The status of investment and UIA's checkered path over 25 years

By Eng. Dr Frank Sebbowa

Uganda Investment Authority was established 25 years ago to help guide and drive investment in the country. Its current executive director, Engineer Dr Frank Sebbowa gives us an analysis and account of the 25 years. Below is his edited article about it. The full version is on www.newvision.co.ug

This year, 2016, marks 25 years of Uganda Investment Authority's own existence. Along the way have been significant successes and challenges, which have strengthened the Authority's resolve to improve service delivery and commit to its mandate of facilitating and promoting investment. However, it is only fair that before we focus on the way forward that we reflect on how our past has been in order to draw lessons that will spur us to greater heights.

It is incumbent on us to recognize the immense support and work done by the Government over the years to ensure that Uganda Investment Authority (UIA) carries out its mandate. In equal measure we must appreciate the various persons, now mainly senior citizens, who have led the entity to its present status. Former Ministers of State for Investment include Sam Kutesa, Prof. Ssemakula Kiwanuka, Aston Kajara and Ajedra Gabriel Aridru, who gave political leadership to UIA and past Board Chairpersons such as Brewer Abaliwano, Dr William Kalema, Patrick Bitature and lately Juma Kisaame deserve appreciation as well as past Executive Directors of UIA who include George Rubagumya, Yob Yobe Okello, and Dr Maggie Kigozi, who led Uganda Investment Authority management for many years.

UIA is a product of the liberation of this country by the National Resistance Movement (NRM) which liberation brought Uganda back onto the world stage where investors (domestic and foreign) began looking at Uganda as safe enough for their investments. As the Government started rehabilitating state systems after the war years more and more investment started flowing into the country and the Government quickly recognised the need to have this happen in an orderly manner; hence the Investment Code Act (1991). It is this Act of Parliament that established Uganda Investment Authority mainly to:

1. Promote Uganda as a worthy investment destination especially for Foreign Direct Investment (FDI) flows.
2. Provide a central place where investors could obtain valid information about investing in Uganda
3.  Ensure that investors had a place where they could get guidance on the national investment requirements or regulations.
4. Provide a location from which investment incentives and certificates could be issued to deserving investors.
5. Ensure investors' export of earned dividends (in foreign currency) was well documented and administered.

Of course over the years, some of these initial mandates of UIA have changed; some have been found not so useful and have been scrapped while others have been added after implementation experience.

Uganda Investment Authority lifespan to date is characterised in three phases namely:

       The Start-up Decade (1991 to 2001)

          The Expansion Years (2002 to 2014)

           The Future Strategising Years (2015 to 2016)

The Start-up Decade (1991 to 2001)

Uganda Investment Authority (UIA) actual activities started out as a desk in the Ministry of Trade and Industry and then to the Ministry of Finance as a Unit before gaining autonomy when the law established it in 1991.

In these early years, focus was mainly on foreign investors who brought in the much needed advanced technology, expert manpower, foreign exchange and marketed Uganda to others abroad as a safe investment destination. Management and staff of the then UIA, spent large amounts of time talking to potential investors abroad in corporate boardrooms, international conventions and conferences. At the time that was the right thing to do since Uganda's image was badly dented. The emphasis then was "tell the potential investors about the untapped natural resources in the country, the good weather and the solid government support and commitment to protect investors and their investment". And indeed foreign investors did come: Celtel, MTN, Shoprite, Sheraton Hotel, etc. ‘discovered' Uganda around that time.

However, dependence on the abundance of natural resources in the country, weather and excellent governance structures was bound to eventually become a stale tale. Most of Uganda's neighbours had these same endowments. But more importantly the world investment promotion strategies were changing. Aggressive methods were routinely being applied by sister organisations to attract investors into their own countries. The UIA method of attracting investors had to change, if Uganda was to remain a contender for the vital investments.
But also internally challenges were beginning to arise:

1. The tax incentives were being abused by some investors who produced limited goods or services inspite of the generous incentives.
2. Because the foreign firms were more aggressive in pursuing incentives, the incentives seemed to be going to foreign investors leaving the domestic ones disgruntled.
3. Other laws streamlining the Government operations were in conflict with the older provisions in the Investment Code Act (1991).

The Government in 2001, on advice of the UIA Board of Directors, reviewed the Investment Code Act (1991) removing many of the offending articles, streamlining the management structure and introducing new aspects. For instance, the Certificate of Incentives was removed and the tax incentives enshrined in the country's tax laws to make the access of these incentives more transparent and across the board to both foreign and domestic investors.

The Expansion Years (2002 to 2014)

With increasing numbers of investors in the country, challenges in the system began to manifest. Sluggish public officials delaying business related decisions, unfair treatment of others and general indifference to investor needs contributed to disenchantment of investors. Realising the importance of retaining happy investors, UIA responded by setting up Team Uganda, an assembly of 33 Government entities that handle in one way or other investors. Team Uganda brainstorms on the expressed and apparent concerns of investors and finds a joint solution to make the doing business in Uganda a better experience for investors.

