a value for money audit report on the facilitation … · value for money audit report on the...

D E C E M B E R , 2 0 1 8

OFFICE OF THE AUDITOR GENERAL

T H E R E P U B L I C O F U G A N D A

A VALUE FOR MONEY AUDIT REPORT ON THEFACILITATION AND PROMOTION OF EXPORT TRADEBY UGANDA EXPORT PROMOTION BOARD (UEPB)

A REPORT BY THE AUDITOR GENERAL

www.oag.go.ug | E-mail: [email protected]

UGANDA

A Value For Money Audit Report on the facilitation and promotion of export trade by

Uganda Export Promotion Board (UEPB)

A Report by the Auditor General

December, 2018

T H E R E P U B L I C O F U G A N D A

AUDITOR GENERAL’S MESSAGE

24th December 2018

The Rt. Hon. Speaker of Parliament

Parliament of Uganda

Kampala.

VALUE FOR MONEY AUDIT REPORT ON THE FACILITATION AND PROMOTION OF EXPORT TRADE BY

UGANDA EXPORT PROMOTION BOARD (UEPB)

In accordance with Article 163(3) of the Constitution, I hereby submit my report on the audit undertaken on

the Facilitation and Promotion of Export Trade by the Uganda Export Promotion Board (UEPB).

My office intends to carry out a follow-up at an appropriate time regarding actions taken in relation to the

recommendations in this report.

I would like to thank my staff who undertook this audit and the staff of the Uganda Export Promotion Board

(UEPB) for the assistance offered to my staff during the period of the audit.

John F.S. Muwanga

AUDITOR GENERAL

IThe facilitation and promotion of export trade by Uganda Export Promotion Board (UEPB) | A Report by the Auditor General

TABLE OF CONTENTS

LIST OF TABLES................................................................................................................................................II ABBREVIATIONS...............................................................................................................................................III

EXECUTIVE SUMMARY.....................................................................................................................................IV

CHAPTER ONE...................................................................................................................................................1INTRODUCTION.................................................................................................................................................21.1 Background...........................................................................................................................................21.2 Motivation..............................................................................................................................................21.3 Description of the Audit Area................................................................................................................31.4 Audit Objective.......................................................................................................................................41.5 Audit Questions.....................................................................................................................................51.6 Audit Scope...........................................................................................................................................5

CHAPTER TWO..................................................................................................................................................6AUDIT METHODOLOGY.....................................................................................................................................72.1 Sampling...............................................................................................................................................72.2 Data collection Methods........................................................................................................................72.3 Data analysis.........................................................................................................................................7

CHAPTER THREE..............................................................................................................................................8SYSTEMS AND PROCESS DESCRIPTION...........................................................................................................93.1 Roles and Responsibilities of Key Players............................................................................................93.2 Process description.............................................................................................................................10

CHAPTER FOUR...............................................................................................................................................12FINDINGS, CONCLUSIONS AND RECOMMENDATIONS...................................................................................134.1 Coordination with other stakeholders..................................................................................................134.2 Sufficiency of trade and market information provided........................................................................144.3 Review of the current trade policies, plans and strategies.................................................................174.4 Support and building capacity of the Exporters .................................................................................18

APPENDICES....................................................................................................................................................21Appendix I: Documents reviewed.....................................................................................................................21Appendix II: Interviews conducted...................................................................................................................22Appendix III: Organisational Structure............................................................................................................23Appendix IV: Funds released for provision of information that were reallocated...........................................24Appendix V: Diversion of funds released for training......................................................................................26

II The facilitation and promotion of export trade by Uganda Export Promotion Board (UEPB) | A Report by the Auditor General

LIST OF TABLES

Table 1: Showing Actual Funding/ receipts for UEPB activities.........................................................................2

Table 2: Showing nature and status of the information provided.....................................................................14

Table 3: Summary of Utilisation of funds released for provision of information.............................................15

Table 4: Showing examples of gaps in the export current policies and Plans.................................................17

Table 5: Utilisation of funds meant for training................................................................................................19

IIIThe facilitation and promotion of export trade by Uganda Export Promotion Board (UEPB) | A Report by the Auditor General

ABBREVIATIONS

EU European Union

MAAIF Ministry of Agriculture Animal Industry And Fisheries

MDAs Ministries, Departments and Agencies

MEMD Ministry of Energy and Mineral Development

MoFA Ministry of Foreign Affairs

MoTIC Ministry of Trade, Industry And Cooperatives

NPA National Planning Authority

UBOS Uganda Bureau of Statistics

UEPB Uganda Export Promotion Board

UNBS Uganda National Bureau of Standards

IV The facilitation and promotion of export trade by Uganda Export Promotion Board (UEPB) | A Report by the Auditor General

Uganda mostly exports agricultural products which contribute 80% of her total exports. These products mainly include coffee, fish, maize, tobacco, tea, beans, and flowers among others.The country is also making progress on the exportation of value added and manufactured products, such as base, metal products, cement, sugar, plastics and cosmetics1.

Export promotion is a key Government priority and the Government recognizes that one of the ways to improve the current balance of payments is to promote exports, ensure stable supply to target markets and ensure that exports are competitive and meet international standards. In a bid to realise this Government has undertaken a number of initiatives aimed at promoting export growth among which was the creation of the Uganda Export Promotion Board (UEPB) to facilitate the development promotion and coordination of all export related activities.

A review of the performance of this Board revealed areas that need attention if UEPB is to achieve its objective. These include those highlighted in the following key findings:

KEY AUDIT FINDINGS1. It was noted that the current coordination measures were ineffective in fostering the development of export trade. There is currently no formal and clear coordination framework through which UEPB engages the other sector players. Similarly, there is no clear definition of the roles and responsibilities of the key players within the export sector.

