Inside govt's plans to build cities as regional centres of economic opportunities

The Government has embarked on a plan to build cities and convert them into regional centres for economic opportunities for the dwellers.

This was after the realisation that the high rate of urbanisation offers immense opportunities that Ugandans can harness, if well planned.

World Bank, in one of its reports on Uganda in the past, raised concern that 65% of Uganda’s impressive economic growth is concentrated in Greater Kampala, which closes out the rest of the country from benefiting from the opportunities arising out of such growth.

At 5.4%, the rate at which Uganda is urbanising is one of the highest in the world, according to the National Planning Authority (NPA). It says that urban areas contribute 70% of non-agricultural GDP, hosting 24% of the population.

“However, this rate of urbanisation has not been matched by the corresponding rate of physical planning, infrastructure development, the necessary social services, security, and drainage and water management system,” the NPA in the NDP IV document, a development roadmap for Uganda for the next five years, says.

The 10th Parliament on April 28, 2020, approved a cabinet proposal for the creation of 15 new cities 10 of which were to become operational in the July of that year and five others were to be operationalised later.

Those that became operational include Mbarara, Mbale, Arua, Gulu, Masaka, Soroti, Hoima, Lira, Jinja, and Fort Portal. The five that are yet to be operationalised include Wakiso, Entebbe, Moroto, Kabale and Nakasongola.

The main concern about the new cities is that government has yet to significantly fund them to enable them to build infrastructure and other social-economic facilities for spurring growth.

“The cities have continued getting almost the same money they were getting when they were still municipalities. If government is serious about promoting balanced economic growth across all regions, the new cities have to be adequately funded,” Florence Namayanja, the Masaka city mayor, said.

Mario Obiga Kania, the State Minister in charge of urban Development, said under the guidance of the fourth National Development Plan (NDP IV), government is looking at the entire country as a single planning area, and urban centres as areas that can stimulate economic dynamism, higher income and better social infrastructure.

“This would as a result, lead to an increase in demand for goods and services that lead to local economic development and improved living conditions. We want to turn urban centres into opportunity areas, where people can congregate and engage in productive activities that lead to economic growth,” he explained.

Kania said: “Urban areas create both market demand and financial incentives for goods. This is why we will turn cities into engines of economic growth. They will serve as hubs for the exchange of local products and services,” he noted.

He added that the strategy is premised on the fact that the more urbanised a region becomes, with its dense population and diverse services, the more opportunities arise for people to sell their goods.

“This creates a positive ripple effect, even in rural areas, as producers in the countryside can find markets for their products in the cities. This is the fundamental reason why urban areas are vital for economic growth,” he said.

He said the strategy also augurs well with government’s job creation plan, whereby urban areas will generate employment opportunities, provide income and offer services that people need, such as healthcare, roads and water systems. These services attract people, and together, create a thriving marketplace.

Dorcus Okalany, the permanent secretary of the Ministry of Lands, Housing and Urban Development, said the rapid urbanisation taking place in Uganda necessitates the need for periodic assessment and regular guidance so that land, which is a scarce resource, can be optimally utilised.

“The quest for orderly development in the urban areas, especially in the suburban areas, and access to services has become more obvious than ever before,” she said.

She pointed out several challenges facing the urban areas, such as limited resources both financial and human capital, laxity among the urban managers, unguided rapid urban explosion, and conflicting legislations, among others.

Unplanned landmarks

Uganda’s urban centres are largely unplanned with only three of the 11 cities having physical development plans.

Although the National Physical Development Plan (NPDP) 2022- 2040 was approved to guide integrated physical and spatial planning, its implementation at lower levels remains low.

Uganda’s economic and logistic hub, the great Kampala Metropolitan Area (GKMA) has no integrated physical development plan, according to the NPA.

“However, GKMA Integrated Urban Development Master Plan (GKMA-IUDMP) and Kampala Physical Development Plan (KPDP) are being developed and updated, respectively with support from JICA,” NPA said, adding that only 14 out of 31 municipalities and 45 of 580 town councils have physical development plans.

“Even those with physical development plans have not developed, detailed plans to guide and regulate development. On average, less than 25% of the existing physical development plans have been implemented,” NPA observed, adding that this unplanned urbanisation limits the realisation of the potential economic, social and environmental benefits associated with well-planned urbanisation.

Rapid urbanisation has also led to high demand for housing outpacing the supply of housing and complementary infrastructure and social amenities.

According to NPA, the percentage of urban dwellers living in slums and informal settlements reduced to 54% in FY2022/23 from 60% in FY2017/18. However, this according to the country’s planners, is still high.

The housing deficit increased to 2.5 million from 2.2 million over the same period.

According to the State of Urban Sector Report 2021-2022 issued by the lands ministry, Uganda, like many countries in Africa, has experienced strong economic and social gains over the last 15 years.

