Opportunities Between Uganda & India: Leveraging the Uganda Airlines

by Business Times
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By Joseph Muvawala (PhD)

Ground Setting

1) India and Uganda share a stronger historical relationship spanning over a century, with the first Indians or Persons of Indian Origin (POIs) coming to Uganda at the beginning of the 20th Century. In fact, later, Uganda’s struggle for Independence was partly inspired by the success of India in overcoming colonization.

2) Notwithstanding the unfortunate occurrences of the “economic war” in the 1970s, Uganda has maintained a favorable policy to India ever since the current Government assumed leadership in 1986. This engagement here championed by the Uganda Airlines is testament to this good brotherhood. As a matter of fact, currently, a great part of our economy is championed by Indians across the social, economic and political fabrics. Uganda’s development story and trajectory cannot be detached from India. That said, there is still need and room for deepening our relationship, especially towards development and socioeconomic transformation for both India and Uganda.

3) This Key- Note therefore seeks to provide some hints on how opportunities between Uganda and India can be exploited for the betterment of both countries. It is elaborated and structured in five ways, that is: (i) A context of the Strategic Direction for Development in both countries; (ii) Status of the previous Opportunities/Engagements between India and Uganda; (iii) A profile of the various opportunities; and (iv) an analysis of how the Uganda Airlines can be leveraged to exploit these opportunities.

II. Uganda’s and India’s Strategic Direction for Development

4) To exploit the current opportunities, it is better to first understand the Strategic Direction for development for both Uganda and India. In any case, these opportunities should be anchored on how the countries visualize, conceptualise and contextualise their development. These are explained here for both Uganda’s case and India’s case.

a) Uganda’s Strategic Direction for Development

5) Uganda’s development ambitions are articulated in the Uganda Vision which aims at transforming the Ugandan society from a peasant to a modern economy by 2040. This modern economy will be exemplified in an improved per capita income of USD 9,500 and improved ways of life. The Uganda Vision aims at utilizing several fundamentals like Infrastructure development and human capital development, among others to harness the country’s opportunities like Agriculture, Tourism, Land, Minerals, Oil and Gas, among others. The Vision is implemented through six 5-year National Development Plans (NDPs). Currently, the country is at finalizing the implementation of the third National Development Plan (NDP) (2020/21 – 2024/25) and has started the formulation of the next NDP (2025/26 – 2029/30)

6) The development gains, with double-digit growth figures in the 1990s and early 2000s, that Uganda enjoyed over time had been mainly due to peace, security, and macroeconomic stability. Nonetheless, marginal development gains from peace, security and macro-economic stability were exhausted by 2010 and new sources of growth were required for the country to achieve both the Vision 2040 and SDG goals and targets. In particular, new bases of growth like improvement in productivity and competitiveness; consolidation of development gains; strengthened collaboration and coordination, strengthened follow-up; and improvement in Government efficiency and Value for money needed to be undertaken. Going forward, these became priorities in the next planning periods.

7) The proposed focus of Uganda’s development is Sustainable Agriculture, Industry, Mineral Development, ICT, and Tourism for Inclusive Growth, Employment and Wealth Creation.

b) India’s Strategic Direction for Development

8) The Government of India unveiled its Vision for the next decade in 2019, ending 2030. With the comprehensive ten-dimensional Vision, the Government aimed to create an India where poverty, malnutrition, littering and illiteracy would
be a matter of the past. India would be a “modern, technology driven, high growth, equitable and transparent society.”

9) The dimensions of Vision-2030 are as outlined below:

i) To create physical and social infrastructure for ten trillion-Dollar economy and to provide ease of living.
ii) Digital India led by the youths with innumerable start-ups and millions of jobs.
iii) To make India pollution free by focusing on Electrical Vehicles and renewables.
iv) Rural industrailisation using modern technologies to generate massive employment.
v) Clean rivers, with safe drinking water to all Indians and efficient use of water in irrigation using micro-irrigation techniques.
vi) Besides scaling up Sagarmala, India’s coastline and ocean waters will power development vii)Through the space programme – Gaganyaan, India becoming the launchpad of satellites for the World
viii) Self-sufficiency in food production and producing food in the most organic way.
ix) A healthy India by 2030 and a distress free health care and wellness system for all.
x) Employees working with elected Government, transforming India into Minimum Government Maximum Governance nation.

