EXPLORING NEW EXPORT MARKETS

There exist enormous possibilities for collaborative partnership through establishing joint ventures in Uganda in manufacturing sector, engineering industry, technical services, banking, insurance, tourism, etc.

ENGR. HUSSAIN AHMAD SIDDIQUI
Mar 26 - Apr 01, 2007

Pursuant to the strategic policy of increasing present export volume, the Trade Development Authority of Pakistan (TDAP) has recently launched an ambitious programme of developing new and non-traditional markets in Africa. It has taken various initiatives in this direction, including visit of a number of businessmen's delegations to prospective countries such as Kenya, Tanzania, Tunisia, Morocco and Uganda.

Pakistan enjoys good relations with Uganda, one of the key markets in East Africa and an important member state of the Organization of the Islamic Conference (OIC). Though the present volume of bilateral trade is negligible, Uganda is considered a potential market for Pakistani goods and services. Trade between the two countries amounted to US$ 20 million in 2005-06, with Pakistan importing goods worth US$ 13 million and Uganda exporting US$ 7 million worth of goods to Pakistan. Till recently, Pakistan was exporting about 30,000 tons of rice annually to Uganda.

Republic of Uganda has an area of 241,038 square kilometers and borders Kenya, Tanzania, Sudan and other countries. It is a land-locked country and Mombassa seaport of Kenya serves Uganda too. With a population of 26.7 million and a labor force of 13 million, it has GDP of US dollars 36.1 billion, according to 2004 estimates. English is the official language, adult literacy rate is 67% and industrial labour speaks English. Exports of Uganda amount to about US dollars 500 million annually. Major export items are coffee, tobacco, tea, maize, millet, sorghum, vegetables, fruits, flowers and livestock. Its imports are in the range of over one billion dollars and include petroleum products, machinery and equipment, transport and vehicles, textiles and building materials.

Uganda is basically an agrarian economy, and its agricultural produces are coffee, tea, tobacco, cotton, corn, maize, millet, sugarcane, pulses, peanuts and potatoes. It is one of the major suppliers of coffee to the world. Floriculture is thriving as reflected in the fact that there are 20 flower-growing farms spread at 170 hectares, employing about 15,000 people, producing roses, for example, for overnight delivery to Europe. Similarly, Uganda's share in vanilla world market is to the level of 100 tons a year, which constitute about 10 percent of the total demand. Fish processing industry is well established. Utilizing an area of 31,000-sq. km. of Victoria Lake, fish catches amount to 100,000 tons annually, which is exported to the USA and European countries.

The manufacturing sector accounts for over 21% of the GDP. Major industries are textiles, fertilizer, sugar, cement and metal products. Other industries include vehicle assembly plant, plywood, furniture, paint, cosmetics, dairy products, food, beverages, tobacco, and other consumer products. There are three sugar mills producing refined sugar, including Kakira Sugar Works and Madhiwani Group in private sector, and two cement plants located at Tororo and Hima to meet domestic demand. The country produces triple and single super phosphate fertilizers from the phosphate rock deposits occurring in Eastern Uganda, said to last another 100 years or so. Besides phosphate, the mining sector covers tungsten, copper, cobalt, tin, iron ore, gold and limestone.

Till recently, most of these industries, whether in public or private sector, were operating much below their installed capacity, mainly due to lack of technical and managerial expertise and non-availability of major components and spare parts required for regular maintenance. Likewise, mining sector was not in good shape either. Kilembe Copper Mines, where copper was extensively mined in semi-processed condition for export, remained closed for decades. Private sector has recently been encouraged to rehabilitate and modernize most of the industrial units in public sector, through divestment, joint venture partnership, management contract and/or leasing arrangements.

The government also embarked upon plans for rapid industrialization and adopting measures for restoring the confidence of investors. At the same time, it had launched a medium term (2000-2005) competitive industrial strategy for the private sector. The exiled Indian/Pakistani-Ugandan businessmen were motivated to return, and now they own a number of industries including construction, steel, glass, sugar and others.

In fact the government of Uganda under President Yoweri Museveni has achieved one of the fastest growing economies of Africa. A number of democratic and economic reforms were introduced during these years, which are now paying dividends. Infrastructure has been rehabilitated and network of roads and railways is being expanded. Healthcare facilities have increased manifold with the assistance of the international agencies, as quite a few of the tropical diseases have been eliminated and the rate of HIV/AIDS cases, in particular, has gone down considerably. Major investment has been made in education sector, and security has improved.

