Provisional Report on licensing of Projects in Q3 -January- March 2020 Financial Year 2019/2020

By David Rupiny
image of financial report

About Uganda Investment Authority

Uganda Investment Authority (UIA) is the primary Investment Promotion Agency (IPA) of the Government of Uganda (GoU), responsible for coordinating, encouraging, promoting and facilitating investment in Uganda; and advising Government on investment policy and related matters.

UIA was set up under the Investment Code Act of 1991, which was later amended in 2005, and 2019. The Investment Code Act is the governing law that establishes UIA (in continuance) and sets forth its key objectives and functions.

In executing its mandate, UIA performs many activities like providing information on investment opportunities, issuing investment licenses, assisting investors in securing secondary approvals, assisting in finding joint venture partners, providing investor facilitation services, development of small and medium enterprises, development of industrial parks, making policy recommendations to Government and providing One Stop Centre services to registering and existing investors.

Introduction

One of the objects of UIA, as per the Investment Code Act 2019 (as amended), is to publish and avail periodic reports on the state of investment in Uganda. This Quarter 3 report is significant in the sense that not only does it provide a realistic picture of the state of planned investments for the period January to March, 2020, but also coincides with the global spread of the COVID-19 pandemic. The report highlights issues like licensed investment projects, value of planned investment projects, planned jobs, comparisons between domestic investment and foreign investment, top investment sectors, top source countries, etc.

Summary of investment performance

In Quarter 3 (January – March, 2020) of financial year 2019/2020, UIA licensed planned investment, both Domestic Direct Investment (DDI) and Foreign Direct Investment (FDI), valued at US$ 302.6 (equivalent to UGX1.145 trillion). Comparatively, the Quarter 3 value of planned investments was higher than in Quarter 2 (US$ 186.6 million) and in Quarter 1 (US$ 262.1 million). The planned investments stemmed from a total of 75 projects, estimated to create 7,551 planned jobs.

Table 1: Summary of licensed planned investment for Q3 (January – March, 2020)

Q1 2019/20 Q2 2019/20 Q3 2019/20 TOTALS
Licensed projects Domestic Direct Investment (DDI) 31 24 17 72
Foreign Direct Investment (FDI) 52 44 58 154
Total 83 68 75 226
Planned investment (USD) Domestic Direct Investment (DDI) 172,727,402.00 63,413,043.00 21,765,457.00 257,905,902.00
Foreign Direct Investment (FDI) 89,424,989.00 123,233,377.00 280,850,168.00 493,508,534.00
Total 262,152,391.00 186,646,420.00 302,615,625.00 751,414,436.00
Planned employment Domestic Direct Investment 3,739 2,549 1,428 7,716
Foreign Direct Investment (FDI) 3,751 5,465 6,123 15,339
Total 7,490 8,014 7,551 23,055

 

  1. Licensed projects

In Quarter 3, the number of licensed investment projects increased to 75 in Quarter 3, up from 68 in Quarter 2. Comparatively, the cumulative licensed investments for Quarters 1, 2 and 3 of 2019/20 was at 226, up from 208 for the same period in 2018/19. This presents a positive trend.

Table 2: The trend of licensed projects Q1 2018/19 to Q3 2019/20

FY 2018/19 FY 2019/20
Quarters Q1 Q2 Q3 Q4 Q1 Q2 Q3
Licensed Projects 67 61 80 78 83 68 75

1.1 Distribution of licensed projects by sector

The Manufacturing sector registered the highest number of licensed projects (39), which accounted for 52 percent of all the licensed projects in Quarter 3, followed by Construction and Whole Sale, Retail, Catering and Accommodation Services at 9.3 percent apiece.

Table 3: Licensed projects by sector for Q1 to Q3 FY 2019/20

Sector Q1 2019/20 Q2 2019/20 Q3 2019/20 %ge for Q3 2019/20
1 Agriculture, hunting, forest & fish 12 13 3 4.0
2 Community & social services 3 6 8.0
3 Construction 2 4 7 9.3
4 Electricity, gas & water 1 0 4 5.3
5 Finance, Insurance, real estate & business services 5 3 6 8.0
6 Manufacturing 54 40 39 52.0
7 Mining & quarrying 1 1 1.3
8 Transport, storage & communications 5 3 2 2.7
9 Wholesale & Retail, Catering & Accommodation Services 4 1 7 9.3
TOTAL 83 68 75 100

1.2 Distribution of licensed projects by source country

China registered the biggest number of licensed projects (20), which accounted for 26.7 percent of all the projects in Quarter 3, toppling Uganda from the Number One spot it occupied in Quarters 1 and 2 to the second position. India maintained its third position, like in Quarters 1 and 2, with Egypt and Mauritius tied in fourth position with four projects apiece, replacing United Kingdom and Belgium, which came fourth and fifth in Quarter 2. 

