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Industrialization in Uganda Notes

Uganda traditionally is an agricultural economy; however there have been some efforts to achieve large scale industrial growth. Uganda‘s industrial sector started way back in 1950s assisted by the UDC (Uganda Development Corporation). Uganda‘s major industries include;

Raw-material oriented, transport oriented, market oriented, power oriented and labour oriented. These are paper and printing, clothing and foot ware, cement, beverages, chemicals, pulp and paper, meat processing, motor vehicle assembling, metal works, cigarrate making, paint and mattress making, etc.

The major Uganda‘s industrial towns include Jinja, Kampala, Tororo, Mbale, Kasese, Masindi, Lira, Mbarara, Masaka, Mukono, Bushenyi, Gulu, etc.

Major industries and industrial towns

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It should be noted that;

  • By independence Uganda was producing consumer goods like salt and imported others.
  • By 1972 the industrial sector suffered from Asian expulsion by Amin Dada and also in 1980s it suffered from political instabilities.
  • The return of Indians saved the sector and its basically dominated by foreign investors.
  • By 1991 the UIA (Uganda investment authority) was established to improve on the sector and by 2003-2004 the manufacturing sector was estimated to increase by 4.0% from the initial.

Factors which have influenced industrial growth in Uganda

The factors that favoured the development of the industrial sector in Uganda can be categorized into physical, human and historical factors.

  • Availability of adequate mineral resource such as copper in Kirembe, limestone and phosphates at Tororo and Hima, clay at Kajjansi-Wakiso thus leading to the growth of cement industries, ceramics, etc
  • Presence of adequate supply of raw-materials especially agricultural products used in agro-based industries like cattle and goat meat for meat packers, cotton used in textiles like in nytil Jinja, sugar cane in Lugazi and Kakira sugar refinaries, milk in Gesa, etc.
  • Availability of adequate and reliable supply of water from lakes and rivers in Uganda. This is used as raw-material in beverage making like in Nile breweries in Jinja and as a coolant in iron and steel rolling industries like in Mukono.
  • The relatively flat and gentle land of Uganda which have favoured the establishment of industrial plants like the flat lands of Kasese and Hima for cement industry, Namanve-Mukono, etc.
  • Availability of extensive land for the setting up and expansion of the industries like in Mbale, Tororo and Mukono for Lugazi sugar plant.
  • Presence of adequate and reliable supply of power especially HEP from Owen falls and Bujagali in Jinja and Mubuku power station in Kasese. The power is used to run machines in the industries such as cement in Hima, steel rolling in Mbarara, etc. Biomass energy has also supported bakery, ceramics at Butende and Lweza.
  • Availability of ready and reliable market of manufactured products from the large population of the country and from foreign markets of DRC, Kenya, Rwanda and South Sudan where Uganda export her products.
  • Presence of adequate capital to invest in the industries which is contributed by the government of Uganda through UIA and Asians who were the pioneers in the industrial sector. Such capital has been used to set up industries, buy machines, pay laboureres, etc.
  • Availability of cheap and constant supply of labour both skilled and semi-skilled from the densely populated districts of Uganda like Kabale, Mpigi, and most skilled labour has been provided by foreign expatriates who work in the industries.
  • The relatively stable political climate of Uganda which has encouraged foreign investments in the industrial sector. This allows the expansion of industries and explains why Kampala, Tororo and Jinja are booming in industrial establishment.
  • Supportive government policies of protecting local industries against foreign competition, giving loans, look for market for manufactured goods, levying less tax on industries which has allowed industrial growth and expansion.
  • Improved transport network of roads, water, air and railway in some areas to transport raw-materials to industries and manufactured goods to market centers like the Kampala-westnile railway which transports tobacco to BAT in Kampala.

