The he E Evolution o of Industry in n Uganda Marios Obwona National Planning Authority Isaac Shinyekwa Economic Policy research Centre Julius Kiiza School of Humanities Makerere University Eria Hisali School of Economics Makerere University Presented at the Learning to Compete Conference: Industrial Development and Policy in Africa in Helsinki, Finland June 24 th to 25 th 2013
Out utline e Question: Why is there so little industry in Uganda? 1. Studies –Is it the investment climate, the institutional, regulatory environment? 2. We document the colonial , postcolonial history and industrial development under the National Resistance Movement (NRM) regime (1986 – to-date). 3. An outline of Uganda’s industrial policy framework. 4. The current structure of the industrial sector 5. A conclusion
Indu ndustri rial de development i in n the he col olonial al rul ule ( (1945-1960) 960) 1. After the WW II UK was foreign Exchange starved 2. Solution: a two-pronged strategy designed to increase exports of primary commodities, and increase production in dollar-earning and dollar-saving industries 3. Two categories of industries emerged: Processing industries- many, rural-based and dispersed prepared cotton and coffee for export • Manufacturing enterprises - fewer and concentrated in urban areas and targeted the domestic • market through import substitution 4. Major capital projects in the 1950s: construction of the hydro-electricity power station; promotion of mineral exploration and extension of the railway from Kampala 5. Uganda Development Corporation: state guarantee the initial risk capital 6. This model of industrial promotion delivered concrete public–private partnerships in the industrial sector
Postcolonial al i ind ndustrial al de development, 1962 1962 – 1986 1986 1. State-guided industrial development continued.- centrally planned 2. The development crisis in Uganda began in the 1970s with the rise to power of Idi Amin (1971-1979). 3. Destroyed the economy, disorganised the industrial and other economic infrastructure, and triggered a spiral of economic mismanagement. 4. Records of the 1970s and 1980s reveals a virtual absence of heavy industries. 5. Uganda registered declining output in both light industries and the potential growth poles for heavy industrialisation.
Manufact ctured’ O Output in Uganda 1966 1970 1973 1977 1980 Sugar (‘000 tons) 128.9 144 68.5 11.4 15.0 Vegetable oils (‘000 tons) -- -- 12.5 1.7 0.0 Animal feeds (‘000 tons) -- -- 24.9 7.6 0.0 Spirits (Waragi) (‘000 litters) 238.0 564.5 910.0 526.0 34.0 Beer (million litters) 19.7 27.8 45.6 22.1 12.0 Cigarettes (billions) 1.3 1.5 1.9 1.9 0.6 Pipe tobacco (tons) 203.0 127 96.0 98.0 12.0 Fabrics (million sq. meters) 40.0 49.6 38.1 36.6 7.5 Blankets (millions) 0.6 1.2 0.4 0.3 0.0 Soap (‘000 tons) 14.9 12.9 6.3 1.1 0.4 Matches (s) (‘000 cartons)* 38.2 49.3 50.0 10.0 2.8 Marches (L) (‘000 cartons) -- -- 4.6 0.2 0.7 Superphosphates (‘000 tons) 24.6 24.8 18.6 1.2 0.0 Steel ingots (‘000 tons) 19.8 19.5 11.7 5.6 1.9 Corrugated iron-sheets (‘000 tons) -- 11.9 5.1 2.0 0.0 Cement (‘000 tons) 122.4 191.9 142.7 73.0 4.9 Paints (million litters) -- 1.7 1.4 0.6 0.1 Blister copper (‘000 tons) -- -- 9.6 2.3 0.0 Footwear (‘000 pairs) -- -- 3.2 1.1 0.0 Fish-nets (‘000) -- -- 349.2 98.5 0.0 Bicycle tires and Tubes (million) -- -- 1.4 0.7 0.0
Indu ndustri rial de development f from 1 1986 – to to-dat ate 1. Uganda’s development priorities for the 1990s and beyond called for greater economic liberalism and less involvement of the state in the economy. 2. Private sector led approach to industrialization, e.g., the Uganda Investment Authority (UIA) was established in 1991 by the Uganda Investment Code, 1991 (amended in 1994) -a one-stop centre for the promotion of investments in Uganda 3. Uganda is a member of the Multilateral Investment Guarantee Agency (MIGA) and the International Centre for the Settlement of Investment Disputes (ICSID). 4. It is from this global investment regime that Uganda’s liberalised industrial policies spring. No distinctly national industrial policies have been crafted.