“However, there was still large unemployment in urban areas as the growth did not happen simultaneously with large job and productivity growth in the industry and service sectors. This has been compounded by a large informal economy and the “growing pains” from rapid urban sprawl, including severe congestion in Kampala,” it reads.

The report further said the next 15 years will be critical for Uganda in achieving Vision 2040 by harnessing the opportunity of demographic trends in Uganda to create an optimal urban system, which is functional and connected.

“Relative to 2040, at least three-quarters of the country’s infrastructure, industry and urban areas are unplanned, characterised by low-density, informal sprawl with challenges of under-serviced urban centres, such as congestion, overcrowding and pollution etc.”

Kania said on the subject of industrialisation, government’s efforts to establish industrial parks in various cities are commendable since they are designed to provide key infrastructure, such as roads, electricity and water to attract investors.

Tangshan Mbale Industrial and Business park. It is one of the flourishing parks, composed of 619 acres, where 40 investors have so far settled.

“This is a significant step forward, especially for investors looking to benefit from cheaper labour in rural areas. For example, in places like Arua, with labour supply and market access in nearby regions like Sudan and Congo, the cost of production could be lower, making products more competitive,” he noted.

He, however, said challenges like the cost of utilities must still be addressed to ensure the viability of these industrial parks.

PPP industrial parks flourish

Government has so far constructed and operationalised six public and three PPP industrial parks. One of these is the Liao Shen Kapeeka Industrial Park, a 2Sq.miles estate.

It has henceforth attracted 22 investors, all of which are operational. The infrastructure project has commenced and is being implemented by Uganda People’s Defence Forces/National Enterprise Corporation and Uganda Investment Authority.

The second PPP park is the Tangshan Mbale Industrial and Business Park, composed of 619 acres, where 40 investors have so far settled. The infrastructure and utilities project is being implemented by China No. 3.

There is also the MMP Buikwe Park, which is composed of 1,000 acres. It has so far attracted 14 investors, of which six are operational, three are constructing, and five are in pre-start stage.

Tarmacking of 23km of roads and provision of other basic infrastructure is pending.

Other privately owned parks include the Mbarara SME Park, Lugazi Industrial Park, Tian Tang Industrial Park in Mbalala – Mukono and the Picfare Nytil Industrial Park.

There is also the Kampala Industrial and Business Park Namanve, composed of 2,200 acres. The park, which is being developed through a UKEF loan of Euros 246m, is estimated at a 50% completion rate.

The State Minister for Finance in charge of General Duties, Henry Musasizi, said land has been allocated to 440 investors, and that 190 factories are operational, 165 are under construction and 85 are in the pre-start phase.

“Feasibility was concluded by Lagan Dott. Work is ongoing to acquire additional land to expand the park to accommodate the SME Park and Solid Waste Treatment plant as well as more investors,” he explained.

Government also established the Luzira Industrial and Business Park, which has 70 acres in total. The park is fully serviced with all the necessary infrastructure. The land was allocated to 13 investors, 12 are operational and one is in the prestart phase.

The other park is the Bweyogerere Industrial Estate of 50 acres. The park is fully serviced with all the necessary infrastructure, while the land was allocated to 10 investors, eight are operational, and two are in the pre-start phase.

Also, under operation is the Soroti Industrial and Business Park of 219 acres.

“This was allocated to 25 investors, two are operational, five are constructing and 18 are in the prestart stage,” Musasizi said, adding that the land is partially serviced with some infrastructure.

The Jinja Industrial and Business Park, which is composed of 182 acres, is also operational. The land was allocated to nine investors.

“One investor - Kiira Motors is already operational while the remaining eight are in the pre-start stage. The land is partially serviced.”

Under operation is also the Kasese Industrial and Business Park, which is composed of 216.96 acres.

The land has been allocated to 15 investors, two are operational, six are constructing and seven are in the pre-start stage. A feasibility study to fully operationalise the park was conducted and completed by AKSA Canada.

Support funds

The State Minister for Finance in charge of General Duties, Henry Musasizi, announced that to support the local cottage industries in FY2023/24, funds amounting to sh64.714b were appropriated to the manufacturing programme under the Industrial and Technological Development Sub Programme.

“Of this, sh59.215b was provided to cater for Industrial and Economic Development and sh4.43b for Management Training and Advisory Services,” he said.

Ramathan Ggoobi, the finance ministry’s Permanent Secretary and Secretary to the Treasury, said the next financial year prioritise the import substitution and export promotion scheme.

“Government has, over the years, increased the capitalisation of Uganda Development Bank from sh58.3b in FY 2019/20, to sh1.5 trillion as of March 2024,” he said.

John Walugembe, the Federation of Small and Medium-Sized Enterprises executive director, said there are signs that many Ugandan firms have overcome the COVID-19 setbacks, and are now ready to flourish.

“Many of these companies now need support to go into full manufacturing, to export not only to the EAC, but also the African Continental Free Trade Area. They need patient capital, which is beyond that at Uganda Development Bank, which has proved to be inaccessible to them,” he said.