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THE FDI PROCESS AND PROCEDURES AS COMPARED TO CDM IN UGANDA

PRESENTATION BYGODFREY SSEMAKULA

INVESTMENT EXECUTIVE UGANDA INVESTMENT

AUTHORITY

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The UIA was established by an Act of Parliament, the Investment Code, 1991, with the following main objectives: -

To promote, facilitate and monitor investment

in Uganda

To provide advisory services to Government on

policies which affect investment

UGANDA INVESTMENT AUTHORITY

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Vision“Make Uganda the leading Investment Destination”.

Mission“Make a significant and measurable contribution to Uganda’s development process by promoting private Investment”.

Expected Results Increased FDI Increased Tax Revenue Creation of more Jobs (Better Purchasing Power) New Technology Increased Exports & Import Substitution GDP Growth

UIA’s Vision and Mission

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SOME UIA ACHIEVEMENTS

Cummulative Value of Planned and Actual Investment 1991-01

0

1,000

2,000

3,000

4,000

5,000

6,000

Year

Val

ue

(M

US

$)

Cum. Planned Investment

Cum Actual Investment

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SOME UIA ACHIEVEMENTS

Cummulative Planned and Actual Employment

0

20000

40000

60000

80000

100000

120000

140000

160000

180000

2000001991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

Year

No

. E

mp

loye

d

Cum Planned Employment

Cum. Actual Employment

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UIA ACHIEVEMENTS

TEN MAJOR FDI COUNTRY SOURCES (1991-2002)

1. United Kingdom2. Kenya 3. India4. Canada 5. United States of America6. Japan7. South Africa8 Norway9 Egypt10. Mauritius

OWNERSHIP OF PROJECTS LICENSED (1991-2002)

FOREIGN41%

JOINT VENTURE

24%

LOCAL35% FOREIGN

JOINT VENTURE

LOCAL

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FDI inflows to Uganda (1989 – 2002)

Year           FDI m$

1989/94 (avg) 23

1995 121

1996 121

1997           1751998          2101999          222

2000 254

2001 229

2002 275 0

50

100

150

200

250

300

FDI (m US$)

Source: WIR 2002, UNCTAD

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PROCEDURES FOR FDI

DOCUMENTS AVAILABLE FOR INVESTORS

• Basic Country Data• Macro-economic data• Outline of Investment opportunities• Business Registration/Licences (Procedures)• Business Costs Guide• Tax Structure• Visa and Work Permit Requirements• Information for visitors• List of Service Providers e.g. Lawyers, Auditors, Accountants, etc.

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Documents that an Investor

Submits:

• Filled UIA Application Form

• Certificate of Incorporation

• Articles and Memorandum of Association

• Business Plan

• Technical Drawings if any

• Feasibility Study if already done

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Assistance Given to an Investor by UIA

• Securing secondary Clearances

• Recommend to Govt investor friendly Policies

• Provide information on investment matters in Uganda

• Securing Land and Work Permits

• Securing utilities e.g. telephone, water, electricity

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Evaluation of Investment Proposals

Issues Looked at from the Application Form:

• Name and Address of the proposed Enterprise - Its Legal Form - Its Bankers - Name, address, Nationality and shareholding of Directors.

• Nature and Location of the Proposed Business

• Proposed capital structure

• Proposed Employment

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Issues Looked at from the Application Form Contd:

• Qualifications, experience, nationality of Mgt and Staff

• How Public Health and Environment will be protected - type of waste products to be generated - steps to capture, treat and dispose of waste products.

• Capacity of the project to contribute to:- - Generation of new earnings or Foreign Exchange - Utilisation of Raw materials, supplies and services - New technology or upgrading of indigenous technology - Socio-economic contribution

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Conditions on the Licence

Usually the licencing takes 2-5 days but these conditions are put on the Licence:

• Maintain proper Financial records, returns, samples and data on the operations of the business.

• Permit UIA staff or agents access to the enterprise

• Take steps to ensure that there is no injury to the ecology or environment.

• Carry out an EIA before implementation

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Minimum Requirements:

• US$ 100,000 for a Foreign Investor• US$ 50,000 for a Local Investor

Ensuring adherence to Contractual agreements:• UIA or its Agents do regular monitoringHandling of Disputes:• Centre for Arbitration and Dispute Resolution• Commercial Court• Business Associations e.g. UMA, PSF, etc.• Appointed ArbiterConfidentiality of Investor Matters:•Officers bound by the OATH of Secrecy they sign.Legal Framework:•The Investment Code 1991, which is an Act of Parliament handles all investment issues including FDI.

