UGANDA | UIA | INVESTORS | VALUE

Coffee, cassava, and fruit processing are some of the crops identified by the Uganda Investment Authority (UIA) that investors should take advantage of to add value to the agriculture sector of the country.

According to CGIAR, farmers lose up to 20 t 25% of their cassava to poor post-harvest handling, where value addition has been carried out, it is done in a rudimentary way and mainly manual due to a lack of appropriate technologies.

In a document that UIA presented to investors in the agriculture sector at the Africa Green Revolution Forum recently, during the Deal room, where each country presents areas for investments to potential investors, UIA sought about $11.3m for adding value to cassava alone.

In the document that was presented by Peter Mulira, the Business Development and Facilitation Executive at UIA, the total requirements for the project is twenty-five (25) acres factory plant and machinery cost has been estimated to be USD 8.4m; of which USD 4.5m is the cost of the starch plant and USD 3.9m is the cost of the ethanol plant.

He explained further that a feasibility study by the Uganda Development Corporation (UDC) of 2021, indicates that the project is financially viable with a positive NPV of $1m, an IRR of 12.4%, and a payback period of 8.4 years.

Coffee:

For coffee, UIA says the total cost of the project is USD 9.4m including capital investment, human resources, operational expenses, and working.

They add that financial projections indicate that the investment capital shall be recovered within 5.3 years with an NPV of USD 16.3m and an Internal rate of return (IRR) of 28.2%.

The establishment of the proposed factory is associated with impressive economic benefits represented by an Economic Net Present Value (ENPV) of USD 22m at a 12% discount rate and an Internal Rate of Return (EIRR) of 42.2% respectively.

Fruit Processing

for fruit processing, the initial project financing is forecasted at a Capex total of USD 10.2m, with a payback period of 56 months, because it starts making profits in year 2, with a taxation return on investment of 15.3%.

Mulira added that a local investor has already been identified to provide land and partial financing in partnership with the Government of Uganda.

How UIA will support the investor

The government through UIA will support the acquisition of secondary licenses or approvals except, where the regulator issues the primary license. They will also recommend where services such as commercial banks, project development assistance from Development Partners, and introductions to Equity Funders among others.

In terms of land, investors can be allocated land in the operational and planned Industrial and Business Parks. In addition, linkages to private land owners for purchase. 

The other option is the possibility of Joint Venture Partnerships through the Matchmaking of licensed domestic investors with foreign inward missions, as well as the establishment of markets for licensed investors to supply raw materials or finished products. 

Other incentives include tax exemptions on the supply of earth-moving equipment and machinery for the development of free zones and industrial parks.

Exempting the supply of construction materials for the development of industrial parks. No excise duty is charged on construction materials for the development of industrial parks or free zones among others from the Uganda Revenue Authority.

Coffee, fruit processing, and cassava are some of the agricultural commodities that were presented to investors in the Deal room, who are interested in the agriculture sector of Uganda, at Africa Green Revolution Forum (AGRF) held in Kigali under the theme Grow Nourish Reward-Bold Actions for Resilient Food Systems.

According to the 2021 Agribusiness Deal room report, a total of 127 companies from across 23 countries on the continent, took part, with Nigeria leading with 24, Kenya at 21, Ghana at 19, and Uganda at 12.

Uganda’s Agri- received one of the highest investor interests, seven in total, demonstrating investors’ appetite for SMEs with a high revenue base that was operational in value addition/processing., Of these four value chains from Uganda attracted a total of US$29M. It is hoped that the presentations will attract even more funding, added Mulira.