Following the Cabinet’s approval of a new mining policy in Uganda, the government will be targeting the cotton, textiles, and apparel (CTA) industry in the third National Development Plan (NDP) to be launched later this year.
The plan, which will contain a detailed sector development approach for the cotton value chain, is to be developed under the National Planning Authority (NPA), in collaboration with Msingi East Africa and consultancy firm Bradan Consulting Services.
With this strategy, the government intends to revamp the CTA sector, based on its potential for value addition, foreign investment, and job creation, in order to benefit from the lucrative global market.
As revealed by Msingi, the global apparel manufacturing market was valued at over $785 billion in 2018 but Uganda could earn only a meagre $22 million of the worth, having the European Union (EU) as its main export destination.
Uganda lags behind in the region’s textile industry with average annual earnings of just $56 million from 2008-2017, under the United States-sponsored Africa Growth and Opportunity Act (AGOA). Meanwhile, other regional neighbours Ethiopia and Kenya earned an average of $221.5 million and $436.5 million respectively over the same period under the scheme.
Thus, the new plan will be focusing on how Uganda can maximize the opportunities that come with AGOA, which has largely been constrained by several policies and market challenges.
New mining policy
As part of the drive to see Uganda maximise economic gains from its natural resources, the Cabinet last month passed a new policy that will see the government automatically own shares in every mining company granted a lease.
The Mining and Minerals Policy 2018, which now prevents investors in the mining sector from owning 100 percent stakes in leases, also makes value addition compulsory. This means companies in the sector can no longer export raw ore as the government looks to increase income from its mineral resources.
“The revised laws will help us revive the mining sector,” Permanent Secretary in the Ministry of Energy, Robert Kasande said.
Achieving efficiency and ensuring equitable and transparent management of mineral revenues are also part of the objectives of the new policy. This is because there have been numerous occurrences of controversies over lands in mining areas, high rate of corruption in the granting of licenses, environmental degradation and deprivation of benefits from mineral exploitation to host communities.
There is also the issue of speculators who lock up investment as they hold most of the hundreds of mining licenses in the country and then trade the licenses at extremely high prices that petrifies genuine investors. To tackle this trend, the government will guarantee the “security of tenure by granting licenses for specified periods that are subject to a ‘use it or lose it principle’, through enforcement of mandatory relinquishment, fines and penalties to minimise speculation and hoarding practices,” the policy read.
Furthermore, the new policy requires investors to have sufficient capital to conduct exploration, exploitation and value addition, according to their licenses. Consequently, once it is enforced, it will expel mineral speculators. The government will also introduce competitive bidding rounds to dismiss incompetent companies and speculators as against the current system of granting licenses regardless of capabilities.
“We think that will transform the mining sector. We are concluding agreements to get money to do aerial magnetic surveys in Karamoja beginning next financial year. That will give us a better assessment as far as minerals are concerned,” Kasande added.
Uganda has minerals across the country – gold, tin, tantalite, tungsten, iron ore, copper, gemstones, cobalt, sand – but all of these contribute just 0.6 percent to the GDP as the country exports unprocessed minerals, with some sold as non-Ugandan products due to lack of certification.