2. The trade and market information provided to exporters was in most cases not up to date while in other cases no information was available at all.

3. There was no evidence of regular review of policies, plans and strategies in the form of policy papers, policy briefs or reports. Similarly there was no clear system of collecting feedback about the current polices through, for example, regular surveys.

4. Some key aspects of building the capacity of exporters, such as, the implementation of the export curriculum, largely remained unimplemented. There was also no evidence that UEPB undertakes post training follow-ups to evaluate the impact of the training and offer post training support.

KEY RECOMMENDATIONS1. UEPB should spearhead efforts to put in place a proper coordination framework with the different sector players in order to harness the synergies that exist amongst the different stakeholders.

2. UEPB should ensure that funds released for provision of trade information are optimally utilised for this purpose. UEPB should also find alternative ways of obtaining information about external markets rather than relying on the embassies and missions and regularly subscribe to online market and buyer information sources which provide reliable and up to date international market information.

1 http/www.businessdirectory.com/export promotion

EXECUTIVE SUMMARY

VThe facilitation and promotion of export trade by Uganda Export Promotion Board (UEPB) | A Report by the Auditor General

3. UEPB should streamline the processes of reviewing existing policies and develop a comprehensive system of gathering feedback from exporters about the current export plans, policies and strategies.

4. UEPB should develop comprehensive training plans as a guide for implementing activities aimed at building the capacity of the exporters. UEPB in addition should desist from reallocating funds meant for capacity building of exporters.

OVERALL AUDIT CONCLUSIONThe export trade sector has to a large extent not performed to its full potential because of a number of weaknesses, such as: inadequate coordination among the stakeholders, insufficient trade and market information, inadequate review of existing policies and strategies and failure to build the capacity of exporters. This sector can, however, perform better and make a bigger contribution to the economy if the identified weaknesses are addressed.

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INTRODUCTION

1.1 BACKGROUNDExport promotion includes all incentive programs designed to attract more firms and individuals into exporting. It involves offering support in product and market identification and development, pre and post-shipment financing, training, payment guaranty schemes, trade fairs, trade visits, and foreign representation2. In Uganda the mandate to facilitate the development, promotion and coordination of all export-related activities that lead to export growth on a sustainable basis has been vested in Uganda Export Promotion Board (UEPB).

Government recognizes that one of the ways to improve the current balance of payments is to increase and diversify exports, ensure stable supply to meet market targets, identify new export destinations in regional and emerging markets, ensure that exports are competitive and meet international standards, develop an effective incentive system to attract and expand investments in export commodities all of which will facilitate growth and development of export trade.3

1.2 MOTIVATIONUganda targets to become a middle income status country with a projected export performance of more than $8 billion by 2020. Uganda’s export performance is, however, still very low with an export to import ratio of 51%.4

Despite government putting in place a number of measures to grow and develop export trade, there still exist a number of challenges for the exporters such as lack of information about cross border trade, including trade policies, taxes, packaging requirements and such other export trade related issues. Because of this, exporters have been exploited in a number of ways, for instance, payment of taxes for items that are zero rated5.

Currently, a large number of Uganda’s exports are very low-value, namely, raw agro products such as coffee, tea, tobacco, lint, grain, fruits and vegetables. Most of the agricultural production is not market based, and this is worsened by lack of both quantity and quality products for the export market.6

Coordination and collaboration of actors along the various value chains is not yet strong to cause collective action towards addressing sector specific needs. For example the lack of commodity platforms to continuously push for the value addition agenda still remains a huge problem. As a result of this weak coordination and collaboration of actors, Uganda has been unable to comply with European Union (EU) requirements.7

There have also been concerns that UEPB has remained invisible and not effective in executing its mandate. The board has only seventeen (17) staff members carrying out the responsibility of promoting exports in the entire country. These were only based in Kampala despite Uganda having several boarder points around the entire country.8

2 http://www.businessdictionary.com/definition/export-promotion.html3 Vision 2040- Page 35.4 Daily Monitor 7th December 2016.5 Export promotions board to train traders. New vision 28th August, 20156 UEPB strategic plan 2015/16 -2019/20.7 Ibid8 http://parliamentwatch.ug/meeting of the committee on trade-tourism-and industry with UEPB officials

CHAPTER ONE

3The facilitation and promotion of export trade by Uganda Export Promotion Board (UEPB) | A Report by the Auditor General

The presentation by the National Planning Authority (NPA) during the 7th National Development Policy forum also highlighted a number of factors hindering Uganda from unlocking its export potential. These included inadequate policy, legal and regulatory frameworks, weak enforcement of the existing legal framework, and the disjointed export market development and sustainability.9

It is against this background that the office of the Auditor General decided to undertake a review of the performance of UEPB in facilitating and promoting the growth and development of export trade. In addition, the review was intended to identify the causes of any challenges noted and to propose recommendations to address these challenges.

1.3 DESCRIPTION OF THE AUDIT AREA1.3.1 General descriptionUganda mostly exports agricultural products, which contribute about eighty percent (80%) of her total exports. These products mainly include, coffee, fish, maize, tobacco, tea, hides and skins, cocoa, beans, livestock/dairy, simsim, flowers, beans, and cotton. Most of the export trade is done by private companies that are also organised under associations. The associations are usually a group of private exporters dealing in the same or related commodities. Examples of these Export Associations include The Grain Council of Uganda, Uganda Flowers Exporters Association, Uganda Fruits and Vegetable Exporters and Producers Association, Uganda Fish Processors and Exporters Association among others.

Uganda is also making progress on the exportation of value added and manufactured products such as base metal products, cement, edible fats and oils, sugar, plastics, soap, personal care products and cosmetics.10 The responsibility to promote the growth and development of export trade lies with Uganda Export Promotions Board).

