Uganda has some formal trade barriers, though bureaucratic inefficiencies, high transport costs, corruption, and an influx of counterfeit consumer products are the primary reasons for increased costs for foreign businesses. In recent years, Uganda has phased out import bans on beer, soda, batteries and cigarettes. Importing beef, chicken, and dairy into Uganda involves lengthy paperwork and slow to little processing - essentially banning the import of these products into Uganda. In addition, Uganda has tariffs on basic food stuffs like flour, sugar, and food-grade oils.
Customs Duties and Taxes on Imports
Uganda has adopted a 3 band duty structure for imports from outside of the East African Customs Union (EACU) agreement. These 3 band rates are:
finished products are subject to 25% duty
intermediate products are subject to 10% levy
raw materials (excluding foodstuffs) and capital goods are 0% (duty free)
Uganda is a member of the World Customs organisation and does comply with the harmonised customs system.
Uganda Revenue Authority requires somes documents to clear the process of importation:
Documented evidence carriage of goods
Customs value declaration
Good release order evidence
Import certificates, issued by the Minister of Tourism, Trade and Industry are required for goods on a "negative list," including used tires and certain types of batteries, and have a validity of six months.
There is no specific procedures for samples shipments. Sample shipments require the same set of documents as a normal shipment. The value of goods should still appear on the commercial invoice indicating "for customs clearance purpose only'' on the invoice. Zero value invoices are not acceptable.
Uganda, with the population of more than 35 million people and an increasing economy, is a potential market for the retail industry. The retail industry sales are estimated at 8 billion US$ in Uganda. The share of wholesale and retail trade in GDP averaged about 18% over the past decade and that in services, around 47%. The country has the youngest population in the world, with 77% of its population being under 30 years of age and about 18% of its population is between the ages of 15 – 24 years. Many international retailers are operating in Uganda alongside local companies. Over the next 10 years, about 7 million people whose age is between 15 and 24 at the moment will enter the consumer market. These figures show that Uganda is holding a “potential” retail index. Uganda is now developing and becoming one of the most dynamic emerging countries in Sub-Saharan Africa. Higher living standards and rising income have enabled people to spend more for their lives. With the exception of the last financial year, sales have been rising year after year and total turnover of retail sales in 2018 is predicted to overcome the previous year. Despite internal and external factors like political volatility, energy shortages and climatic changes threatening its economic stability, Uganda has emerged with encouraging positive real GDP growth rates throughout the previous decade. Many global analysts remain positive about Uganda’s exponential growth potential in the coming years. For instance, Uganda is counted among the fastest growing economies in Africa, with a growth in per capita income estimated at 3.2% in 2016.
Historically, the retail sector in Uganda’s major cities has been dominated by a large number of small sized retailers. Traditional “Dduuka” (mom and pop) stores have overshadowed consumers grocery shopping experiences in Uganda. However, after a long absence of large retail chains, new preferences emerging among consumers indicate the advent of important developments at the country’s retail front. The distribution of Dduukashops per thousand populations decreased during 2002-2010 whereas that of supermarkets and hyper-supermarkets rose over the same period. Moreover, the combined share of Dduuka is expected to decline to 50% in future years. On the other hand, supermarkets and hyper-supermarkets are gradually replacing traditional small-scale retailers and gaining popularity by providing a wider array of services under one roof.
Uganda has become home to three of these large supermarkets chains with approximately 12 branches flourishing already and expansion plans underway for many more. Shoprite, the first modern supermarkets chain to establish in the country, oﬀers high quality products at competitive prices for 20,000- 25,000 varieties of food and non-food items under one roof. The Kenya-based supermarkets chains Uchumi and Nakumatt established their first centres in Kampala in 2010 to oﬀer retail solutions to professional buyers for up to 10,000 food and 30,000 non-food items. The most recent addition to the retail market is Tuskysis, another hyper supermarket shelving up to 30,000 items, running successfully in Kampala and suburbs and already planning expansion through more stores.
According to a report published by the Uganda Communications Commission, in the second quarter of 2017 internet penetration in Uganda jumped to 45.4% (from 43.8%), reaching an estimated 17.1 million. The report also shows that in the same period mobile internet subscriptions registered a 14.5% growth, with 1.6 million new subscribers, whereas fixed internet subscription grew by 3.2% (+4,850 subscribers). For the year 2018, Forbes magazine ranked Uganda in the seventh spot of countries with the highest internet penetration in Africa. However, the quality of internet is much lower in rural areas compared to urban areas (and it has to be kept into consideration that, according to the Uganda Bureau of Statistics (UBOS) 2017 Statistical Abstract, over 75% of Uganda’s population lives in rural areas). The most popular web search engines in Uganda are Google (95.3%), Bing and Yahoo (2.5% and 1.6% respectively).
E-commerce is rapidly growing in Uganda, and it is expected to shortly become the second largest online market in the East Africa region, after Kenya. This is mainly due to the rapid growth in telecommunications users and the widespread use of mobile money payments: in fact, Ugandan commercial banks implemented the Mobile Money service, which allows mobile phone users to electronically transfer funds to retailers or individuals. Moreover, many banks are now offering VISA debit cards which allow for online payments, and some are even offering credit cards.
Uganda’s e-commerce market offers a wide range of goods and services, including the possibility to pay taxes online. However, due to the absence of specific e-commerce regulations, informal and even illicit transactions continue to be carried out online. The main e-commerce platforms in the country include Jumia, Dondolo, GoodsExpress, Intraline, Paple Rayn, OLX and Eye Trade.
According to a report by Contador Harrison, Ugandans in the age group 30-40 are the biggest online spenders. Most of Uganda’s domestic B2C e-commerce sector is run on mobile devices and on social media platforms, including Facebook, WhatsApp, Snapchat and WeChat. In May 2018 Uganda’s parliament passed a law which imposes a tax of 200 shillings a day (around USD 5 cents) on users of social media platforms such as Facebook, WhatsApp and Skype. Although officially the law is aimed at raising public revenues, it has been criticized as a way to limit free expression.
Industry accounts for 21 % of Uganda's GDP in 2017 and employs about 7% of the labour force. Manufacturing allows the country to yield more benefits from its agricultural production. The agro-food sector is processing coffee, tea, nuts, dairy products, fruit and vegetables, canning of animal products and forage production. In addition, the industry focuses on the production of fertilizers and also the processing of skins into leather, and silk and cotton textile. The mining industry is engaged in the extraction of iron, gold, cobalt, copper, tin, wolframite, cement and phosphates. The first gold refinery in the country was inaugurated in 2017 in Kampala to boost gold sector earnings and make the country a gold-trading hub. The construction sector has also witnessed major growth since the 1990s liberalization, supported by government-initiated infrastructures projects such as the Isimba hydropower plant or the oil pipeline to Dar es Salaam. But in the longer term, the thriving of the sector will depend on the capacity of the manufacturing industry to provide the necessary goods and equipment in order to reduce import dependence.
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