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You are here: Home/News/Article/Uganda Gears Up to Beat End of Fabric Provisions

Uganda Gears Up to Beat End of Fabric Provisions

Published date:
Monday, 16 January 2006

Uganda's AGOA office is working around the clock to have a spinning mill ready before the expiry of third country fabric sourcing in September 2007.

"We need to have our own fabric source by then, otherwise all these mushrooming textile factories will close shop," Susan Muhwezi, the special presidential assistant on AGOA, said last week.

She said Gherzi, a Swiss firm had been contracted to look at the viability of setting up a spinning mill.

"We need to be at the point of producing yarn for export and local use by September 2007 so that the local factories continue operating," Muhwezi said. Gherzi did a feasibility study last year.

In its draft report on "market & techno-economic feasibility study for a short spinning mill in Uganda," Gherzi said, "Based on preliminary findings, it is felt the basis for setting up a profitable spinning mill exists."

It says the project has economic benefits because it would be an agro-allied venture, which utilises 100% indigenous inputs like cotton.

"There is substantial value-addition. A kilo of cotton worth $1.1 becomes $2.2 when converted into cotton yarn.

"Hypothetically, if Uganda's current export worth $40m of cotton lint is converted into yarn, it would become $80m," the report said. It says a typical mill employs 175 direct workers and creates indirect employment for thousands in cotton farming, packaging and transport sectors and compliments the Government's poverty alleviation efforts.

It says cotton-textile sector has high foreign exchange earning potential.

"The proposed pilot project would generate exports of $10m per annum," it said.

It said investment in spinning mill would strengthen Uganda's industrialisation drive.

"Yarn export would enhance the country's prestige by putting Uganda on the world textile map, along with Zambia, South Africa and Nigeria," it says. The report says availability of high quality local material, competitive power and wage rate which account for over 80% of the total cost of production, justifies investment in spinning.

"The preliminary analysis of the proposed project shows that the project is financially viable, though the high capital intensity entails longer payback period. Availability of existing infrastructure in form of factory building could leverage. A few potential investors of repute have shown interest in the project," the Gherzi report said in its executive summary.

"If it's viable, we will then look for investors, because it's costly. We will very much want to have more investors in the textile sector," Muhwezi said.

Experts say up to $100m (sh182b) may be required for a spinning mill project.

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