A new textile factory worth approximately $40m was on Wednesday launched in Kampala. However, instead of celebration, Fine Spinners are likely to be greeted with measured optimism at best and cynicism at worst.
This is because Uganda has been here before. Previous investors courted by the government haven’t lived up to expectations either because they weren’t up to the task or the business environment wasn’t conducive enough for them to succeed.
As a result, Uganda’s once booming textile industry has remained in limbo despite incentives such as America’s African Growth and Opportunity Act (AGOA).
As President Museveni admitted while officiating at the new factory’s launch, Uganda hasn’t benefitted from the AGOA initiative introduced in 2000 to make it easier for exporters in selected African countries to access the US market without major hindrances.
Some African countries, particularly South Africa, Kenya and Lesotho, have taken aantage of the initiative to boost their trade with the US. In Uganda, attempts to work with Sri Lankan investors at the Bugolobi site, now taken over by Fine Spinners a few years ago, ended in failure. On the other hand, local players have not made much headway for unclear reasons.
This state of affairs has cost Uganda an opportunity to add value to its cotton and boost the farmers’ incomes tremendously while generating thousands of new jobs.
Besides, unlike coffee which many Ugandans hardly use, textiles have a big domestic market to serve even before exports are considered.
One hopes, therefore, that in Fine Spinners, this government has this time round attracted a credible investor with the requisite resources and capacity to transform Uganda’s textile industry.
On its part, the government ought to support investors in the textile sector by providing a good policy framework to begin with. For instance, it wouldn’t make sense to attract investors in the sector while at the same time looking on as imports from China and other countries get in at cheaper prices.
Source : The Observer