Manufacturing as share of GDP, 1980-2008 Trends in the sectoral composition of GDP, 1980 - 2008
The he ind ndustri rial pol policy cy framework rk 1. Macroeconomic stability policies 2. Trade policy reforms: The tariff reduced from the average MFN rate of 19 % in 1994 to 11 % in 2005 though it rose slightly to 15 • percent in 2008 following the implementation of the CET in the East African Community Non tariff barriers except those that are compatible with the WTO guidelines have been gradually replaced by • tariff equivalents Uganda’s tariff code grants duty exemptions on inputs that are not locally available especially capital inputs and • other raw materials. 3. Sector specific policies Policies implemented in the mid 1980s targeted stabilization of the economy and to revamp the productive capacity • of the industrial sector – The emergency Relief and Rehabilitation Programme of 1986 and the Economic Recovery Programme of 1987/88 to 1991/92 Way Forward I and II of 1990-1995 entailed a wide range of measures to attract private investment through reform • of the tax system, financial sector and foreign exchange market liberalization and dismantling of state marketing monopolies. The Industrialization Policy and Framework 1994-1999 sought promote the expansion of the country’s export base. • The Medium Term Competiveness Strategy (2000-2005) for the private sector sought to address bottlenecks to firm • level competitiveness The Medium Term Competitiveness Strategy (2005-2009) to catered for aspects like business regulation, cluster • development and value addition Uganda’s National Industrial Policy – 2008 to promote private sector-led industrialization through development of an • efficient and reliable infrastructure.
Composition of Co n of the he Indu ndustri rial S Sector r 1. Sectoral composition Construction sub-sector was the largest (61 percent); • Formal manufacturing (20.2 percent); • Water supply (6.9 percent); • Informal manufacturing (6.6 percent); • Electricity supply (3.9 percent); and • Mining and quarrying (1.4 percent). • 2. Detailed description of sub-sectors Agro-industrial - two broad categories: food processing and agro-based products; • Chemical industries : food, health, household, building, pharmaceuticals and • plastics products; Metallurgical industrial : steel rolling mills, metal working (roofing and fencing • materials); foundries, forging and machine shops, domestic appliances, spare parts, equipment and tools; Engineering : transport, agricultural, textile, the metal working, electric & electrical • equipment; Non-metallic minerals: cement and lime small; and • Paper and printing- small-scale: cartons, boxes, paper bags, and printed materials. •
Distribution o of firms i in the m e manufacturing s sub-se sector or by em employm yment b band Number of employees: 1-4 5-9 10-19 20-49 50-99 100 + Total 1. small scale. Btw 5 and 9 - 58 Processing of Meat, Fish and Dairy prodts 15 21 16 11 11 15 92 • %:. Coffee Processing 24 110 28 15 5 3 185 Btw 10 and 19 - • 18 % Grain Milling 55 390 119 23 6 3 599 2. Medium scale Tea Processing 1 2 5 3 26 38 Btw 20 and 49 - 9 • % Bakery, Manufacture of Other Food prodts 6 72 54 50 11 8 203 3. Large scale Manufacture of Beverages and Tobacco 1 33 19 14 5 9 83 Btw 50 to and • Manufacture of Textiles and Leather prodts 14 120 36 28 8 11 220 100 or more - 3 % Sawmilling, Printing & Publishing 42 199 81 45 5 9 385 This suggests that Uganda has Chemicals and Chemical Products 11 18 19 21 8 5 83 a very small Manufacture of Plastics 7 66 49 27 11 12 178 proportion of large scale Manufacture of Metal Products 33 326 62 35 13 12 484 manufacturing Manufacture of Furniture, Other Man. 25 545 115 36 7 1 730 firms . Total 233 1,901 600 310 93 114 3,280 Source: UBOS Business Register 2007
Regi gion onal distribution on of of manufact cturing firms Industry Kampala Central East North West Total 1. During the 1960s and early 1970s, Processing of Meat, Fish & Dairy Prodts 23 19 18 13 19 92 Jinja town was the Coffee Processing 21 94 33 1 36 185 main industrial hub of Uganda Grain Milling 190 98 193 39 79 599 2. Kampala Tea Processing 2 8 3 2 23 38 emerging as the Bakery & Manuf. of Other Food Prodts 93 45 25 8 32 203 major industrial Manufacture of Beverages & Tobacco 51 12 10 6 4 83 town Manuf. of Textiles & Leather Prodts 80 33 47 26 34 220 3. Central region - 61 % with 42 % Sawmilling, Printing & Publishing 275 35 26 19 30 385 located in Chemicals and Chemical Products 66 8 7 2 83 Kampala Manufacture of Plastics 60 37 47 2 32 178 4. Eastern -18 % Manufacture of Metal Products 263 79 55 32 55 484 5. Western – 15%. Manuf. of Furniture and Other 250 151 137 51 141 730 6. Northern – 6% Total 1,374 619 601 199 487 3,280 Source: UBOS Business Register 2007
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