Telecommunication and Information Technology industry is developing fast. Focus is on creating additional capacity for power generation and transmission in the country where only three-percent population has access to the electricity. A 250-MW hydroelectric power project is being constructed at a cost of US dollar 530 million at Bujagali falls of the River Nile near Jinja City by an American IPP (independent power producer), and transmission line network is being expanded. Luxury hotels, skyscraper buildings, attractive public gardens and modern commercial centers are few of their recent achievements. With a stable national currency, the inflation has now reduced to about six percent, in comparison to over 200 percent in 1988. The nation once internationally known for poverty, civil war and ignorance is now transformed into relatively peaceful and prosperous state and a symbol of African renaissance. Today, the country is once again a popular destination for multi-faceted tourism it offers, earning more than USD 100 million a year.

There are enormous possibilities for collaborative partnership through establishing joint ventures in Uganda in manufacturing sector, engineering industry, technical services, banking, insurance, tourism and others. There are opportunities for export of Pakistan's machinery and equipment for sugar, cement and fertilizer/chemical industries and small hydropower to Uganda. A variety of light engineering goods are required, such as irrigation pumps, machine tools, construction machinery, mining equipment, environment-related equipment, tractors and agricultural implements, bicycles, domestic appliances and industrial spare parts.

Pakistan can extend technical assistance for developing and modernizing textile, cement and sugar industries, and train its engineers and technicians in different fields related to these sectors. Investments, domestic as well as foreign, are being made in Uganda in light engineering, industries, integrated textile mill, organic fertilizer plant, pharmaceutical industry, vegetable oil mill, steel re-rolling, leather products, bicycle manufacturing and the SME sector.

Sometime in 1986, Uganda was interested to import from Pakistan large quantities of various items, such as blankets (4 million), jute bags (5 million), shoes (130,000 pairs), bicycles (30,000) and machine-made carpets (250,000 square meters). For the purpose Uganda had asked for a line of credit and Pakistan agreed, but somehow the credit did not materialize. As a special gesture, however, the Pakistan government gifted two road rollers manufactured by Heavy Mechanical Complex Taxila, but there was no follow-up seeking a commercial order for export of construction machinery to Uganda.

Likewise, in early 1990s, a project for manufacturing of bicycles in Uganda was identified, among other proposals, by the Islamic Chamber of Commerce and Industry for cooperation with Pakistan Engineering Company Limited (PECO), the pioneering and leading bicycle producers in Pakistan. The unit, first of its kind in Uganda, was proposed to manufacture 300,000 bicycles annually at Kampala by the private sector. After initial meetings between the partners, the Pakistani side carried out a project feasibility report based on which the investor in Uganda purchased an industrial plot near the capital and construction of housing colony was undertaken.

The Uganda Development Bank was willing to arrange financing for the project that was estimated to cost about three million US dollars, utilizing credit lines of the International Development Agency (IDA) and Islamic Development Bank (IDB). Subsequently, there were exchanges of delegations at senior level, and resultantly it was agreed that the scope of Pakistani company would include technical collaboration, management and operation, training, consultancy, franchise and supply of machinery. It could have been a major breakthrough for Pakistani industry in Uganda where bicycle market remained dominated by the Indian and Chinese suppliers. Unfortunately, the project, though at an advanced stage of take-off, could not materialize.

No doubt we lost excellent opportunities in the past to make inroads, rather in a big way, in this prospective market, nonetheless, Pakistan can still get a reasonable share in trade and commerce, if concerted efforts are made. Besides the above-mentioned areas of collaborative interest, the country needs cement, sugar, salt, soap, medicines, pesticides, plastic products and other consumables that we produce and export at competitive rates internationally.

There exists need for identifying and implementing ways and means, as a first step, to intensify trade and to develop economic and technical co-operation between Pakistan and Uganda, for which initiative has to be taken by the trade bodies of the two countries which already maintain contact. These measures could have significant and positive impact not only on enhancing trade volume but also opening new avenues for strengthening economic and industrial relations between the two countries. Also, Pakistan may consider offering credit facilities to Uganda for the purchase of Pakistani engineering goods.