Boosted by UNDP support, Uganda's diaspora is investing back home in a big way
KAMPALA - When it comes to investing, three words often come to mind - risky, intimidating, and scary. But Dr.William Olwoch-Lalobo, Dr.Margaret Lubega and Dr.Emmy Wasirwa, are the exception to the rule.
- In 2014, remittances were estimated at $900m, up from $873m in 2013.
- About 80% of the remittances by the diaspora are for consumption and not investment, according to a 2013 Bank of Uganda feasibility study.
- More than 2 million Ugandan citizens live and work abroad, but only 30% of them contribute to national development.
- The "Compendium of Investment and Business Opportunities in Uganda" produced with UNDP's contribution, aims to inform Ugandans in the diaspora about the existing investment opportunities in all sectors, and the legal requirements of starting and operating a business successfully.
- A primary dealer shared gateway, an online platform, is now open to Uganda's diaspora for investing directly in government securities.
The trio is among several Ugandans who have successfully invested in Uganda following years of working and living abroad. Dr.William Olwoch-Lalobo is an hotelier and proprietor of a private hospital while Dr.Margaret Lubega owns a brick-making company. Dr.Emmy Wasirwa manufactures Liquefied Petroleum Gas (LPG).
For many years, they sent money back home to family and friends in an effort to maintain social ties. But all this changed following the publication of a Compendium of Investment and Business Opportunities in Uganda that details cost estimates of starting up businesses in different sectors in the country. The Compendium was produced by the Uganda Investment Authority (UIA) with UNDP’s financial and technical support, under the project on “Capacity Building for Strengthening Diaspora Resource Mobilization and Utilization”.The Ministry of Foreign Affairs, which has been implementing the project over the last four years, has widely circulated the Compendium to Ugandans living abroad and to the Country’s missions to sensitise to help them on investment opportunities back home.
Preventing maternal and infant mortality
At one such forum in Dallas, Texas, where the Ugandan diaspora had gathered for an annual get-together, a government official who had been sponsored by the project shared information on Uganda’s business environment and the opportunities outlined in the Compendium. Dr.Olwoch-Lalobo, who had been listening intently in the audience that day, was inspired to return home and set up the Paragon, after realizing there was a huge gap in antenatal and maternity care in Uganda.
Uganda currently accounts for 2% of annual maternal deaths globally, with 289,000 mothers dying annually from complications related to pregnancy or childbirth, according to “Trends in maternal mortality estimates 1990 to 2013,” a report released in May 2014 by World Health Organization, UNFPA, UNICEF and the United Nations Population Division (UNPD).
“The compendium is well elaborate and gives you a good picture and the cost estimates of each investment,” says Dr.Olwoch-Lalobo who practiced for several years as a medical doctor in California for many years.
Located 5km from Kampala’s city center in the quiet and well-built up suburb of Bugolobi, Paragon hospital opened in 2012, and will accommodate up to 400-bed hospital when fully complete. In the same year, Dr. Olwoch-Lalobo, opened Pagoda Guest House in Gulu Northern Uganda, and later Heritage Safari Lounge in Murchison Falls National Park in 2014. The three enterprises currently employ a combined workforce of over 100 people
Banking on bricks and mortar
Unlike Dr Olwoch-Lalobo, Dr.Margaret Lubega, chose a road less traveled – and opted to set up a brickmaking company. A pediatrician by profession, and Medical Director at First Pediatric Care Center, in North Carolina USA, Dr Lubega is a founder of Athi Building Products Company Ltd which manufactures interlocking bricks. The bricks, are made from a mixture of soil, clay, sand and cement – making them more weather resistant, durable and environmentally friendly.
“I love helping the youth, especially boys who tend be drawn into criminal acts whenever they are idle. Looking at the cost estimates in the compendium opened my eyes to invest in brick-making machines. The boys are now employed and with each brick they sell at UGX Shs1000, they earn a living from it and this keeps them busy”, she says.
Making cooking gas affordable
With capital of UGX Shs100 million Dr.Emmy Wasirwa started Wana Energy Solutions Limited, which manufactures Liquefied Petroleum Gas (LPG) and currently employs over 20 people. The retired UK primary health worker says he saw huge potential in the energy sector, and wanted to provide a sustainable and environmentally friendly alternative to charcoal and kerosene.
Only about 0.01% of Ugandans use gas as a fuel, according to estimates by the Ministry of Energy and Mineral Development. This implies that majority of the population relies on other forms of fuel, particularly charcoal, made from wood, which in turn comes from forests, and generates substantial amounts of carbon emissions.
Wana Energy Solutions intends to make a difference by providing rural clients with discounted durable clean energy cook stoves on credit, in addition to piloting three to five franchise retail locations with women entrepreneurs in the peri-urban and rural market. Beneficiaries will be required to register with community development officers in their areas before accessing the gas at a cost of UGX Shs2000 payable daily for six months. A new 8kg cylinder currently costs UGX Shs120,000, and shs60,000 to refill, while a new 12kg costs UGX Shs250,000 and UGX Shs 150,000 to refill.
“We realized that the initial costs of setting up and starting to use LPG are very high given the meager incomes of the population. We think this kind of innovation will encourage an average Ugandan to start using gas and save on the costs incurred on other commonly used fuels like charcoal, Electricity and firewood,” explains Wasirwa whose company received a SEED award in 2014. The award, founded by UNDP, United Nations Environment Programme (UNEP) and the International Union for Conservation of Nature (IUCN) recognises small grassroots enterprises in developing countries that deliver social, environmental, and economic benefits.
Adds Dr Wasirwa: “I am grateful to Uganda Investment Authority and UNDP. If I had not been sensitized about the different opportunities in my country, I would still be in UK languishing with how to invest my money back home without incurring lots of losses".
Despite their success, the three entrepreneurs say a number of challenges are still curtailing diaspora investment. Most notable is the lack of skilled and competent professionals, insufficient local demand, and corruption.
“Majority of Ugandans still prefer the local bricks to interlocking bricks,” argues Lubega, adding that this has slowed down the expansion of the business despite the booming real estate market in the country. Similarly, many households prefer using charcoal for cooking rather than the liquefied petroleum gas which is regarded as more costly.
A new Diaspora Policy, supported by UNDP's Diaspora project, currently before Cabinet, is expected to smooth some of these rough patches and make it easier for Ugandans living abroad to invest back home and contribute to the socio-economic and political development of the country. Bank of Uganda recently introduced the Primary Dealer Shared Gateway, an online platform to make it easier for online trading and investment in government securities, mainly targeting the diaspora. Government also plans to introduce a Diaspora Bond in future to mobilise financing for huge infrastructure projects while a new Uganda diaspora portal recently rolled out by the Ministry of Foreign Affairs is helping to disseminate information to the diaspora and to respond to inquiries in a timely manner.