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V. TRADE POLICIES AND PRACTICES BYSECTOR
(1) Overview
1. Uganda 'sturbulent history hasleftsignificant imprints onthecountry 'seconomic structure.
Political unrest andeconomic mismanagement inthe1970s andearly 1980s discouraged activities in
theformal sector, including thecultivation oftraditional export crops, suchascoffee andtea,and
agriculture-related processing. Thedeterioration oftransport andenergy infrastructures compounded
economicsegmentation,leavingsubsistenceagriculture,basedmainlyonbananaandrootcropsgrowing,
asthemainstay ofemployment andproduction.
2. Heavyregulationandextensivenationalizationstifledinvestmentandinnovation,andemigration
deprived thecountry ofcapital andmanagerial skills. Foreign exchange allocation focused onasmall
number ofprivileged firms, mainly producers ofimport substitutes, while themajority ofenterprises
notonlydepended ontheparallel exchange market offering farlower rates, butoften hadtosurrender
export proceeds attheover-valued official rate.
3. Today,theexchangerateismarket-determinedandallforeignexchangecontrolshavedisappeared
(Chapter I(2)). Apart fromafewcases of"infant industry protection" -forbeverage, cigarette, and
battery producers -Uganda hasabolished awidearray ofquantitative restrictions anddismantled many
entrenched State trading monopolies. Nevertheless, partly forbudgetary reasons, thepaceoftariff
liberalization waslessambitious.
4. Hightariffsaremaintainedinkeysectors,suchasagriculture,fisheries,foodprocessing,textiles
andleather. Average tariffs onagricultural imports exceed 20percent,while foodprocessors operate
behind tariffs ofup30percent(Chart V.1). Effective protection islikely tobeevenhigher than
thenominal ratessuggest, duetoduty- andtax-free imports ofbasicfarminputs (fertilizers, pesticides,
seeds, agricultural machinery andtools) andofrawmaterials usedby"higher value added industries"
(Chapter IV(2)(iii)). However, although amajor source ofgovernment revenue andapotentially
powerful toolofsectoral development, highcontinued tariffs maymask, andevenencourage, economic
inefficiencies andsectoral distortions.
5. Rehabilitation ofUganda 'sinfrastructure isbeing given highpriority. Many basic service
industries arescheduled forrestructuring andmodernization toimprove theirefficiency andbusiness
orientation. Ongoing reforms maynotonlybenefit these industries -transport, telecommunications,
energy, banking andinsurance services -butspillinto,andpromote, activities inother sectors thus
supporting thegeneral objective ofeconomic diversification.
6. Efficiency-enhancing investment in,andderegulation of,Uganda 'stransport sector appears
tohaveeased amajor infrastructural bottleneck. Lower freight ratesandenhanced reliability ofservice
mayhelpmobilize idleresources inremote areas, promote regional andstructural adjustment, and
"monetize" informal agricultural activities. Lessheadway hasbeenmade, however, inupgrading and
expanding thetelecommunications andelectricity systems, andimbalances appear toexist inthe
commercial banking sector. Thebanks 'rôleinproviding cropfinancing (pre-financing forprocessing
andmarketing) contrasts withlittledevelopment financing, inparticular ofinvestments insmallholdings.WT/TPR/S/4 Trade Policy Review
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7. Many infrastructural sectors -including telecommunications, electricity andrailtransport -
aremonopolized bypublic-sector enterprises which must submit theirtariffs andoperating plans to
thecompetentMinistriesforapproval.Inthebankingsector,recentlegislativechangeshavestrengthened
thesupervisory powers oftheCentral Bank (Bank ofUganda).
(2) Agriculture, Fisheries andFood Processing
(i) Main features
8. Farming isUganda 'sdominant economic activity. In1993/94, itrepresented over50percent
ofGDP, including substantial non-monetary production, andgenerated more than90percentofthe
country 'sexport earnings (Table AV.2, andChapter I).Thesector absorbs about 80percentof
Uganda 'sworkforce, mainly onsmall holdings withanaverage sizeoflessthan2hectares. Only
teaandsugar aregrown onlarger plantations.
9. Fertile soilsandfavourable climatic conditions helpunderpin Uganda 'sself-sufficiency for
awiderange offoodcrops, including bananas, cassava, sweet potatoes, millet, maize, andsorghum.
However, onlyonethirdofproduction ofthese crops iscurrently marketed intheformal sector, and
onlysmall amounts aretraded internationally. While cashcrops suchascoffee, tea,cotton, andtobacco
represent lessthan5percentofGDP, theyremain themainexports (Chart V.2); untilthelate1980s,
coffee alone accounted formore than90percentoftotalexports.
10. Large areas ofunutilized, butpotentially productive, landappear tolieidle. Available data,
while imperfect, suggest thatonlysome one-third ofUganda 'spotentially arable landisactually
cultivated.1Over 90percentofthecultivated areaisusedforfood crops (Chart V.3), witha
considerable degree ofintercropping bothoffoodandcashcrops (e.g.bananas andcoffee).
(ii) Policy objectives andinstruments
11. Inlinewiththelong-term objective ofbuilding "anindependent, integrated andself-sustaining
national economy", theGovernment aimsto:
(i) promote food production through theadoption ofappropriate technology and
infrastructure investment;
(ii) rehabilitate anddiversify agricultural exports through more efficient production,
processing andmarketing systems;
(iii) stimulate agro-industrial development;
(iv) create employment; and
(v) further rural development.2
1Some 80percentofUganda 'sterritory isestimated tobearable (FAO, 1992). However, theauthorities
statethatthereisevidencethatpreviouslyunderutilizedagriculturallandisreachingfullutilization(MFEP(1993b)).
2Museveni (1986); MFEP (1993b).WT/TPR/S/4 Trade Policy Review
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12. While, intheshort run,theexploitation ofpreviously under-utilized landmayhelpboost
production, theauthorities recognize thatlonger-term growth depends essentially onimprovements
inproductivity.3Promoting competition isacrucial element inthiscontext; economic liberalization
andderegulation inproduction, processing, andmarketing (Chapter II(2)andIV(4)(i)) areintended
toenhance theintensity andefficiency ofresource use.
13. Recent policy initiatives include theabolition ofpricecontrols oncashcrops andthetermination
ofallStatemarketing monopolies (Chapter IV(3)(vi) and(4)(i)). Attention isalsopaidtoexpanding
andupgrading thecountry 'sbasicinfrastructure, fostering research anddevelopment (R&D) -including
through theNational Agricultural Research Organization (NARO) -andintensifying quality controls.4
While foreign investment infarming itselfisrestricted under Uganda 'sInvestment Code, commitments
inthefoodprocessing sector, particularly inexport-oriented segments, areencouraged.5
3MFEP (1993b).