1.3.2 Legal FrameworkUganda Export Promotion Board (UEPB) is mandated to promote Uganda’s exports as provided by section 2 of the Uganda Export Promotion Board Act Cap.102 of 1996.

1.3.3 Vision and MissionVision: To position Uganda’s goods and services as products of choice in the international markets

Mission: To facilitate the development, promotion and coordination of all export-related activities that lead to export growth on a sustainable basis”. 1.3.4 The Objectives of the UEPBThe objective of the UEPB is to facilitate the development, promotion and coordination of all export related activities that lead to export growth on a sustainable basis.

9 Unlocking Uganda’s Export Potential-7th National Development Policy Forum.10 Daily Monitor 14th December 2016.


1.3.5 ActivitiesThe UEPB Act obligates UEPB to facilitate the development promotion and coordination of all export related activities. In doing this UEPB undertakes the following activities.a) Coordinate all export related activities among the different sector players.b) Provide trade and market information services c) Formulate and recommend to Government export plans, policies and strategies.d) Promote the development of exports through provision of technical advice in production and post- harvest handling, and test marketing new exports.e) Provide customized advisory services to exporters such as basic trainings in export business skills, export distribution channels, foreign trade practices. f) Provide trade promotional services by organising and coordinating trade fairs and trade missions aimed at fostering export growth.

1.3.6 Organisation structureUganda Export Promotions Board (UEPB) is a semi-autonomous statutory body under the Ministry of Trade, Industry and Cooperatives (MTIC). The board is composed of twelve (12) directors namely: The chairperson of the board who is always from the private sector, one representative from the Ministry of trade, Ministry of Finance, Ministry of foreign Affairs, a representative from the Uganda Manufactures Association (UMA), a representative from the National Farmer’s Association, two representatives exporter associations, one representative from the chamber of commerce, the Executive Director Uganda Investment Authority, and the Executive Director Export Promotions Board. The day-to-day operations of UEPB are managed by the Executive Director assisted by three (3) directors. A detailed organization structure is appended as Appendix III.

1.3.7 FundingUEPB received a total of UGX. 8.2 billion during the three year period under review for export related activities as summarized in Table 1 below:Table 1; Showing Actual Funding/ receipts for UEPB activities

Period 2015/16 UGX ( Bn)

2016/17 UGX ( Bn)

2017/18 UGX ( Bn)

Total UGX ( Bn)

Amount 1.7 3.3 3.2 8.2

Source: OAG analysis of UEPB receipts for 2015/16, 2016/2017 and 2017/2018

1.4 AUDIT OBJECTIVEThe main objective of the audit was to assess the effectiveness of measures put in place by UEPB to facilitate and promote export trade. 1.4.1 SpecificAuditObjectivesThe specific audit objectives were to assess the extent to which UEPB hada) Fostered effective coordination amongst the different sector players as a way of promoting the development of export trade.b) Ensured that exporters gain/get access to reliable, accurate and timely information to facilitate decision making.c) Ensured that the existing policy and regulatory frameworks facilitate the growth and development of Uganda’s export trade. d) Facilitated building the capacity of exporters through regular and focused training to participate in export trade competitively.


1.4 AUDIT QUESTIONSThe audit aimed at answering the following questions;a) Has UEPB fostered effective coordination amongst the different sector players to foster the development of export trade?b) Has UEPB ensured that exporters gain/get access to reliable, accurate and timely information to facilitate decision making?c) Has UEPB ensured that the existing policy and regulatory frameworks facilitate the growth and development of Uganda’s export trade? d) Has UEPB facilitated building the capacity of exporters through regular and focused training to participate in export trade competitively?

1.6 AUDIT SCOPEThe study focused on the current arrangements put in place by UEPB to facilitate the development, promotion and coordination of export related activities that support the development of export trade.

The study covered three financial years, that is, 2015/16, 2016/17, 2017/18 and was mainly done at UEPB headquarters located on the 2nd Floor, UEDCL Tower, plot 37 Nakasero Road.

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AUDIT METHODOLOGY

The audit was conducted in accordance with the International Organization of Supreme Audit Institutions (INTOSAI) Performance Auditing Standards and the Performance Auditing guidelines prescribed in the Office of the Auditor General (OAG) VFM audit manual. The standards require that the audit be planned in a manner which ensures that an audit of high quality is carried out in an economic, efficient and effective way and in a timely manner.

2.1 SAMPLINGThe main focus of the study was to assess the measures put in place by UEPB to foster the development of export trade. Eight (8) of the thirteen (13) exporter groups dealing in the main categories of exports, namely, agricultural exports and manufactured products were selected for interviews.

2.2 DATA COLLECTIONThe following data collection methods were used to gather audit evidence:

Audit Question Data collection method

Has UEPB fostered effective coordination amongst the different sector players to foster the development of export trade?

The team interviewed UEPB Officials, Exporters and officials of Ministry of Trade, Industry & Cooperatives (MoTIC) Details of persons interviewed are attached as Appendix I. The team also reviewed a number of documents as detailed in Appendix II.

Has UEPB ensured that exporters got access to reliable, accurate and timely information to facilitate decision making?

The team interviewed a sample of exporters and reviewed documents to compare information provided and the information needs of the exporters. In addition to this the team reviewed the contents of the UEPB website (www.ugandaexports.go.ug) to if the information available for exporters was adequate. In addition the team made comparisons with information on websites of similar export agencies within the region.

Has UEPB ensured that the existing policy and regulatory framework facilitate the growth and development of Uganda’s export trade?

The team interviewed UEPB officials, Exporters and Ministry of Trade, Industry & Cooperatives (MoTIC).

