WT/TPR/S/93 Trade Policy Review
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IV. TRADE POLICIES BY SECTOR
(1) INTRODUCTION
1. Agriculture, dominated by food crops, is the leading sector of the Ugandan economy.  Coffee
is the main cash crop.  As part of its economic reforms, the Government has been liberalizing the
sector since 1987;  marketing of inputs and products has been liberalized and trade barriers have been
reduced.  The 2000 Plan for Modernization of Agriculture, formulated within the framework of thePoverty Eradication Action Plan (PEAP), has encompassed the reforms.  Agricultural activities,
currently dominated by subsistence farmers, are to be reoriented toward the market.  The reforms have
helped to increase production of non-traditional crops,  including flowers, fruit, vegetables and spices.
Strategic reserve stocks are required for certain products for food security purposes.  Customs tariffs
on agricultural imports range up to 15%;  the maximum rate applies to, inter alia,  edible vegetables,
certain roots and tubers, edible fruit and nuts, peel of citrus fruit or melons, meat and edible meat
offal, aquatic invertebrates, dairy products, and certain edible products of animal origin.
2. The mining sector remains underdeveloped.  Operations in the sector are subject to
exploration, mineral dealer and mining licences, depending on the nature of activities.  The mining
statute is being revised.  The revised statute will increase the number of licences required to operate inthe sector.  Customs tariffs on mineral imports range from 7% to 15%.  While foreign investment is
hoped for, there is little encouragement on the horizon.
3. The manufacturing sector in Uganda is small, and capacity utilization is very low;  it is import
intensive.  Several programmes have been launched aiming to expand this sector, particularly by
attracting foreign investment, but Uganda's landlocked position has been a detriment to development
in this sector.  There is some hope, however, for an expansion in textiles and apparel and in agri-
processing.  Customs tariffs on manufactured imports range up to 15%;  the maximum rate applies to,inter alia,  beverages, manufactured tobacco, carpets, rugs, certain wearing apparel, and certain leather
products.
4. The services sector constitutes a promising opportunity for future growth.  Already, it
contributes almost as much to GDP as agriculture.  Liberalization reforms have positively affected
growth in telecommunications and financial services, and a new emphasis on information technologyis likely for the future.  Tourism too provides hope, particularly if political tensions are reduced.
Uganda has made specific commitments, under the General Agreement on Trade in Services (GATS),
in tourism and travel-related services, and in telecommunications services.
(2) A
GRICULTURE
(i) Overview
5. The agriculture sector dominates the Ugandan economy.  It accounts for over 40% of GDP
and about 90% of export earnings.  It also provides the bulk of the raw materials for the largely agri-
based industrial sector.
6. Eighty per cent of Uganda's population reside in rural areas, and depend primarily on the
agricultural sector for their livelihood.  Even so, agriculture accounts for only half of national income.Agricultural output comes primarily from about three million smallholder, subsistence farmers who
account for 75% of the total.  Uganda produces a variety of agricultural products, including food
crops, oil seeds, livestock, and fish, as well as traditional export commodities such as coffee, tea,
cotton, and tobacco.  As a result of economic liberalization, non-traditional agricultural production
has increased, including flowers, fruit and vegetables, and spices.Uganda WT/TPR/S/93
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7. Food crops predominate, contributing 71% of agricultural GDP.  Livestock products account
for 17%, export crops 5%, fish 4% and forestry 4%.  Only one third of the food crop produced is
marketed, compared with two thirds of livestock production.  About 42% of agricultural GDP consists
of subsistence crops for home consumption and is non-monetized.
8. Around 30% of arable land is currently under cultivation.  In terms of acreage, bananas
constitute 28% of total cropped area, followed by ce reals (25%), root crops (17%), pulses (14%), and
oil seeds (8%).  Export crops constitute only 8% of total cropped area.
9. Since 1987, the Government has been successfully implementing trade and structural policy
reforms embracing liberalized systems for input and output markets, trade, investment, and tax
regimes.  For the agriculture sector, these reforms have included liberalization of agricultural input
trade, liquidation of cooperatives, liberalization of domestic and export produce marketing andprocessing, reduction of restrictive tariff and non-tariff barriers, and abolition of taxes on most
agricultural exports.  National silos are being privatized.
10. In August 2000, the Government released its Plan for Modernisation of Agriculture (PMA),
which encompassed the liberalization mentioned above and is one of the Government's main
strategies for poverty reduction.  The PMA was pr oduced within the Poverty Eradication Action Plan
(PEAP) framework.  The PMA is multifunctional but, because so much of Uganda’s poverty is within
the agriculture sector, many of the activities affect agriculture, and the Ministry of Agriculture,
Animal Industry, and Fisheries will be instrumental to the success of the PMA.
11. The objectives of the PMA are to: increase incomes and improve the quality of life for poor
subsistence farmers, improve household food secu rity, provide gainful employment, and promote
sustainable use and management of natural resources. These objectives will be achieved through
reorienting the activities of subsistence farmers toward the market.  In particular, the broad strategiesfor achieving the PMA include:
- making poverty eradication the overriding objective of agricultural development;
- deepening decentralization to lower levels of local governments for efficient service
delivery;
- removing direct government involvement in commercial aspects of agriculture and
promoting the role of the private sector;
- supporting the dissemination and adoption of productivity-enhancing technologies;
- encouraging farmers to seek food security not only through household
self-sufficiency, but increasingly through specialization and taking advantage of the
market and gaining improved incomes;
- ensuring that all intervention programmes are gender-focused and gender responsive;
and
- ensuring the coordination of the multi-sectoral interventions to remove any
constraints to agricultural modernization.
12. The PMA aims to accelerate agricultural growth in Uganda by:  research and technology
development;  agricultural advisory services, such  as extension services;  agri-processing andWT/TPR/S/93 Trade Policy Review
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marketing;  physical infrastructure;  sustainable use of natural resources;  agricultural education
throughout the school system;  and improving access to rural finance.
13. The simple average tariff in agriculture (Major Division of ISIC Revision 2) is 11.2% (well
above the overall average rate of 9%), with tariffs ranging up to 15% (Table AIV.1).  Like all
products, agricultural imports are subject to the 2% import licence commission and 4% withholding
tax.  Unprocessed agricultural products are exempted from VAT.  For food security purposes,strategic reserve stocks are required for products such as maize, beans, peas and sorghum;  for maize,
the required stock is 100,000 tonnes above annual consumption.
(ii) Subsectors
(a) Coffee
14. The importance of coffee in the Ugandan economy and its impact on the livelihood of
Ugandans cannot be over-stated.  Smallholders produce 99% of total coffee production;  each farmer
has, on average, five hectares of land.  Coffee pr ovides employment to approximately five million
Ugandans, either directly or indirectly.  Uganda is the second largest coffee producer in Africa after
the Côte-d'Ivoire and ranks ninth in the world.  However, Uganda accounts for only 3% of world
production and therefore has little impact on world pricing.  Most of the coffee is exported in rawform, with the result that Uganda might benefit from value that could be added by moving up the
processing chain.  Furthermore, the value of coffee exports has declined in recent years, largely as a
result of declining world coffee prices (Table IV.1).
