Ugandan manufacturers have emphasized the need for better aggregation of raw materials to reduce high production costs, which currently make their products unaffordable and less competitive in local, regional, and continental markets. This discussion follows President Museveni’s recent state of the nation address, where he highlighted the low absorption of Ugandan-made products within these markets.

According to President Museveni address, the nation is focused on Export Figures such as Ugandan exports to the East African Community (EAC) amounted to $2.140 billion in 2023 as well as the exports to the Common Market for Eastern and Southern Africa (COMESA) were $2.157 billion in 2023.

He also address production surpluses like Cement, where Uganda produces 6.4 million metric tonnes annually, with internal demand at 2.4 million tonnes, creating a surplus of 4 million tonnes. Sugar where production is 600,000 metric tonnes, while internal demand is 380,000 metric tonnes and Steel that average production is up to 610,000 metric tonnes against an internal demand of 1.5 million metric tonnes.

President Museveni questioned who would buy these additional products, such as milk, cement, and sugar, underscoring the need for broader market access in East Africa and Africa.

Meanwhile, there are some challenges faced by Manufacturers and according to Allan Ssendyowa, Director for Policy, Research, and Advocacy at the Uganda Manufacturers Association, pointed out several factors contributing to the issue are Redundant Capacity which studies shows that Ugandan manufacturers operate at only 49% to 54% capacity and that the High cost drivers significantly affect competitiveness.

He also said that Cost of Raw Materials makes production for export requiring a steady supply of raw materials, primarily agricultural, in large quantities and that obtaining raw materials in smaller amounts from distant sources increases costs and disrupts supply chains.

Manufacturers suggest that the government should create a more conducive environment to lower production costs and make Ugandan goods more competitive in local and international markets. Such recommendations include Improved Aggregation of Raw Materials that will have efficient aggregation systems to ensure steady and sufficient supply of raw materials as well as centralizing raw material sources to reduce transportation and logistical costs. Enhancing infrastructure such include Investment in infrastructure to support the efficient movement of raw materials and finished goods. Meanwhile, policies that reduce operational costs for manufacturers and Incentives for local sourcing and utilization of raw materials.

According to the Uganda’s Manufacturing Output in 2022, U$7.46 billion (12.06% increase from 2021) was made while, in 2021, US$6.66 billion (12.08% increase from 2020).

In summary, while Uganda has demonstrated substantial growth in manufacturing output, challenges such as high production costs and low capacity utilization hinder competitiveness. Strategic measures to aggregate raw materials and supportive government policies are crucial for enhancing the absorption of Ugandan products in local and broader markets.


SOURCE: NilePost

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