Document Review: The team also reviewed draft policies. Details of documents reviewed and interviews conducted are attached as Appendix I and II.

Has UEPB facilitated building the capacity of exporters through regular and focused training to competitively participate in export trade?

The team interviewed a sample of exporters and reviewed documents such as budgets, work plans, training reports among others. Details of these are attached as Appendix I and II.

2.3 DATA ANALYSISBoth Qualitative and quantitative data collected was analysed to establish and conclude on the performance gaps and the causes for such observed gaps.

CHAPTER TWO

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CHAPTER THREE

3.1 ROLES AND RESPONSIBILITIES OF KEY PLAYERSThere are number of key players with different roles to play in export promotion. The key players and their roles include the following:

3.1.1 Uganda Export Promotions BoardThe Board is mandated to facilitate and coordinate all activities aimed at promoting and developing Export trade. In doing this the board is responsible for the effective implementation of activities such as export market development which includes enhancing exporters understanding of export markets for day-to day decision making, export trade promotional services which entails promoting awareness about Uganda’s products in the markets, trade information services which aim at making available on a consistent and timely basis critical market and business information to facilitate exports, trade policy advisory which is designed to periodically review existing policy and regulatory framework with the aim to proposing improvements that facilitate growth of the trade, export skills and capacity development which is aimed at enhancing the capacity of exporters to favourably compete.

3.1.2 Ministry of Trade, Industry and Cooperatives (MoTIC) This is the line ministry that supervises the activities of UEPB to ensure that UEPB achieves its mandate. It also works together with UEPB to address any gaps in the policy and regulatory frame work. This is done through drafting and finalisation of policies and regulations when need arises. The Ministry is also represented on the board and therefore is part of UEPB governance structure. The Ministry of Trade together with the Ministry of Foreign Affairs also negotiates for preferential market access for Ugandan products.

3.1.3 Ministry of Foreign Affairs (MoFA)Ministry of Foreign affairs (MoFA) through its foreign

missions works closely with UEPB to promote Uganda exports in their mission countries, under commercial diplomacy. The ministry also facilitates the establishment of display centres in missions in target countries/markets. Working together with the Ministry of Trade, UEPB negotiates for preferential market access for Ugandan products. The ministry is also represented on the board and therefore is part of UEPB’s governance structure.

3.1.4 Ministry Of Agriculture Animal Industry and Fisheries (MAAIF)Ministry of Agriculture Animal Industry and Fisheries (MAAIF) carries out inspections to monitor the quality of agricultural products. They also come up with quality standards for agricultural products and carry out quality certification of agricultural products ready for exports. Furthermore, they train farmers on post-harvest handling techniques to minimise post-harvest handling.

3.1.5 Uganda National Bureau of StandardsUganda National Bureau of Standards (UNBS) monitors quality standards and ensures that products from Uganda meet the required international standards.

3.1.6 Uganda Bureau of StatisticsUganda Bureau of Statistics collects, maintains and disseminates statistics about export trade which are used for planning and decision making by the key sector players namely UEPB and the private exporters.

3.1.7 Ministry of Energy and Mineral DevelopmentMinistry of Energy and Mineral Development inspects, regulates, monitors and evaluates activities of private companies in energy and mineral sectors. It also provides policy guidance in the development and exploitation of the energy and mineral resources.

SYSTEMS AND PROCESS DESCRIPTION


3.1.8 The ExportersThese include all firms and individuals exporting goods and services from Ugandan. It is from these exporters that organisations/ Associations of the different exporters are formed. The exporters are also the primary beneficiaries of the services provided by UEPB such as trade information, and trade promotional activities among others.

3.2 PROCESS DESCRIPTION Export Promotion is undertaken through a number of processes. The key processes are:

3.2.1 Coordination with other stakeholdersCoordination includes all measures and activities that are aimed at organizing the different stakeholders so as to enable them work effectively to facilitate the growth and development of export trade.

This includes harmonised planning, implementation and monitoring of sector activities within detailed operational frame work that clearly defines the roles and responsibilities of each of the different stakeholders.

3.2.2 Provision of trade information servicesCollection, processing and dissemination of Trade InformationThis process is aimed at making available, on a consistent and timely basis, critical market and business information to facilitate exports.

The information provided includes; detailed tariffs for all markets by product category, general market entry information, lists of importers by country and product category, price data from major price determining centres, analysis of market trends for products exported by Uganda, information on import and export procedure, data tracking on trade flows by product and importing and exporting country, annual export performance reports, business opportunities, standards and statistics.

UEPB obtains the necessary information from both on-line and off-line sources. Information obtained online includes that from the public ledger, the international source for price and market trends whereas offline sources include all information obtained from embassies, UN and all regional markets.

The information obtained is then cleaned, analysed, packaged and disseminated to exporters and trade partners who need it. Information is disseminated through media in form of bulk emails, dissemination workshops and sessions, print and non-print media and online channels such as websites and the internet.

UEPB also undertakes one-on-one follow up with specific exporters who may have unique information requirements and provides support to these exporters to ensure that they obtain all the information they need.

3.2.3 Market intelligence and advisory servicesThis process is aimed at enhancing market research, building export statistical data bases, and provision of both free and paid for market services. The process involves UEPB conducting regular market analyses and surveys to obtain information about the market and to respond to market specific enquires and requirements that may have been raised by exporters.

This is done through review of reports and bulletins about export trade, review of web articles and any other related literature on trade and export markets. In some cases, exporters contact UEPB with market specific inquiries and requirements.

In response to them, UEPB conducts awareness, mentorship and market linkage activities with the relevant sector players. This is aimed at enlightening the exporters about existing market opportunities and how they can take advantage of these opportunities.