Table IV.1
Coffee exports from Uganda, 1995/96 – 1999/00
Robusta Arabica
Coffee
seasonTotal
quantity
(60 kg.
bags)Total value
(US$
million)Quantity
(60 kg. bags)Value
(US$ million)Quantity
(60 kg. bags)Value
(US$ million)Avg.
Price
(US$/kg.)Avg.
Price
(US$/lb)
1995/96 4,147,603 388.9 .. .. .. .. 1.56 .71
1996/97 4,237,114 355.1 3,789,013 288.8 448,101 66.3 1.40 .63
1997/98 3,032,338 276.5 2,691,878 227.4 340,460 49.1 1.52 .69
1998/99 3,647,989 283.0 3,291,540 247.7 356,449 35.1 1.29 .58
1999/00 2,917,257 164.7 2,390,682 121.8 526,575 42.9 .94 .43
.. Not available.
Source: Uganda Coffee Development Authority (UCDA).
15. Until 1990, the state-owned Coffee Marketing Boar d controlled all coffee marketing.  Both
internal and external sales and prices were controlled at all levels.  In 1991, the Government began a
process of liberalization that is still continuing.  All matters pertaining to coffee have been divested by
the Government to the Ugandan Coffee Developm ent Authority (UCDA), an independently operating
parastatal, although the Ministry of Agriculture, Animal Industry and Fisheries is charged with overallpolicy guidance.  The minimum price system has been abolished, and the marketing of coffee and of
inputs, except planting materials, liberalized.
16. The objectives of the UCDA, as outlined in the Uganda Coffee Development Authority
Statute of 1991 (as amended) are:
- to promote, improve, and monitor marketing of coffee with a view to optimizing
foreign exchange earnings and payments to the farmers;Uganda WT/TPR/S/93
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- to control the quality of coffee in order to  ensure that all coffee exported meets the
standards stipulated by the contract between the seller and the buyer;
- to develop and promote the coffee and other related industries through research and
extension arrangements;
- to promote the marketing of coffee as a final product;  and
- to promote domestic consumption of coffee.
17. The coffee subsector comprises four categories of operators, i.e. farmers, collectors,
processors, and exporters.1  The collectors are primarily storage operators who buy from farmers and
sell to processors.  All categories (except farmers) are required to register with the UCDA.  The
UCDA is funded from registration fees charged to  its members:  collectors pay U Sh 50,000 per year;
processors pay between U Sh 100,000 and 250,000 per year, depending on the number of hullingmachines they own;  and exporters pay U Sh 1.5 m illion per year.  Additionally, the UCDA collects a
cess of 1% on the f.o.t. (free-on-truck) price of exports.  The use of UCDA revenue is determined by
its Board, which is comprised of two farmers, two collectors, two processors, two exporters, and three
government representatives.  It is used for research (as determined by the Board), development,
training, and extension services.  The registration fees from collectors are delegated to localauthorities, which use the proceeds to assist and/or regulate coffee in their areas.  For example, the
local authorities are responsible for assuring that collectors have proper storage facilities.
18. Because government strategies for enhancing agricultural production are not crop specific, the
PMA does not specifically target coffee (or any other product).  Nonetheless, the PMAs priority area
that is most relevant to coffee remains the need for continued research and technology.  Coffee wilt
disease has posed a serious threat to the sustainability of the coffee sector in Uganda and therefore
research targeted at addressing this is a priority.  The UCDA pays public institutions, including(Makerere University), to conduct research on coffee-related matters.
19. Declines in production in recent years have been due not only to wilt disease but also to
drought and the aging of coffee trees.  Therefore, in addition to research activities targeted at coffee
wilt disease, there has been a major restocking programme financed with U Sh 1.5 billion.  Coffee
seedlings are being distributed through UCDA to replace lost and old coffee plants and to expandcoffee production.
20. Despite the 17% reduction of coffee production in 1999/2000 over the previous year, Uganda
maintains a comparative advantage in coffee production.  As a result, the Government is continuing to
focus efforts on coffee as one of the prime agricultural subsectors that can have a major impact on its
poverty eradication efforts.  Indeed, coffee rejuvenation is an important part of the Government'spoverty reduction strategy (through the HIPC-related Poverty Action Fund);  the Government, for the
first time, allocated U Sh 500 million in 1999/2000 for new planting and is expected to continue that
support for at least two more years.  For its part , UCDA subsidizes plantings, but not fertilizers or
other chemicals.  In the 2001/2002 Budget Speech, the Government indicated that it will procure
seedlings for distribution to farmers, which will result in an additional 8,400 hectares of arabica androbusta coffee being planted.  This will produce an additional 16,800 tonnes of coffee beans over the
next three years.  Because coffee wilt disease still poses a threat, the National Agricultural Research
Organisation (NARO) will receive additional f unding from both the UCDA and the Government to
intensify research in this area.
                                                     
1 There are currently 30 exporters;  the number dropped from 150 following the liberalization of the
subsector, because of competition.WT/TPR/S/93 Trade Policy Review
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21. Exports of raw coffee, generally as "green beans", predominate.  The Government, however,
wants to add value in this industry, and it is looking for investment, although this may be difficult to
attain, since inter alia,  the investment needed is heavy, and the human resources needed are rare.
22. Imports of coffee and coffee products are subject to customs tariffs ranging from zero to 7%,
and to the 2% import licence commission and 4% withholding tax.
(b) Cotton
23. Cotton constitutes the second most important cash crop produced by Uganda.  It is exported
primarily in bales as raw cotton.  Cotton exports have fluctuated in the past few years, but the
Government is committed to efforts to revive the cotton industry, both because it is a major source of
revenue for many rural farmers who are not able to produce coffee, and because Ugandan cotton is
generally of high quality and enjoys a comparative advantage in the region.  The industry (includingtextiles) employs up to 1.4 million people, including farmers, ginners, textile workers, middle-men,
oil millers, transporters, and exporters.
24. Cotton production fluctuates from year to year, as it is largely dependent on weather and has
also been affected by political difficulties in certain regions.  Nonetheless, there are clear indications
of expansion.  In 1999/2000, total production was 117,000 bales, earning farmers U Sh 22.51 billion(in spite of a very low farmgate price), and ginners nearly U Sh 20 million (Table IV.2).  Between
1991/92 and 1996/97, acreage under cotton increased at a rate of 17% per year;  127,000 hectares
were planted in 1996/97.  Current production and acreage under cotton cultivation are down
significantly from three decades ago when 900,000 he ctares produced 470,000 bales.  The significant
reduction reflects the decline in production after the expulsion of the Ugandan Asian population in
1972 and other political problems in subsequent years.
Table IV.2
Cotton production and sales, 1994-00
Earnings by farmers Earnings by ginners
YearProduction
(Bales)a Avg. farmgate
price (U Sh/kg.)Value
(U Sh billion)Avg. f.o.t. price
(U Sh/kg.)Value
(US$ million)
1994/95 33,000 1.80 10.99 400 7.39
1995/96 56,416 1.68 17.53 350 11.06
1996/97 110,700 1.56 31.94 320 19.84
1997/98 32,000 1.49 8.82 390 6.99
1998/99 82,000 1.38 20.93 400 18.37
1999/00 117,000 1.04 22.51 300 19.66
a About 560 kg. of seed cotton make 1 lint bale of 185 kg.
Source: Information provided by the Ugandan authorities.