10) Most recently, Government of India developed the India Vision 2047 where a number of targets were made for realization when India will be commemorating 100 years of independence (in 2047). The focus of the Government of India will be on: (i) Complementing the macro-economic level growth focus with a micro-economic level all-inclusive welfare focus; (ii)Promoting the digital economy & fintech, technology-enabled development, energy transition, and climate action; and (iii) Relying on virtuous cycle starting from private investment with public capital investment helping to crowd-in private investment.

11) Elaborating more on the goals for 2047, the union budget for 2023-2024, the first budget in the Amrit Kaal, envisioned India as a technology-driven and knowledge-based economy with strong public finances and a robust financial sector. The principles that prominently emphasized, including: (i) Inclusive Development; (ii) Reaching the Last Mile; (iii) Infrastructure and Investment; (iv) Unleashing the Potential; (v) Green Growth; (vi) Youth Power. (vii) Financial Sector.

III. Profile of Previous Opportunities/Engagements Between India and Uganda

12) In the past, Uganda and India have been coordinating and working together in bilateral cooperation and assistance. This can be the starting point for exploiting opportunities between the two countries. Some of these
are detailed below.

  • i) During the visit of India’s Prime Minister’s to Uganda in 2018, the following were agreed upon between the two countries:
  • Uganda has MoUs and Agreements with India on bilateral defence cooperation in July, 2018 (exemption from VISA requirement for Official and Diplomatic passport holders;
  • Cultural Exchange Programme between India and Uganda;
  • Plans for Establishment of a Regional Material Laboratory in Uganda;
  • Two credit lines for construction of electricity lines and sub-stations, worth USD 141 Million and Agriculture & Dairy Production (USD 64 Million);
  • Additional training for UPDF in India
  • Donation of Vehicles to UPDF
  • Bhabhatron Cancer Therapy machine at Uganda Cancer Institute
  • Books for school going children
  • Solar Irrigation pumps for agriculture

ii) Government of India provided medicine to support the fight against the
COVID-19 pandemic
iii) India provided 44 Utility vehicles for civilian use were provided to Uganda in March, 2020
iv) The second phase of the Pan-Africa e-network project was launched by the Government of India in Uganda. A hospital and University were identified for the e-VBAB. Online courses in some Universities in India and Uganda were initiated;
v) Uganda Parliamentary Forum on India was created in August, 2022
vi) MoU signed between the National Forensic Science University, Gandhinagar, and Uganda’s Ministry of Defence. Uganda earmarked 130 acres of land in Jinja for the permanent campus of India’s National Forensic Science University (NFSU)
vii)India conducts courses for Uganda’s Defence Personnel, at the Ugandan Army’s Senior Command and Staff College, Kimaka.
viii) Commercial Relations between Uganda and India: Uganda is beneficiary of the Duty Free Tariff Preference (DFTP) Scheme of India for Least Developed Countries. Major Items of Indian exports to Uganda include: pharmaceuticals and its related products, vehicles, plastics, paper, coffee, tea, spices, wood and wood articles, among others.

IV. Existing Opportunities for Both Uganda and India

13) The following are some of the highlights of the key opportunities for both Uganda and India

i) Security, peace, Macroeconomic stability and a favorable policy
14) Over time, Uganda has enjoyed and continues to assure sustainable peace, security and a stable macroeconomic environment. This is characterized by long-term stability in prices. Uganda’s economy is among the few countries that
remained resilient during and after the COVID19 pandemic. This environment offers the best confidence indicators for Investors. Beyond that, Uganda offers a strong incentive package to investors, including concessions on land, tax,
electricity, and other Government-specific support. A profile of these incentives can be accessed from the Uganda Investment Authority website at www.ugandainvest.go.ug.

ii) Market Potential and related Opportunities

15) Uganda has a population estimated at about 48 million people, the majority of whom are young people. Additionally, Uganda is land-linked and has a bigger hinterland of the East African Market that connects to several countries, including Kenya, Rwanda, South Sudan, Tanzania and the Democratic Republic of Congo. The current population estimate for the entire East African Community (EAC) is 285 million people.

