What Does New UDC Bill Mean for Uganda’s Economy?

A few weeks ago, this web parliament finally passed the Uganda Development Corporation (UDC) Bill 2014 which had been shelved is a landmark for Uganda’s economy.

The new law seeks to re-establish UDC as a statutory agency mandated to spearhead investment on behalf of the government.

This will be done through strategic sectors that require huge capitalization and many risks and those with long term returns where the private sector is often slow to invest.

UDC was established back in 1952 while the country was still under British colonial government whose role was to facilitate the local industrial development.

At the time, the state was entirely in control over the economy. By 1960, the Corporation had quickly turned around the economy and about 18,000 people were employed within the projects it oversaw.

However following Idi Amin’s expulsion of the Asians who controlled most of the industries, UDC took them over but unfortunately lacked the technical capacity to maintain their output.

Consequently, the Corporation began to sink slowly until it hit its final snag upon the liberalization of the economy when Milton Obote took power.

Privatization has since become the approach to doing business with government selling off most of the state owned companies.

However, with the NRM faced with the biting levels of unemployment and the need to propel Uganda into a middle class economy, the state considers that industrialization is the only way out.

Chimpreports spoke to UDC’s Senior Legal Officer, Pauline Among who also doubles as the Spokesperson on the significance of this Bill.

Among explains that this is a milestone for UDC and the country since much as the Corporation has continued to exist, the absence of a law establishing it has been a constraint especially from being operational and venturing into large scale investment.

One of the ferries on Lake Victoria that is under UDC's Kalanga Infrastructure Services. Ltd (KIS)

One of the ferries on Lake Victoria that is under UDC’s
Kalanga Infrastructure Services. Ltd (KIS)

“Through UDC, government seeks to complement the private sector and then gradually pull out and plough these investment projects back to private sector and general public through IPOs. The new law will see an initial capitalization funding of USD 500bn and then we’ll work out ways to raise the remaining funds. UDC only needs empowerment to source for finances from other players among them the private sector.”

According to Among, UDC will soon develop an operationalisation process that entails the complete criterion upon which the viable projects will be chosen.

“The Corporation will give priority to projects with higher multiplier effects and those that have capacity to catalyze other sectors. We are also guided by the sectors considered as key by the NDP II (National Development Plan).”

Currently, UDC has already undertaken a number of projects in agro processing, infrastructure development and most recently the ambitious automotive industry.

The Kalangala infrastructure service was established to ease access of utilities for people on the L. Victoria Island.

The project includes electrical generation and distribution, piped water, a road connecting mainland to Bukakata as well as 2 ferry services.

After government’s recent agro-zoning of the different regions in Uganda, it considered to establish agro-processing facilities to add value to various agro products.

A fruit factory is being constructed in Soroti with assistance from Korea International Cooperation Agency (KOICA).

“Government wants to tap into the abundance of citrus and mango fruits within the Soroti sub region. The factory will provide a ready market for this produce and this comes along with other utilities like water, roads, electricity, IT, and secondary facilities from the waste”.

Similarly, 7 other zonal processing facilities will be set up across Uganda including 2 tea factories in Kabale and Kisoro as well as a fruit processing plant in Luwero for pineapple and mangoes.

There’s no doubt that Uganda is vastly endowed with natural resources including minerals but the continued exportation in their raw form hasn’t translated into much for the economy.

Among says that in order to bridge this gap, government will establish a cement factory in Moroto, an Iron and steel processing plant in the Muko and also venture in glass manufacturing given the quality sand deposits along Lake Victoria in Masaka.

UDC is also looking to revive the salt production on Lake Katwe in Kasese.

Other key sectors such as tourism and the national carrier, Uganda Airlines are among those that UDC is eyeing to inject money into.

Among couldn’t disclose details about these two projects but affirms that they are in planning stage.

Kiira Motors

On what informed Uganda Development Corporation’s decision to invest in Kiira Motors for car manufacturing, Among says; “With the new trends in our education and the innovations, there’s a lot that Uganda can get from car manufacturing. The sector has so far presented opportunities especially in employment and the other components of the value chain.”

She adds that while the industry requires hefty capitalization, government through UDC will partly fund the project but the biggest portion will be sourced from the private sector.

The UDC Bill could as well be a new dawn that presents hope for the thousands of unemployed Ugandans.

Many argue that industry, manufacturing and tourism remain the biggest creators of employment with an immense ripple effect in other sectors.

With the kind of employment opportunities that this new wave presents, the challenge however remains on whether the unemployed possess the required technical and vocational skills so as to avoid a recurrence of the 1970s stagnation.

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