25. The regulatory, development, and commercial responsibilities for the cotton subsection reside
with the Cotton Development Organisation (CDO), a pa rastatal institution established in 1994.  The
CDO is active in setting standards for cottonseed and lint, producing, processing, and distributing
cottonseed, and announcing cotton prices at the beginning and end of the cotton growing season.  The
CDO's role is currently under review by the MAAIF, which is assessing what changes, if any, should
be undertaken with respect to the CDO's activities in a more liberalized economy.Uganda WT/TPR/S/93
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26. Customs tariffs on cotton and cotton products (HS Heading 52) range from 7% to 15% and
average 11.7%.  Like other products, imports of cotton and cotton products are subject to the 2%
licence commission tax and 4% withholding tax.
(c) Other crops
27. Tea has been a significant contributor to export earnings for Uganda, although, like coffee, it
has suffered similar difficulties, such as lower prices and reduced production.  Some 22,100 tonnes oftea were exported in 1999 down from 23,355 in 1998.  This reflects a 6.4% fall in production, from
26,400 tonnes in 1998 to 24,700 tonnes in 1999.  This was in contrast to the increase in acreage,
which rose by 6% in the same period.  The lower production is due to the severe drought that affected
the south western and central regions of Uganda.
28. Tobacco  production has been of increasing importance to Uganda, particularly as 80% has
been for the export market.  In its Budget Speech 2001/02, the Government raised excise duties on
cigarettes from 122% to 130%.
29. Commercial floriculture  is still a relatively new subsector, having started in 1993.  The
subsector has expanded from one farm in 1993 to 20 farms with 75 hectares in 1997/98.  The rapid
expansion has included shipment of roses and other flowers to the Netherlands from where Ugandanflowers compete successfully in ten different markets.  Uganda earned US$30 million from flower
exports during the 2000/01 season.
30. A variety of fruit and vegetables  is commercially produced but exports have been limited,
accounting for approximately US$2 million in 1998.  The primary markets for these goods have been
the United Kingdom, Belgium, and Sweden.  The volume of exports has been expanding, with an
annual growth rate of 48% between 1994 and 1998.
31. Bananas  are the most abundantly cultivated food crop in Uganda.  Annual production is
estimated at 8.5 million tons, accounting for 15% of world production.  However, banana production
has been primarily for domestic consumption, with per capita consumption the highest in the world.
In addition to providing food, bananas ensure income to farmers throughout the year, play a key role
in import substitution, provides soil surface cover, prevent soil erosion, and serve as feed for
livestock.
2
32. A 15% customs tariff applies to imports of edible vegetables, certain roots and tubers, edible
fruit and nuts, and peel of citrus fruit and melons.
(d) Forestry
33. Total forest estates cover about 14% of Uganda's land area;  state forest represents 50% of the
total.  Domestic supplies constitute about 95% of Uganda's timber requirements.  Forestry accountsfor about 6% of GDP.  Government revenues from forestry activity have increased from
U Sh 716.9 million in 1996/97, to U Sh 1.1 billion in 1999/00 and U Sh 1.5 billion in 2000/01.
34. There has been a noticeable loss of forest cover in recent years, caused by clearance for
agriculture, the over-harvesting and degradation of forests, the encroachment of government reserves,
and the degazetting of forest reserves for alternative purposes.  Concerned about this, the Government
                                                     
2 National Agricultural Research Organization (2000).WT/TPR/S/93 Trade Policy Review
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approved a new National Forestry Policy in 2001, the first such policy since limited changes were
made in 1988 to an original 1929 policy.3
35. The Government, in its 2001/2002 Budget Spe ech, indicated that a new National Forestry
Authority would be created to implement the recently approved Forestry Policy.  However, the new
Authority is unlikely to cover all needed respons ibilities in the sector.  In sum, according to
authorities, the sector is in a state of flux.
36. Forestry management in Uganda has been heavily biased in favour of forests in protected
areas.  The public sector has exercised exclusionary management of these resources.  Farm forestry
and forests outside of protected areas receive little attention and few resources;  little has been done
except for projects funded by donors.  The new policy forms part of a larger process, the 1999 Forest
Sector Umbrella Programme, which will include legal and institutional changes.  Control of forestryresources, however, has been decentralized to local governments, and this presents a challenge for
future policy implementation.
37. The major potential products for export include veneers;  lumber;  poles, mainly of
eucalyptus;  and furniture items made of Mahogany and other hardwoods such as Mvule, Elgon Olive,
and Nkoba.  However, as part of a strategy to encourage value-added products, exports of raw timberare prohibited.  Technology is being developed for industrial production of charcoal.
38. Imports of forestry and logging products are subject to a standard tariff rate of 7%.
(e) Livestock and fisheries
39. Livestock accounts for 17% of agricultural production and 9% of GDP.  It has expanded
steadily since 1995, growing at an estimated 2.2% per annum.  Dairy cattle production constitutes
most of the growth, with potential in beef cattle, poultry, sheep, goats and pigs remaining largely
unexploited.  As of 1998, the stock included 5.6 million cattle, 1 million sheep, 6 million goats,1.5 million pigs, and 22 million chickens.
40. Uganda is endowed with plentiful fresh-water fish resources comprising natural lakes and
rivers, which cover about 18% of Uganda.  The subsector is dominated by private fishermen, traders
and exporters.  The largest and most productive areas are Lake Victoria, Lake Kyoba, Lake Albert,
Lake Edward, and Lake George.  The major fish produced is Nile Perch.
41. The Fisheries Resources Department of the Mi nistry of Agriculture, Animal Industry and
Fisheries issues licences for industrial fish pro cessing, commercial fish farming, and boat building.
Sanitary and phytosanitary problems that affected exports in 1997/98, led to a temporary hiatus in
accepting new applications for industrial fish processing in order to allow for fish-stock assessment.
An environmental impact assessment by the National Environmental Management Authority isrequired before a licence for a fish plant is issued.  Foreign investment is welcomed, especially in
processing.
42. There are 11 registered fish exporters, mainly providing products to the European market.  In
1992, fish exports earned US$76 million for Uganda, but the subsector has been in serious decline,
and earned only US$24 million in 1999.  Export earnings have been affected primarily by a 1998 EUban after incidents of fish poisoning, which led to illness among consumers, and reports of unhygienic
conditions at landing sites.  The ban was lifted in 2000.  Fish and fish farming is expected to rebound
quickly, particularly given the sustainable catch estimates of around 300,000 tonnes.  With average
                                                     
3 Ministry of Water, Lands and Environment (2001).Uganda WT/TPR/S/93
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annual harvests totalling 235,000 tonnes between 1990 and 1997, there is sufficient room for
expanding production.  There is scope for further expanding production and exports through
development of aqua culture and provision fo r high yield and quick maturing fish fry.
43. Customs tariffs on imports of live animals average 12.2%, with rates ranging from 7% to
15%.  Imports of meat and edible meat offal, aquatic invertebrates, dairy products, and certain edible
products of animal origin are subject to a standard tariff rate of 15%.
(3) MINING AND ENERGY
(i) Mining
44. Mining in Uganda in the 1950s and 1960s was based primarily on copper and accounted for
approximately 30% of the country's export revenue.  More recently, mining has contributed less than
1% to GDP and 7% of export earnings.  The precipitous decline in the mining sector brought about bypoor policies, political instability, and security concerns in the 1970s and 1980s has reversed.  In 1990
only 50 licences were issued for mining compared with 129 in 2000.
