The Time is Right. The Time is Now!

Focus

Anjali Taneja Arora highlights the unlimited investment opportunities for India and Uganda to participate in each other’s development process

Uganda is fast emerging as one of the favourite investment hotspots in Africa, and was the leading recipient of Foreign Direct Investment (FDI) in East Africa in 2013. In Sub Saharan Africa, it ranks among the top 10 investment destinations. The country’s sound investment policies have impelled India to reinforce bilateral trade and investment relations with Uganda. Interestingly, Uganda witnessed the highest number of investment projects from India in 2013-14, as per the data released by the Uganda Investment Authority (UIA). India has also emerged as Uganda’s leading trade partner in 2013 with bilateral trade between the two countries crossing the $1 billion mark. While both countries share certain similarities, India and Uganda have their own set of comparative advantages which can turn out to be mutually beneficial.

Comparative Advantages

Firstly, given its geographic advantage, Uganda is rich in natural resources including oil, gas and mineral deposits. A clear case in point is the discovery of crude oil deposits in Lake Albertine Basin. According to the Ministry of Energy and Mineral Development, Uganda possesses approximately 3.5 billion barrels of oil, of which 1.2-1.7 billion are commercially recoverable, and holds 350 billion cubic feet of gas in the Lake Albert region. The Ministry also reported that the country is endowed with over 50 different types of minerals. Uganda and India can explore the possibility of collaboration in the field of mineral exploration, mapping and testing services, in view of the growing number of specialised research institutes and testing laboratories being run by India.

Research and development (R&D) forms the cornerstone of India’s improving productive capacities. As per reports of the India Brand Equity Foundation (IBEF), R&D investments by India touched $42 billion in 2013 – the eighth largest globally, with an estimated growth to almost $44 million this year.

At the same time, India’s engineering industry, which accounts for 63 percent of the overall foreign collaborations, has bagged several overseas deals in exploration services, R&D and execution of energy projects. Therefore, bilateral engagement in this field will not only expand India’s outreach, but will also enable Uganda to tap its underground wealth.

Secondly, favourable climatic conditions and fertile soil offer a conducive environment for natural vegetation and wildlife to flourish in Uganda. The agrarian set up of the economy allows the country to depend on the production and export of perishable commodities and intermediate products at large. However, low productivity in the agricultural sector has been highlighted in Uganda’s National Budget Framework 2014-15 as one of the key challenges leading to food insecurity and malnutrition.

Seeds of Success

While on the trade front, India has already implemented Duty Free Tariff Preferential Scheme (DFTPS) for least developed countries, wherein Uganda is a major beneficiary, Uganda can also invite India to contribute to agro-processing and value addition. According to IBEF, at $30.5 billion, the agriculture sector accounted for 6.8 percent of India’s total Gross Capital Formation in 2012-13. During the same period, the export share of ‘agricultural and processed food products’ in total exports increased to 13.53 percent from 10.5 percent in 2010-11. 

Gains from the Services Sector

Thirdly, the Gross Domestic Product (GDP) of both countries is largely driven by the services sector. While tourism is one of the largest contributors of foreign exchange revenues in Uganda, information technology (IT), infrastructure, construction, education, healthcare, banking and financial services contribute significantly to India’s economic growth. Uganda and India can explore the possibility of mutually benefitting partnerships in fields such as healthcare, information technology and education.

India’s healthcare sector is characterised by affordability, availability of specialised technology and accessibility. The domestic industry is expected to touch $100 billion by 2015 and $275.6 billion by 2020. The country’s pharma industry accounts for about 1.4 percent of the global share in value terms, and 10 percent in volume. India’s pharmaceutical exports stood at $14.84 billion in 2013-14, and are expected to be more than the size of domestic sales by 2015-16. India’s exports of retail medicines, medicaments and vaccines, which account for the largest share of the export basket to Uganda, have seen an increase. Economical cost and quality treatment solutions combined with an innovative approach have facilitated India’s rise as an attractive destination for healthcare tourism and a base for clinical trials. Similarly, there is a lot that India can offer as a global leader in the delivery of IT & IT enabled services (ITeS).

India possesses world class education infrastructure that runs renowned academic institutions including universities, colleges and training institutes. Seventeen Indian Institutes of Technology (IITs) are among the top 100 institutes in Quacquarelli Symonds (QS) Asia rankings 2014, up from 11 institutes last year. Ten academic institutions of India have made a mark on the top 100 list of Times Higher Education–BRICS & Emerging Economies Rankings 2014 – the world’s first global ranking of universities in BRICS and other emerging economies. India continues to offer scholarships and training opportunities to Ugandan students and professionals in the fields of electronics, engineering, information technology and commerce.

The need of the hour is to maintain a collaborative approach – one which defines the contours of bilateral relations between the two countries in the most appropriate manner. The timing for such an engaged partnership cannot be better. Uganda’s national budget 2014-15 will be presented shortly and India has witnessed the formation of a new government. In fact, Uganda has projected some of its highest medium term expenditure allocations for energy and mineral development, education and health, among others in its 2014-15 national budget framework paper. This represents an opportunity to invest and participate in each other’s development process.

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Author

Anjali Taneja Arora works with the Economic and Commercial Wing of High Commission of India in Uganda (accredited to Rwanda and Burundi). Views are personal. She may be reached at eco84anj@gmail.com.

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Diplomatist Magazine was launched in October of 1996 as the signature magazine of L.B. Associates (Pvt) Ltd, a contract publishing house based in Noida, a satellite town of New Delhi, India, the National Capital.

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