Uganda opens avenues of growth for Indian SMEs
Over the years, Uganda has made a successful transition from an agriculture-based economy to an industrialized economy. Since 1987, the Ugandan government has actively pursued economic reforms to facilitate overall economic development.
As a result, Uganda has recorded an average economic growth rate of 6.5% per year in the last decade.[1] Today, this country is ranked as one of the fastest growing nations on the African continent.
Changes in economic policy initiated by the Ugandan government have played a significant role in boosting production and export earnings. Significantly, Uganda’s gross domestic product (GDP) growth rate in 2008 was pegged at around 6.9%.
Uganda’s business-friendly environment, diversified economy and openness to foreign direct investment (FDI) are making it a lucrative destination for Indian SMEs.
business relations
India is one of Uganda’s most prominent trading partners. It exports coffee, tea, sugar, inorganic chemicals, auto components, sporting goods, plastic, and rubber to Uganda.
Alternatively, Uganda’s export basket for India includes commodities such as spices, cocoa, timber, wool, cotton, ceramics, leather, copper, boilers, machinery and mechanical appliances.
In recent times, there has been a sharp rise in joint ventures and business collaborations between India and Uganda. In particular, bilateral trade between India and Uganda increased from $112.06 million in 2006-07 to $168.76 million in 2007-08.[3] Taking advantage of this stupendous growth seen in recent times, industry experts are of the opinion that bilateral trade between India and Uganda will double in less than 5 years.
Trade and investment areas
Given the high demand for Indian products in Uganda, Indian SMEs can take advantage of business opportunities in sectors such as textiles and garments, pharmaceuticals, glass, paper, leather and food processing.
Indian SMEs can continue to enter the Ugandan market by exploring the mining sector. Uganda has large unexplored deposits of minerals such as gold, tungsten, cobalt, iron, and kaolin.
Additionally, Indian SMEs in the hospitality and tourism sectors can capitalize on the growing demand for luxury resorts, serviced apartments and business hotels in Uganda and expand their operations in the African nation.
Considering that there is a capacity gap of almost 50% in the 3-5 star hotel categories in Uganda, Indian hoteliers can venture into this market to bridge the gap between supply and demand.
Realizing the abundant scope for growth for SMEs in India and Uganda, the governments of both sides agreed to facilitate further cooperation between SMEs in the two countries.
At a recent India-Africa business summit in New Delhi, India committed US$500 million to Ugandan projects from its Aid to Africa budget.