4NARO, asemi-autonomous body setup1992, ismandated toundertake, promote, andco-ordinate research
inthecrops, fisheries andforestry sectors. Itisheaded byaBoard consisting ofgovernment officials, academics,
andrepresentatives andprivate farmer organizations. NARO oversees eight research institutes; itsfunding is
based ongovernment grants, donor assistance, research fees, anddonations.
5Processing ofcrops, fishandmeat aredesignated aspriority areas forinvestment. Foreign investment in
thebakeries,confectioneries,andfoodprocessingexclusivelyfortheUgandamarketisnotencouraged(TableIII.2).WT/TPR/S/4 Trade Policy Review
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14. Although domestic regulatory barriers have gone, tariff protection remains significant
(Table V.1).6However, thereisnoother significant formofproduction; according totheauthorities,
Uganda doesnotoperate anysubsidy schemes promoting production, domestic consumption orexports.
Table V.1
Tariffs onmain foodproducts, 1993-94
(PercentandUS$thousand)
HS Products Tariff average
1994/95Exports Imports
July-December 1993
Major exports
Agricultural andlivestock production (ISIC 1110)
0708 Leguminous vegetables, fresh orchilled 30.0 2,432 1
0901 Coffee 10.0 52,931 0
1005 Maize 13.3 12,492 8
1201 Soya beans 30.0 1,535 326
2401 Tobacco, unmanufactured 30.0 2,272 365
Manufacture offood, beverages andtobacco (ISIC 31)
Slaughtering, preparing andpreserving meat
4101 Rawhides andskins ofbovine animals 30.0 2,984 0
Canning, preserving fruitandvegetables
0713 Dried leguminous vegetables, shelled 30.0 4,141 1
Canning, preserving fishandcrustacean
0304 Fishfillets andother fishmeat 30.0 4,070 0
Other foodproduction
0901 Coffee 25.0 21,215 5
0902 Tea 30.0 4,657 4
2402 Cigars, cigarillos, andcigarettes 60.0 52 43
Major imports
Manufacture offood, beverages andtobacco (ISIC 31)
Slaughtering, preparing andpreserving meat
1502 Fatsofbovine animals, sheep, orgoat 20.0 0 2,135
Manufacture ofoilandfats
1511 Palm oil 30.0 11 2,171
Manufacture ofgrain millproducts
1101 Wheat ormeslin flour 30.0 28 3,955
Manufacture ofsugar products
1701 Cane orbeetsugar 25.0 28 3,178
Note: Tariffs onmostagricultural items arebound atceiling ratesof80percent; some 60items, mainly livestock products andcereals,
arebound atratesbetween 40and70percent(Chapter IV(2)(iii)(b)). Allfisheries products arebound at50percent.
Source: Government ofUganda.
6Despite itsstrong international position inthesector, Uganda maintains tariffs of10percentonnon-roasted
coffee (HS0901.11) and30percentonroasted coffee (HS0901.21). Teaimports, whether green orblack,
beara30percenttariff.Uganda WT/TPR/S/4
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15. Whiletheeconomicweightofcoffeeproductionhasprovedanassetduringtherecoveryprocess,
italsoentails risks. Thesector 'sperformance, andtheattendant appreciation oftheUganda Shilling,
havedelayed alternative activities suchassome fledgling orrecovering industries, andtourism. With
thisinview, theauthorities recently introduced theCoffee Stabilization Taxtosterilize windfall gains
accruing fromthecoffee boom and,thus, easetheupward pressure ontheexchange rate(Chapter I).
(iii) Policies inindividual sectors
(a) Coffee
16. Thecoffeesector,whilerepresentingonlyasmallshareofGDP,hastraditionallybeenUganda's
single most important export earner. Itsrôlehasdiminished, however, since thelate1980s, asthe
productionofothercashcropspickedupagainandworldcoffeepricesdeclineddramatically(ChartV.4).
Thecollapse ofanexport quota system administered bytheInternational Coffee Organization (ICO),
inJuly1985, aggravated supply andprice pressures ontheworld market and,in1992, prices reached
analltimelowoflessthanUS$0.50 perlb.Nevertheless, coffee stillcontributed some 60percent
ofthecountry 'sagricultural export earnings.
17. Unlike tea,coffee isgrown predominantly onsmall holdings, eachwith0.1to0.5hectares
ofland, often incombination withsubsistence crops suchasbananas. This, andthecrop'snatural
longevityandresilience,helpexplainwhythesectorfaredbetterduringUganda'spastperiodsofpoliticalWT/TPR/S/4 Trade Policy Review
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andeconomic disarray thanvirtually anyother economic activity.7In1991, thetotalpopulation of
the13major coffee growing districts was6.6million, involving over1.1million farmfamilies.
18. Uganda, theworld 'ssixth largest coffee producer, grows thetwomajor varieties -arabica
androbusta. While arabica, cultivated inregions above 1,200 metres, generally fetches higher prices,
itrepresents nomore than10percentofUganda 'stotalproduction. Theauthorities havedrawn up
plans toreplace unproductive oldrobusta treeswithnewrobusta clonal varieties, anddevelop high
yielding anddisease-resistant arabica varieties.8
19. Coffee production peaked intheearly1970s at230,000 tonnes buthasgradually declined since
toabout 150,000 tonnes today. Thesector longsuffered fromextensive regulation andananti-export
policy bias. Competition wasvirtually absent: State-owned enterprises -theCoffee Marketing Board
(CMB) andtheUganda Railway Corporation (URC) -monopolized allstorage, marketing andtransport
activities, while producer prices, processing andmarketing margins were setbytheGovernment.
Nominal farmgate prices were rarely raised inlinewithinflation, resulting inasharp dropinreal
producer revenue; andallexport proceeds hadtobesurrendered attheover-valued official exchange
rate,driving awidening wedge between realfarmgate andeffective world market prices. Anyexcess
revenue wasmopped upbyanexport tax(Chapter IV(3)(ii)).
20. Policies havechanged dramatically since 1987. TheCoffee Marketing Board wassplitinto
twoorganizations, CMB Limited -acoffee exporting company without anymonopoly rights -and
theUganda Coffee Development Authority (UCDA), aState-run regulatory body.9UCDA 'smandate
includes promotion andmonitoring ofcoffee marketing, quality control, licensing ofcoffee operators,
andmonitoring ofnon-binding "indicative prices".10Theexport taxwasabolished in1992, while the
official exchange ratewasdevalued andunified withtheparallel market ratein1993. Thereforms
have translated intorising farmgate prices since thelate1980s (Chart V.2), despite acontinuous
deterioration, until1992, ofworld market conditions (Chart V.4).
