TRENDS AND IMPACTS OF FOREIGN INVESTMENT IN DEVELOPING COUNTRY AGRICULTURE

UGANDA
Trends and impacts of foreign investment in
developing country agriculture
BOX 5
Reasons for investing in coffee, flowers and fish sectors in Uganda, 2009
140
Coffee Processing and Export
Uganda is a good volume
producer of coffee and has a
liberalized market. Multinationals
were invited to invest n
the coffee industry following
liberalization in the 1990s.
Source: Field interviews.
Flowers and Cuttings
FIGURE 6
Average number of employees in formal
enterprises in Uganda, 2006/2007
Small 10-19
24%
Medium 20-49
12%
Two novel features about Uganda are its
climate and the availability of adequate
water for farming. Uganda’s climate is characterized
by hot and humid conditions and
all-year-round high temperatures, which are
ideal for production of small budded (sweetheart)
roses and chrysanthemums cuttings.
Preferential Market Access:
Uganda’s floriculture exports benefit from
preferential tariffs to the European markets.
Products that are destined for the USA
market, quota and duty free under the African
Growth and Opportunity Act (AGOA)
preferential trade arrangement.
In 1995, floriculture enterprises formed
the Uganda Flower’s Exporters Association
(UFEA). Through this association, members
supported the setting up of a cold storage
facility, Fresh Handling Ltd, to efficiently
handle horticultural products in cold storage
and arrange for appropriate air transport.
Currently, members pay a handling fee,
which includes the use of cold stores, the
professional fee and air freight charges.
Fresh Handling is presently operating at full
capacity, and plans are underway to expand
it.
Large >50
15%
Source: Uganda Business Register, 2006/2007
Micro 5-9
49%
Challenges
Fish Processing and Export
Uganda has extensive fresh water resources.
Half of Lake Victoria, the second largest
fresh-water lake in the world, is located in
Uganda. The country is also endowed with
an additional 160 smaller lakes and a number
of rivers, including the Nile, on which
substantive fish harvesting and farming can
be done (Uganda, UIA, 2007).
Lake Victoria is home to the Nile perch
(Lates Niloticus), which is in high demand in
Europe, and the wild tilapia (Oreochromis Niloticus).
Uganda’s bio-physical environment
also favours warm water fish aquaculture. In
2002, the Food and Agriculture Organization
(FAO) estimated that over 70 percent of
districts in the country have the potential for
aquaculture development. Uganda’s other
competitive advantages include; (i) the low
cost of labour (lower than many other countries);
(ii) the highly trained professionals in
fisheries related fields; and (iii) low cost of
raw fish; the price is lower in Uganda than
in neighbouring countries.
i. Delays in operationalizing Investment
Policies: Uganda’s investment incentive of a
ten-year tax holiday that was introduced in
the Budget Speech of 2007/8 is yet to be
operationalized.
i. High production Costs: These are attributable
to the high cost of electricity, the
recent reintroduction of taxes on generator
diesel and the high freight charges.
Presently, air freight charges in Uganda
range between US$1.9 per kg and US$2.2
per kg of product, compared with US$1.6
per kg of product in Kenya.
ii. In addition to the high freight charges,
the fish processing sector faces risks from