UEPB also reaches out to partners in other countries to follow-up on identified opportunities through mainly commercial diplomacy in collaboration with the Ministry of Foreign affairs.

The exporters are then provided with information and/or linked to the identified markets while at the same time UEPB engages with the relevant stakeholders to address any issues that may be identified or emerging in the market.


3.2.4 Review of export policy, plans and strategiesExport trade policy advocacy and adviceUEPB monitors and periodically reviews national and international trade policy environment with the objective of developing and recommending to planners, policy makers, and partners, and actions and strategies geared towards fast tracking development and enhancing the competitiveness of the Uganda’s export sector.

In undertaking this activity, UEPB collects information from the various stakeholders on weaknesses in the current policy and regulatory issues. This is mainly done through the annual dialogue of exporters geared towards evaluating and advising the export policy formulation domestically, and negotiations and advocacy at the international level.

Once the policy issues are raised, they are evaluated together with any other policy and regulatory issues that may have been raised through other forums. UEPB then engages with the relevant stakeholders to address the policy gaps and organises stakeholder awareness activities such as workshops to provide feedback about the actions taken on the policy and strategy gaps identified.

3.2.5 Provision of customised advisory ServicesExport market and product developmentThis process is aimed at building and enhancing exporters understanding of the export markets and facilitating the expansion and diversification of Uganda’s export markets and products. UEPB annually conducts an assessment of the priority markets to identify high potential products for export development and promotion. This is then followed by calls of interest from interested exporters to participate in the process.

Once UEPB receives responses from these exporters, they are evaluated to assess their market readiness. This assessment involves assessing the capacity of these firms to engage in sustainable export trade, and identification of any gaps that may impair their ability to sustainably participate in the trade.

UEPB then conducts capacity building and product development activities such as trainings in order to ensure that the gaps are addressed. Once these have been addressed, UEPB conducts business matchmaking that is, linking the export ready firms to any identified buyer opportunities through for example organising on and offline business meetings. UEPB follows up this by facilitating the exporter to deliver at least one trial order after which the exporter will be expected to continuously supply to meet the demands of the market.

3.2.6 Trade promotional servicesTrade promotion is aimed at increasing Uganda’s presence in the export market and promoting awareness about Uganda’s export products. This is mainly done through supporting exporters to participate in trade fairs. UEPB undertakes this by first reviewing and updating its database of trade promotional events such as trade fairs, trade expos and forums. In addition to this, UEPB conducts a weighted assessment of the trade fairs to determine the level of importance, priority and given the fact that the available resources have to be allocated to areas of maximum impact. This leads to the generation of a list of target fairs for the year and an activity plan for the trade participation and support services.

This information is then disseminated to target participants who include companies, individuals, and MDAs. At the same time, UEPB conducts trade fair preparation activities such as signing MOUs with participating firms, coordinating the development of the necessary promotional information materials, in order to prepare the firms to participate effectively in the trade events.

Participating firms and MDAs are then facilitated to participate in these trade fairs by for example securing and paying for exhibition space, booking travel tickets and accommodation, transportation of exhibits. As part of trade promotion also UEPB sometimes participates in trade events on behalf of Uganda, organises exporter recognition activities such as exporter awards ceremonies and dinners, and export week where activities such as export walks, export clinics, are undertaken.

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CHAPTER FOUR

FINDINGS, CONCLUSIONS AND RECOMMENDATIONS

4.1 COORDINATION WITH OTHER STAKEHOLDERSSection 4 of the UEPB Act mandates the Board to facilitate the development promotion and coordination of all export related activities that lead to export growth on a sustainable basis.

From interviews and review of documents, it was noted that the current coordination measures were ineffective to foster the development of export trade. There is currently no formal and clear coordination framework through which UEPB engages the other sector players. Similarly there is no clear definition of the roles and responsibilities of the key players within the export sector. The sector is characterized by duplication of initiatives and roles by sector players, disjointed implementation of common activities, and lack of shared goals and objectives amongst the different sector players.

A review of documents and interviews, for instance, revealed that there are a number of sector players particularly the exporter associations, UEPB, Ministry of Trade, and Uganda National Chamber of Commerce among others undertaking the same or similar activities such as organizing trade fairs, and organizing trainings on related or similar subjects for exporters.

In the circumstances it is very difficult for government to tap into the synergies that would have been developed if there was effective coordination within the sector. This has also hampered the implementation of common sector initiatives such as the National Export Development Strategy.

The low coordination amongst various sector players also makes it very difficult for UEPB to ensure that activities whose mandate lies with other government agencies are effectively implemented. Such activities include enforcement of product quality standards which is a mandate of UNBS, and quality control inspections which is a mandate of MAAIF for, agricultural products. There was also no evidence of joint efforts to address common sector challenges such as development of product value chains.

Management ResponseThere have been efforts to establish a structured coordination framework as indicated in the National Export Strategy (NES I), Export Action Plan and National Export Development Strategy (NEDS). Indeed, there exists a gap in the “precise definition” of what coordination entails, in respect to UEPB mandate. For example, there are different types of trade fairs, which may be classified by target product or audience. But the Act does not clearly define which trade fairs UEPB is mandated to coordinate.

This makes it difficult for UEPB to enforce its coordination mandate. Gaps also exist in definition of the extent to which UEPB can intervene in the mandate of other institutions. At the moment UEPB’s role has majorly been informational and liaison with partner institutions to tap into available programs and support that would be beneficial to the export fraternity.

UEPB, however, currently works with other government agencies such as UNBS, MAAIF, UIRI, PSFU and UIA to implement export related activities.


Audit CommentAlthough the Act is not clear about what coordination should entail and to what extent UEPB can intervene in the mandate of other institutions, UEPB should spearhead efforts to formulate a framework to address these gaps since it is the one mandated to coordinate all export related activities.

