they declined slightly after1985.
Tobacco
For several years after independence, tobacco was one of Uganda's major foreignexchange earners, ranking fourth after coffee, cotton, and tea. Like all other traditionalcash crops, tobacco production also suffered from Uganda's political insecurity andeconomic mismanagement. Most tobacco grew in the northwestern corner of thecountry, where violence became especially severe in the late 1970s, and rehabilitationof this industry was slow. In 1981, for example, farmers produced only sixty-three tonsof tobacco. There was some increase in production after 1981, largely because of the
efforts of the British American Tobacco Company, which repossessed its formerproperties in 1984. Although the National Tobacco Corporation processed andmarketed only 900 tons of tobacco in 1986, output had more than quadrupled by 1989.
Sugar
Uganda's once substantial sugar industry, which had produced 152,000 tons in 1968,almost collapsed by the early 1980s. By 1989 Uganda imported large amounts of sugar,despite local industrial capacity that could easily satisfy domestic demand. Achieving
local self-sufficiency by the year 1995 was the major government aim in rehabilitatingthis industry.
The two largest sugar processors were Kakira and Lugazi estates, which by the late1980s were joint government ventures with the Mehta and Madhvani families. Thegovernment commissioned the rehabilitation of these two estates in 1981, but thespreading civil war delayed the projects. By mid-1986 ,work on the two estatesresumed, and Lugazi resumed production in 1988. The government, together with anumber of African and Arab donors, also commissioned the rehabilitation of the KinyalaSugar Works, and this Masindi estate resumed production in 1989. Rehabilitation of theKakira estate, delayed by ownership problems, was completed in 1990 at a cost of
about US$70 million, giving Uganda a refining capacity of at least 140,000 tons peryear.
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International Trade
The twenty-thousand Ugandan shilling banknote, issued by the Bank of Uganda.
Since assuming power in early 1986, Museveni's government has taken important steps
toward economic rehabilitation. The country's infrastructure notably its transport andcommunications systems which were destroyed by war and neglectis being rebuilt.Recognizing the need for increased external support, Uganda negotiated a policyframework paper with the IMFand the World Bank in 1987. It subsequently beganimplementing economic policies designed to restore price stability and sustainablebalance of payments, improve capacity utilization, rehabilitate infrastructure, restoreproducer incentives through proper price policies, and improve resource mobilizationand allocation in the public sector. These policies produced positive results. Inflation,which ran at 240% in 1987 and 42% in June 1992, was 5.4% for fiscal year 1995-96and 7.3% in 2003.
Investment as a percentage ofGDP was estimated at 20.9% in 2002 compared to13.7% in 1999. Private sector investment, largely financed by private transfers fromabroad, was 14.9% of GDP in 2002. Gross national savings as a percentage of GDPwas estimated at 5.5% in 2002. The Ugandan Government has also worked with donorcountries to reschedule or cancel substantial portions of the country's external debts.
Uganda is a member of theWTO.
Uganda is becoming increasingly dependent on the import of capital through loans and
grants, the import of services, and of manufactured goods. The value of imports was
consistently double the value of exports throughout the 1990s, and in 1999 the ratio of
imports to exports came close to being 3 times in size. Apart from cash-crops such as
tea and coffee, Uganda's principal exports in 1998 were US$39.9 million of fish and fish
products, US$47.4 million of iron and steel, and US$47.2 million worth of electrical
machinery and supplies. It should be noted that the EUbanned the import of fish from
Uganda between 1999 and mid-2000 as some supplies were poisonous; although this
ban has now been lifted this event seems likely to effect future sales. The main recipient
of these exports in 1998 was the EU, which received 50.9 percent of the total; broken
down individually, the key countries were the Netherlands, which imported 6.3 percent,
Switzerland (6.2 percent), Germany (5 percent), and Belgium (3.7 percent). Other key
export-partners are the United States which regularly receives around 25 percent, and
Kenya which received 4.6 percent in 1998.