45. The four minerals that currently account for over 90% of production are cobalt, limestone,
volcanic ash, and limonite.  Vermiculite and gold will join the above category soon.  Except for a few
large processing companies, small-scale operators and artisanal workers carry out most of the mineralproduction in Uganda.  Production is effected by the private sector except for a few remnants of
public companies, which will soon be privatized or liquidated.
46. The Department of Geological Survey and Mi nes (DGSM) of the Ministry of Energy and
Mineral Development is responsible for the formulation and implementation of the mineral policy on
behalf of the Government.  Under the Mining Act, the Department is responsible for the monitoring of
operations and enforcement of regulations in the mining sector.  It also undertakes the acquisition,
analysis, interpretation, and dissemination of basic geo-scientific data and other activities, with a viewto promoting investment in the sector.  The DGS M issues exploration, mineral-dealer and mining
licences, provides geo-scientific data, initial assessment of mineral prospects, and technical support to
new exploration companies. An environmental impact assessment, approved by the National
Environment Management Authority, must be presented to DGSM before a mineral exploration
licences is issued.
47. The Government of Uganda, in cooperation with the World Bank, conducted a review of the
sector.  It was completed in May 2001.  As a result of the review, a programme to be supported by the
World Bank and other donors is being developed to build capacity for the development of the sector.
A sub-component of the proposed programme is to  include airborne surveys, geological mapping,
mineral/environment information systems, and management and sustainability of small-scale andartisanal mining.  The goal of the programme is to attract investment in the sector.  The Government
has put in place a National Mineral Policy and is currently revising the now outdated Mining Statute.
48. The new mineral policy is aimed at creating an internationally competitive investment
environment for the sector in order to have a strong and profitable private-sector-driven mining
industry.  The policy is designed to provide an enabling political, legal, and fiscal framework to attractforeign and local private investment in mining activities, and to regularize as well as encourage
small-scale mining.  As a result, it is hoped that private entrepreneurs will gradually increase mineral
production and, therefore, its trade.
49. The draft of the revised mining law proposes that ownership of minerals remains vested in
Government, with exploration and exploitation requiring express authority from the Ministry ofWT/TPR/S/93 Trade Policy Review
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Energy and Mineral Development.  The draft provides for terms for the issue of prospecting,
exploration, retention, location, and mining licences, which are required for exploration or
exploitation of minerals, and involvement of DGSM in the conclusion of mineral agreements (and
settling disputes) with investors.  The statute also proposes control and regulation of commercial
exploitation of industrial minerals such as clays, sand, murram, and building stones for the purpose of
promoting efficient utilization, safety, and environment protection, applying light-handed regulationsto small-scale miners, and reservation of artisanal mining operations to Ugandans, as well as
categorizing royalties to be levied on gross revenues and their distribution among central and local
governments.
50. Customs tariffs average 8.8% in the mining and quarrying sector, with rates ranging from 7%
to 15%.
(ii) Energy
51. Uganda depends heavily on imported petroleum products and this consumes a large portion of
its export earnings.  The country produces its own electric power from Owen Falls Dam and other
small stations.  Total energy consumption in Uganda is estimated at over five million tonnes of oilequivalent.  Of this, over 90% is derived from biomass (wood/charcoal and agricultural residue).
Consumption of petroleum products increa sed by 38% between 1995 and 1999, from 386,638m
3 to
534,844m3 (Table IV.3).  This increase is largely attributed to the increase in registered automobiles
in Uganda.
Table IV.3
Sales of petroleum products by type, 1995-99
(Cubic meters)
Period Petrol Aviation fuel Diesel Fuel oil Kerosene LPG Total
1995 166,048 31,556 120,395 24,566 43,068 1,005 386,638
1996 181,777 42,241 124,348 29,468 43,425 1,420 425,615
1997 177,044 44,643 125,621 34,121 48.579 1,629 431,637
1998 191,977 60,708 150,908 39,384 60,062 1,841 504,880
1999 201,127 51,072 167,576 40,782 72,087 2,200 534,844
Source: Petroleum Department, Ministry of Natural Resources.
52. Installed capacity of electricity stagnated at 183 MW for four years (1996-99).  With the
recent commissioning of additional units at th e Owen Falls Dam Extension, installed capacity has
increased to 283 MW.  Peak demand still exceeds production by about 60 MW, leading to load
shedding, which has served as a significant constraint for investment and economic diversification.Domestic demand is estimated to be growing at approximately 2% per month and is expected to
increase steadily for the next 20 years, due to projected economic growth rates and the lifting of the
population from poverty.  Currently, Uganda exports 30 MW of power to Kenya, 8 MW to Tanzania,
and 2 MW to Rwanda.  Estimates suggest that, wi th expansion of Uganda's generation capacity,
exports to these three countries could reach 130 MW by the year 2010.
53. The Government is moving to liberalize the energy sector, recognizing the need for increased
access to energy resources.  Given the capital intensity of power investments, and in line with the
Government's commitment to attract private capital and expertise in the provision of utilities, the
sector has been opened to private investment.  Uganda has concluded several power purchase
agreements with foreign investors to help develop its power infrastructure.
54. Kenyan and Ugandan officials recently confirmed that construction work for an oil pipeline
linking Eldoret in western Kenya with Kampala would commence in 2002.  The 320-kilometerUganda WT/TPR/S/93
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pipeline, which is estimated to cost US$80 million, is expected to reduce transportation costs
substantially.
55. Customs tariffs average 8.4% on imports of petroleum products, with rates ranging from zero
to 15%.   Imports of electricity are duty free.
(4) MANUFACTURING
56. The manufacturing sector in Uganda is small, contributing approximately 10% to GDP.  The
sector is characterized by small-scale processors of agricultural commodities (food processing), and
production of basic simple consumer goods:  beverages, tobacco, textiles and apparel, leather and
leather products, wood products, metallic products, clay products, cement, and chemicals.  Capital
goods industries are still few in number.  Industrial output grew by 10.9% in 1999, up from 9.8% in
1998 (Table IV.4).  The increase in output is primarily attributed to improvements in the sugar,electricity and soap industries.
Table IV.4
Annual percentage changes in the index of industrial production, 1990-99
Industry
categorySugar BeerSoft
drinksCigarettes Textiles Cement Electr.Soaps/
edible oilsAll items
1990 82.3 -0.5 54.8 -18.7 -28.4 54.9 11.6 12.5 10
1991 46.8 0.6 8.2 30.9 18.0 0.8 6.2 6.0 16.9
1992 26.1 -4.2 -18.7 -6.7 10.8 39.6 26.0 14.8 8.8
1993 -8.0 27.6 24.3 -10.3 -21.9 37.3 -1.2 5.3 2.1
1994 20.1 29.1 53.5 3.3 -42.7 -13.0 4.3 29.1 16.1
1995 17.9 66.9 38.3 8.0 -39.2 95.7 3.9 20.0 27.9
1996 38.4 24.8 24.8 8.2 -7.6 97.9 6.9 -9.8 22.9
1997 6.9 37.6 -4.9 6.1 .. 65.4 7.8 72.9 32.7
1998 0.4 25.8 16.5 -1.3 -8.2 10.7 1.2 7.8 9.8
1999 20.0 6.0 9.2 -11.5 5.0 7.5 8.8 22.0 10.9
.. Not available.