21. Uganda isamember oftheInternational Coffee Organization (ICO), andhasratified thenew
International Coffee Agreement adopted inMarch 1994. Tothedisappointment ofproducer countries,
thenewAgreement didnotinclude provisions toregulate volume orprices ofproduction andexports.11
Possibly inanticipation ofthisoutcome, 28producer countries, including Uganda, representing
85percentofworld coffee output, formed theAssociation ofCoffee Producing Countries (ACPC)
inSeptember 1993. ACPC agreed onaCoffee Retention Scheme, which became effective inOctober
1993. Thescheme requires participants toretain upto20percentoftheirexportable coffee production
ifspecified price levels areundercut (Table V.2). Itsimplementation in1993/94 coincided witha
lowharvest inBrazil, andworld market prices rebounded sharply.
7Coffee isaperennial cropwhich generally requires minimal maintenance.
8MFEP (1993b). According totheauthorities, over 400hectares have been replanted since 1991.
9CMD Ltd., commanding amarket share ofsome 16percent, currently competes withsome 120private
exporters.
10According totheauthorities, theindicative prices, which replaced aprevious regulated price system, are
intended toinform operators ofthemarket situation atanygiven time.
11F.O. Licht, International Coffee Report, 12April 1994.Uganda WT/TPR/S/4
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Table V.2
TheACPC Coffee Retention Scheme
Arabica Robusta Retention requirement
(percentofexportable coffee)Price level (cts/lb)a
75cts/lb orless 60cts/lb orless 20
80cts/lb orless 65cts/lb orless 10
85cts/lb orless 70cts/lb orless zero
over85cts/lb over70cts/lb release ofstock
a 15daymoving average ofICOdaily price indicator.
Source: Government ofUganda.
22. InOctober 1994, Uganda introduced aCoffee Stabilization Tax,designed tomitigate adverse
effectsofthecoffeeboomontheexchangerate,domesticprices,andindustrialdiversification(ChapterI,
BoxI.1andChapter IV(3)(ii)).
(b) Tea
23. Teagrowing inUganda covers about 20,000 hectares, halfofwhich isunder estate management.
About 30percentoftheteaareaiscultivated bysome 30privately-owned estates, while theremainder
iscontrolled directly orindirectly bytwoparastatals andtwojointventures.12They areconcentrated
inthesouth-western partofthecountry, which offers favourable natural conditions.13Teagrowing
demands more constant attention thancoffee anditsprocessing ismore complex, organized and
labour-intensive.
24. Inthe1970s, teaproduction wasseverely affected byUganda 'spolitical andeconomic decline,
andbyexpropriation. Production came down from 23,000 tonnes in1972 tolessthan2,000 tonnes
inthelate1970s, when mostfactories closed down. Inrecent years, theGovernment hasimplemented
orstarted preparing several reforms, including reprivatization ofexpropriated estates, removal ofthe
Uganda TeaAuthority 'sexport monopoly, andestablishment oftheUganda TeaBoard.14Efforts
arealsomade toimprove incentives forsmallholders, whodepend forprocessing ontheUganda Tea
Growers Corporation. Farmgate prices haverisen significantly inrecent years andproduction has
respondedswiftlytoamorefavourablemarketenvironment,withatenfoldincreaseinquantitiesbetween
1986 and1993 (Chart V.2). Uganda produced 12,000 tonnes ofteain1993, 80percentofwhich
were exported.
12TheparastatalsaretheAgriculturalEnterprisesLtd(AEL)andtheUgandaTeaGrowersCorporation(UTGC);
thejoint ventures aretheToro andMityana TeaCompany (TAMTECO) andtheUganda TeaCompany.
13Teaisgenerally grown ongood soilsinregions over1,200 metres withrainfall ofmore than1,200 mm
peryear.
14AbillontheUganda TeaBoard iscurrently being prepared. Itwould commit theBoard tothefollowing
functions:representationoftheteaindustry;collection,compilationanddisseminationofinformation;registration
ofteaplanting, processing, andtrading; assisting inpolicy formulation; andsupervision ofresearch andquality
control.WT/TPR/S/4 Trade Policy Review
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(c) Cotton
25. Cotton wasUganda 'smostimportant export cropuntilthe1940s, when itwasovertaken by
coffee.15Production peaked intheearly 1970s atabout 87,000 tonnes onacultivated areaof
900,000 hectares, butfelltolessthan2,000 tonnes (on70,000 hectares) inthelate1980s.
26. Observers haveattributed thedecline oftheindustry mainly totheexpulsion oftheUgandan
Asians, whoowned many oftheginneries (1972), andtoover-regulation.16Until1991theGovernment
zoned areas forcotton production, fixed prices forcotton seedandlint,andplaced allginneries under
licensing. Trade wasmonopolized bytheLintMarketing Board (LMB), aparastatal. Thelackof
incentives together withtheeconomic difficulties andpolitical unrest ofthe1970s and1980s prompted
farmers toswitch tofoodcropproduction, nurturing theinformal sector.17
27. Since themid-1980s, theGovernment hastaken stepstorehabilitate andliberalize theindustry.
In1994, theLMB wasrestructured intoapurely regulatory body, theCotton Development Organization
(CDO). Farmgate prices werederegulated andallowed toalignwithinternational prices. While many
ginningfacilitieshavebeenrehabilitated,theauthoritiesseeaneedforstrengthenedverticallinkstowards
textiles andclothing production, which isbelieved tohave significant development potential.18
Downstream activities benefit fromsignificant tariffescalation: while allimports ofcotton andcotton
yarns (HS5201to5207) aresubject toa10percenttariff, cotton fabrics (HS5208to5212) bearrates
between 20and30percent.
(d) Tobacco
28. Tobacco production, traditionally ofminor importance inUganda, hasmore thantripled over
thelasttenyears toexceed 5,000 tonnes in1993. Ofthis,over80percentisexported (Chart V.2).
29. Untilrecently, agovernment-industry jointventure involving British American Tobacco (BAT)
controlled theprocessing chain fromthefarmgate tocigarette production, shielded byanimport ban
oncigarettes.19In1994, facing over-production ofleaves, theGovernment allowed asecond company,
Philip Morris, toimport cigarettes oncondition thatittooktheleafsurplus forprocessing abroad.
Asnoted inChapter IV(2)(iii), this"partial liberalization" wasaccompanied bytariff increases on
manufactured tobacco from 30to60percent(HS2402), resulting insignificant escalation asthe
30percenttariff onunmanufactured tobacco (HS2401) wasleftunchanged.
15Uganda 'scotton cropisofmedium staple, grown mainly innorthern andeastern parts ofthecountry at
altitudes oflessthan1,500 metres.
16EIU(1995) andFAO (1992).
17Asanannual crop, cotton implies higher marginal production costthanperennial crops (coffee, tea),and
maymore easily besubstituted byfood crops.
18MFEP (1994a).