http://en.wikipedia.org/wiki/Ugandan_shillinghttp://en.wikipedia.org/wiki/Bank_of_Ugandahttp://en.wikipedia.org/wiki/Musevenihttp://en.wikipedia.org/wiki/World_Bankhttp://en.wikipedia.org/wiki/Inflationhttp://en.wikipedia.org/wiki/Gross_domestic_producthttp://en.wikipedia.org/wiki/WTOhttp://en.wikipedia.org/wiki/WTOhttp://en.wikipedia.org/wiki/WTOhttp://en.wikipedia.org/wiki/WTOhttp://en.wikipedia.org/wiki/Gross_domestic_producthttp://en.wikipedia.org/wiki/Inflationhttp://en.wikipedia.org/wiki/World_Bankhttp://en.wikipedia.org/wiki/Musevenihttp://en.wikipedia.org/wiki/Bank_of_Ugandahttp://en.wikipedia.org/wiki/Ugandan_shilling -
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Uganda's imports in 1998 consisted of US$130.3 million of road vehicles, US$111.6
million of petroleum.
Trade (expressed in billions of US$): Uganda
Exports Imports
1975 .026 .200
1980 .345 .293
1985 .387 .327
1990 .147 .213
1995 .461 1.058
1998 .512 1.409
Source: International Monetary Fund. International Financial Statistics Yearbook 1999.
US$72.4 million in cereals, and US$53.65 million of medical goods and
pharmaceuticals. These imports were predominantly sourced from the EU, which
supplied 17.3 percent (the United Kingdom being the main partner, providing 5.6
percent), neighboring Kenya supplied 12.3 percent, Japan 4.5 percent, and India 4.1
percent. The countries of East Africa have been trying to create a meaningful intra-
regional trade organization since the 1960s. The signing of the East African
Cooperation (EAC) treaty between Uganda, Tanzania, and Kenya in 1999 was a
continuation of this historic aim; however, in practice little has been done to
reduce tariffs . Uganda is also a member of the Common Market for Eastern and
Southern Africa (COMESA), which in 1996 introduced an 80 percent tariff reduction on
trade within COMESA countries; by 2001 Uganda was one of the only members to
implement this reduction in full.
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Trade Relations Between India and Uganda
Uganda and India have been actively engaged in trade with one another for a number ofyears. This trade relationship has been significant in contributing to economic benefits
for both countries.
Relations between India and Uganda have been problem-free, but episodic, theFederation of Indias Chambers of Commerce and Industry notes. The Indian community played a prominent role prior to and in the early years ofUgandas independence, a factor that resulted in cordial relations from 1962 till the Idi
Amins take-over in 1971.
Ugandas relations with India suffered most notably in 1972 when Amin expelled themfrom the country. In the late 1980s, Indian nationals started returning to Uganda andrepossessing most of the properties they had lost at expulsion.
Today, the number of people of Indian origin in Uganda is estimated at between12,000 and 15,000. Out of this, about 5,000 hold Indian passports and the remaininghold British, Canadian, Ugandan and other passports.
Most Indian nationals in Uganda are occupied with business, owing to their good
entrepreneurial acumen. There is also an inflow of new entrants, mostly in thecategory of professional or skilled and semi-skilled workers.
Many of the prominent Indian nationals are executives in the banking and insurancesectors, as well as that for Information Technology.
The volume of trade between India and Uganda has increased. Between 1984 and2003, the volume rose from $5.6m to $105.5m. In subsequence, Indias exports toUganda, have also increased.
India is now the second biggest exporter to Uganda (after Kenya). Exports constitutearound 8.5% of Ugandas total imports.
Major exports items are: pharmaceuticals, bicycle and bicycle parts, automobile
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components, tyres, small industry and agro-processing machinery, 2-wheelers, textilefabrics, sports goods etc.
According to the federation, Indian products account for 30% of the total
pharmaceutical imports into Uganda. India is the largest exporter ofpharmaceuticals/chemicals to Uganda, states the federation.
Indias performance in the field of tyres and tubes is also satisfactory, with a share of25%. After Kenya, it is the second biggest exporter of tyres and tubes in Uganda.Imports from Uganda are, however, negligible.
India-Uganda trade is tilted largely towards India. Mainly raw hides and skins, cobalt& allows, teak wood, scrap etc are imported in very small quantities. Information at
the Uganda Investment Authority (UIA)shows also that India is potentially, thelargest investor in Uganda. Among the Indian companies registered with the Authorityare Tata Group of Companies; APTECH Uganda; Roadmaster Cycles; and MahindraTractors.
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SWOT ANALYSIS OF INFRASTUCTURE
STRENGTHS:
Emerging Industry:
The infrastructure Industry is at a nascent stage. So there is a long way to go
for the industry. The life of the industry goes with the economy, which is the
end user of the Infrastructure.