Source: Uganda National Bureau of Statistics, Entebbe.
57. Capacity utilization has been very low, at less than 20% for most industries.  Many industries
are dependent on imported inputs (steel 97%, plastics 94%, paper 94%).  Most industries are high-costproducers;  this affects the international competitiveness of Uganda's manufactured products.
58. A recent study by UNIDO identified eight key challenges facing Uganda’s manufacturing
sector:  lack of competitiveness as a result of high costs due to low productivity and quality;  outdated
technologies;  few agri-food processing facilities;  poor product quality; poor technical/business
information; inadequate institutional support, especially for SMEs;  scarcity of investments;  and poorindustrial infrastructure facilities.
59. A recent survey, conducted by the Uganda Investment Authority, established that transport
costs are much higher in Uganda than in neighbouring countries.  Other infrastructure costs, such aspower, water, and telecommunications, are also relatively inefficient, which contribute to the
difficulties industries in Uganda encounter.  These high costs along with taxes on inputs are areas in
which the Government is intending to take action.  The Government hopes that current efforts in the
power industry and in telecommunications will benefit manufacturing, as well as other sectors.WT/TPR/S/93 Trade Policy Review
Page 66
60. Much of the investment in manufacturing was made after the enactment of the Investment
Code of 1991.  The code had a number of incentives, particularly tax holidays, but these were
repealed by the 1997 Income Tax Act.
61. The Department of Industry and Technology has been focusing its efforts on encouraging and
promoting private-sector investment.  In particular, the department is mandated to encourage the
establishment of industries that can add value to domestically produced primary goods.  Theseindustries should be encouraged to have forward and backward linkages, primarily to the agricultural
and mining sectors, and should be export oriented.  The industries that are particularly targeted are
small and medium-scale industries in agri-processing.
62. In the period 1991-98, total investments in Uganda amounted to US$1.43 billion, of which
manufacturing projects accounted for about US$677.7 million (47%).  In 1998 the Uganda InvestmentAuthority licenced 2,021 projects, of which 1,051 were in the manufacturing sector (52%).
Employment generated by total investment is  estimated at 81,972 of which 42,012 jobs were
earmarked for the manufacturing sector, constituting 58% of total jobs created.  Within the
manufacturing category, agri-processing accounted for about 58% of the total.
4
63. The Government continues to work towards creating a suitable climate for production and the
development of industrial enterprises, with an emphasis on expansion of exports.  In 1999, the
Ministry of Tourism, Trade, and Industry, with s upport of UNIDO, initiated a three-year project under
the Uganda Integrated Program.  The overall objective of the project is to enhance the
competitiveness and sustainability of the industrial sector in Uganda. The Ministry has also proposed
measures that would further improve the investment climate in the industrial sector.5
64. The UIA's Big Push Strategy identified only two manufacturing subsectors for emphasis.  The
first was agri-processing (along with agriculture).  In the context of Uganda's cotton potential, thestrategy is to make Uganda "the textile centre for Africa".  The vision is to process 90% of cotton
production to final and intermediate levels in the next ten years, and to achieve 1 million bales (from
120,000 bales in 1999/2000) with a projected impact of at least 60,000 jobs in ginneries and textile
mills.  This is estimated to require over US$1.54 billion in new investment for US$800 million in
foreign exchange earnings per year.
65. Opportunities for further cotton processing have yet to be realized on a large scale, but
prospects for Uganda, for example under the Unit ed States' African Growth and Opportunity Act
(AGOA), could be exploited.  At one time, Uganda ha d a competitive textile industry, but the political
problems in the 1970s and 1980s left Uganda a major importer of textiles and apparel.
66. The other manufacturing industry targeted in the Big Push Strategy was printing and
publishing, especially the production of primary school books, which currently cost Uganda at least
US$7 million of imports per year.  Import relief has targeted this sector (Chapter III(2)(ii)(e)).
67. The simple average rate of customs tariffs in the manufacturing sector is 8.9%.  The
maximum rate of 15% applies to, inter alia,  imports of manufactured tobacco, clothing, furniture
(except metal) and plastic products (Chart IV.1).
                                                     
4 Ministry of Tourism, Trade, and Industry (2001).
5 Ministry of Tourism, Trade, and Industry (2000a).Uganda WT/TPR/S/93
Page 67
0.03.06.09.012.015.018.0Chart IV.1
Average Ugandan tariffs by ISIC classification, 2000/01
ISICPer cent
Source :ISIC
111
121
122130
210
220230290
311-312
313
314
321322323
324
331332Major groups
Agriculture and livestock production
Forestry
LoggingFishing
Coal mining
Crude petroleum and natural gas productionMetal ore miningOther mining
Food products
Beverages
Tobacco
TextilesClothingLeather products
Footwear
Wood productsFurniture except metalISIC
341
342
351352353
354
355356361
362
369371
372
381382383
384
385390Major groups
Paper products
Printing
Industrial chemicalsOther chemicals, incl. pharm.Petroleum refineries
Petroleum and coal products
Rubber productsPlastic productsPottery and china
Glass and products
Other non-metallic mineral productsIron and steel
Non-ferrous metals
Fabricated metal productsNon-electrical machinery incl. computersElectrical machinery
Transport equipment
Professional and scientific equipmentOther manufactured products
WTO Secretariat estimates, based on data 
provided b y the U gandan authorities.Overall tariff average
(9.0%)WT/TPR/S/93 Trade Policy Review
Page 68
(5) SERVICES
68. The Services Sector shows promise for Uganda with its contribution of almost 40% to GDP.
Growth has lagged behind that of the industrial sector but performed better than the agriculture sector.
In 1999/2000, services grew by 6.2%, industry by  9.9% and agriculture by 1.6%.  Uganda is
traditionally one of the leading providers of high quality social services in east Africa.  In the 1960s,
Uganda offered tertiary educational services that were renowned throughout eastern Africa.Institutions such as Makerere University and Mulago Hospital provided training for the region's
aspiring professionals.
69. Uganda does not have any overall policy objective for the services sector.  However, under
the aegis of the Ugandan Investment Authority, the Big Push Strategy is to promote specific
subsectors, several of which are in the services sector.  The overall objective of the Big Push Strategyis to transform Uganda from one of the world's poorest economies into a world-class provider of
services with a widespread impact on general living standards, as well as a producer of high quality
agri-products.  The strategy focuses on eight subsectors in which Uganda has a potential competitive
advantage, most of which are services, namely education services, medical services, information and
communications technology, printing and publishing, financial services, and air cargo logistics and aninland port.  The emphasis of this strategy is on streamlining government machinery to promote the
growth of the private sector, promoting confidence among investors in these subsectors, and other
actions.
(i) Financial services
70. The Financial Institutions Statute (1993) is the basis for reform in the financial services
subsector.  The statute gave the Bank of Uganda responsibility for licensing any entity wishing to set
up banking, foreign exchange, or any other financial institution in the country.  There are now17 commercial banks, seven of which have a majority foreign ownership and account for 50% of the
assets of the banking system.  There is one publicly owned commercial bank, which has the biggest
national network of branches; the Government is determined to divest ownership of that bank.