Economic importance of industrial sector to Uganda

  • Industrial growth in Uganda leads to an increase in the manufacture of goods for exports. This leads to earning of foreign exchange through exports like sugar to South Sudan; coffee to USA, etc. this exchange has been used for further development.
  • It has led to exploitation of local resources such as soil for farming, minerals like limestone in Tororo, forests, water, etc. this has contributed more jobs to Ugandans, forex and a general development.
  • The sector facilitates the growth of modern infrastructure such as roads, railway, health and education facilities, these indirectly benefits all the people in Uganda.
  • The government of Uganda generates revenue from taxes and licenses imposed on industries. Such revenue from BAT, Nile Breweries, Hima and Tororo cement has been used to set up infrastructures and support other sectors.
  • Manufacturing industries provide market to the raw-materials produced in the agricultural and other sectors like cotton for textile by freedom, tobacco for BAT, clay for tiles by Uganda clays. Thus development of such sectors.
  • It generates employment opportunities to various categories of Ugandans such as engineers, chemists, managers, transporters, etc. it should be noted that many people are employed in Kakira sugar, Nile breweries, Hima cement, earning a lot of incomes thus improved living standards.
  • Industrial concentration has resulted into growth of urban centers like Kampala and Jinja. The two towns partly developed due to concentration of industries like Uganda breweries in Luzira, TUMPECO in Ntinda, BIDCO in Jinja, etc.
  • Industries have contributed to acquisition of skills mainly formal and job training. Such skills are used for further industrial development as it has been in Kakira sugar, Hwang sung fish factory, etc.
  • It has attracted both local and foreign tourists for leisure and study purposes. Coca cola and pepsi plants in Namanve and Mbarara are destination for secondary and primaryschools. Tourists bring in foreign exchange which is used for infrastructural development.

However manufacturing industries in Uganda have got negative contributions which include;

  • Industries lead to pollution of air, water and land. Nile and Uganda breweries foristance dump their waste products into Lake Victoria killing thousands of fish and contaminating water supply for towns such as Kampala.
  • The bakery and ceramics industries have cut down forests for bio-mass power. Also industrial expansions like in Namanve, Mbale and Tororo forests have been cleared.
  • Industrial expansion has reclaimed the swamps in many parts of the country like in Nakawa, Ntinda and Kyambogo for Oscar and Spear Motors, Nalukolongo valley for Ssembule steel mills and this has caused environmental degradation.
  • Industries have led to urbanization and RUM associated problems. RUM has decreased labour for agriculture in rural areas, un employment, street beggers, high crime, slums, prostitutions like in many parts of Kampala of Kisenyi, Katanga, Kivulu, etc.
  • Many industries in Uganda are foreign owned leading to constant profit repatriation like century bottling company, uniliver Uganda limited, etc. this leads to under development of Uganda.

Problems limiting industrial development in Uganda

Uganda has a steadily expanding manufacturing sector with Kampala, Jinja, Tororo, Mbale, Mbarara, Arua industrial towns.

The sector has contributed much of the country’s GDP increasing from 6.5% to 15% majorly depending on agro-based industries of breweries; cigarettes (BAT) grain milling, textile, bakery, tea factories like Igara, etc.

It should be noted that these industries are small and produce less output and this is due to the following problems

  • Limited capital to invest in the sector and there is limited access to credit facilities which becomes a setback to expansion and establishment of new investments in Uganda.
  • Inadequate skilled labour force to operate industrial activities like in Kakira and Lugazi sugar industries, cobalt mining industry in Kasese, etc. most of Uganda‘s industries rely on foreign expensive expatriates which increase production costs and prices of manufactured goods limiting their competition for market.
  • Fluctuating and expensive power supply to industries which affect industrial production. Power load-shedding has limited development of heavy industries like steel rolling in Mukono, Uganda Bati, Mukwano group of companies, etc. the limited power calls for use of diesel generators increasing the cost of production.
  • Political instabilities in Uganda since 1970s in addition to 1972 economic war have scared foreign and local investments in the sector. Wars have also destroyed supporting infrastructure and drained government budget thus limited funding to the sector.
  • Shortage of market of manufactured goods mainly due to poverty among locals and competition from imported products which are cheaper than the locally produced, foristance Kakira sugar, textiles from southern range Nyanza have faced a lot of competition and limited market.
  • Inefficient transport facilities especially the railway network and water which limit raw-material, labour and goods mobility thus industrial stagnation. Some roads are impassable during rainy seasons leading to high transport costs.
  • There is a problem of dumping manufactured goods by industrialized countries of China and Europe, such commodities are cheaper and out compete local products limiting industrial development.
  • High taxes imposed especially on imported raw-materials and manufactured goods. Industries like steel rolling in Mbarara and Mukono which imported raw-materials have faced this problem, increasing production costs and manufactured goods prices.
  • There is severe smuggling of manufactured goods in Uganda especially around boarders of Busia from Kenya and this undermines the market for locally manufactured goods.
  • High costs of production emanating from high cost of utility facilities such as electricity, water, communication, high taxes, imported skilled labour, etc. these makes manufactured goods prices high thus less market demand.
  • Un supportive government policies in relation to protection and promotion of local industries against foreign competition. This has increased dumping and smuggling. The privatization verses nationalization also scare local investments.
  • Corruption by ministry officials has led to failure of national industries such as Tri-star Apparel garments in Bugolobi, Tororo fertilizer industry all collapsed due to corruption.
  • Inadequate raw-materials like iron ore, copper and other chemicals to use in the industries foristance Roofing steel rolling mills depends on imported raw-materials which is very expensive to produce iron sheets. Also agro-based industries are affected by climatic changes like Southern Range (textile) which use cotton and BAT which use tobacco.
  • Inadequate modern technology necessary for industrial development. It should be noted that the imported technology is very expensive and this led to closure of a salt plant at Katwe and a fertilizer factory in Tororo.