Huge Growth Potential:
The Uganda's infrastructure Industry has a huge potential to grow. Even at
todays nascent stage the industry is growing at the rate of fifteen percent,
which is almost double than that of the current GDP rate of the country.
Improves the Productivity:
The infrastructure improves the productivity of the economy by increasing
the life of the structures.
Availability of raw materialsThere is sufficient availability of raw materials in the region.
Real Estate Development
It is on a high and is attracting the focus of the industry towards
construction.
WEAKNESS:
Distance between projects reduces business efficiency.
Chances of Natural disadvantages are there.
Training itself has become a challenge.
Lacks of clear define process and procedures for construction and its
management.
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Low financial support.
OPPORTUNITIES:
Public sector projects through Public Private Partnerships will bring
further opportunities.
Developing supply chain through involvement in large projects is likely
to enhance the chances in construction.
Financial supports like loan and insurance and growth in income of
people is in support of construction industry.
THREATS: Long term market instability and uncertainty may damage the
opportunities and prevent the expansion of training and development
facilities.
Lack of political willingness and support on promoting new strategies.
Natural abnormal casualties such as earth quake and floods are uncertain
and can prevent the construction boom.
Inefficient accessibility in planning and concerning the infrastructure and
signs.
Political and security conditions in the region and Late legislative
enforcement measures are always threats to any industry in Uganda.
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PARTII INDUSTRY SPECIFIC
STUDY
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Chapter 1:
Introduction of the infrastructure Industry and its effect in theeconomy of Uganda:
Uganda's case is a common one in Africa with inadequate infrastructure holding
back development and economic growth. The government and its development
partners are aware of this restraint and are taking active steps to address this
problem.
Although significant efforts have been made to develop and rehabilitate theexisting physical and non-physical infrastructure, potential investment
opportunities still abound. For instance, the communications and energy sectors
still require further investment particularly from the private sector. The
Government of Uganda is seeking private in the energy sector given the bright
prospects of Uganda's economy. With less than 10% of the mainstream capacity of
2,700 megawatts of power exploited, Uganda has the potential to be a major power
supplier in the Sub-Saharan African region. Other areas with possible investment
potential could include storage, education, communication & related services,general construction/real estate development and medical services.
Uganda has gazetted over 1000 hectares of prime industrial land to be developed
into fully serviced industrial estates and export processing zones. The Uganda
Investment Authority, which holds the government interest in the proposed project,
is actively courting private sector participation in the development of industrial
estates and export processing zones.
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EFFECT OF THE INFRASTRUCTURE on the
economy of Uganda:
Quality of Life:The quality and cost of living in Kampala and other major towns in
the country compares favourably with what investors may hope to find
elsewhere in Africa. Modern first class hotels, serviced apartments are to be
found in the urban centres.
Leisure facilities exist for such pass-times as golf, horse riding and
equestrian sports, tennis, white water rafting and sailing on the Lake
Victoria. Uganda's education system is still among the best in Africa and
provides good quality education at different levels. Foreign investors and
their expatriates can enrol their children at a number of reputable
international schools in the country. Unfurnished housing accommodation in
Kampala goes for between US$500 and US$2000 per month.
Education
There are presently eleven universities in the country and a number of
polytechnics with Makerere University being the major national higher
institution of learning. All levels of skills and training needed for a growing
economy are to a great extent addressed. Particular emphasis has been
placed by the country on the development of the science-based skills such as
medicine, research, engineering and technology.
The country generally boasts of an impressive literacy rate by any
standards and this is likely to improve following the recent introduction by
Government of the Universal Free Primary Education. Ugandan labour is
relatively cheap and large percentage of the population can speak and write
English which should prove a major asset for foreign investors wanting tocome to Uganda.
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Structure and Function of the infrastructure Industry in Uganda:
The infrastructure of Uganda includes four sectors.
-
Telecommunications- Road & Transport (Logistics)
- Real-Estate
- Energy
1)TelecommunicationsThe Telecommunication sector is growing with the introduction of
new technology. Uganda has two national telecom operators, namely,
Mobile telecommunications Network (MTN) - a South Africa led
consortium, and Uganda Telecom Limited (UTL), which was privatised in2000. The companies provide mobile cellular phone networks, paging
services and other modern communication services to meet the business
needs of users.