19TheGovernment isconsidering selling itsstake inBAT Uganda (Chapter IV(4)(i)).Uganda WT/TPR/S/4
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(e) Food crops
30. Theproduction offoodcrops absorbs 90percentofUganda 'scultivated landandaccounts
for70percentofagricultural GDP (Table AV.2). Ofthis,however, onlyone-third iseffected in
themonetary (formal) economy andonlylimited, although rapidly increasing, amounts areexported.
Thedominant foodcropisbananas, withaproduction share ofabout 50percent, followed byroot
crops suchascassava andsweet potatoes (30percent), maize, millet, sorghum andother cereals
(10percent), andpulses andoilseeds.20Inrecent years, asubstantial volume ofmaize hasbeen
exported, largely asrelief supplies toneighbouring countries (Table AI.1).
31. Food cropproduction hasgrown steadily overthelastdecade (Chart V.5), duemainly toan
increasing policy biasagainst cashcrops atthattime. While direct Stateintervention appears tohave
beenlimited,domesticandexportmarketingwasmostlyinthehandsofaState-ownedProduceMarketing
Board andother government agencies.21
32. Theauthorities seeasignificant development potential inthefoodcropsector, owing tothe
rehabilitation oftheformal economy (andtheattendant increases innational income anddemand) and
multilateral andregional trade liberalization. Significant resources have thusbeen devoted to
infrastructural improvements, inparticular inthetransport sector, andagricultural research aimed at
20MFEP (1993b).
21UNDP/IBRD (1990).WT/TPR/S/4 Trade Policy Review
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upgrading cultivation technologies andcontaining pests anddiseases. While theProduce Marketing
Board isscheduled forprivatization andfurther institutional reforms areenvisaged, highcontinued
tariffs -mostly 30percent-tendtoperpetuate anincentive structure encouraging import substitution
rather thanexport expansion (Table V.1).
(f) Livestock
33. Uganda 'snatural environment, vastplateaux withmoderate climate, generally provides good
grazing forcattle, goats, andsheep. However, asinmany otherareas, political instability hasprevented
thelivestock sector fromdeveloping itsfullpotential; itsshare inGDP shrank fromover10percent
toaround8percentoverthelastdecade(monetaryandnon-monetaryactivitiescombined;TableAV.2).
Certain sub-sectors, inparticular dairy, haverecovered since themid-1980s.
34. Livestock producers andrelated processors aregranted significant tariff protection. Average
tariffs amount to29.7percentformeat products (ISIC 3111), 21.5 percentfordairy products
(ISIC 3112), and27.8percentforleather goods (ISIC 323).
(g) Fisheries
35. While representing nomore than2percentofGDP, thefisheries sector provides over
50percentofUganda 'sanimal protein consumption. More thanone-sixth ofthecountry iscovered
bywater (42,000 km2),offering scope forsignificant fishing activities. Estimates suggest thatthe
country 'ssustainable harvest isabout 300,000 tonnes perannum, more than20percentabove the
current catch.22Thesector ismade upmainly ofsmall, private operators (fishermen, fishtraders,
andexporters).
36. Considerable amounts offishareeither smuggled intoneighbouring countries, orwasted due
tolackofpreservationandtransportfacilities.Accordingtoofficialsources,onlytwo-thirdsofUganda's
catch in1991 were actually consumed inthecountry orexported (1percent).
37. TheGovernment 'spolicy focus isonmaintaining anadequate fishing environment (e.g.through
elimination ofwater weed), improving processing andmarketing facilities (storage, transport andquality
controls), andpromoting related industries (boatbuilding, fishpreservation equipment). Mostimported
fishandfishproducts aresubject to30percenttariff (Table V.1); tariffs ontenitems arebound at
ceiling ratesof50percent.
(3) Mining
38. Although nocomprehensive mineralogical surveys havebeenundertaken todate, Uganda 's
mineral potential appears relatively modest compared toother African countries.23Despite significant
efforts since themid-1980s, limited amounts ofminerals, including some gold, areproduced and
exported. TheGovernment isreportedly examining aproject toextract cobalt fromapyrite stockpile
atKasese, whose potential production isestimated at1,000 tonnes peryearoveraten-year period.24
22MFEP (1993b). Nileperch, introduced intheLake inthe1960s, currently represents nearly halfofthe
catch, ahead ofNiletilapia (30percent) andRastrineobola (6percent).
23MFEP (1993b).
24EIU(1995).Uganda WT/TPR/S/4
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39. Theauthoritiesconsiderthat,giventheeconomicrisksinvolvedinexplorationanddevelopment,
mining isanareawhere government canplayamajor rôleincreating anappropriate environment for
privateactivities.25Plansexisttoexpandgeologicalmappingandtheevaluationofmineralandpetroleum
deposits; revise theMining Acttocreate investment incentives inaddition tothose provided under
theInvestment Code; improve theregulatory framework, including environmental controls; and
encourage linkages withdownstream activities, forexample theproduction ofbricks, tilesandother
construction materials.
40. Uganda 'sMining Actreserves allrights forexploration andextraction totheState. The
Government isempowered toallocate landandmineral leases topotential explorers, whomustsupport
theirapplications bywork plans. According totheauthorities, however, therearenorigidproduction
controls; prices arefixed freely androyalty obligations maybewaived, asiscurrently thecasefor
goldmining. TheStateowns several mining companies, butisconsidering privatization ofsomeentities
(Chapter IV(4)(i)).
41. Mineral imports generally bearrelatively lowtariffs, 10percentinmostcases (Table AV.1).
Most fuelenters dutyfree, butissubject toheavy excise taxation atrates ofupto225percent
(Chapter IV(2)(iii), Table AIV.2). Domestic pricecontrols onfuelwereremoved recently andreference
import prices introduced forcustoms valuation purposes (Chapter IV(2)(iii)). Reports indicate
considerable smuggling intothecountry.26
(4) Manufacturing
42. Uganda 'ssmall manufacturing sector, withaworkforce ofover60,000, represents 5percent
ofGDP(Table AV.2).27Itisdominated byprocessing ofagricultural products (coffee, textiles, leather,
sugar, beerandtobacco), butalsoincludes producers ofpaper andwood products (furniture), chemicals
(soap, paint), andconstruction materials (bricks andcement) andretraders oftyres. Thesector has
developed rapidly, withlarge variations among industries, inanincreasingly liberal andpredictable
environmentsince1987(ChartV.6).Whileoutputofthefood-processing,chemicals,andsteelindustries
morethantripled between 1987and1994, production oftextiles, clothing, leather andfootwear showed
nogrowth.
43. MuchofUganda'smanufacturingactivitiesarecarriedoutbysmallenterprises;over80percent
offirms employ 35persons orless.28Production offurniture, tools, andclothing arethetraditional
domains ofsmall-scale manufacturing, contrasting withlarger entities inthefoods, beverages, tobacco,
textiles, construction materials, andsteelsectors (Table V.3).29
25MFEP (1993b).