71. Other financial institutions include: seven credit institutions, one building society, one post
office savings bank, 17 insurance companies, three institutions that include micro-finance, a foreignexchange, and a stock exchange.
(a) Banking
72. By 1999, the three largest of the 17 commercial banks accounted for 55.5% of total deposits
in the banking system.  The Government had maintained significant ownership and control of the
banking system, but this has been reduced systematically through a divestiture programme, which hasseen Government sell off all its shares in all banks except one.  The latter remains to be privatized
only because its sale in 1998 was found to have been handled fraudulently, and the shares had to
revert to the Government.  Privatizing this bank , however, is a high priority for the Government.
73. The statutory minimum paid-up capital requirement for banks that were already operating,
both foreign and locally owned, was U Sh 2 billion as of 1 January 2000.  As a result of the revisedFinancial Institutions Statute of 2001, these banks have until 1 January 2003 to increase this to the
new minimum paid-up capital requirement of U Sh 4 billion.
74. The revised Financial Institutions Statute provides for a review of the regulatory system for
financial institutions.  The statute is aimed at strengthening the prudential regulations governing banks
and deposit-taking non-bank financial institutions.  In particular, the Act raises minimum capital andUganda WT/TPR/S/93
Page 69
on-going capital adequacy requirements, strengthens restrictions on insider lending and large loan
exposures, and introduces a requirement for mandatory prompt corrective actions to be imposed on
distressed banks by the regulator.  The new statute takes into account the Basle Principles.
75. With regard to the foreign dimension of the regulations, there are no restrictions based on
national requirements, provided that the minimum standards and requirements are met and are,
consistent with internationally acceptable best practices.  Furthermore, there are no depositrestrictions on foreign resources, and foreign professionals are acceptable provided they satisfy the
professional standards required by the Bank of Ug anda.  Foreigners and Ugandans must meet the
same required standards set by the Bank of Uganda.  Ugandans are permitted to borrow abroad.
Interest rates are market determined.
76. There has been improvement in the financial performance of the banking sector.  The ratio of
non-performing loans to total private sector loans declined from 22.9% in June 1999 to 12.8% in
March 2000.  The capital base of the banking industry increased by more than 50% in fiscal year
1999/2000.  Commercial banks' deposits expanded by al most 16% in the first nine months of the same
fiscal year.
6
(b) Insurance
77. The Insurance Statute of 1996 governs insurance services in Uganda.  The statute created the
Uganda Insurance Commission (UIC), which is grante d the power to administer, supervise, regulate,
and control the business of insurance in Uganda.  The UIC oversees all firms offering insurance and
reinsurance products, brokers and agents, loss adjusters and assessors, and risk inspectors, either
locally owned or owned by foreigners.
78. Capital requirements for the licensing of an in surance entity are as follows:  local companies
are required to have paid-up capital of not less than U Sh 200 million for life or non-life insurancebusiness, and U Sh 500 million in case of reinsurance business.  Foreign companies are required to
have U Sh 1 billion for life or non-life insurance business, and U Sh 2.5 billion in case of reinsurance
business.
7  A company can be registered for both life and non-life insurance business.
79. There has been a decline in licensed insurers and reinsurers in Uganda, mainly locally owned
companies, since 1997.  This is primarily a result of  their inability to comply with the provisions of
the Insurance Statute, and of the failure by some operators to attain the minimum paid-up capital
requirement that became mandatory in April 1998.  The number of local insurers dropped from 22 to
13 in 2000 and to 11 in 2001.  As of September 2001, there were 17 insurers, 27 licensed brokers,
212 agents and 10 loss assessors.  There is one state-owned company, the National Insurance
Corporation.  The number of foreign companies has risen to six as of September 2001.  The foreignfirms operating in Uganda are AIG Uganda Limited, Jubilee Insurance, Goldstar Insurance, East
African Underwriters Ltd., Insurance Company of East Africa Uganda) Ltd., and Transafrica
Insurance Company Ltd.
80. Ugandan citizens cannot be insured by foreign insurance companies not registered in Uganda,
but Ugandan companies can insure non-residents.  There is no regulation of insurance premiums, butthe minimum premiums set by companies are subject to the UIC's approval.  There was a small
general increase in premiums written between 1996 and 1999, from U Sh 29.9 billion to U Sh 33.9.
This reflects an increase in non-life business and a decrease in life business (Table IV.5).  Non-life
business constitutes over 90% of the business.
                                                     
6 Kawuma (2001).
7 Insurance Statute, 1996. Part I, Section 6.WT/TPR/S/93 Trade Policy Review
Page 70
Table IV.5
Indicators of insurance services, 1996-2000
1996 1997 1998 1999 2000
Number of companies .. 26 19 18 17
Local .. 22 14 14 13
F o r e i g n . .4544
Type of operators
Insurers .. 25 19 18 17
R e i n s u r e r s . .1000
B r o k e r s . . 3 02 83 03 0
Loss assessors/adjusters .. 6 11 13 11
Agents .. 89 170 233 166
(U Sh million)
Total gross premium income 29,924.6
(100)30,502.6
(100)32,877.5
(100)33,870.7
(100)..
Non-life
(Share of business)26,442.8
(88.4)27,794.2
(91.2)28,961.8
(88.1)31,156.1
(92.0)..
Life
(Share of business)3,481.8
(11.6)2,708.4
(8.8)3,915.6
(11.9)2,704.5
(8.0)..
.. Not available.
Source: Uganda Insurance Commission (2000), Annual Report 1999/2000 .
(ii) Telecommunications and other communication services
81. The Ministry of Works, Transport, and Communications set out Uganda's last
telecommunication policy in January 1996.  The policy outlined the intention of the Government to
liberalize, privatize, and restructure the telecommuni cations subsector with the view to achieving:  an
increase in the telephone density from 0.26 (per 100 persons) to 2.0 (per 100);  an increase in mobileteledensity;  the introduction of new services such as mobile cellular phones, electronic mail, Internet,
paging, etc.;  an improvement of telecommunications facilities and service quality;  meeting demand
for telecommunications services;  and an increase in the geographical coverage of
telecommunications services throughout Uganda.
8
82. The Uganda Communications Act of 1997 was promulgated with the intention of liberalizing
the communications subsector, regulating competition, separating telecommunications from postal
services, and creating the Uganda Communications Commission (UCC) as the regulatory body for
communications issues.  The UCC issues all the minor licences in the subsector, while the Minister
responsible for communications, upon advice from the UCC, issues the major licences.  The UCC has
recently developed a Rural Communication Development Policy.
83. Tariffs of fixed telephone services are set by the recently privatized Uganda Telecom Limited
(UTL) and subject to UCC approval.  Interconnec tion tariffs are negotiated between operators and
subject to UCC approval.  In addition to the 17% VAT on all telecommunications services, the
Government proposed, in its 2001/02 Budget Speech, to introduce a 7% excise duty on mobile
telephone services.
84. Uganda's communications infrastructure has been growing rapidly, particularly since the
establishment of a privately owned second national operator.  Two companies are licensed as national
                                                     
8 Ministry of Works, Housing, and Communications (2000).Uganda WT/TPR/S/93
Page 71
operators:  Uganda Telecoms Limited (UTL), and MTN, a firm from South Africa.  Further growth is
expected as a result of the recently concluded privatization of UTL, which sold 51% of its shares to a
German led consortium.  A third company (with fo reign ownership) provides cellular services only.
