UGANDA, Kampala | Real Muloodi News | In May this year, the president approved the establishment of 25 industrial parks across the country in all sub-regions to boost wealth creation and local economic development.
The development of these industrial parks has presented investors with marvelous business opportunities. But how does one take advantage?
The Uganda Investment Authority (UIA) is facilitating the process by offering investment licenses, and facilitating access to land for investors to set up industrial operations.
UIA Executive, SME division, Mr Nasser Yawe, explains the process of how local and foreign investors can access land to capitalise on the opportunity that the industrial parks present, particularly for local Ugandan companies.
Guidelines to Acquire Land from UIA Industrial Parks
Here are the requirements you will need to satisfy when applying for land in one of the industrial parks:
(a) An application for investment in land shall be on Form UIA 2 and shall have:
- A detailed project proposal showing the project business activity and the primary products or services to be produced on the land applied for.
- The proposed total amount of investment in US dollars.
- Documented evidence of the investor’s ability to raise funds to implement the project.
- 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.
- The amount and nature of the land (amount of acreage) that shall be required for the project, including the infrastructure facilities.
- Evidence of the Investor’s Track Record in terms of experience in implementing similar investment projects in the past.
- The expected implementation period for the project (in months).
- The expected impact of the project on the environment and whether an EIA shall be necessary.
(b) The application for investment in land shall be accompanied with:
- The Memorandum and Articles of Association of the investment entity.
- A copy of the Certificate of Registration or certification of incorporation.
- The Company’s Investment License issued by UIA.
- A Business Plan articulating items in subsection (a) above
- Preliminary architectural layout of the proposed facilities (giving details of proposed land utilisation).
Once you have completed the application, here is the process that follows, along with estimated timelines for each stage:
2. Land Allocation Procedure:
- Application on Form UIA 2 for land by an investor company submitted to UIA Offices along with all required attachments as in (b) above.
- Evaluation of the application by an Evaluation Committee comprising the Executive Director and at least three Heads of Divisions of UIA. (10 Working Days)
- Consideration of the application by the relevant sub-committee of the UIA Board. (3 Months)
- Consideration and final allocation of land by the UIA Board. (2 Weeks)
- 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)
- Submission of the draft lease agreement to the Solicitor General for clearance.
- Legal documentation (Signing of Lease Agreement with UIA which is subject to approved terms and conditions and processing of Leasehold certificate of title) (1 Month including Solution Ground Approvals)
Below are the terms and conditions governing the allocation of land:
3. Terms and Conditions of Land Allocation
Land shall be allocated to investors on the following conditions:
- Only entities recognised under the Companies Act of Uganda and qualifying Government Agencies for doing business or similar activities shall be eligible for UIA land allocation.
- An initial lease offer of 5 years, within which the investor would have undertaken substantial development on the land. This term is to be extended to a full term of 49 years (or as determined by the UIA Board) upon satisfactory development of allocated land.
- Those allocated investment land shall pay a premium and ground rent as determined by the UIA Board (See notes in 4 below) unless the land is subsidised in line with the government policy on prioritised investment sectors.
- (a) Investors allocated fully subsidised land (for government prioritised investment sectors) to provide performance security as 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.
(b) Within 18 months of allocation, the investor should have started development of the land in terms of approved building plans, approved EIA, and begun physical construction; failure of which the lease shall automatically lapse, and the land shall revert to UIA and the performance bond will be cashed, and the proceeds given up to the state.
5. The investor company that is given the land shall not change the shareholders for the first 5 years.
6. Preference will be given to sectors prioritised on the government’s list of investments.
4. Waiver of Premium
5. Priority Sectors
The following are currently the priority sectors in line with the government policy that will be eligible for fully subsidized land:
- Mineral beneficiation
- Information and Communication Technology
- Government departments and agencies that have qualified for allocation of land in industrial parks for doing business or similar activities will be eligible for fully subsidized land.
6. Exceptional Cases
They shall consider an investor who does not fall within the sectors in (5) above but applies for a waiver of premium in exceptional circumstances. The exceptional circumstances will include cases where the applicant;
- Has invested or plans to invest more than USD 25 million.
- Intends to create over 500 jobs and,
- Is likely to incur over USD 400,000 on backfilling of the land.
- It shall not entitle an investor who had already paid part or the whole of the premium to a refund after they have been granted a waiver.
7. Important Notes
Payments for Leased Land:
Payments for Leased Investment Land shall be as follows and/or as amended by UIA Board from time to time:
- Ground Rent to enable UIA to manage the land shall be USD 10 per acre per annum for Greater Kampala Area and USD 5 per acre per annum for other parks.
- The Total Payable Lease Premium, as stated in the Lease Agreement, shall be payable in the following instalments:
‐ 1st Instalment of 10% of the total payable lease premium prior to the signing of the Lease Agreement.
‐ 2nd Instalment of 30% of the total payable lease premium within 6 months from the date of signing the Lease Agreement.
‐ 3rd Instalment of 30% of the total payable lease premium within 18 months from the date of signing the Lease Agreement.
‐ 4th and last Instalment of 30% of the total payable lease premium within 36 months from the date of signing the Lease Agreement.
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.
If you have a registered company and are interested in acquiring land in Uganda’s industrial parks, then you are urged to contact UIA for an investment license. With a comprehensive business plan, solid proof of financing, and a sketch map of land utilisation, you can get an initial land lease of five years, extendable to 49 years after completion of physical development.
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