26According totheUganda Petroleum Dealers Association, some 25percentofdomestic consumption are
smuggled intoUganda. Theresulting lossoftaxrevenue isestimated atUS$1.2 million annually (Nachrichten
fürAußenhandel, 19December 1994).
27UNIDO (1992).
28UNIDO (1992).
29EIU(1995).WT/TPR/S/4 Trade Policy Review
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Table V.3
Composition ofthemanufacturing sector, 1989
ISIC Enterprises Employment Employment
perenterpriseNumber Percent Number Percent
31 Food, beverages andtobacco 480 27.9 28,035 47.0 58
32 Textiles, clothing, leather and
footwear160 9.3 10,320 17.3 65
33 Wood andfurniture 556 32.3 9,760 16.4 18
34 Paper andpaper products 106 6.2 2,050 3.4 19
35 Chemicals, rubber andplastics 47 2.7 1,610 2.7 34
36 Non-metallic mineral products 60 3.5 3,150 5.3 53
37 Ironandsteel 7 0.4 635 1.1 91
38 Tools, hardware, metals,
machinery305 127.7 4,070 6.8 13
39 Other 2 0.1 30 0.1 15
Total 1,723 100.0 59,660 100.0 35
Source: UNIDO (1992).Uganda WT/TPR/S/4
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44. Tariffaveragesinmostareasexceed20percent(ChartV.1)andsomeitems-beer,softdrinks,
motor vehicle batteries andusedvehicle tyres-aresubject toquantitative restrictions. IntheUruguay
Round, Uganda bound tariffs onsome60manufactured products, including photographic goods, rubber,
andcertain machinery, atceiling ratesbetween 40to80percent.
45. Duty andtaxremissions ordrawbacks areavailable forplant, machinery, equipment and
specialized vehicles; rawmaterials notavailable locally ifusedasinputs by"important andhigh-value
industries"; anyproducts whose importation isconsidered tobeinthenational interest; andallimported
inputs incorporated inexports (Chapter IV(2)(iii)(e)). Inaddition, awiderange ofinvestment incentives
isoffered (Chapter III(2)(ii)). Thewidespread anddiscretionary structure ofsuchexemptions, combined
withsignificant tariffs onfinished products, islikely tocreate aframework ofhigheffective protection
andmaintain adistorted range ofincentives.
(5) Services
(i) Main features
46. Theservices sector accounted formuch oftheexpansion ofUganda 'sformal economy during
thepastdecade, increasing itsshare inGDP frombelow 35percentin1983/84 tonearly 40percent
in1993/94 (Table AV.2). Commerce, construction andtransport werethethree largest sub-sectors
in1993/94, representing some 13percent, 6percent, and4percentofGDP, respectively.
47. Inview ofitssupportive rôleformany economic activities, theGovernment hassought to
rehabilitate anddevelop basic infrastructural services -including transportation, energy and
telecommunications -andthefinancial services sector. Asinother areas, theregulatory environment
forthese industries hasbeensignificantly rationalized andliberalized, andsome ofthekeyoperators -
mostly State-owned -havebeenrestructured orprivatized. Within thetransport sector, deregulation
oftherailsegment hashelped intensify intra-modal competition, withapositive impact onproductivity
andtariffs. Transportation, construction, telecommunications, banking andtourism arelisted aspriority
areas under theInvestment Code (Chapter III(2)(ii)).
48. Under theGeneral Agreement onTrade inServices (GATS), Uganda hasmade some specific
commitments intourism andtravel-related services. Nom.f.n. exemptions areincluded inUganda 's
Schedule.30
(ii) Transport
(a) Road transport
49. Most transport inUganda ismade byroad. Theshare ofroadhaulage isintheorder of
90percentindomestic traffic and60percentininternational traffic, withtheUganda Railway
Corporation supplying most oftheremainder.
50. Road freight carriers havetraditionally operated inafairly openenvironment, freeofaccess
barriers to,andpriceregulations in,thedomestic market. Provisions under theRoad Traffic andSafety
Actof1970, which allow forlicence-based entry restrictions, related totheroutes served, andprice
approval requirements, havenotbeenusedinpractice.31Allcompanies areprivately owned. Foreign
30GATS/SC/89, 15April 1994.
31Arevision oftheActiscurrently under preparation.WT/TPR/S/4 Trade Policy Review
Page 74
nationals maybuy,ownandoperate Uganda-registered trucks under thesame terms andconditions
asnationals.32Safety checks arecarried outannually bytheUgandan Police, which issues aroadlicence.
51. Theauthorities consider thattherecent abolition oftransport privileges benefitting therailways
(seebelow) hasintensified competition intheroadfreight sector which, intheabsence ofeffective
inter-modal competition, hadscope formonopolistic priceandmarket-sharing arrangements. According
totheauthorities, freight ratesforexport traffic havealmost halved overthepasttwoyears.
52. Long-distance andtransit traffic passing thecountry 'scurrent tworoadtollstations ischarged
between USh200and500perunit,depending onvehicle size. Foreign-registered trucks traversing
thecountry orcarrying goods toaUgandan destination musthaveatransit goods license, issued annually
atacharge ofUS$100 pervehicle, andatemporary roadlicense which isvalidfor30days(US$30 to
US$100). These trucks areprohibited frominternal cabotage, i.e.theyarenotallowed tocarry goods
betweentwopointswithinthecountry.Accordingtotheauthorities,therestrictionisdesignedtoprevent
"unfair competition" fromforeign companies, which aresubject todifferent systems ofroadandtraffic
taxation. However, effective enforcement seems toprove difficult inpractice. Foreign vehicles are
freetoreload consignments fordestinations abroad.
53. Virtually allpassenger transport inUganda isconducted byprivate busoperators. They must
belicensed, mainly forsafety reasons saytheauthorities, bytheTransport Licensing Board. TheBoard
verifies andapproves theoperating schedules submitted bythecompanies, which mustregularly submit
performance reports totheBoard, containing information onpassenger numbers, mileage andany
technical breakdowns.33While approval requirements forbusfareswereabolished recently, operators
servicing thesame routes apparently tendtoco-ordinate prices. Access toindividual routes isfree
inprinciple; however, intheevent ofcongestion, itisatthediscretion oftheBoard torefernewcomers
toalternative routes which arelesseffectively serviced. There arenonationality requirements affecting
owners oroperators.
(b) Railandmaritime transport
54. Since itsrestructuring in1993, theUganda Railway Corporation (URC) hasbeenoperating
onaself-supporting, commercial basis. Virtually allexclusive rights andsubsidies havebeenabolished,
including aprevious obligation oncoffee exporters torelyexclusively ontherailways. Although fully
government owned, theURC isfreetosetitstariffs and,subject toapproval, transport schedules.
