Uganda: Turkish group invests $600mln in economic zone

By Halima Athumani

KAMPALA, Uganda

The Ugandan government has made its first deal with a foreign investor in its effort to create special economic zones – the deal is with ASB Group Turkey.

A special economic zone is a geographic area to which a foreign investor which is building a plant may bring goods and services for the production process without incurring customs duties, Uganda’s Minister for Finance and Economic Development Matia Kasaija said at a press conference on Monday.

"The Ugandan government through its policy objective of adopting free zone schemes seeks to increase Uganda’s export potential and diversify exports in the process, thereby reducing the current trade deficit.”

The government on Monday signed its first deal of this kind with ASB Group of Turkey, which has agreed to invest $600 million in a special economic zone.

Minister Kasaija said that the agreement “ushers in critical investment in manufacturing, agro business, particularly livestock and meat production in Uganda.”

“It will also provide for an array of investments in attendant industries such as leather and tanning, animal feed, and renewable energy among others.”

The investment, to be located in Uganda’s Central district of Nakaseke, will be accompanied by infrastructure development as well as the transfer of technology skills to farmers. “Furthermore the quality of products will improve greatly and the free zone will market our country as a credible investment destination,” the minister said.

The ASB business plan indicates that the special economic zone will attract over 200 business enterprises, create between 15-20,000 skilled and semi-skilled direct jobs for Ugandans, and about one million indirect jobs along the production chain.

The Finance Minister apologized for the long wait for this agreement to be made, as the Turkish company had started negotiations for the free zonein 2009.

Sedef Yavuzalp, Turkish ambassador to Uganda. describes the agreement as a symbol of the close relationship between Turkey and Uganda. “I think this will be one of the most important investments to benefit the Ugandan economy, the Ugandan people and the Turkish people.”

“This project will generate $4 billion annually for Uganda when they have exports production at full capacity,” Yavuzalp said.

The project is also expected to produce 700 MW of electricity in the free zone.

The ASB Group of Companies Chairman Sitki Ayan despite the fact petroleum production is one of the main economic subjects in Uganda, “For us agriculture, livestock and animal husbandry will be our main focus.”

Sitki said they hope to improve the quality of products for export from local producers and generate profit for both sides.

“We are going to focus on electricity, factories, agriculture and invest directly, for example we are planning to invest in livestock, coffee, and cotton and put up processing plants. We will also invite other investors.”

Failure to meet International standards has limited the scope of Ugandan beef exports to within the East African region, but Sitki said: “When we establish our system, Uganda will be able to easily export to Turkey, Iran and other European countries.”

The ASB Group of Companies has previously signed economic free zones with Egypt, Senegal and Ghana.