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Monday, 04 July 2016 / Published in Weekly News Scan

Free Trade Zones to attract Shs3 trillion investments

The Uganda Free Zones Authority (UFZA) is projecting to attract investments worth $1 billion (Shs3.3trillion) by 2020, according to officials.

Through a host of tax and non-tax incentives, UFZA is targeting this investment growth from various sectors in the economy as investors come in the country to set up operations in value addition and agro-processing.

Mr William Mugerwa, the director operations and business development, told reporters at Kampala Serena Hotel yesterday the authority had already signed an agreement with a Turkish company, ASB, to set-up a free investment zone on an 18 square mile land in Nakaseke, which would attract at least 200 entities.

“I believe we have prospective investors who are willing to set-up their facilities in Uganda because of the incentive structure we have provided. The investor will be guaranteed a high investment return with the tax incentives we are providing,” he says.

The rather ambitious plan is premised on the fact that ASB is projected to invest at least between,$300m (Shs1 trillion) and $400m (Shs1.3 trillion) once the agreement is concluded with the government. Additionally, UFZA officials reveal that there is sustained interest from several state-owned and private Chinese companies.

According to Mr Richard Jabo, the UFZA executive director, Free Zones are custom-controlled areas where raw materials are landed, handled, manufactured or reconfigured for export without being subjected to import and export duties. In Uganda, UFZA was established in 2014 to license, regulate and market free zones in order to generate export revenue, manufacturing and attract investment.

Tax incentives
UFZA has revealed an incentive system to attract investors in the zones. Among them is the unrestricted after tax profit repatriation, complete exemption on income from agro-processing, total exemption from taxes, levies and rates on exports and a 10-year tax holiday on finished goods, among others.

“These incentives will allow investors to produce and process large quantities and better goods at relatively competitive lower costs for the export market,” Mr Jabo says.

Ms Clare Kaweesa, the UFZA manager legal affairs, told reporters there were no plans to compromise on labour rules because the tax incentives were fair enough to attract investments.

The government has been embarking on several infrastructure projects in the roads and energy sectors in order to attract investors. However, the country continues to depend on imports and export of mostly raw and unprocessed goods. More so, unemployment levels remain high.

“There is no easy way to create jobs except if we carry out industrialisation and encourage agro-processing,” Mr David Bahati, the State minister for Planning told reporters at the same event, adding: “The working assumption for the government is that Free Trade Zones will create jobs through industrialisation.”

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  • Open Government Partnership
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  • Publish what you pay (PWYP)
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