Theonlyexception appears tobeapublic service obligation onindividual routes which, ifimposed
bytheGovernment, mustbefinancially compensated. Themodalities arecurrently being worked out.
55. TheURC owns boththerailnetwork andtherolling stock, andthere areatpresent noplans
forinstitutional separation. Itsmaintenance facilities (railworkshops) are,however, earmarked for
privatization.UnderarecentPerformanceAgreementwiththeGovernment,cross-subsidizationbetween
individual activities isprohibited.
32In1993,Uganda-registeredpickuptrucksachievedamileageof354millionvehiclekilometres,ascompared
with244millionkilometresfortwo-axletrucks,66millionkilometresforthree-axletrucks,61millionkilometres
fortrailers, and53million kilometres forarticulated trucks.
33In1993, minibuses withacapacity ofupto14passengers accounted for277million vehicle kilometres,
lightbuseswithupto40passengersreached21millionkilometres,andmedium-sizedbuses54millionkilometres.Uganda WT/TPR/S/4
Page 75
56. TheCorporation hastosubmit inadvance itsoperating plan, which isapproved inthecontext
oftheGovernment 'sannual budget. TheCorporation isnotsubject toanysector-specific regulatory
controls but,likeallother parastatal enterprises, toauditing bytheAuditor General andanobligation
tosubmit quarterly performance reports totheMinister ofWorks, Transport andCommunications
andthePERD Secretariat (Chapter IV(4)(i)(c)). According totheauthorities, while railfares have
notchanged significantly overthepastthree years, theURC'soperating efficiency hasimproved and
previous supply bottlenecks havelargely disappeared.
57. Shipping services ontheLake Victoria havenotdeveloped. Thefewferries operated bythe
URC arewithout private competitors, eventhough market entry isunrestricted.
(c) Airtransport
58. Uganda 'saviation policy iscommitted tothegeneral objective ofpromoting foreign tradeand
investment; there arevirtually noprotective industry interests. (Uganda Airlines owns andoperates
onlyonelarge passenger jet.) Aliberal approach mayhavecontributed, incombination withthe
country 'seconomic expansion, torapid traffic increase: airpassenger andcargo traffic grewatannual
ratesof15and53percent, respectively, between 1991 and1994. During thatperiod, twelve new
operators commenced scheduled andnon-scheduled airservices toandfrom Entebbe, thecountry 's
onlyinternational airport. Theleading carriers in1993 wereSabena (13percentofpassengers and
39percentofcargo onscheduled flights), British Airways (13percentand14percent), Kenya Airways
(20and5percent) andUganda Airlines (28and1percent).34
59. Theprincipal regulatory framework forscheduled flights isprovided byUganda 'sBilateral
AirServices Agreements. Within thisframework, theauthorities usually decide onthenumber of
designated airlines onindividual routes andthefrequency ofoperations. Airfares areapproved by
theGovernment onadvice ofUganda 'sCivil Aviation Authority (CAA), theregulatory body inthe
sector. While every carrier hastherighttofileitsowntariffs forapproval, theCAA seeks toencourage
inter-airline agreements, based onIATA recommendations, ontariffs forindividual routes.
60. Inaddition toitsregulatory functions, theCAA ismandated todevelop, manage andmaintain
Uganda 'saerodromes, including restaurants, duty-free shops, maintenance andflight catering services.
However, inpractice, thesearesubcontracted toprivate firms. Traditional monopolies, e.g.forground
handling services, were restructured recently withtheaimofeasing bottlenecks incargo handling.
While theaward ofsupply contracts isnotsubject toexplicit nationality criteria ,CAA tends toprefer
qualified local firms over foreign-owned companies intheevent ofcapacity limits ortechnical
monopolies.
(iii) Energy
61. Commercial energy supplies -mainly intheformofoilandhydro-electricity -cover nomore
than10percentofUganda 'stotalenergy consumption. They aredwarfed bytheuseoffuelwood
andcharcoal; onlyabout three tofivepercentofthepopulation hasaccess toelectricity.35However,
inviewofincreasingly pressing wood shortages andarapidly rising energy demand, theGovernment
seeks tomodernize electricity generation anddistribution.36
34UgandaAirlines,currently100percentStateowned,isbeingconsideredforprivatization(ChapterIV(4)(i)).
35EIU(1995).
36MFEP (1993b); UMA (1993); UMA (1994).WT/TPR/S/4 Trade Policy Review
Page 76
62. Uganda 'selectricity system, currently based onone150HWhydroelectric plantandtwosmall
plants totalling 6MW, wasbuiltupinthelate1940s and1960s, respectively. Nosignificant investments
havebeenmade since and,according totheauthorities, maintenance haslargely beeninsufficient.
Thus, despite some donor-funded rehabilitation work, thesystem continues tosuffer from endemic
undercapacity andoutmoded, unreliable equipment. Power cutsarefrequent and,intheviewofthe
Uganda Manufacturers 'Association, more disruptive -interms ofworking hours lost-thanstrikes
orother forms oflabour unrest.
63. Tominimize theeconomic andsocial impact ofpower failures, supply priorities havebeen
established; hospitals, theNational University andasteelrolling plantaregranted preferential treatment
intheevent ofshortages. (Thesteelplant must, however, close-down during peakhours.) Similar
arrangements existforthesoftdrinks andbeerindustry, paper andplastics producers, andbakeries
whose operations concentrate onoff-peak hours.
64. TheUganda Electricity Board (UEB) istheprincipal owner andoperator ofthecountry 'spower
plants andnetwork equipment. TheBoard isfullygovernment owned; tariffs mustbeapproved by
theMinistry ofNatural Resources. Thecurrent billing ratio, i.e.theshare ofpower supply actually
soldtocustomers, isintheorder of70percentandhastended toincrease recently. UEBiscommitted
tobecoming commercially self-supporting by1997, i.e.tomeetalloperating costs, capital expenses,
income taxliabilities, interest payments, andrepayments onoutstanding loans. Under theGovernment 's
liberalization andderegulation strategy, private companies areallowed inprinciple toparticipate in
electricity generation anddistribution; some potential investors havestarted feasibility studies.
65. Uganda exports substantial amounts ofelectricity, over20percentofitstotalproduction, to
Kenya (Table V.4). Under acontract dating from 1955, itiscommitted tosupply 30megawatts of
continuous power upto2008. Exports toTanzania, onacommercial basis, started recently under
abilateral UEB-TANESCO Electricity Agreement. Theauthorities seeapotential formore intensive
regional co-operation inthesector.
Table V.4
Electricity supply, 1984-93
(Inmillion kWh)
Production fordomestic use Internal consumptionaExportsb
1984 614.4 497.9 216.1
1985 626.5 459.1 215.0
1986 637.2 530.1 231.0
1987 611.2 514.3 176.2
1988 567.4 372.7 110.0
1989 660.9 432.3 156.6
1990 738.0 530.0 166.5
1991 785.0 598.6 126.6
1992 994.3 768.6 289.1
1993 977.9 739.1 258.4
a Domestic production minus transit anddistribution losses.
b Allexports aretoKenya, except for900,000 kWh in1993.