Measures to curb down the above problems

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Qn Examine the steps being taken to encourage industrial development in Uganda.

Approach

  • Define manufacturing industries i.e. the transforming or changing of organic or inorganic substances into new products i.e. chemically by hands or by use of machines.
  • Identify the types of industries in Uganda as well as industrial towns and draw a map to locate them.
  • Give the status of the industrial sector in Uganda.
  • In one paragraph state the problems facing manufacturing industries.
  • Explain the measures being taken, NB. Don’t use words like should, can and may.
  • Uganda has encouraged foreign investments by investors from China, India, Japan, Europe, USA, etc. These come with capital, technology and skilled labour for industrial development like Uniliver Uganda limited, coca cola, BIDICO, etc.
  • Privatization which has led to better financial performance, increased production and profits. Foristance Uganda grain milling company, Tororo cement industry, Uganda clays limited, and Nile breweries were privatized.
  • There is training of man power in universities like Makerere and Kyambogo producing engineers, tailors, technicians, etc, to work in industries like Sembule steel mills, TUMPECO, BETA Uganda, Phonics logistics, etc. The ministry of trade and industry has created institutions like Uganda Investment Authourity (UIA), Uganda Manufacturing Association (UMA) which attract local and foreign investors, organize trade shows and fairs thus industrial growth and development.
  • The government of Uganda is protecting local industries through levying high taxes on imported goods similar to those produced in Uganda like Nile breweries, BAT have benefited from this protection.
  • The government has also banned some commodities imported to out compete local industries, to allow them grow to a large scale. This has helped coca cola, pepsi cola and picfare to flourish.
  • In Uganda peace and stability has continued to prevail especially in Kampala, Jinja attracting more investment in the sector. This explains why Kampala has got many industries such as Mega form, New Vision printing and publishing; Hwang sung fish factory, etc.
  • The UMA has broadened the market for industries in Uganda by organizing annual trade fare at Lugogo in Kampala which has attracted millions of buyers. Madhivan, Hima and Tororo cement are popular exhibitor.
  • The East African community, COMESA, WTO, AGOA, have been joined by Uganda in order to expand market for their manufactured goods for industrial growth and development.
  • The upgrading of Owenfalls dam and construction of Bujagali power station, thermal generator installation, etc have increased on power supply for manufacturing industries especially Roofing, iron and steel rolling, etc.
  • The government has given tax holidays; decrease the taxes on imported raw-materials which have attracted local and foreign investors to invest in the industrial sector of Uganda. BIDICO in Jinja has been attracted by this.
  • Research has been under taken in the sector by Uganda Industrial Research Institute to improve capacity and competence of local industries like Lweza clays, Kampala pharmaceuticals industry, Wavah and Rwenzori water producing industries, etc.
  • Improvement in transport and communication has greatly helped in acquisition of raw-materials and industrial products distribution, foristance the Kampala-Arua road to transport tobacco from West Nile to BAT in Kampala.

Qn. ‘agriculture is the back born of industrial development in Uganda‘ Discuss.

Qn. To what extent has transport influence the location of manufacturing industries in Uganda?

Qn. To what extent have raw-materials influenced the location of manufacturing industries in Uganda?

 

 

 

 


 




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