The operators are renegotiating interconnection and universal services agreements, and new
arrangements are expected to be in place by the end of 2001.
85. Fixed telephone services are poor in Uganda, with approximately 64,000 ground lines for
20 million people.  The mobile market, however, has grown rapidly, from approximately
2,000 subscribers in 1996 to 177,000 in 2001.  Growth has largely resulted from increasing
competition;  MTN entered the market as a GSM provider in 1998, and Telecel (a UTL subsidiary) in
January 2001.  The operators have in their licences a commitment to contribute to rural development.
86. Internet services are widely available in Uganda through six different Internet service
providers, all of which are privately owned compan ies;  some have foreign ownership or operate in
other countries.  There are 24 Internet cafes.
87. Uganda has made substantial progress in developing its information technology (IT)
infrastructure and establishing a legal and regulatory framework for IT.  The Government is placing a
heavy emphasis on developing a skilled workforce that will be able to take advantage of InformationTechnology.  IT is one of the activities emphasized as part of Uganda's Big Push Strategy for faster
economic growth.
88. Uganda's emphasis on IT is predicated on the belief that the competitive disadvantages facing
the country, largely as a result of its geographical position, do not hold for services that Uganda might
provide using the digital medium.  Development of IT infrastructure is taking place not only in
Kampala, but is being extended to the district level, thereby encouraging growth and employment in
rural areas.
89. Uganda is not a signatory to the WTO Information Technology Agreement (ITA).
90. In postal services, Uganda Posts Limited, a parastatal, is granted a monopoly for production
and issuance of postage stamps, prestamped envelopes, aerograms, and international reply coupons.
However, domestic, regional and international couriers are licensed to carry letters below 1kg.  There
are ten courier operators, some undertaking only domestic operations, some with domestic andregional operations, and some with domestic, regional, and international operations.
91. Uganda bound, without limitations on national treatment, measures affecting cross-border
supply, consumption abroad, and commercial presen ce for supply of telecommunications services.  It
also bound, without limitations on market access, measures affecting consumption abroad of
telecommunications services;  limitations on market access apply to the binding of measures affectingthe other modes of supply.  Measures affecting presence of natural persons for the supply of
telecommunications services are unbound.
9
(iii) Transport
92. The Ministry of Works, Transport and Communications is responsible for the transport sector.
The Ministry has continued to pursue the Government's medium-term transport strategy to promotesafe, efficient and reliable transport services as a means of providing effective support to increasing
agricultural and industrial production, trade, touris m, social and administrative services.  The strategy
is also aimed at enhancing national and regional integration in order to open up the entire country,
                                                     
9 WTO document GATS/SC/89/Suppl.1/Rev.1, 29 November 1999.WT/TPR/S/93 Trade Policy Review
Page 72
facilitate transit traffic, and promote cross-border trade with a view to supporting the Poverty
Eradication Plan.  The Ministry estimates that transport services contribute approximately 6% of
GDP.
93. Because Uganda is landlocked, it must rely on the port in Mombasa (Kenya) and the road
between Mombasa and Kampala, a distance of approximately 1200 kilometres.  Transporting a
container of goods between Mombasa and Kampala is  believed to take twice the time and expense as
transporting the same container between London and Mombasa.10
(a) Air transport
94. The Ministry of Works, Housing and Communications is also responsible for civil aviation.
Civil aviation has been operating for over two decades on the basis of legislation derived from the
defunct East African Community.  A draft National Civil Aviation Policy has been formulated andwill soon be presented to Cabinet for approval.  This policy will include a new regulatory framework.
95. Air transport (civil aviation) is governed by the Civil Aviation Authority Statute of 1994.  The
Civil Aviation Authority (CAA) is the regulatory body  for all civil aviation activities.  Its regulatory
activities include:  licensing of air operators and aerodromes;  registration and certification of aircraft;
safety oversight;  designation of airlines;  tariff approval; and protection of consumer rights.  TheCAA is also responsible for approving passenger a nd cargo operations in Uganda.  Investment in and
operation of non-scheduled passenger and cargo services in and out of Uganda are subject to prior
approval by the CAA.  An investor is required to present the proposed business plan to the Air
Services Licensing Committee of the CAA Board of Directors at a meeting open to the public.  Upon
issuance of the Air Services Licence, the investor must also obtain an Air Operator's Certificate from
the Directorate of Air Navigation and Regulatory Services.  There are no restrictions on the presence
of foreign suppliers in the operation of airline services, fuel vending, aircraft, passenger and cargohandling, or provision of catering services.  There are no nationality conditions on the recruitment of
the management staff in all aspects mentioned above.  Additionally, cross-border supply is fully
liberalized with a goal of supporting the development and promotion of tourism.
96. Air transport services are primarily available at Entebbe International Airport, Uganda's sole
international air gateway.  As at September 2001, ten international airlines were operating at Entebbe.There are two other small domestic airports that are allowed to receive international traffic, for
purposes of promoting tourism.  The CAA is responsible for the management of all the airports;  it has
licensed private companies to manage some of the five small airports.
97. All internal commercial air travel is privately operated, currently by five companies.  These
include foreign owned companies, locally owned co mpanies, and companies with joint foreign-local
ownership.  The only state-owned commercial air-transport company, the Uganda Airlines
Corporation, is under liquidation.
98. Airport business services that directly affect air transport also include fuel vendors, handling
agencies, and providers of onboard catering services.  Since the Government liberalized the supply of
fuel products, no regulatory actions are being applied to fuel vendors.  It is assumed that thecommercial presence of four suppliers will lead them to charge competitive prices.
99. In-flight Catering Services of South Africa currently has exclusive rights;  these are due to
expire in July 2006.  It is expected that the provision of this type of service will be opened for
competition.  Aircraft handling has been contracted out to ENHAS, a Ugandan company partially
                                                     
10 United States Department of Commerce (2000).Uganda WT/TPR/S/93
Page 73
owned by SABENA, which leases facilities for it s operations.  An initial five-year contract for
ENHAS expired in March 2001, and a new tender process to select an additional handling operator is
under way.  Two companies have self-handling licences.  ENHAS must submit its scheme of charges
for approval, and the charges must be justified through an audited costing of each service.  Since low
volume of traffic may limit the number of service suppliers in the area, regulatory control (approval),
especially with regard to pricing, will continue to be implemented by CAA.
100. Uganda has bilateral air service agreements (BASAs) with various countries.  These
agreements, especially the old ones, have many restrictive provisions, such as:  single designation
(only one airline is allowed to operate on the route);  capacity controls (type of aircraft used had to be
specified);  frequencies (based on existing traffic when agreement was signed);  royalty payments
when an airline reduces frequencies or increases capacity on the route);  exchange of traffic rights waslimited to only 3
rd and 4th freedoms of the air;  and 5th, 6th, 7th and 8th freedom rights were not
permitted.  More recent agreements have been more liberal to accommodate multiple designations,
and remove capacity controls and other restrictive practices.  All rights are now easily granted subject
to specific conditions.