16) This provides a ready market for several ventures that India and the Indians are involved in, ranging from pharmaceuticals, education, health and to technology, especially for the youthful market, among others. Also, Uganda’s population offers an opportunity to invest in the housing industry, with the country having a housing deficit of over 2.2 million housing units.

iii) Agriculture and Agro-industry

17) Uganda is a predominantly agricultural economy, with a bigger part of the population involved in agriculture and with a bigger part of exports (70%) coming from the agricultural sector. It is important to highlight, however, that there still exist challenges in value-addition. This is where the opportunity lies for Indian Investors. Investors can exploit several agricultural
value chains to their benefit and to the benefit of the Ugandan economy. In fact, as earlier hinted on, Value-addition in key growth areas is one of the priority focus areas that the Government of Uganda is looking to harness more. This has a
number of positive ripple effects across the economy, including realization of more income per value of produce; more jobs created and forex realized, among others

iv) Uganda’s Tourism and Natural Endowments

18) Uganda has a wealth of natural endowments and tourism potential that can be exploited by prospective Indian investors. Uganda is endowed with unique attractions like mountain gorillas, the Nile River, lakes, proximity to the equator, good weather, rich cultural and historical heritage, and a hospitable population, among others.
19) This is something that prospective Indian investors can explore for several opportunities. Further discussions can be undertaken between the Indian Investors and the relevant Authorities and stakeholders.
v) Industry and Trade (Import-Replacement and Export Promotion)

20) Uganda’s industry contributes about 27.6 percent to Uganda’s GDP, just above agriculture which contributes 24 percent and way below services, that contributes about 44 percent. Most importantly, this contribution is still below
the required percentages to cause Uganda’s socio-economic transformation. The composition of Uganda’s industrial sector is as shown in the table below.

Table 1: Decomposition of Uganda’s Industrial Sector and its contribution to the GDP

S/No. Industrial Sector Component Percentage Contribution
1.Mining and Quarrying 2
2. Manufacturing 15.4
3.Electricity 1.3
4.Water 2.3
5.Construction 6.6
Total Industry Contribution 27.6

21) In terms of manufacturing, the major industries that are based on processing are mainly from agricultural products like: tea, tobacco, sugar, coffee, cotton, grains, dairy products, and edible oils. Others include: beer
brewing; cement, fertilizers, matches, metal products, paints, shoes, soap, steel, textiles, and motor vehicles. There is an opportunity for India and the Indian businessmen to exploit opportunities in these and other sections of the industry
that are not fully exploited yet. There specifically exists opportunities in Mining, Oil and gas, especially with Uganda’s Oil and Gas Industry.

22) Uganda is keen to locally/nationally “replace” (substitute) imports of some commodities that are predominantly imported so that they are produced locally. These then become an opportunity for the prospective Indian Investors. These priority commodities (goods and services) for import-replacement were selected based on some or all of the following 10-point criteria, that is: value/volume of imported goods and services; existence of some domestic production capacity; presence of raw materials; technological complexity involved; strategic importance of goods and/or services; high potential for job
creation; essential commodity or service; linkages with other sectors or industries; capital requirements; and previous/ongoing Government investment.

23) Some imports though of small value, are essential for the livelihood of Ugandans and are susceptible to disruptions in global value chains, for example, salt and fertilizers among others. These are also prioritised in Uganda’s Import Replacement Action Plan.

24) Based on the 10-point selection criteria, the 14 prioritised commodities (goods and services) for Uganda’s import replacement (substitution) are: Petroleum and Petroleum Products; Iron and Steel; Medical and Pharmaceutical Products; Veterinary Drugs; Cereals; Plastics; Vegetable Fats and Oils; Textiles; Salt; Fertilizers; Sugars and Sugar Preparations; Transport Services; Construction Services, packaging, and Medical Services.

25) For petroleum and petroleum products, the progress in the quest to exploit Uganda’s oil and gas resources offers opportunity to invest in the petrochemical industry. There are several spinoff enterprises that offer investment opportunities like fertilizer, plastics, and other spinoffs which offer highly lucrative investment opportunities.

vi) Land
26) Land refers to all nature, living and non-living, which is used in the production of goods and services. The importance of land as a factor of production is such that without it, no production can take place. Unlike other factors of production, such as labour and capital, whose use value declines over time due to death of labour force as well as wear and tear of equipment, land has the characteristics of durability. The use value of land does not decrease over time. Therefore, land is an essential factor of production because: it provides raw material and space/surface for setting up the sites for industrial infrastructure.

