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Free Trade Zones in Uganda Requires Funding of Shs400 Billion

Free Trade Zones in Uganda Requires Funding of Shs400 BillionPhoto by

By Mark Keith Muhumuza

Kampala — In order to acquire land and start actual work on the development of Free Trade Zones in Uganda, the authority responsible for the establishment could require funding of up to Shs400 billion.

Established in 2014, the Uganda Free Zones Authority (UFZA) was meant to attract export-oriented investments to Uganda that would be given specific tax incentives.

The Uganda Free Zones Authority is a body corporate under the supervision of the Ministry of Finance, Planning and Economic Development. It was established following His Excellency the President’s assent to the Free Zones Act, 2014 and started operations on 1st September 2014. The Agency is responsible for the establishment, development, management, marketing, maintenance, supervision and control of free zones and to provide for other related matters.

The overall objective for adoption of Free Zones in the country is to create an enabling environment aimed at enhancing economic growth and development of export-oriented manufacturing in all sectors of the economy, in order to diversify the country’s economic base, attract foreign direct Investment (FDI), generate employment, increase foreign exchange earnings, enhance technology transfer, skill acquisition/upgrading as well as create backward linkages.

While launching the 2015/16 - 2019/20 Strategic Plan in Kampala on Tuesday, Mr Richard Jabo, the executive director UFZA, revealed that implementation will require funding of between Shs360 billion and Shs400 billion over the next five years.

"Over the next two years, we are looking at establishing two free zones in the country. That will require funding from government and other sources. The estimate is that if we are to implement this plan, we could need about Shs400 billion over a period of five years to 2019/20," he said on the sidelines of the launch.

Free Zones are a sort of Special Economic Zone where a government sets up a designated area where regulations differ from the rest of the country. In order to reduce its $3.37 billion trade deficit, Uganda has been looking at attracting investors in the country to produce goods for export at much lower costs.UFZA for the last two years been operational but is yet to acquire land for the construction of facilities in the free zones.

The budget for land acquisition alone is upwards of Shs30 billion, according to the plan.

"The options for funding our plan can include setting up of fund where the government and development partners can contribute money to. Land acquisition is one of the very complex aspects of UFZA, which requires full financial support," Mr Jabo added.

Not enough funds

Operational. The Uganda Free Zones Authority (UFZA) is still underfunded and it remains to be seen whether the government will commit about Shs140bn in the 2017/18 financial year. However, Mr Gabriel Ajedra, the state minister for finance in charge of general duties was non-committal on whether UFZA would receive funding as stated in the plan.
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