ConclusionWith the current level and structure of coordination within the sector, it is unlikely that government will benefit from the input of the various sector players if the planning, implementation and monitoring of sector activities remains disjointed.

RecommendationUEPB should spearhead efforts to put in place a coordination mechanism with the different sector players as a way of ensuring synchronized development of the export trade sector. This will curtail wastage of resources through duplication of roles.

4.2 SUFFICIENCY OF TRADE AND MARKET INFORMATION PROVIDEDSection 5 (a) of the UEPB Act obligates UEPB to provide trade and market information services including, i) details of tariffs for all markets by product category, ii) general market entry information, iii) lists of importers by country and product category, iv) price data from major price determining centres, v) Analyses of market trends of products exported by Uganda, vi) Information on import and export procedures and documentation requirements by Uganda’s trading partners, vii) data tracking on trade flows by product and by importing and exporting countries. This is aimed at facilitating current and prospective exporters to make informed business decisions.

From interviews and review of documents it was observed that the information provided was in most cases not up to date while in other cases no information was available at all. Out of Eight (8) exporter associations interviewed members from five (5) associations indicated that UEPB had not been very effective in addressing their information needs. In some cases information on some aspects such as details of tariffs for all markets by product category, Price data from major price determining centres, data tracking on trade flows by product, and by importing and exporting countries was not availed to them at all. The table below summarises the provision and availability of trade information to exporters by UEPB.

Table 2: Showing nature and status of the information provided

Status Type of information

Available but not regularly up dated General market entry information

List of importers by country and product category

Analyses of market trends for products exported by Uganda

Information on import and export procedures and documentation requirements by Uganda’s trading partners

Information that was not available for exporters. Details of tariffs for all markets by product category

Price data from major price determining centres

Data tracking on trade flows by product and by importing and ex-porting countries

Source: OAG analysis of information provided by UEPB


A comparison between information on the UEPB website and websites of similar entities in the region revealed that the information on the UEPB website was not comprehensive enough to address the information needs of the exporters. The website of the Export Promotion council of Kenya (http://www.epc.go.ke/), for example, had information on designing of an export strategy, selecting export market, pricing for exports, how to market and promote a company overseas, packaging and labelling, getting export goods to market, among others. Such information was not available on the UEPB website. Similarly the website of the Rwanda Investment and Export Promotion Agency (http://www.rwandainvest.com) had information about how to start an export company, how to link producers and farmers, and main export policies. These did not feature on the UEPB website.

Failure to provide comprehensive and up to date information was caused by a number of factors some of which are highlighted below:a) UEPB did not regularly subscribe to online market and buyer information sources such as Public Ledger11 and Kompass12 which are the main sources of reliable and up to date information. From the review of documents and interviews it was established that UEPB last subscribed to these sites in 2016.

b) UEPB also relies on Uganda’s embassies and missions abroad for market and product information. This strategy was found to be ineffective since most of these embassies and missionaries do not prioritise commercial diplomacy. The embassies are understaffed and the available staff lack the skills to collect and provide UEPB with this information.

c) UEPB sometimes reallocated funds meant for collection and dissemination of trade and market information. An analysis of UEPB’s expenditures for the financial years 2016/17 and 2017/18 revealed that some of the funds released for this purpose were either un-utilised or spent on other activities as summarised in Table 3 below and detailed in Appendix IV.

Table 3: Summary of Utilisation of funds released for provision of information

Item Period Budget(millions)

Releases(millions)

Un-utilised Non-wage(millions)

Re-allocated(millions)

Trade and Market Information Services

2016/17 369.5 322.7 0 16.1

2017/18 404.2 404.2 22.9 20

Exporters from all the eight (8) exporter groups interviewed stated that the information provided by UEPB was neither sufficient nor reliable to meet their information needs.

11 A Global business insight that tracks all the major developments in agricultural commodity markets, provides news, analysis and market data for over 700 agricultural commodities, including grains, oils and oil feeds, feeds, softs and more10 B2B information provider.


Management Responsea) Indeed, the information gap noted does exist on the UEPB website. This has primarily been because of the noted staffing gap. As a remedy, UEPB has contracted a service provider to assist with the restructuring of the website to include the missing information and e-commerce components. UEPB has also recruited more staff, especially in the Trade Information Division (TID) and Export Market and Product Development Division (EMPD). These will be instrumental in updating the information on the website.

b) UEPB also established better working relationships with URA, particularly under the Uganda Electronic Single Window, and UBOS to ensure regular access to statistical information. This is relevant to ensuring that information on trade flows and trends is regularly updated. UEPB is hopeful that by January 2019, the exporters will be able to access the required information easily and regularly on and offline.

c) Management has already taken steps to prioritize subscription to at least one (1) credible market information and intelligence (Public Ledger) and one (1) buyer information (Go4Business World) source. This will enable the TID to generate more regular Export Opportunity Bulletins and Market reports.

In view of the noted performance gaps on the website, UEPB has employed alternative information dissemination methods to bridge the gap. These include regular training and sensitization activities, buyer seller meetings in Kampala and upcountry locations. UEPB has also developed a number of physical (printed) information tools, brochures and booklets, to provide the required information. UEPB has also developed a comprehensive Export Guide book that provides information on all export aspects which soon will be available on the UEPB website. Not all information needs to be updated at the same rate of regularity. Some information such as market trends and flows, are updated depending on availability of statistical information which in most cases is available on a quarterly basis.

Audit CommentAlthough management has endeavored to use alternative methods of information dissemination, these have not been very effective so far since a number of exporters interviewed could not access the needed information through these methods. Management should therefore popularise these alternative methods amongst the exporters.

