UIA Explains Land Acquisition in Uganda’s Industrial Parks
Africa Investment Opportunities

UIA Explains Land Acquisition in Uganda’s Industrial Parks

Any investor intending to acquire land in Uganda’s industrial park must have a registered company, an investment license, a comprehensive business plan, solid proof of financing, and a sketch map of land utilization.

Uganda Investment Authority (UIA) Director for Industrial Parks development Hamza Galiwango added that fulfilling the above conditions leads to an investor getting an initial lease of five years extendable to 49 years after completion of physical development.

“A performance bond of 12 months is issued to enable the investors to take possession of the site,” he said during a tour of the Kampala Industrial and Business Park (KIBP) by officials of the Uganda Investment Authority (UIA) recently.

The Authority does not allow mortgaging without consent, neither does it allow change of shareholders at initial lease term and transfer without UIA consent,” he explained.

He pointed out that eighty-two industries are fully operational in all the government-owned industrial parks around the country. These have created 45,000 jobs for Ugandans.

To date, all the land in KIBP has been allocated to 311 prospective investors with 63 investors fully operational while 111 investors are in the construction stage. Currently, infrastructure is being developed by the Lagan Dott Namanve Co LTD funded by UKEF to the tune of 246m USD.

“New technologies have been introduced in the industrial parks such as the Roofings Group rebar plant, QCIL HIV pill, GIS Transformer Company,” he said adding that the Authority has constructed 17 boreholes and carried out optical and dental; camps as part of the corporate social responsibility.

He said that the major projects being worked on including facilitating UFZA to undertake a feasibility study through DFID, Trademark East Africa in the Jinja Industrial Park for the establishment of a free zone.

“The Authority is also undertaking steps to acquire land for industrial parks development in Nakasongola, Gulu, Katosi, Kazo, Arua and Tororo areas and also working with UNRA to secure land for the Kampala Jinja Expressway to improve the accessibility of KIBP Namanve.

The Authority is also working with the Standard Gauge Railway (SGR) project to secure land for the establishment of the Standard Gauge Railway in Uganda with a spur into the KIBP, Namanve.

In partnership with SME division, UIA is also working to develop the Mbarara SME Park into a fully developed unit with common shared facilities for SME development.

“We are working with NAADS, OWC, KDLG, UIRI to secure land for Kabarole Industrial park development while facilitating MOLG/Office of the President to develop Agro-Industrial Hubs in Soroti and Masindi areas,”

Uganda Investment Authority has the mandate to develop 27 Industrial and Business Parks around the country to create jobs, ease accessibility of land for investments, introduce new research, technologies and skills development as well as boost Uganda’s exports and therefore increase Uganda’s revenue base.

The Authority is also mandated to establish Science, Technology, Engineering and Innovation (STEI) Park, and business incubator in each of the four Regional Cities of Arua, Gulu, Mbale, and Mbarara, and five Strategic Cities of Fort Portal, Hoima, Jinja, Nakasongola, and Moroto as well as in Kampala Capital City.

Details on land acquisition below

GUIDELINES FOR ALLOCATION OF INVESTMENT LAND BY UGANDA INVESTMENT AUTHORITY

(UIA)

  1. APPLICATION

1(a) An application for Investment land shall be on Form UIA 2 shall give:

  1. A detailed project proposal showing the project business activity and the main products

or services to be produced on the land applied for.

  1. The proposed total amount of investment in US dollars.

iii. Documented evidence of the Investor’s ability to raise funds to implement the project

  1. Expected Project Impact on the Economy in terms of job creation, capital investment, turnover, and export revenue where applicable as well as other benefits to the community.
  2. The amount and nature of land (amount of acreage) that shall be required for the project including the necessary infrastructure facilities.
  3. Evidence of the Investor’s Track Record in terms of experience in implementing similar or related investment projects in the past.

vii. The anticipated implementation period for the project (in months).

viii. The anticipated impact of the project on the environment and whether an EIA shall be necessary.

1(b) The application for Investment land shall be accompanied with:

  1. The Memorandum and Articles of Association of the investment entity.
  2. A copy of the Certificate of Registration or certification of incorporation.

iii. The Company’s Investment License issued by UIA.

