Ugandan agricultural and agro-processing sector.

The economic output is dominated by agriculture, which was responsible for 44% of GDP in 1996/97. Agriculture employs over 80% of the labour force and also accounts for over 90% of export earnings. Total GDP amounted to US$5.4 billion in 1995, compared to US$134 billion in the case of South Africa. Most agricultural production takes place in the south, where the climatic conditions have always supported the densest rural populations.

Uganda forms part of the East Africa plateau, mostly at an altitude of 1000 to 3000 metres above sea level. It has an equatorial climate, modified by altitude. Most areas receive 1000 to 1500 mm of rainfall per year. Temperatures vary between 15 and 25°C. The natural vegetation ranges from forest to savannah. Favourable conditions for the cultivation of food and cash crops are found in most areas. Continuous cultivation is carried out where the rainfall is reliable and two to three crops per year are attainable. More than 75% of the land is available for cultivation or pasture. However, large areas are under-utilized. Only 8 million of the 40 million acres of arable land were being cultivated in 1997. Land tenure systems are a mixture of traditional practices, colonial regulations and post-colonial legislation and vary from region to region. The most widely found system is "customary tenure", which does not recognize the right of the individual to own land, although he or she may use land subject to the approval of family, clan or community. The co-operative network (over 5000 at village level) has played an important role in assisting farmers in the past two decades. 

Grapes

Woman  Plucking Tea

Agricultural production comes almost exclusively from 2.2 million smallholders, mostly working 2 to 3 hectares of land, using traditional methods of cultivation and family labour. South Africa could therefore learn valuable lessons from Uganda with regard to commercializing its own small scale farming sector. Food crops (plantains, cassava, sweet potatoes, millet, sorghum, maize, beans, groundnuts and sesame) represent 60% of agricultural GDP, livestock 19% and export crops (coffee, cotton, tea and tobacco) 12%. Some high value crops, such as cut flowers and certain vegetables and fruits, are also being exported. The government is developing a strategy to encourage exports of both food crops and high value crops, in order to diversify exports. The total value of Ugandan agricultural exports amounted to US$491.1 million in 1996. The most important products exported to South Africa and the BLNS countries were coffee, tobacco, fresh cut flowers, ginned cotton and oilseeds.

Uganda is normally self-sufficient in food production. This means that the small scale farming sector is successful in providing food for a population of almost 20 million people. Subsistence production is the norm and only about one-third of food crops are marketed. Crop marketing in Uganda takes place within a policy of trade liberalization, which corresponds to the situation in South Africa. Crop marketing is handled by co-operatives, marketing boards and private companies. The export monopolies previously enjoyed by marketing boards have been removed in line with the general policy of liberalizing trade. As a result of this, coffee producers’ earnings have increased from 20% to 84% of the free-on-board value of coffee exported. 

Coffee Tree

The NRM Government has embarked on the road of privatization. A number of state-owned companies, e.g. cotton ginners, dairy processing facilities and the Uganda Seed Project, have been earmarked for privatization. The Ugandan Government encourages foreign investment in their country.

For this purpose, the Uganda Investment Authority (UIA) was established. It is a statutory body that serves as a one-stop centre for promoting Uganda as a business location for investment by foreign and domestic investors. It assists investors to implement their plans, advises Government on investor-friendly policies and structural requirements and is responsible for licensing foreign investment. During the period 1991 to 1996 a total of 1 053 investment projects were implemented, comprising a total investment of US$1.34 billion and providing 80 133 employment opportunities. Of these, 38% are foreign-owned, while 24% are joint ventures between Ugandans and foreigners. The most important sources of foreign investment (in terms of number of projects) were the United Kingdom, Kenya and India. However, in terms of the value of investment projects, South Africa ranks third as source of investment. South African companies that have invested in Uganda include South African Breweries, MTN, Alliance Air, Multi Choice and Metro Cash ‘n Carry.

Some investment opportunities in agriculture and agro-processing highlighted by the Executive Director of the UIA, Mr Yob Yobe Okello, include cut flower production for exports, oil seed production and processing, cotton production, ginning, spinning and weaving, production and processing of livestock products, fruit and vegetable production and value adding with regard to coffee and grains. Several investment opportunities in tourism, manufacturing and services were also identified. There are many opportunities in Uganda’s privatisation program as well, e.g. the Uganda Dairy Corporation. Although foreigners are not a

llowed to own land in Uganda, leases, ranging from 5 to 99 years, are available.

A number of investment incentives are available, including capital allowances and operational expenses deductible from a company’s income and deductible annual allowances for depreciable assets. A uniform corporate tax rate of 30 percent is applied. The foreign exchange regime has been fully liberalised and there are no restrictions on the movement of capital in and out of the country. The Ugandan population is reasonably well trained, with a fair number of graduates. Labour legislation include aspects such as medical, pension and leave benefits. Uganda has a growing and open economy with a government committed to private enterprise. An abundant raw material base and access to growing regional and domestic markets are further advantages. Uganda has access to the East African market comprising 74 million people, Comesa (with 23 member countries and 300 million people), as well as duty free and tariff quota access to the EU in terms of the Lomé Convention and duty free access to the US market for certain products under the GSP system.
http://www.daff.gov.za/docs/GenReports/Uganda.htm