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FDI PROMOTIONAL TECHNIQUES Used:

Direct mail shotsWebsiteExisting investorsForeign missions accredited to UgandaConference delegationsInternational consultants/Fairs/ExhibitionsOutward missionDelegate programmeFriend of UgandaUganda Embassies abroad

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SELECTED PRIORITY SECTORS

Mining Services (Finance, Education and Medical) Tourism Packaging, Printing and Publishing Agriculture( Crops and Livestock) Information & Communication Technology Energy, Forestry, Textiles, Floriculture Pharmaceuticals

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TARGET COUNTRIES

South Africa China Egypt Netherlands India Malaysia France Italy

Denmark United Kingdom North America

Germany

Sweden

Mauritius

Kenya

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SECTOR PERFORMANCE (1991- 2002)

-

200,000,000

400,000,000

600,000,000

800,000,000

1,000,000,000

1,200,000,000

1,400,000,000

1,600,000,000

1,800,000,000

2,000,000,000

SECTORS

PL

AN

NE

D V

AL

UE

(U

S$

)

AGRICULTURE, FORESTRY &FISHINGCONSTRUCTION

FINANCE SERVICES

MANUFACTURING

MINING & QUARRYING

OTHER BUSINESS SERVICES

PROFESSIONAL SERVICES

REAL ESTATE

SOCIAL SERVICES

TOURISM

TRADE

TRANSPORT, COMMUNICATION,AND STORAGEWATER & ENERGY

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Projects to Undergo EIA

• General – dealing with character,scale and land-use change.

• Urban Development

• Transportation.

• Water-resource development – dams, rivers, and water resources.• Aerial Spraying• Mining – quarrying, open-cast extraction and exploration.• Forestry related activities

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Projects to Undergo EIA Contd:

• Agriculture – large scale agriculture, use of new pesticides, introduction of new crops and animals use of fertilizers.• Processing and manufacturing industries• Electrical infrastructure – generation, transmission• Hydrocarbon management• Waste disposal- solid, sewage, hazardous and atmospheric emissions• Natural Conservation areas- creating and modifying protected areas.policies for managing forests, water catchments, ecosystems, exploiting natural flora and fauna, and introducing alien flora and fauna.

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EIA APPROVAL PROCEDURE:

Activity Duration (w/days)(upper limits)

Review of developer’s project brief:(Initial Screening Process) 21

Scoping process and preparation of T.O.R. TBD*

Review of T.O.R. 21

Preparation of EIS TBD*

Circulation and Commernt on EIS 21Decision of the EIS 21

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Indicators used in approving projects:• Nature of Project.• Location• Natural Resources t be affected• Magnitude of impacts• Waste production (if any)• Relationship of the project and other future and related activities.

Monitoring Mitigative Actions:• Self- monitoring by the developer.• NEMA staff, Lead Agencies including Districts and Public.

Penalties on failure to implement mitigation Activities:• Closure of facility – as last resort.• Prosecution• Serving an improvement notice• Demanded to under take an enforcement audit

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Comparing FDI and CDM• Just as is done in FDI, projects under CDM sectors (Energy, Forestry, Agriculture, Waste Magt, Transport) are promoted using the same techniques but emphasizing more on their importance- enabling emission reduction to facilitate curbing climate change.• CDM is a Subset of FDI due to use of the same Promotional techniques• CDM projects also need the approval of UIA• CDM Projects also carry out EIA.• CDM projects need secondary approvals e.g. from a DNA just like in any other FDI project which needs an approval from a line Lead Agency. – Currently Uganda does not have a DNA but has a focal point office-The Meteorology Dept.

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Comparing FDI and CDM Contd:

• The Focal Point Office- Meteorology Dept. apartfrom its staff draws Expertise from: Ministry of Energy, Forestry Dept., NEMA

• UIA could be a member of the DNA once it is place to handle the promotion with experts drawn from the Meteorology Dept. to handle GHG aspect.

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Strengthening smooth running and quick approvalsOf CDM Projects:

• Make the body that is responsible for FDI e.g. UIA be the secretariat of DNA so as to coordinate all issues concerning CDM.

Reason: - UIA has a good network with other bodies from which it can easily draw expertise to appraise a CDM project proposal with reduced bureaucracy more so if it had a hand in attracting this investment.

Confidentiality:The confidentiality that applies to any FDI applies to a CDM project since the officers handling are bound bythe OATH of Secrecy.

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CONTACT INFORMATION• UGANDA INVESTMENT AUTHORITY,• The Investment Center• Plot 28 Kampala Road• P.O.Box 7418 Kampala

• Tel: (256) 41 251562/5• Fax: (256) 41 342903• Email: info@ugandainvest.com • Website: www.ugandainvest.com

T H A N K Y O U