  1. A Business Plan articulating in detail items in sub‐section 1(a) above
  2. Preliminary architectural layout of the proposed facilities (giving details of proposed land utilization).
  3. LAND ALLOCATION PROCEDURE:
  4. Application on Form UIA 2 for land by an investor company submitted to UIA Offices along with all required attachments as in 1(b) above.
  5. Evaluation of the application by an Evaluation Committee comprising of the Executive

Director and at least three Heads of Divisions of UIA. (10 Working Days)

iii. Consideration of the application by the relevant Sub‐Committee of the UIA Board.

(3 Months)

  1. Consideration and final allocation of land by the UIA Board. (2 Weeks)
  2. Lease offers shall be valid for strictly 14 days within which written acceptance of the offer must be given to UIA. (1 Week after Board Approval)
  3. Submission of the draft lease agreement to the Solicitor General for clearance.

vii. Legal documentation (Signing of Lease Agreement with UIA subject to approved terms and conditions and processing of Leasehold certificate of title) – (1 Month including

Solution Ground Approvals)

  1. TERMS AND CONDITIONS OF LAND ALLOCATION

Land shall be allocated to Investors on the following conditions:

  1. Only entities recognized under the Companies Act of Uganda and qualifying

Government Agencies for purposes of doing business or similar activities shall be eligible for UIA land allocation.

  1. An initial lease offer of 5 years, within which the Investor would have undertaken substantial development on the land. This term to be extended to a full term of 49 years (or as may be determined by the UIA Board) upon satisfactory development of allocated land.

iii. Those allocated investment land shall pay a premium and ground rent as shall be determined by the UIA Board (See notes in 4 below) unless the land is subsidized in line with the government policy on prioritized investment sectors.

iv (a) Investors allocated fully subsidized land (for government prioritized investment sectors) to provide performance security in form of a bank or insurance bond equivalent to 10% of the value of the leased land valid for 18 months within which period the conditions in subsection (iv) below should have been achieved.

iv (b)  Within 18 months from the date of allocation, the investor should have started development of the land in terms of approved building plans, approved EIA, and commenced physical construction; failure of which the lease shall automatically lapse and the land shall revert back to UIA and the performance bond will be cashed and the proceeds forfeited to the state.

  1. The investor company allocated UIA Investment land shall not change the

Shareholders for the first 5 years.

vii. Priority will be given to the priority sectors as guided by the Government’s priority listing of investments.

  1. WAIVER OF PREMIUM
  2. PRIORITY SECTORS

The following are currently the priority sectors in line with the government policy that will be eligible for fully subsidized land.

  1. Agro‐processing
  2. Mineral beneficiation
  3. Information and Communication Technology
  4. Tourism
  5. Government departments and agencies that have qualified for allocation of land for purposes of doing business or similar activities will be eligible for fully subsidized land.

iii. Exceptional cases.

3

An investor who does not fall within the sectors in 4 above but applies for a waiver of premium shall be considered in exceptional circumstances. The exceptional circumstances will include cases where the Applicant;

  1. Has invested or plans to invest more than USD 25 million.
  2. Intends to create more than 500 jobs and,
  3. Is likely to incur over USD 400,000 on backfilling of the land.
  4. An investor who had already paid part or the whole of the premium shall not be entitled to a refund after they have been granted a waiver.
  5. Important Notes

4(a) Payments for Leased Land:

Payments for Leased Investment Land shall be as follows and/or as amended by UIA Board from time to time:

  1. Ground Rent to enable UIA to manage the land shall be USD 10 per acre per annum for

Greater Kampala Area and USD5 per acre per annum for other Parks.

  1. The Total Payable Lease Premium as shall be indicated in the Lease Agreement shall be payable in the following installments:

‐ 1st Installment of 10% of the total payable lease premium prior to the signing of the Lease Agreement.

‐ 2nd Installment of 30% of the total payable lease premium within 6 months from the date of signing the Lease Agreement.

‐ 3rd Installment of 30% of the total payable lease premium within 18 months from the date of signing the Lease Agreement.

‐ 4th and last Installment of 30% of the total payable lease premium within 36 months from the date of signing the Lease Agreement.

4(b) Failure to pay on time shall attract an interest equivalent to the Bank of Uganda inter-bank lending rate payable to UIA and shall render the Lease Agreement subject to revocation at the exclusive option of the UIA Board.