On the other hand, the President decided that investors' grievances deserved even better attention to ensure that ministries and departments of Government were also responding to the investors' needs. He set up the Presidential Investors' Round Table (PIRT): a system in which select aspects of investment are examined by participants from the private sector appointed by the President or the Prime Minister for a period of two years. Recommendations of the PIRT working groups are adopted where appropriate. The efforts of PIRT directly led to the creation of the Ministries for Information Technology and that of Tourism, among many other important government interventions in improving the investment environment in Uganda. UIA as secretariat to PIRT is proud to have been at the centre of these developments.

Land for investment at the beginning was mainly obtained by applying to the then Kampala City Council, which was quite sluggish. To overcome this, the  Government decided to avail investment land directly to UIA. Hence the decision to task UIA to develop 22 industrial parks across the country, of which it has so far attended to only nine (Bweyogerere, Luzira, Namanve, Kasese, Soroti, Jinja, Mbarara, Mbale and Moroto) due to financing constraints. Financing has been a challenge to the development of serviced land (land with water, electricity, roads and possibly built warehouses) for investors to install their factories. We are proud that inspite of these constraints, Luzira and Bweyogerere are fully functional while Namanve, Mbarara and Soroti are at various stages of development and occupation by investors.

Attention to the domestic Small and Medium Enterprises (SME) became more urgent and UIA was tasked to look into this area although the current law is silent on them. It is a well-known fact that any country to develop its industrial backbone requires a strong SME. UIA moved to correct this omission firstly by drafting the initial country SME policy with the support of its parent Ministry of Finance Planning and Economic Development and then later taking on direct support to Uganda's SME through training domestic entrepreneurs in business management and technical skills development, which are critical elements in the SME sector growth. More recently UIA has started guiding various valued addition chains on the importance of business cluster formation as a means of forward and backwards linkages.

On the core mandate of investment promotion, licensing and support, UIA has had to change with the times. By 2013 it was clear that for Uganda to attract a reasonable number of investors (both domestic and foreign) concerted effort had to be made in targeting the potential investors. This is when foreign trips to conventions and conferences started to be scaled down in preference to internet based research of investor markets and subsequently participate only in conventions where identified desired investors were likely to be. UIA increased its engagement with Uganda's missions abroad as a means of identifying potential investors. Hence the increased UIA support to Uganda Ambassador led inward missions. Likewise, our engagement with foreign missions in Kampala from countries with greater investment potential has also increased.

The tail-end of this period has also seen increased efforts to actualise the investors' one stop centre at UIA. While UIA has struggled with the physical one stop centre comprising of five government agencies (UIA, Uganda Registration Services Bureau, Uganda Revenue Authority, Directorate of Citizenship and Immigration Control, Directorate of Land Registration and the National Environmental Management Authority) working from UIA offices to serve investors as they register and license their investments in Uganda.  Cabinet finally approved and Government financed the establishment of enhanced investors one stop centre. This has two components: the physical one stop centre to be built on the UIA land at Plot 15 Baskerville Avenue in Kololo. (It has been determined that three government entities: Uganda Investment Authority, Uganda Registration Services Bureau, Capital Markets Authority, can share this physical facility when fully constructed).

The world has moved to the internet, UIA also has been enabled by Government to set up an electronic One Stop Center; its electronic portal (eBiz) is found at www.ebiz.go.ug where seven government agencies that handle investor approvals are able to interact electronically and the investor is able to transact with them remotely through the internet.

The future strategising years (2015 to 2016)

The global changes in the investment promotion space have meant that UIA must re-discover itself. Thus although we had a working Strategic Plan 2013/2018 in place, when the institution got a new board of directors at the end of 2014, the first focus point was development of a better strategy: The UIA strategic plan 2016/2021, which is more aligned to the National Development Plan 11 and the overarching Uganda Vision 2040. This strategy focuses on better investment generation from within Uganda while upping the foreign drive for investment. It proposes a lean but very efficient and better facilitated work force at UIA which will always be focused on investors; domestic and foreign.

The modern investor has become more sophisticated and the old investment sector profiles are no longer adequate. Investment promotion agencies are now developing investment-ready projects. UIA has now embarked on the process of getting a pipeline of bankable projects. While financing constraint do prevent UIA from generating all needed bankable projects, it will continue to solicit for project briefs from Government agencies and the private sector projects with feasibility studies for marketing to the now sophisticated investors calling for bankable projects.

It is inevitable that UIA will need to work with many strategic partners within and outside of Uganda. It has been agreed internally in UIA that must sign corporation agreements or MOU's with other investment promotion agencies, with chambers of commerce and will continue to follow Government leads and engage wherever The President and other officials go and/or generate friends. When other Heads of State visit, UIA has decided it will look for potential investors in the visiting delegations.

Brief summary of actual achievements:

An Investment Promotion Agency such as UIA aims at attracting investment that will create jobs for its nationals, introduce new technology in the economy and make taxable profits. The past 25 years of UIA greatly aided by The President and others has seen UIA attracting licensing many companies from within Uganda and 73 countries of the World. The general performance in this regard is tabulated as follows:

Licensed projects and value 1991 to 2015

A major element which should guide our future efforts in the targeted investment promotion is source countries for investments. Uganda has always led the table and as such needs more effort.

The Top 10 sources of investment by million dollars

The UIA journey over the 25 years is much longer than I have indicated. There have been ups and downs but we are optimistic that what lies ahead will be better, much better than where we have been.

The writer is the executive director of the Uganda Investment Authority