Table 4: Top 5 source countries for licensed projects (Q1 to Q3 FY 2019/20)

  Q1 2019/20 Q2 2019/20 Q3 2019/20
ID Country Licensed Projects %ge Country Licensed Projects %ge Country Licensed Projects %ge
1 Uganda  31 37.3 Uganda  24 35.3 China  20 26.7
2 China  22 26.5 China  18 26.5 Uganda   17 22.7
3 India  6 7.2 India  11 16.2 India   10 13.3
4 Kenya  4 4.8 UK  3 4.4 Egypt   4 5.3
5 USA  3 3.6 Belgium  2 2.9 Mauritius   4 5.3

1.3 Domestic Direct Investment (DDI) vs. Foreign Direct Investment (FDI)

FDI saw 58 projects, up from 44 the previous quarter. DDI, on the other hand, declined to 17 projects in Quarter 3, down from 24 projects in Quarter 2.

In percentage terms, DDI accounted for 22.7 percent in Quarter 3, compared to 35.3 percent in quarter 2 – a decline of 12.6 percent. On the other hand, FDI accounted for 77.3 percent, up from 64.7 in Quarter 2 – an increase of 12.6 percent.

Table 5: Comparison of domestic projects and foreign sourced projects for Q1 to Q3 FY 2019/20

Categories Q1 2019/20 Q2 2019 Q3 2019/20 TOTAL
Local Projects (No.) 31 24 17 72
Local projects (%) 37.3 35.3 22.7 31.9
Foreign Projects (No.) 52 44 58 154
Foreign Projects (%) 62.7 64.7 77.3 68.1
TOTAL 83 68 75 226

Graph 1: Comparison of domestic projects and foreign sourced projects for Q1 to Q3 FY 2019/20

  • Planned investment

The total value of licensed investment projects in Quarter 3 is US$ 302.6 million, equivalent to UGX1.145 trillion. This is up from Quarter 2’s US$ 186.6 million, equivalent to UGX706.6 billion.

Table 6: The Trend of Planned Investments in US Dollars, Q1 FY 2018/19 to Q3 FY 2019/20

  FY 2018/19 FY 2019/20
 Quarters Q1 Q2 Q3 Q4 Q1 Q2 Q3
Planned Investments in US Dollars     237,060,005.70    345,498,769.10     232,802,407.00  531,785,993.00   262,152,391.00    186,646,420.00   302,615,625.00

2.1 Distribution of planned investment projects by sector

The Construction Sector registered the highest amount of planned investments in Quarter 3 (US$ 144.4 million), which accounted for 47.7 percent of all the planned investments in Quarter 3. This was largely on account of a Chinese investment project worth USD138.33 million, under the specialized construction sub-sector.

Table 7: Distribution of planned investment projects by sector

  Sector Q1 2019_20 Q2 2019/20 Q3 2019/20 %GE
1 Agriculture, Hunting, Forest & Fishing 59,590,924.00 22,243,364.00 1,276,779.00 0.4
2 Community & Social Services 4,191,947.00 4,824,813.00 1.6
3 Construction 45,068,018.00 4,387,617.00 144,436,508.00 47.7
4 Electricity, Gas & Water 210,000.00 25,545,000.00 8.4
5 Finance, Insurance, Real Estate & Business Services 11,097,000.00 4,908,273.00 33,900,000.00 11.2
6 Manufacturing 136,996,782.00 74,175,219.00 49,706,477.00 16.4
7 Mining & Quarrying 25,550,000.00 7,300,000.00 2.4
8 Transport, Storage & Communications 6,640,667.00 46,190,000.00 2,090,298.00 0.7
9 Wholesale & Retail, Catering & Accommodation Services 2,549,000.00 5,000,000.00 33,535,750.00 11.1
  TOTAL 262,152,391.00 186,646,420.00 302,615,625.00 100.0

2.2 Distribution of planned investments by source country

China registered the highest amount of planned investments (US$ 164 million), which accounted for 54 percent of all the planned investments in Q3 2019/20.

