Construction of Uganda’s free special economic zone near Entebbe International Airport is at 30%, with completion expected at the end of 2022.

The sh47b facility is expected to facilitate international trade, as Uganda looks to increase exports and narrow the trade deficit.

Already, the first production unit is being roofed and its industrial floor laid, while the second and third structures are under construction.

Samuel Kasule, the executive director of the Uganda Free Zones Authority (UFZA), said the facility will have four production units, housing seven industries mainly dealing in gold refining, bulking, light manufacturing, branding, packaging and processing.

Kasule said the facility will also house all government trade facilitation agencies to speed up exports and guide on quality to beat international competition. He said since Uganda is predominantly an agricultural country, the facility will also have cold storage to facilitate export of products such as flowers, fruits and vegetables.

“The progress is good and we are impressed. This facility is strictly for export promotion. Research has shown us that most of the products we import are produced in free zones of countries. This is because of the low cost of production there. So it is time for us to set up our own,” Kasule said during a tour of the site last week.

He said once complete, the facility is expected to rake in about $4m (sh56.56b) in government revenue each year, for 12 to 15 years, with an aggregate investment portfolio of more than $1.5b (about sh5.302 trillion).

It is also expected to generate more than 500,000 jobs and about 10% of Uganda’s exports.

The board chairperson, Peter Balimunsi, said the zone will promote innovation, competition, challenge and, therefore, drive enhancement of quality for Ugandan goods.

“As a board, we are impressed by the progress and are hopeful that we will soon see a change in the trade history of this country,” Kasule said.

The UFZA was set up by an Act of Parliament under the finance ministry to establish free economic zones, where goods can be manufactured for export competitively.

A free zone is a designated area where goods are regarded as being outside the customs territory, as far as import duty is concerned.

It usually takes the form of manufacturing or processing facilities as well as science and technology parks or even a tourism development zone.

Balimunsi also said the setting up of the second public free zone at Buwaya in Entebbe would soon commence, having suffered a number of setbacks such as the compensation for squatters on the project land.

About 109 acres were secured for the project at Buwaya, Entebbe in Waksio district, where approximately 30 businesses will create approximately 15,000 jobs.

Balimunsi said up to 80% of what will be produced in Buwaya will be labelled ‘only for export’.

He said only firms dealing in high value goods and perishables will be allowed in the free zone because they complement the airport.

“The land is near the airport. We, therefore, expect operators to support the airport. The two shall leverage on each other,” Balimunsi said.

He said the development of the two government industrial parks is expected to increase export earnings by at least $100m (sh366b) per year and create more than 2,500 direct jobs.

“The investors who manufacture from within the parks will be exempted from import duty for raw materials and enjoy economies of scale accruing from the planed production zones.

Additionally, they will enjoy unrestricted remittance of profit after-tax, tax holiday for 10 years on finished consumer and capital goods as well as 100% exemption from tax on income from agro-processing,” Balimunsi said.

He said the incentives will allow investors to competitively produce goods for export.

Balimunsi added that this will promote export growth and diversification (by creating forward and backward linkages), enhance technology transfer/skills development, accelerate economic growth and create jobs.

According to the World Bank, Uganda’s export performance is still among the lowest in the world, even though there has been a marked increase in exports in the last decade.