101. At the regional level, phase one of the air transport liberalization scheme under COMESA has
been implemented.  Under this phase, any airline that is majority owned by COMESA nationals or
Governments can be licensed in a COMESA State provided it meets the licensing criteria, especially
the technical capability to operate the service.  An y such COMESA airline is  permitted to mount two
daily services between any two COMESA city pairs without the requirement of a bilateral air services
agreement.  Additionally, all COMESA airlines are granted 5th freedom traffic rights up to 30% of
capacity on routes not served by national airlines.  The level of implementation by Uganda goes
beyond these minimum requirements, e.g. 100% foreign-owned companies are allowed to offercommercial services from Uganda, provided at least half the fleet are registered in Uganda.
102. International passenger traffic growth fell short of anticipated targets in 1999/2000, primarily
because of the security situation in the Great Lakes region.
(b) Road, rail, and maritime transport
103. The transport subsector has not received as much attention as services such as
telecommunications and energy.  As a consequence, roads are insufficient and poorly maintained,
particularly secondary and tertiary networks.  Uganda's rural feeder roads cover about 13,000 miles.
104. The Government has launched a ten-year road  sector development programme (RSDP) with
an expected budget of US$1.5 billion.  In the 2001/02 Budget, U Sh 101 billion was provided to
commence construction of six main roads and for compensation for the Kampala By-Pass.  Overall,emphasis is being placed on the construction and maintenance of trunk and feeder roads.  The
programme also seeks to encourage private-sector participation in road construction, maintenance,
and financing.
105. The Ugandan railway system consists of 1,250 km. of track.  Built 50 years ago, the system
has been poorly maintained, though it provides an important link to the port at Mombasa, Kenya.
Less than 10% of domestic freight and 30% of external trade is carried by rail.
106. The Uganda Railways Corporation (URC) holds a monopoly over rail transport.  It is
operating only 21% of its railway network, althoug h its tonnage continues to grow.  Revenues have
also increased, by 40% between 1998 and 1999.  As a result, URC has invested over U Sh 950 million
for the acquisition of new equipment and rehabilitation of older equipment.WT/TPR/S/93 Trade Policy Review
Page 74
107. The Government is still committed to privatizing the URC, although no decisions have yet
been made regarding the privatization method or timetable.
108. As a landlocked nation, Uganda relies on the port at Mombasa (Kenya) for seaport services.
Domestic transport takes place on the country's under-utilized waterways.  Once Ugandan goods have
crossed the border into Kenya they are beyond the control of Ugandan businesses;  the private sector
has expressed a desire to have an area set aside for Ugandan goods, under distinct management, at theMombasa port.  It is believed that such a system would provide greater security and efficiency in the
handling of Ugandan goods.
(iv) Tourism
109. Uganda is well positioned to take advantage of the tourist industry due to its cultural and
historical heritage along with an endowment of bi ological diversity.  Uganda ranked 13 among the top
20 tourism earners in Africa, with US$142 million in 1998, reflecting an increase of 5.2% over the
previous year.  This represented a market share of 1.5% of the African continent.  National Parks,
under the Uganda Wildlife Authority, are among the top tourist attractions in the country.
110. Tourism is one of the fastest growing economic subsectors in Uganda, having grown by
approximately 18% per annum (on average) since 1993.  However, due to security issues in someparts of the country, and the Great Lakes Region as a whole, the growth rate was 10% in 1999.
Visitor arrivals to Uganda increased from 73,000 in 1995 to 227,000 in 1997.  In 1999, tourism
contributed an estimated 2% to GDP, and its earnings represented 24.3% of total exports of goods and
81.8% of exports of commercial services.
111. Employment related to tourism is significant, amounting to approximately 13,000 in the
accommodation segment alone.  Total related employment is 30,000, with equal numbers of men and
women.  The infrastructure for tourism includes 41 hotels, 85 inns, 736 lodges, 17 motels, 139 guesthouses, and 108 other arrangements.
112. Total investment in the tourism subsector amounted to approximately US$344 million during
the period 1991-97.  However, recent analyses of the industry note the lack of special incentives for
new investment and the need for closer regional collaboration, including the possibility of a single
joint visa for Uganda, Kenya, and Tanzania.  They also note the lack of a comprehensive nationaltourist policy and a lack of general appreciation, especially among decision makers and opinion
leaders, on how tourism can improve the country's economy and the welfare of the population.
11
113. The basic regulatory framework for tourism is contained in the Statutory Instruments 1972
No. 143, the Tourist Agents (Licensing) Act 1968, th e Tourist Agents (Licensing) Regulations 1972,
the Hotels Act 1964, and the Operations Guidelines for Tour Operators and Travel Agents 1997.
114. An Integrated Tourism Master Plan was developed by the Department of Tourism, Wildlife
and Antiquities (DTWA) in cooperation with the United Nations Development Program in 1993.  The
plan emphasizes the development of infrastructure , training of personnel, promotion of private
domestic and foreign investment, and the conservation of wildlife.
115. The DTWA is charged with developing a competitive and sustainable tourist industry
consistent with the protection and conservation of environmental and cultural values.  The
Department's mandate is to exploit tourism as a means of generating wealth, foreign exchange,
employment, and to promote Uganda among the international and local communities.  The overall
                                                     
11 Blandina Joan Nshakira (2001).Uganda WT/TPR/S/93
Page 75
objectives are, inter alia, to develop a policy and institutional framework for the tourism subsector;
increase the country's share of the international tourist market;  and increase the contribution of
tourism to export earnings and to GDP.
116. The Uganda Tourist Board (UTB) is a semi-autonomous parastatal established in 1994 under
the MTTI.  The UTB is a small, specialized agency focusing on development of the tourism subsector
although it also provides some regulatory oversight.  Because the activities of the UTB overlap withother development agencies, there have been discussions on the divestiture of the UTB by the
Government and the creation of a fully private tour ism promotion agency that would also have some
regulatory functions.  The most recent vision for change in the UTB was presented by the
Government in its Budget Speech for 2001/02, in which it was proposed to combine the UTB, the
Uganda Investment Authority and the Uganda Export Promotion Board into a single entity.  Thatproposal is under consideration.
117. In the Uruguay Round, Uganda made specific commitments under the GATS in tourism and
travel-related services.  Indeed, Uganda bound, without limitations on national treatment, measures
affecting cross-border supply, consumption abroad and commercial presence for the supply of tourism
and travel-related services.  It also bound, without limitations on market access, measures affectingcross-border supply and consumption abroad of these services.  Limitations on market access apply to
the binding of measures affecting commercial presence for the supply of these services.  Measures
affecting presence of national persons for the supply of tourism and travel-related services are
unbound.
12
                                                     
12 WTO document GATS/SC/89, 15 April 1994.Uganda WT/TPR/S/93
Page 77
SELECTED BIBLIOGRAPHY
ASYCUDA Online information available at:  www.asycuda.org/trade/htm.
Bank of Uganda (1993), Foreign Exchange Guidelines to Banks and Foreign Exchange Bureaux ,
Kampala.
Bank of Uganda (2000a), Annual Report 1998/99 , Kampala.
Bank of Uganda (2000b), Quarterly Economic Report , Vol. 01/2000, Kampala.
Bank of Uganda (2000c), "The St atus of Exports and the Uganda Shilling and the Way Forward",
presentation made to the Exporters’ Forum, Kampala.
Bank of Uganda (2000d), "Agriculture:  Medium to Long-term Policy in Uganda", Conference on
trade policy, 29-30 November 2000, Kampala.
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