Service delivery is improving steadily with various players
introducing new products into the market. For instance, MTN announced
plans to set up a fibre-optic network in Uganda, expected to be operational
by the second quarter of 2001.
2)Road & Transport (Logistics)Uganda continues to invest heavily in the development of its
infrastructure. Uganda's excellent road system is well linked to its principal
trading partners, Kenya and Tanzania. The bulk of the country's imports and
exports are handled through the port of Mombasa in Kenya.
Road transport costs per ton range from US$40 - 50 per ton and
delivery time from Mombasa to Kampala is normally four days at most. The
costs by rail are up to 50% cheaper and this mode of transportation is
recommended for bulk cargo. The main airport at Entebbe currently handles
more than 40 international flight connections per week to various cities in
Europe, thus easing travel in and out of the country. Direct flights exist to
London, Paris, Brussels, Johannesburg, Cairo, Tehran, Dubai and Moscow.
In addition, a number of international courier firms such as DHL, TNT and
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Skypak are actively represented in the country making delivery of urgent
documents and materials easy.
3) Real-EstateIn Uganda large amount of land is available for the use. Land is
considered as a big benefit for the development of any country. The prices in
real estate are fluctuating in different regions of Uganda with ample
resources in the land Investors may acquire land on leasehold basis for
renewable periods of up to 99 years. Land can be obtained from private
owners, local councils and other government agencies. Land in Kampala is
more expensive than land in other areas of the country. The Uganda
Investment Authority (UIA) maintains a database of land that is available for
investors. In addition, the UIA owns large tracts of land in various parts of
the country.
4)EnergyThis has been Uganda's major infrastructure constraint. In spite of
having a potential hydroelectric power generation capacity of some 2,700
megawatts, Uganda currently produces less than 200 megawatts of energy.
National demand for electricity continues to expand rapidly on account of
the fast growing economy.
Uganda has taken steps to address this deficiency, three private power
projects have been commissioned and has added another 700 MW toUganda's energy production by the year 2003. The private projects include
the Kalagala Falls Power Project promoted by Arabian International
Construction Ltd - Egypt and Nile Independent Power promoted by Applied
Energy Services, USA. Together, these two projects are investing an
estimated US$1 billion. Work on all the projects is already underway.
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SWOT Analysis of the sectors in Infrastructure in
Uganda(Business Activities Point of View):
1)TELECOMMUNICATION
Strength
Sector rapidly grew leading to coverage in 90% of the country
One of the most competitive sectors in Uganda
Price point has decreased rapidly, making phones affordable to growingmasses of Ugandans
Six months from the introduction of mobile money transfer, MTN andZain registered approximately 250,000 clients onto the mobile moneytransfer service moving over 40 billion shillings in transactions.
Voice SMS service offered.
Uganda telecom recently launched solar-powered GSM phone.
Weakness
Penetration has leveled off
Price point may not lower further
Value-added services slow in developing (compared to other regional
countries like Kenya and Rwanda)
Opportunities
Value-added services including mobile banking and other SMS-basedoptions
East African fiber optic cable will lead to vast internet opportunities
Sector deregulated in 2000
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Threats
Low literacy rates limits rural penetration
Rapid expansion sector may have too much competition
Urban market is near full maturation
2)Road & Transport
Strength & Opportunities
Demand for transport growing faster than GDP
Increasing interest from IFI, institutional investors & some specializedoperators
Availability of instruments to mitigate risks
Weakness & Threats Weak legal framework for PPP/PSP
Risk of head to head competition between various modes
Region perceived as high risk (political risk, regulatory risk)
3)Real Estate
Strength & Opportunities Vast available land resource
FDI in real estate is also increasing
Increasing prices of land
Weakness & Threats Lack of regulation from government
Irregularity in the pricing of the land
4)Energy
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Strength Fast growing demand (especially for power)
Availability of vast under-exploited resources (hydro & thermal
generation) Reasonable openness towards private foreign investors (but less so in
water & sewage)
Weakness
Limited pool of suitable local partners
Weaknesses in the legal & regulatory framework
Opportunities
Increasing interest from IFI and institutional investors
High priority for national governments and regional cooperation
bodies/initiatives
Threats
EAIO region perceived as a high risk area
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Chapter 2(Part A):
Comparitive position of Infrastructure with India and Gujarat(Achievements & Challenges):
Transport
Achievements
Transport Relatively low cost of moving goods across borders.