Source: Uganda Electricity Board.Uganda WT/TPR/S/4
Page 77
(iv) Telecommunications
66. Telecommunications inUganda areseverely underdeveloped. The"telephone penetration"
ofthecountry, some0.2mainlinesper100inhabitants, isamong thelowest intheworld.37TheUganda
Postal andTelecommunications Corporation (UPTC) aimstoachieve apenetration rateofabout 0.6
by2005, which isslightly lessthanthecurrent levels ofKenya, Zambia orZimbabwe.
67. UPTC isthemonopoly owner andoperator ofUganda 'sbasic telephone network, andalso
actsastheregulatory body under thegeneral direction oftheMinistry ofWorks, Transport and
Telecommunications. Abillisbeing prepared tocreate anindependent regulatory body, named the
Communications Commission, forbothpostal andtelecommunications services. Mobile telephone
services areinthehands ofaprivate monopolist whose licence isduetoexpire attheendof1995.
Revisionofthe1983UPTCAct,involvingdecisionsontheUPTC'seventualprivatization,isinprogress.
68. Telephone tariffs arehighandheavily biased against long-distance andinternational calls.
While callswithin adistance of30kilometres arecurrently charged USh50per6-minute unit(between
60and150kilometres: USh50per30seconds), international callsoutside theCOMESA areacost
USh4,000 perminute.38However, according totheauthorities, thedistance factor willbeflattened
inthecourse of1995. Nomore than50percentofUganda 'stelecom billisactually collected on
average, duetofactors suchasfraud, latepayments bysome Government Departments, andbilling
periods ofthreetofourmonths. However, UPTC hasachieved asmall surplus inrecent years, implying
that"honest" payers areseverely overcharged. Attempts arebeing made tostreamline andaccelerate
UPTC 'sinternal procedures, including thebilling process.
69. Withaviewtoprotecting theCorporation 'srevenue base, Uganda maintains severe restrictions
ontheuseofcall-back services. (Theauthorities areconcerned, thatsuppliers ofsuchservices use
UPTC 'ssatellite capacity, domestic network andswitching equipment without adequate compensation.)
70. Onconnection tothenetwork, UPTC subscribers havetopayaone-time charge ofUSh60,000
plus, ifrequested, USh60,000 forthetelephone set.Therental feefortheline,including theset,
isUSh1,500 permonth. While theUPTC 'sbasic network monopoly doesnotinclude terminal
equipment, theCorporation offers suchequipment incompetition withafewlicensed suppliers. Type
approval, granted bytheUPTC, ismandatory withaviewtoprotecting thetechnical integrity ofthe
system.
71. Private companies arefreeinprinciple toinstall andoperate radio orsatellite transmission
equipment, including portable satellite earthstations. Theymustbelicensed bytheMinistry ofWorks,
Transport andTelecommunications andrespect national frequency regulations. While theUPTC 's
tariffs aresubject toMinisterial approval, private operators, e.g.twocurrent providers ofIntelsat
services, maysettheirownrates.
37Uganda currently hassome 34,000 telephone subscribers, 80percentofwhich arelinked toanautomatic
exchange.
38Thecorresponding intra-COMESA tariff isUSh2,000 perminute, calls toKenya orTanzania cost
USh50per3.75 seconds.WT/TPR/S/4 Trade Policy Review
Page 78
(v) Financial services
72. Uganda 'sfinancial sector currently consists of15commercial banks, twodevelopment banks,
21insurance companies andseveral other institutions, including over70foreign exchange bureaus.
There isatpresent nostock exchange, norarethere stockbroking firms inUganda.
(a) Banking
73. Thecommercial banking sector shows asignificant degree ofconcentration, withtheUganda
Commercial Bank (UCB) accounting forover40percentoftotaldeposits andadvances. TheState
isextensively involved inbanking activities, holding allshares oftheUCB and49percentstakes in
threeforeignmajority-ownedbanks(TableV.5).TheCooperativeBank,runbytheUgandaCooperative
Movement, hasthesecond largest branch network, butranks fifthinterms ofdeposits. Anumber
ofbanks, notably theUCB, arefacing serious liquidity andsolvency problems.
74. Traditionally, thebanks 'lending activities havebeenbiased towards themanufacturing and
commercial sectors, which absorbed 60percentofalloutstanding loansin1994. Agriculture accounted
forsome 25percent, mostly usedforpre-financing ofcropprocessing andmarketing activities.39
While theEastAfrican Development Bank (jointly owned among Kenya, Uganda andTanzania with
asmall private shareholding) isexpected tofocus oninfrastructure andother long-term financing for
agriculture, itreportedly suffers from alimited capital baseandsignificant amounts ofbadloans.
75. Theinstitutional andregulatory framework forthefinancial services sector arelaiddown in
theBank ofUganda Statute andtheFinancial Institutions Statute. ThetwoStatutes, which came into
lawinMay1993, aredesigned tostrengthen therôleoftheCentral Bank (theBank ofUganda, BOU)
asthemonetary andsupervisory authority, andenhance thesoundness ofthebanking system through
improved andextended prudential regulation.40
76. Under theStatutes, theBOUisempowered toissueandrevoke licences, authorize newbranches
andmergers offinancial institutions, approve theappointment ofabank'sauditor, carry outitsown
inspections, and,ifnecessary, impose sanctions andrestrictions onailing institutions (e.g.prohibition
ofdividendpayments,cease-and-desistorders,replacementofmanagement,fines,andcompleteseizure).
Inconsultation withtheMinister ofFinance andEconomic Planning, theBOU maysetlimits onthe
amount, maturity, purpose andinterest ratesofloans andadvances. TheBOU mayalsoregulate, again
inconsultation withtheMinister, prudential norms regarding assetquality, conditions forlicensing,
minimum capital requirements, andlimitations oncredits toinsiders orsingle borrowers.
77. Alicence application mustinclude information onthenationality ofdirectors andshareholders,
proposed location, estimated number ofemployees, capital structure, andbusiness plans. Ingranting
alicence, theBOUtakesintoaccount, interalia,thefinancial conditions andreputation oftheapplicant,
thecapital structure andbusiness prospects oftheinstitution aswellasthe"convenience andneeds
ofthecommunity tobeserved" and"public interest" (Financial Institutions Statute, Sections 5,6).
While,accordingtoBOUofficials,theBankdoesnotconsidernationalityanimportantcriterion,regional
policy factors, e.g.thedeployment ofbranches across rural areas, mayhaveconsiderable weight.
39BOU (1994).
