Discovery of crude oil to draw investors to Uganda

Continuing efforts both from the government, as part of a recently introduced official African strategy, and private Turkish entrepreneurs, including the Turkish Confederation of Businessmen and Industrialists (TUSKON) and the Turkish Light Academy, a private school serving in Uganda, heavily contribute to Turkish investors expanding their presence in this market. Turkey is planning to open at least 15 new embassies in different corners of the African continent in 2010. Uganda, also known as the “Pearl of Africa,” will be one of these countries.

President Abdullah Gül’s latest invitation asking Ugandan President Yoweri Kaguta Museveni to visit Ankara was a clear indication of such ties between the two nations. Museveni is due arrive in Turkey next month and will also attend a business meeting organized by TUSKON.

A promising East African market, under the rule of a two-decades-old stable government -- unfamiliar to a politically volatile region which has suffered from feuds and power struggles in the past -- today is attracting more investors than ever before. A recent discovery of rich crude oil and natural gas reserves is undoubtedly a major factor in the increasing interest in this fertile land. The newly discovered reserves are expected to give a strong boost to Uganda’s rise as an eminent economic power in East Africa in the years to come, observers say.

Political instability and a lack of effective national economic policy throughout the decades undermined genuine progress in the country’s economy, mostly dependent on foreign energy sources. The country is now inching closer to coming out of its shell and integrating with international markets, a first in its history. Following stable economic growth of 6 percent on average over the past 10 years, an impressive performance, and the pearl of Africa is now shining brighter than ever. Turkey’s trade with this country has also benefited from such a positive atmosphere. Turkey’s exports to Uganda neared $20 million in 2008 from $1.36 million in 2000. Such figures, however, are still below desired levels and must be increased.

Melih Ulueren, Mustafa Günay (R)

A turning point in Uganda’s history, observers argue, will be the realization of an ultimate goal of becoming energy self-sufficient. Who will provide the necessary technological infrastructure to drill and utilize huge crude oil reserves –- anticipated at 6.4 billion barrels -- remains a key question. This process could take some time, but Uganda will eventually emerge as a regional power. A member of such key institutions as the Organization of the Islamic Conference (OIC) and the East African Community (EAC), Uganda also places heavy importance on healthy relations with neighbors. Uganda is also currently serving as a nonpermanent member of the UN Security Council until the end of 2010. The country depends on Kenya’s Mombasa port for access to international markets.

Opportunities from food processing to renewable energy

Today’s Zaman visited the country to see first hand the emerging investment opportunities and Turkish entrepreneurs doing business in Uganda. There are currently 14 Turkish firms that recently entered the country’s market to expand their business. All in the country’s capital city of Kampala, these Turkish companies, in a variety of sectors from furniture to food, provide jobs for nearly 1,000 people in Uganda.

A view from the Turkish Light Academy in Kampala TUSKON, Turkish school to serve as bridge to Uganda TUSKON Secretary-General Mustafa Günay, accompanied by Today’s Zaman, stresses that their union is doing its best to serve as a bridge and promote relations between Uganda and Turkey. “TUSKON has organized trade bridge conferences between Turkey and Uganda in the past, and such attempts were very effective in introducing both markets to each other,” he says, adding that the efforts of the Turkish Light Academy have also been helpful in this regard. As regards an approaching visit by Ugandan President Museveni to Ankara in May, Günay said this would open a new page in relations. TUSKON will bring Museveni and his delegation together with Turkish businessmen in İstanbul. The parties are expected to discuss possible future partnerships and investment opportunities in Uganda. “This is a good opportunity to promote Uganda in Turkey, and Ugandan officials are aware of this,” Günay, also the honorary consul to Uganda, said. Speaking to Today’s Zaman on political and economic relations, Turkey’s nominated ambassador in Kampala. Melih Ulueren, said the two countries have just started to get to know each other and will improve relations further through increased investments. As regards the expected visit to Ankara by the Ugandan delegation in May, he said the parties expect to sign an “air transport deal.” Such a development is closely linked to Turkish Airlines’ (THY) plans to commence direct flights to Kampala in June of this year. Underlining that the number of Ugandan businessmen who are willing to cooperate with Turkey has recently increased, Ulueren said the government is ready to do its best to simplify visa procedures for entrepreneurs from Uganda. Along with other Turkish business circles and civil society organizations, TUSKON and the Turkish Light Academy have been and will be helping accelerate ties between Uganda and Turkey. Isaac Omading, the business editor of Uganda’s New Vision paper, says the government wants to encourage foreign investors to produce their goods in Uganda rather than import them. “The government places importance on improving domestic market conditions and providing employment to local people first,” he says, adding that Turkey could share its experience in industry with Uganda. Making mention of the recently found oil reserves, he says the government wants the oil to be drilled and refined in the country. As regards the role of Turkish entrepreneurs in the country, he says the Turkish school, along with TUSKON, contributes immensely to improving ties with Turkey. A recent support program by Kimse Yok Mu (Is Anybody There), a Turkish charitable association, on last year’s Eid al-Adha (Feast of the Sacrifice) was praised in the country, and President Museveni thanked Turkish entrepreneurs in person.

Yılmaz Sonkaynar, the owner of Moonstar, an interior design firm, is one of them. Sonkaynar arrived in Uganda in 2005 and decided to start a permanent business in Kampala. “It was my own decision, and I do not regret it. I am happy,” he says, adding that the country offers vast opportunities. But, according to Sonkaynar, investors in Uganda must meet two key requirements: “They must bring strong capital, and must know the market well.” Making mention of such drawbacks as heavy taxation on imports and problems in transport, Sonkaynar says these could be overcome in one way or another. “What is important is that you are determined to do business here. The government could introduce special incentives for any investors once they are convinced of its capacity to invest,” he explains. Noting that there are many foreign investors in Uganda, he says mainly Chinese and Indian firms dominate the domestic market but that the government is willing to maintain a balance in the domestic market and that this could be a big opportunity for Turkish entrepreneurs. He also underlines that Turkey and Turkish products must be further promoted in this country and that the government should exert more effort in this regard.

Diamond Logistics’ Necmettin Karlıoğlu says Ugandans are more encouraged now to establish their own firms to reclaim power in the domestic market than ever before and that small and medium-sized enterprises (SMEs) will lead this process. “Turkish companies could undertake a leading role in the reconstruction of the Ugandan market. We are receiving demands from local firms for advisory services. … People have faith in the job we do in this country,” he states. Noting that most Ugandans bring in Turkish products via Dubai because it is easier to transport this way, he says Turkey has potential when it comes to shuttle trade with this country.

Sadi Ergün from Decoration World, another Turkish architectural firm, says they expect the construction industry to see a boom in the following five years. “Raw materials could pose a problem in new construction projects. Turkish investors could take the opportunity to establish a cement factory in Uganda, for instance,” he adds.

İsmail Akgün from Royal Plastics says Turkish entrepreneurs who want to enter the Ugandan market must take the issue seriously and stay away from “destructive competitiveness.” “We have seen some firms bring non-standard products to be strong in competition. But these eventually failed to stay here and left,” he explains. As regards the Ugandan president’s visit to Ankara, Akgün says Turkish businessmen in the country are hopeful that the visit will bring about advantages for them. “The more the two countries strengthen ties, the faster we will expand in this market.”