Trucking sector is liberalized and more mature than other parts of Africa.
Challenges
Improving infrastructure and transport services to hinterland countries particularly SouthSudan.
Addressing bottlenecks at regional ports.
Roads
Achievements
Roads Adequate road density and high traffic volumes.
National network is in relatively good condition.
Challenges
Providing adequate funding for road maintenance.
Improving rural road quality and connectivity.
Improving road safety conditions
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Railways
Achievements
Kenya-Uganda railway is one of the more heavily used railways in East Africa.
Challenges
Boosting traffic and productivity
Air
Achievements
Liberalized air transport markets with growing traffic and good connectivity to East
African hubs.
Challenges
Boosting air safety standards.
Water Resources
Achievements
Well endowed with water resources relative tobenchmarks.
Challenges
Managing conflicts between alternative water uses.
Protecting water resources, such as wetlands, from encroachment, degradation andpollution
Irrigation Development of irrigation has been strategicallyplanned around areas of high cultivation.Exploiting major potential for development of high-return,small-scale schemes on the eastern side of the country.
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Water Supply & Sanitation
Achievements
Achievement of MDG for sanitation and close to achieving MDG for water based on
expansion of intermediate service levels.
Efficiency of water utility improved significantlydue to use of performance contracts.
Challenges
Expanding supply of utility water to keep pace with rapid urbanization.
Increasing access to improved water and sanitation services for poor households.
Addressing stubbornly high system losses and furtherimproving cost recovery.
Power Sector
Achievements
Power Major power sector reform.
Recent doubling of power generation capacity.
Accelerating electrification, particularly in rural areas.
Challenges
Addressing very high system losses and improving costrecovery of the utility.
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Information and Communication Technology (ICT)
Achievements
Early and successful ICT sector reform.
Huge expansion of mobile telephony penetration and footprint with highly competitivemarket.
Terrestrial connection to new submarine cables via Kenya.
Challenges
Optimizing industry tax burden.
Reducing costs of broadband services.
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Trend of business with India:
India, one of Asias fastest growing economies, plans to establish a
Shs48 billion knowledge centre in Kampala to promote international
trade in Africa. Mr K.T Chacko, the director Indian Institute of ForeignTrade, revealed the plan at a conference aimed at getting the input of
beneficiaries of the India-Africa Institute of Foreign Trade (IAIFT) in
Kampala.
Pan African project
It is meant to be a Pan-African project that will promote the marketing
of products from Africa to the world. There will be a huge opportunity
for acquiring professional knowledge, Mr Chacko told Daily Monitor onthe sidelines of a conference.
The institute which will kick off at the Uganda Management Institute
(UMI) this year, before getting its headquarters due in 2013, will train
students in management courses including; International Business,
Masters in Business Administration and several executive development
programmes. Mr Deo Lukonji Bbosa, the acting director of UMI said
IAIFT will initially be hosted at faculty of business and competiveness at
the institute.
Strengthen cooperation
The institute is part of efforts by the Indian government to strengthen
economic cooperation and trade with African nations, under its Pan-
African Project. The programme was initiated at the first India-Africa
Forum Summit held in New Delhi in 2008. At the second summit in
Ethiopia last month, Indias Prime Minister Manmohan Singh also
announced a $5 billion credit line for African nations pursuingdevelopment goals. The initiatives come at time when major powers in
several parts of the world are scrambling for a share of business and
mineral resources in Africa.
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Other economic powers competing for Africa include; China and the
European Union which have initiated various trade agreements with
African governments such as the European Partnership Agreements.
Indian Perspective
BHEL (Bharat Heavy Electricals Limited ) a major player in Indian
economy is planning to invest in Uganda for the development of the
Electricity and power generation in the country.
The labour in the country is found to be cheap in comparison to other
African nations so for infrastructure improvement Uganda is the best
suited and has seen increase in Indian colaboration. Recently oil has been found in the fields of Uganda and India is
exploring the opportunities for its petroleum needs.
Uganda has flexible foreign investment rules so with the use of it Indian
investors are gaining good returns over their investment in the
infrastructure sector.
There has been an establishment of Foreign agreement of $20 million
with a target to bring growth in the transactions for both the countries.
Uganda is growing in comparison to other African nations also Uganda isalso prime importer of Indian products so with the development of
Uganda, Indian exports will also sees a rise of 12% every year since
2002.