RecommendationIn addition to the steps being undertaken to address the information gap, UEPB should also explore alternative ways of obtaining information about external markets rather than relying on the embassies and missions by regularly subscribing to online market and buyer information sources, and desist from reallocating the funds disbursed for provision of trade and market information.


4.3 REVIEW OF THE CURRENT TRADE POLICIES, PLANS AND STRATEGIESSection 5 (e) of the UEPB Act obligates UEPB to formulate and recommend to government export plans, policies and strategies designed to provide efficient adequate and coordinated measures for the promotion of Uganda’s exports. The 2015/16-2019/20 UEPB strategic plan also stipulates that UEPB will develop policy papers, policy briefs and policy reports as a way of addressing the gaps in the current policy and legal framework.

There was no evidence of regular review of policies, plans and strategies in the form of policy papers, policy briefs or reports. Although, through interviews, UEPB officials indicated that they undertake review of the current policies there was no evidence to confirm this. In the UEPB annual work plans it was also evident that this activity was not being prioritized through allocating resources to undertake it.

Similarly, there was no clear system of collecting feedback about the current polices through, for example, regular surveys. Audit evidence obtained indicated that feedback was only obtained during the exporters’ week activities. Exporters interviewed revealed that information about the existing policy gaps was volunteered by the exporters through challenges they experienced and not gathered by UEPB.

This implies that the existing challenges with the current policies and strategies will still remain a hindrance to the development of the export sector. From the review of documents and interviews with exporters, it was observed that a number of policy gaps currently exist, but because of lack of follow-up with Ministry of Trade they are likely not to be addressed in the near future. Refer to table 4 below for details.

Table 4: Showing examples of gaps in the export current policies and Plans.

Observation/ Finding Examples where this was noted Audit Comment

No policies, regulations or guidelines. Regulations/ guidelines on mandatory registration of exporters

No evidence of actions taken by UEPB to address this.

Export regulations for export of agri-cultural commodities


Guidelines for packaging of goods for exports


Regulations to better the implementa-tion of the Act


Regulations for cross border trade No evidence of actions taken by UEPB to address this.

Regulations/guidelines for packaging of goods for export.


Policies that have remained drafts for more than two years

National trade fair and Exhibition Policy

Policy has been in draft since 2015

National Iron and Steel Policy Policy has been in draft since 2015

Tea and Spices Policy Policy has been in draft since 2015

Source: OAG interviews and review of policy documents


Management ResponseManagement confirms that UEPB has not performed in the direction of Section (5)(e) of the UEPB Act, especially in respect to developing policy papers, policy briefs and policy reports, as stipulated by the UEPB Strategic Plan 2015/16 to 2019/20. However, this stems from the inability of UEPB to undertake the necessary policy evaluation activities, such as evaluation studies and surveys, regular meetings with exporters and being present in the target markets to observe the day-to-day challenges of exporters, which is primarily because of budgetary and staffing limitations.

Although these activities are included in the initial workplans they are normally scaled-down in the final workplan due to the funding ceiling indicated by MoFPED. These activities were also undertaken in the past, especially with the support of development partners. For the period under audit, UEPB has played a participatory role in the policy development process especially with regard to policies under the Ministry of Trade, Industry and Cooperatives and Ministry of Agriculture, Animal Industry and Fisheries. UEPB has also participated in the development of NEDs, Export Action Plan and the Uganda grain trade policy. It is currently participating in the formulation of the tea policy, the trade fair policy, the poultry policy, and the iron and steel policy, among others.

Further, UEPB has re-initiated discussions with development partners to support these activities on a regular basis. In addition, UEPB is lobbying the relevant organs to support these coordination and policy activities as unfunded priorities.

Audit CommentAlthough UEPB participates in the formulation of policies this should not take away its core mandate of reviewing and identifying policy gaps so as to make recommendations to government for improvement.

Recommendationa) UEPB should continue to engage with the relevant stakeholders to ensure that activities such as evaluation studies and surveys and regular meetings with exporters are planned for, funded and implemented. In addition, UEPB should prioritise the activities when developing work plans and budgets.

b) UEPB should also streamline the processes of reviewing existing policies and develop a comprehensive system of gathering feedback from exporters about the current export plans, policies and strategies.

4.4 SUPPORT AND BUILDING CAPACITY OF THE EXPORTERS Section 5 of the UEPB Act obligates UEPB to provide customised advisory services in various areas including i) basic business skills, ii) Export distribution channels, iii) basic elements of foreign trade practice, iv) briefing on target markets by product with detailed documentation regarding standards and quality requirements, price spreads margins, and tariff classification, v) details of preferences given to Uganda products by country, vi) technical evaluation of a company to export, vii) technical advice on export agreements and advice on how to secure pre-shipment credit and other short term medium export credits.


In order to achieve this UEPB developed structured strategies and programs for building the capacity of exporters and these included exporter coaching and mentoring, export readiness programs, and implementing the export curriculum.

From the review of documents it was established that UEPB had undertaken some trainings in the form of export readiness trainings, exporter coaching and mentoring. However, other aspects, such as implementation of the export curriculum, largely remained unimplemented. Similarly, there was no evidence that UEPB undertakes post training follow-ups to evaluate the impact of the training on the exporter’s business and also offer any post training support.

This was partly caused by the shortage of staff to undertake the implementation of these activities. By the time of the audit (October 2018) UEPB had six (6) technical staff compared to the approved structure of thirteen (13). In addition to this it was observed that UEPB had not developed comprehensive training plans on how these follow-ups were to be undertaken.

A review of the annual work plans and budgets also revealed that the un-implemented capacity building programmes were never included as part of the work plans and thus an indicator of non-prioritisation of the activities. In some cases the funds released for training were either un-utilised or reallocated to other activities other than export market development, as highlighted in the table 5 below.