27) Opportunities in land exist in: setting up production installations on the land; land and real-estate developments especially for the ready market in Uganda that may be constrained in terms of real-estate development; development of land management systems, among others.

vii) Capital

28) Capital refers to the resources that are used as input for further production of goods and services to make an economic profit or societal wealth. Capital is divided into two, that is:

  • Financial capital; which is the financial resources invested by entrepreneurs to purchase physical assets or land or to pay wages, to facilitate the production of goods and provision of services; and
  • Non-financial capital (physical capital), which is the accumulated stock of physical assets i.e., machinery, factory buildings, raw materials, and means of transportation.

29) Opportunities exist to the Indian Government and investors through provision of affordable and long-term credit for Ugandans and Uganda’s development needs. Particularly, there exist opportunities in reduction of the Cost of Capital and Expanding Options for Long-Term Capital. There is need to think of and implement innovative capital and financing mechanisms, including bonds, partnerships and PPPs, among others.

viii) Labour related opportunties and Human Capital Development

30) Labour refers to all human effort of any kind, manual or mental, skilled or unskilled, scientific or artistic employed in the production process and is usually accompanied by some form of reward. The most important trait of labour as a factor of production is precisely its capabilities to work. On the other hand, Human capital refers to the economic value of a worker’s abilities and skills and so Human capital development relates to how the economic value of this
specific individual can be improved.

31) Uganda provides a number of opportunities to the Indian Government and Indian Investors who are keen on labour and human capita development. Particularly, opportunities exist in health, education, apprenticeships, skilling and certification, trained & skilled labour externalization; creation of education hubs, BTVET Institutions; and Higher Education Institutions, among others.

ix) Technology

32) Technology refers to scientific knowledge and techniques that can be applied to increase the efficiency of production of goods and services as defined by the ratio of output to input (productivity). Technology may be grouped into three broad categories: (i) Digital Technologies such as cloud computing, Artificial Intelligence (AI), the Internet of Things (IoT), big data and blockchain; (ii) Physical Technologies such as robotics, 5G, 3D printing, and drones; and (iii) Biological Technologies such as gene editing, bio printing and neurotechnology.

33) Opportunities can be exploited between India and Uganda across all these forms of technology of: Digital Technologies; Physical Technologies and Biological Technologies. Particularly, there is need for technology hubs, increment in absorptive capacities of production firms, STI parks, broadband and internet technologies, bio-technology and bio-safety among others. The requisite laws and policies will be studied and fast-tracked to provide an adequate environment for operation.

x) Knowledge

34) Knowledge for production to take place is an essential. Knowledge manifests in various forms including the: “Know-What”; “Know-How” and “Know-Why”.

35) “Know-What” is the knowledge of facts, concepts, phenomena and processes. “Know-How” are the skills and abilities to do something or produce a good or service. “Know-Why” is related with competences, theories and experimentations. The effects of knowledge as a factor of production manifest through other factors of production because, it is tacit and intangible.

36) India has opportunities to carry out knowledge – transfer onto its Ugandan counterparts. Uganda will benefit a lot in terms of increment in productivity, economic development, improvement in people’s wellbeing and overall socio-economic development.

xi) Other Opportunities

37) There exist several other opportunities that can be exploited. These include:

38) Infrastructural Development: Uganda is still in the infrastructure development phase where a number of infrastructures are still required to drive Uganda’s development. These range from road construction, railway construction, oil and gas related projects, energy generation, transmission and distribution projects, irrigation projects and clean energy projects, among others.
39) Arts, Creatives, Culture, Games & Sports: Uganda is home to several cultures. It is also home to a number of youths who are involved in games and sports. Most recently, Uganda won the hosting bid together with its East African Counterparts to host Africa’s prestigious football tournament of the 2027 African Cup of Nation (AFCON). Uganda also a promising Cultural and Creative Arts Industry. Our Indian colleagues can therefore exploit opportunities to this end. Further discussions on how these can be operationalised and realised can be undertaken.

V. How Uganda Airlines Can be Leveraged to Support These Opportunities
40) The Uganda Airlines will contribute to harnessing these opportunities mainly through the transportation of the requisite factors of production, raw materials and finished products to and from both Uganda and India.

Dr. James Muvawala is the Executive Director of the National Planning Authority

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