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Chapter 2(Part B):
Policies and Norms of Uganda for Infarstructure Industry for
cooperation and licensing:
Authorities in International Trade
Uganda Export Promotion Board- UEPB carries whose mandate "tofacilitate the development, diversification, promotion and co-ordination ofall export related activities that lead to export growth on a sustainable basis.
Uganda Revenue Authority - Maximizing central government tax revenue
while optimizing resource utilization by ensuring a fair and equitable taxadministration.
Uganda Investment Authority -Uganda offers an exceptional opportunityfor your business in the heart of Africa. Located almost in the center of thewidespread African Market, Uganda is already the preferred home of severalleading Global Corporations and International Organizations. Uganda is oneof the fastest growing economies (+6%) and one of the most liberalcountries for foreign investment in Africa. A place where opportunities for
business are plenty, it is an ideal place to set up a bridgehead to accessAfrica. Uganda Investment Authority provides pro-active assistance in allaspects for investing in Uganda.
Uganda Manufacturers Association- UMA's role is to promote, protectand coordinate the interests of industrialists in Uganda.To act as a watchdogand an effective mouth piece for it's members.,To initiate discussions andexchange of information amongst members on industrial issues, UgandaManufacturers Association advises Government on key policies affecting the
industry
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ICT and Infrastructure policy (Key strategic issues and suggested remidial
actions)
The rapid developments witnessed during the recent years in the field of ICT
directly impact on the economic, social and cultural life and are now broadlylinked to the ability of countries to keep pace with the advances. The disparity
among countries as measured by the digital divide separating them is a major
challenge facing the developing countries in regard to economic revival and the
guarantee of a secure future for their people.
Uganda is consequently working within the scope of a comprehensive and
integrated plan intended to promote the communications technology sector with a
view to supporting the countrys development effort and fulfilling the requirements
for boosting investment and opening up the economy to the outside world in thecontext of an external environment characterized by economic globalization,
competition in trade, industry and technology.
Infrastructure: policies
Key Strategic Issues:
1. Any action to deal with infrastructure and content development should stemfrom a national e-strategy reflecting each countrys conditions and priorities. To
ensure sustainability of the e-strategies relevant stakeholders should be involved in
their development and implementation and appropriate financial and technical
support offered to developing e-strategies.
2. The urgent need to mobilize massive resources for investments in information
and communication technology in the developing countries especially the least
developed countries.
3. The need for the provision of ICT equipment at the lowest cost.
4. Special attention should be given to inclusion of remote and underserved areas
and disadvantaged groups including women, youth and persons with disabilities in
deployment of infrastructure.
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5. Enabling Public Private Partnership (PPP) for the deployment of national ICT
infrastructure
6. Investing in and deploying broadband communication technologies to enhance
capacity of ICT infrastructure.7. Seek affordable and sustainable solutions for infrastructure development.
8. The need to develop and strengthen Libraries, Archives and Documentation
Centres.
Actions:
1.
Develop national policies and implementation mechanisms to address specificobstacles to ICT deployment.
2.
a) Government should source financing for ICT innovations in order to turn them
into productive enterprises.
b) ICT development debt swaps under the HIPC for e-government initiatives.
3.
a) Government should promote manufacture of ICT equipment locally.
b) Government should reduce and where possible waive all taxes on ICT
equipment and software and put in place mechanisms for follow up.
4.
Establish a universal access fund for infrastructure especially geared to
underprivileged areas and disadvantaged groups including women, youth andpersons with disabilities.
5.
Create incentives for local and Foreign Direct Investment
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6.
a) Establish a National Information Portal to promote dissemination and access to
information in the public and private sector domain
b) Establish a National Internet Protocol backbone network, and adequateconnectivity to the Global Information Infrastructure (GII).
c) Establish infrastructure that addresses ICT applications of crosscutting sectors
like health, education, agriculture, local administration, etc.
7.
a) Government to promote and support development of appropriate ICT solutions
that are affordable and sustainable.
b) Promote and guide the establishment of community radio stations so as to
increase levels of information dissemination and public participation.
8.
a) Government should promote and where necessary invest in strengthening
libraries, archives and documentation centers.
b) Create national and regional Resource Centres.