40The"financial institutions" covered bytheFinancial Institutions Statute include banks, credit institutions,
andbuilding societies, butnotinsurance companies (Section 2).Uganda WT/TPR/S/4
Page 79
Table V.5
Banks inUganda, 1993-94
Name OwnershipaNumber of
branches and
agenciesaDepositb
(USh billion)Advancesb
(USh billion)
Commercial banks
Uganda Commercial Bank 100% Government 134 91.5 96.8
Standard Chartered Bank (U)
Ltd100% private (foreign) 1 23.0 7.6
Barclays Bank (U)Ltd 49%Government
51%private (foreign)3 21.3 14.8
Bank ofBaroda (U)Ltd 49%Government
51%private (foreign)6 18.8 11.4
Stanbic Bank (U)Ltd 49%Government
51%private (foreign)1 14.3 9.0
Cooperative Bank Ltd 100% Uganda Cooperative
Movement23 13.6 15.8
NileBank Ltd 100% private (local) 4 10.6 7.0
Gold Trust Bank Ltd 100% private (local) 3 6.2 1.6
Tropical Africa Bank Ltd 50%Government
50%private (foreign)3 4.2 3.3
Sembule Investment Bank
Ltd100% private (local) 4 2.8 1.9
Greenland Bank Ltd 100% private (local) 3 2.5 1.5
Orient Bank Ltd 100% private (local) 1 0.6 0.0
International Credit Bank Ltd 100% private (local) 1 0.4 0.5
Centenary Rural
Development Trust100% private (local) 8 ... ...
Kigezi Bank ofCommerce 100% private (local) 1 ... ...
Development banks
EastAfrican Development
Bank97%Governments of
Uganda, Tanzania, andKenya
3%Others1 ... ...
Uganda Development Bank 100% Government 1 ... ...
... Notavailable.
a December 1994.
b June1993.
Source: Bank ofUganda.
78. Differing minimum equity requirements areapplied under theFinancial Institutions Statute
tonational- andforeign-owned newbanks; theseamount toUSh500million andUSh1,000 million,
respectively. Allfinancial institutions, whether Ugandan- orforeign-owned, arerequired tomaintain
atleast8percentoftheirriskadjusted assets inequity, andaminimum amount ofliquid assets as
determined bytheCentral Bank.
79. TheGovernment ishoping topromote thedevelopment ofthefinancial sector withaviewto
improvingmacro-economicstability,encouragingprivatesavingandensuringitsefficienttransformationWT/TPR/S/4 Trade Policy Review
Page 80
intoproductive investment.41Since themid-1980s, theGovernment hastaken steps topromote the
interbank market andamarket fortreasury bills. Thecurrent focus isonestablishing anational capital
market,includingastockexchangeinKampala(KSE),andrestructuringailingbanks,namelytheUganda
Commercial Bank, theCooperative Bank andtheUganda Development Bank.42
(b) Insurance
80. Uganda 'sinsurance sector ismade upof21companies, several ofwhich are100percent
foreign-owned, inthelifeandnon-life business. TheNational Insurance Corporation (NIC), thelargest
insurer, witha35percentmarket share, iswholly State-owned. Itisrunonacommercial basisand,
according totheauthorities, scheduled forprivatization (Chapter IV(4)(i)).
81. Supervision ofthesector isinthehands oftheCommissioner ofInsurance, whoactsunder
thegeneral direction oftheMinister ofFinance andEconomic Planning. TheCommissioner haspower
toapprove andcancel theregistration ofcompanies, carry outon-the-spot inspections atleastonce
ayearand,ifnecessary, order insurers tochange business practices.
82. Foreign-owned companies aregiven national treatment, according totheauthorities. Although
theInsurance Decree 1978 allows theGovernment, toacquire ashare ofupto49percentinany
company (Section 2),theclause hasnotbeenusedtodate. Allinsurers must maintain aminimum
capital ofnotlessthanUSh2million, halfofwhich istobedeposited withtheBank ofUganda.
Premium ratesaresetbythecompanies andapproved bytheCommissioner; inpractice, however,
tariff structures andratesarefairly uniform.
(vi) Tourism
83. After adecade ofvirtual absence, tourism hasexpanded rapidly inrecent years. Tourist arrivals
increased frombelow 60,000 in1990toover90,000 in1993, providing employment forsome 40tour
operators and60hotels. Theresulting proceeds, US$48 million, correspond tomore than20percent
oftherevenue from merchandise exports.
84. Thesector 'srecent expansion benefited inparticular fromUganda 'spositive security record;
recent infrastructure investments (e.g. transport, accommodation); macro-economic liberalization,
including theconvertibility oftheUganda Shilling; andtheunilateral abolition ofvisarequirements
forover50countries (mostly developed countries andPTAmembers). Tourism isoneofthepriority
areas forforeign investment (Chapter III(2)(ii)). According totheauthorities, national treatment is
accorded toallforeigners engaged inthesector.
85. TheGovernment isconfident ofthesector 'sfuture growth potential. TheIntegrated Tourism
MasterPlan,launchedinMay1993,emphasizesthedevelopmentofinfrastructure;trainingofpersonnel;
promotion ofprivate domestic andforeign investment; andconservation ofwildlife. TheUganda
Tourism Board wascreated toimprove themarketing ofUganda 'stourist attractions abroad, including
through participation ininternational fairs.43
41MFEP (1993b); MFEP (1994a).
42ABillproviding foratrusttotakeoverthenon-performing assets oftheUCB iscurrently examined by
theNRC. Arestructuring planfortheCooperative Bank isunder implementation (MFEP (1994b)).
43MFEP (1994b).Uganda WT/TPR/S/4
Page 81
86. Tourism istheonlysector inwhich Uganda hasmade specific commitments under theGATS.44
Itisaccordingly bound nottoplace restrictions oncross-border supply andconsumption abroad of
twotypes oftourist andtravel-related services: hotels andrestaurants, andtravel agencies andtour
operators services.45However, concerning thecommercial presence ofservices providers, Uganda
reserved therighttocontinue operating theapproval requirements under theInvestment Code andrelated
regulations (Chapter III(2)(ii)). Also, except fortechnical personnel notlocally available, Uganda
isnotcommitted toaccepting thepresence offoreign nationals supplying tourist services initsterritory.
44GATS/SC/89, 15April 1994.
Within agiven sector, suchcommitments cover fourdifferent modes ofdelivery: cross-border supplies,
consumption abroad, commercial presence, andpresence ofnatural persons. Unlike thelatter twocategories,
cross-border supplies andconsumption abroad donotinvolve theservices provider entering theterritory ofthe
importing country. Ifnotspecifically reserved, aGATS Member undertakes nottoplace anyrestrictions on
themodes ofsupply inthesectors listed initsSchedule ofCommitments.
45Tourist guide services arenotincluded.