However, in Quarters 1 and 2 Uganda remained the Number One source of planned investments (54) worth USD163.9 million, a percentage of 34.0, followed by the United Kingdom (USD53.5 million; 20.6%), China (USD21.7 million;17.2 percent), India (USD17.9 million;12.5%) and Seychelles (11.1 million; 5.9%)

Table 8: Top 5 source countries for planned investments Q2 to Q3 2019/20

Q2 2019/20 Q3 2019/20
Country Amount (US $) %ge Country Amount (US $) %ge
1 Uganda 63,413,043 34.0 China 163,969,000 54
2 UK 38,450,000 20.6 Mauritius 53,500,278 18
3 China 32,073,555 17.2 Uganda 21,765,457 7
4 India 23,344,508 12.5 Kenya 17,900,000 6
5 Seychelles 11,073,684 5.9 India 11,115,000 4

2.2.1 Comparison of Domestic Direct Investment (DDI) and Foreign Direct Investment (FDI)

The number of FDI grew to 58 investment projects, up from 44 investment projects in Quarter 2. The number of DDI, on the other hand, declined to 17 investment projects, up from 24 investment projects in Quarter 2.

In percentage terms, FDI accounted for 77.3 percent of planned investment in Quarter 3, up from 64.7 percent in Quarter 2 – an increase of 12.6 percent. On the other hand, DDI accounted for 22.7 percent of planned investment in Quarter 3, compared to 35.3 percent in Quarter 2 – a decline of 12.6 percent.

Table 9: DDI projects and FDI projects compared for Quarter 3

Categories Q1 2019/20 Q2 2019/20 Q3 2019/20 TOTAL
Domestic Direct Investment (USD) 172,727,402.00 63,413,043.00 21,765,457.00 257,905,902.00
Domestic Direct Investment planned investment (%) 65.9 34.0 7.2 34.3
Foreign Direct Investment (USD) 89,424,989.00 123,233,377.00 280,850,168.00 493,508,534.00
Foreign Direct Investment sourced planned investment (%) 34.1 66.0 92.8 65.7
TOTAL 262,152,391.00 186,646,420.00 302,615,625.00 751,414,436.00
  • Planned employment

In Quarter 3, planned jobs are estimated at 7,551, down from 8,014 planned jobs in Quarter 2, but higher than the 7,490 planned jobs in Quarter 1 (of financial year 2019/20).

3.1 Distribution of planned employment by sector

The Construction sector registered the highest number of planned employment (2,813), accounting for 37 percent of all the planned employment in Q3. Manufacturing came second with 2,563 planned jobs, with Wholesale and Retail, Cat and Accommodation Services a distant third with 599 planned jobs.

Table 10: Distribution of planned employment by sector (Q1 to Q3)

Sector Q1 2019/20 Q2 2019/20 Q3 2019/20 %ge Distribution per sector
1 Agriculture, Hunting, Forestry & Fishising 1,089 2,997 182 2.4
2 Community & Social Services 159 348 4.6
3 Construction 80 183 2,813 37.3
4 Electricity, Gas & Water 97 386 5.1
5 Finance, Insurance, Real Estate & Business Services 299 172 418 5.5
6 Manufacturing 5,519 4,012 2,563 33.9
7 Mining & Quarrying 260 172 2.3
8 Transport, Storage & Communications 214 206 70 0.9
9 Wholesale & Retail, Catering & Accommodation Services 192 25 599 7.9
TOTAL 7,490 8,014 7,551 100.0

3.2 Distribution of planned employment by source country

Chinese sourced projects registered the highest level of planned employment (3,782), which accounted for 50 percent of all the planned employment in Q3 2019/20, followed by Uganda (18.9%), India (5.6%), Kenya (4.1%) and Mauritius (3.5%).

Table 11: Top 5 Source countries for planned employment, Q2 to Q3 2019/20

  Q2 2019/20 Q3 2019/20
  Country Amount %ge Country Amount %ge
1 Uganda 2,549 31.8 China  3,782 50.1
2 China 1,455 18.2 Uganda   1,428 18.9
3 India 1,234 15.4 India   424 5.6
4 Seychelles 1,084 13.5 Kenya   312 4.1
5 UK 518 6.5 Mauritius   265 3.5

3.2.1 Comparison of distribution of planned employment between domestic projects and foreign projects for the period Q1 to Q3 2019/20

Planned jobs from Domestic Direct Investment (DDI) accounted for 1,428, a drop from 2,549 planned jobs in Quarter 2, a further drop by nearly half from the Quarter 1 figure of 3,739 planned jobs.

On the other hand, planned jobs from Foreign Direct Investment in Quarter 3 rose to 6,123, up from 5,465 in Quarter 2.

Table 12: Comparison of distribution of planned employment between domestic projects and foreign projects for the period Q1 to Q3 2019/20

Categories Q1 2019/20 Q2 2019/20 Q3 2019/20 TOTAL
Planned employment attributed to domestic projects 3,739 2,549 1,428 7,716
Domestic projects (%) 49.9 31.8 18.9 33.5
Planned employment attributed to foreign projects 3,751 5,465 6,123 15,339
Foreign projects (%) 50.1 68.2 81.1 66.5
TOTAL 7,490 8,014 7,551 23,055