Its business as usual in Uganda despite the recent security threats and a looming election in 2011. Executive director at the Uganda Investment Authority (UIA) professor Maggie Kigozi says the country continues to register new businesses and has recently hosted several very successful trade missions. 'This trend shows us that, despite the security threats, investors are still very confident in the Ugandan security systems, and are comfortable in the knowledge that their investments are safe.'
Among the very interesting opportunities in Uganda right now is agro-processing, which the UIA say is yielding a lot of opportunities for investors.
British company Africa-Ventures Development Company (AVDC) is taking the leap to exploit the potentially lucrative opportunities in Uganda's agro-processing sector. AVDC plans to establish a fruits and vegetables processing plant that will take advantage of an existing gap.
Uganda is one of the
world’s top banana-growing countries, producing an estimated 10 million tonnes of the fruit each year. It is not just the sweet apple banana that is a hit in international markets: pineapples, mangos, passion fruits and vegetables like hot peppers are also in high demand due to their good quality.
Uganda’s vibrant organic farming industry is poised to make the country a major source of organic fruits and vegetables.
Fruits exports have increased steadily over the years - in 2007, the value of exports hit more than $1-million. But, as the fruit is exported fresh, Uganda is missing out on the full potential of its produce. There is huge potential for the production of quality, semi-processed or value-added fresh fruits and vegetables.
Investment opportunity
Africa-Ventures Development Company plans to set up the Lugazi Foods Company to process fresh fruits and vegetables. The company is seeking
an investor to partner in the venture which has the potential to be very lucrative.
Cost of investment: GBP2 million
Return on investment: based on 40% shareholding
Project description
The proposed Lugazi Foods Company aims to increase the competitiveness of Uganda’s fresh fruits and vegetables exports by investing in the production of value-added fresh fruits, including pre-cut, portioned and pre-packed in consumer retail packs. The business will initially target the four most popular fruits – pineapples, apple bananas, passion fruits and also hot peppers. Production will be stimulated easily for scaling up once sufficient demand and capacity is established. The business will also seek to exploit the high demand for organic and fair traded fruit and vegetable products.
Project justification
Access to Resources: Growing of the
abundant fresh fruits and vegetables is largely dominated by small-scale farm producers in central, eastern and western Uganda. There are over 200 000 internationally certified (IDOAM and FiBL 2009) farmers involved in organic farming, producing mostly pineapples, passion fruits and apple bananas. Access to organic raw fruits further increases the competitiveness of Uganda’s value added fresh fruits and vegetables.
Access to Markets: Uganda is already exporting raw fruits and vegetables to the European Union. Demand for processed fresh fruits and vegetables is increasing, presenting new export market opportunities. Uganda’s hot peppers are preferred, especially in the UK, Netherlands and France due to their high quality. In addition, based on the growing global market for organic products now estimated to be above £40 billion, Uganda is bound to be a market leader as a source of organic semi-processed fruits and vegetables.
Availability of affordable labour: Uganda has a competent and well educated labour force that will provide a base for recruiting appropriate staff for the project.
Favourable Location: Excellent climatic conditions drive the production of a variety of fruits and vegetables for the export and regional markets. The country’s geographical suitability for organic production also presents enormous advantages for growing of organic produce. Uganda is well connected for international markets due to the accessibility of the major international airport, which has sufficient cargo flights.
Potential Markets
The European Union presents huge potential export market for minimally processed fruits and vegetables. The main target market will be the major supermarkets, food distributors and the hospitality industry. The growing number of supermarkets in the region, particularly in Uganda, Rwanda, Southern Sudan, Burundi and
the Democratic Republic of Congo, present additional market opportunities. The implementation of the East African Community’s Common Market Protocol which will allow free movement of goods, people, services and capital in member states will also present huge opportunities for the company in terms of access to a larger market, as well as facilitate future regional expansion plans.
Project site
The Uganda Investment Authority has secured land that is available for leasing to investors interested in setting up processing plants. A portion of the land has been developed into industrial parks, with the basic infrastructure such as power, water, sewerage and road networks established. AVDC is also exploring the possibility of setting up the processing facility in a special economic zone. Investors operating in the zones benefit from a host of incentives and tax exemptions.
For further details about the project
contact: info@tradeinvestafrica.com