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Policies and norms of India related to Infrastructure:
POLICY IN INDIA
It is a republic with a federal structure and well-developed independent judiciary
with political consensus in reforms and stable democratic environment. GDP at
current prices stood at US $ 479.40 billion and present growth rate is 5.4 percent
(2001-02) with a low inflation rate of 1.9%. India is the 4th largest economy in
terms of Purchasing Power Parity (PPP). It has a rapidly growing consumer market
of more than 300 million people and has developed as one of the largest cost-
competitive technical workforce nations with large pool of skilled manpower and
Professional management including engineers, lawyers, managerial personnel,
accountants etc. India was identified by 82 percent of US companies as their top
destination for software outsourcing and there is a promising future in the
burgeoning information technology industry. In the recent years India has also
adopted conducive foreign investment policies and well-balanced package of
fiscal incentives with free repatriation of profits and capital investment.
While the Government has so far been the predominant provider of infrastructure
facilities, social obligations of governance have led to increasing pressures on
finances of the service providers resulting in inadequate availability of resourcesfor improvement of existing systems and additions of capacity. The immediate
requirement of funds for development of new facilities and improvement of
existing ones has been estimated at US$ 500 billion in various sectors.
Requirement of funds during 2005-06 for Power, Roads and Port sectors is
expected to be US$ 12.2, 2.7 and 0.7 billion respectively.
The Government has been putting in place legal and policy structures in vital
sectors of telecom, roads, oil & gas and ports to foster private participation. Fiscal
incentives are being provided for projects in these sectors and private participationis being sought for bringing in technology, management and financial resources in
setting up new capacities and improvement of existing ones. Government has also
been participating in the development of private projects as partner cum facilitator.
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Government Financing
Infrastructure projects typically involve large capital expenditures in order to
create physical assets that will subsequently be used for the production of
economic and social services in the long term. They are complex activities
requiring specific expertise and resources for both the construction and
operating phases, significant financial outlays, and the need for some parties
to bear the risks associated with the project. Historically, the tendency has
been for infrastructure financing, construction and operation to be primarily
within the public sector, although contracting out some specific construction
or operational tasks was undertaken by the private sector. Highways,
telecommunications, power, railroads, hospitals, prisons and schools arecommon examples of utilities that were funded by the state. These were
viewed as having natural monopoly characteristics, involving externalities,
or as not appropriate for a userpays approach, and thus not suitable or
feasible for private sector provision.
Private Sector in Infrastructure Financing
Since the late 1980s, there has been a profound reassessment of public
policy towards the infrastructure sectors as a result of technological change,
better appreciation of the linkages between incentive structures and
operational efficiency, and greater acceptance of a user pays philosophy
(Grimsey and Lewis, 2004). Consequently, there has been a shift towards
private management (private sector participation) and private ownership
(privatization) of these industries, as well as the competitive provision ofservices within parts or all of these sectors (liberalization) for two major
reasons. First, because of the generally poor performance of state-owned
monopolies. Second, because of the rapid globalization of world economies,
which has brought into sharp focus the economic costs of inadequate
infrastructure, prompting several developing countries to seek new
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initiatives to promote competition, involving private and foreign interests in
the provision of infrastructure.
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Chapter 3
Business Opportunities in future in Infrastructure:
Uganda must invest at least $20-billion in infrastructure over the next
five years to drive economic growth and put the East African nation on
the path to transformation into a middle-income economy by 2030, a new
study has shown.
The study, by consulting firm Deloitte, shows that, for Uganda to achieve
the aspirations of the National Development Plan (NDP), the countrymust invest heavily in energy, rail, road, airport and telecoms
infrastructure.
According to the Uganda Infrastructure Fund (UIF) feasibility study, the
country currently faces an infrastructure funding deficit of $15-billion,
having managed to secure funding commitments totalling $5-billion from
various financiers.
The NDP, Ugandas development blueprint, outlines President Yoweri
Musevenis governments vision to improve road and rail networks,create employment opportunities, improve labour force distribution and
the training of human resources, and use the private sector as the engine
of growth and development. The plan envisages that Uganda will be a
middle-income economy by 2030.
The study suggests that an initial government investment of $300-
million, in the form of equity or debt, could provide sufficient seed
capital for the UIF, whose total capital is projected at $1-billion in the
early phase, with the balance being, raised from private investors.It reveals that, with a legal and regulatory framework that facilitates
private investment in infrastructure (through a publicprivate partnership
framework), the UIF has the potential to create significant private-sector
development opportunities.
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Uganda continues to attract high levels of foreign investment despite
unrest, endemic corruption and wildly fluctuating currency prices. The
strength of the countrys natural resources have ensured that industrial
construction projects continue to take place, but to date these have had
little impact on the countrys antiquated infrastructure. The constructionsector is forecast to demonstrate year-on-year (y-oy) growth of 14.9 % in
2011, taking the industry value to US$2.6bn.
Uganda received a US$120mn loan from the World Bank with which to
carry out vital improvement work to the countrys national electricity
grid, according to Engineering News. The work, which is part of a drive
to connect more citizens to the network, will address power shortages
across the country and reduce the need for businesses to rely on
expensive diesel generators. The Ugandan government has received a US$120mn loan from the
World Bank (WB) to finance a project to upgrade the national electricity
grid. The five-year project will consist of building 137km of transmission
lines and substations, along with offering technical support and
connecting approximately 6,500 new customers to the grid in the
countrys south-western region. The funds will also be used to move
people residing on land through which the line will run.
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Future Trade Opportunities between India & Uganda
Ugandas abundant natural resources like oil, gas, minerals and many more yet tobe discovered imply Uganda has a good future ahead. He urged Ugandans,
regardless of political differences, to rally behind government to harness theextraction of these resources now.
Technology is another factorbrightening up Ugandas future. That Uganda haschance to adopt sophisticated technologies, like Brazil did 40 years ago, to harnessinnovation and productivity in agriculture and transport sector. He said technology
transfer is cheaper and more affordable today than 40 years ago.
Thirdly, are trade opportunities coming with creation of the East AfricanCommunity. Moving together, he said, the region has higher bargaining power inworld trade whereby a mere 1% increase in our share of the world trade will bringus $70m.
The ever widening middle class is an additional opportunity for Uganda. Hedefined this as Ugandans living on between $2-$20 per day. By 2030, one in every
two Ugandans will be in this middle class. This will increase localconsumption/market, which is an incentive for increased production. He saidgovernment must attract more Foreign Direct Investments to nourish this middleclass.
The demographic dividend arising from a growing population whereby in future
there will be fewer children and elderly people to support. Uganda has lots of landnear urban centers which is an advantage to be harnessed to increase foodproduction.
China will soon start outsourcing low-skill manufacturing jobs perhaps as manyas 85m over the next 10 years. Katongole says Ugandas young labor force standsto benefit from this. Uganda also has a relative proximity to US and Europe, themajor destinations for Chinese products.
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Existence of the growing number of younger entrepreneurs in both business andindustry. The social media revolution exposes these younger entrepreneurs toknowledge, curiosity and readiness to take business risks.The ever improving quality of corporate governance in Uganda. There isincreasing dependence on market research, relationship trust, ethical businessstandards, quality consciousness and global branding among todays businessclass. The advent of capital markets and venture capital is further evidence.Katongoles paper prescribed urgent necessary regulatory reforms in the energysector to take the development pace to another level.
Potential for trade between Gujarat & Uganda
Following sectors have high potential to develop trade between Gujarat andUganda
Agriculture and Agro Processing Dairy Industries Technical Skill Up Gradation Petro-Energy Research
The progressive State like Gujarat can play a decisive role in the
development of Uganda.
India has emerged as one of the largest investors and tradingpartners of Uganda in the last two decades.
These include manufacturing, agro-processing, banking, sugar, real estate, hotel,tourism, textiles, pharmaceuticals, construction and the ICT sector. Srivastavapoints out that bilateral trade between both countries has grown from $5.6m in1984 to more than $262m in 2007, while planned investment from India was$377.25m, the largest from any foreign country.Relations between India andUganda date back to the 19th Century, when over 30,000 Indians were brought toUganda during the colonial times to build the railway line from Mombasa toKampala.
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CONCLUSION
According to the report and SWOT analysis we can conclude that theinfrastructure sector Uganda is growing rapidly. among the infrastructuresector logistics and energy are the developing sectors. the sector is on theverge of developing but due to corruption and political turmoil there hasntbeen significant growth. Uganda has recently changed its foreign policyhence lot of investments are about to pump in to the country. World BankIndia, china and various other countries are investing in Uganda. EspeciallyIndia with various trade agreements and infrastructure projects investing inUganda. so investment in infrastructure sector of Uganda will give greatreturns.