Table 5: Utilisation of funds meant for training

Item Period Budget(millions)

Releases(millions)

Un-utilised Non-wage(millions)

Re-allocated(millions)

Export market development and promotions**

2016/17 1,175.7 778.6 24.4 7.2

2017/18 344.8 344.8 0 15.3

Source: OAG analysis of the UEPB budget and expenditure records.

**Trainings are budgeted under export market development and promotions.

Management ResponseIndeed, there has been a weakness of follow-up and this is due to low staffing levels. Three (3) members of staff have been recruited into the technical departments to support this function. UEPB awaits guidance from relevant authorities for further recruitments. Work plans will also be revised to emphasise follow-up support and monitoring activities

In addition, UEPB plans to include, a staff recruitment component and the prioritisation of trainings in the budget for financial year 2019/20.

RecommendationUEPB should develop comprehensive training plans as a guide for implementing activities aimed at building the capacity of the exporters. UEPB, in addition, should desist from reallocating funds meant for capacity building of exporters


OVERALL AUDIT CONCLUSIONThe export trade sector has to a large extent not performed to its full potential because of a number of weaknesses such as inadequate coordination among the stake holders, insufficient trade and market information, inadequate review of existing policies and strategies and failure to build the capacity of exporters. This sector can however perform better and make a bigger contribution to the economy if the identified weaknesses are addressed.


APPENDICES

Appendix I: Documents reviewedS/N Document Purpose

1. The UEPB Act Establish the mandate of UEPB and the functions of the board.

2 Uganda National Export Policy To establish the policy objectives and interventions aimed at facilitat-ing the growth and development of trade.

3 National Export Development Strategy To establish and understand the strategies developed in order to boost export trade.

4. Draft Policies such as National trade fair and Exhibition Policy,National Iron and Steel PolicyTea and Spices Policy

To understand the contents of the policy and to assess the extent to which these policies have been reviewed, approved and implemented.

5. The UEPB strategic plan 2015/16-2019/12 - To establish the UEPB’s strategic priorities and how these relate to the UEPB functions.- To evaluate the effectiveness of the strategies put in place by UEPB to promote export trade.

6. Ministerial Policy Statements To evaluate the policy interventions by government to promote and develop export trade.

7. Annual Work plans and Budgets To establish activities planned and funds allocated for the implementation of such activities.

8. Quarterly performance reports To assess the level of implementation of planned activities by UEPB.

9. Budget Performance Reports To assess the efficiency and effectiveness with which UEPB executes its budgets.

10. Activity Implementation reports To confirm that activities reported as implemented were actually implemented by UEPB.


Appendix II: Interviews conductedS/N Document Purpose

1. UEPB staff: Executive Director, Director export market development and production, Director Trade information.

- To get a deeper understanding of operations of UEPB and the activities undertaken as part of the development of Export Trade. - To understand the major challenges facing UEPB in executing its mandate.- To understand who the major stakeholders are and the key processes in development of export trade.

2 Ministry of Trade Officials To understand how UEPB relates to the Ministry of Trade and to corroborate information obtained from interviews with other stake holders.

3 Association of Uganda Vegetable Exporters and Producers Association

- To understand the activities and challenges of the Vegetable exporters and how they relate with UEPB.- To ascertain how UEPB has helped these exporters grow and develop their export business.

4. The Grain Council of Uganda To understand the contents of the policy and to assess the extent to which these policies have been reviewed, approved and implemented

5. The Uganda Tea Association - To understand the activities and challenges of the grain exporters and how they relate with UEPB.- To ascertain how UEPB has helped these exporters grow and develop their export business.

6. Uganda Small Scale Association of Uganda

- To understand the activities and challenges of the tea exporters and how they relate with UEPB.- To ascertain how UEPB has helped these exporters grow and develop their export business.

7. Uganda Manufacturers Association - To understand the activities and challenges of the manufactures and exporters and how they relate with UEPB- To ascertain how UEPB has helped these exporters grow and develop their export business

8. Uganda Flower Exporters Association - To understand the activities and challenges of the manufactures and exporters and how they relate with UEPB- To ascertain how UEPB has helped these exporters grow and develop their export business

9. Uganda Oilseeds Producers Association - To understand the activities and challenges of the manufactures and exporters and how they relate with UEPB- To ascertain how UEPB has helped these exporters grow and develop their export business

10. Uganda Cocoa Association - To understand the activities and challenges of the manufactures and exporters and how they relate with UEPB- To ascertain how UEPB has helped these exporters grow and develop their export business


Appendix III: Organisational Structure


Appendix IV: Funds released for provision of information that were reallocated

Invoice Number Description EFT / Check Number Distribution Amount

Reallocations for FY 2016/17

HM-UEPB2017-410 Payment for supply of stationery 12883525 3,709,900

HM-UEPB2017-677 Payment for supply of stationery 14325673 732,203

HM-UEPB2017-623 Payment for supply of headed papers 14311956 225,000

HM-UEPB2017-623 Payment for supply of headed papers 14311956 1,250,000

HM-UEPB2017-677 Payment for supply of stationery 14325673 4,067,797

HM-UEPB2017-627 Payment for supply of office stationery 14311963 3,970,799

HM-UEPB2017-627 Payment for supply of office stationery 14311963 714,744

HM-UEPB2017-315 Office operations 12299626 836,000

HM-UEPB2017-410 Payment for supply of stationery 12883525 667,782

Total 16,174,225

Reallocations for FY 2017/18

HM-UEPB2018-428 Payment for allowances for B.O.D Technical Committee meeting held on 11th April 2018

17433341 350,000

HM-UEPB2018-512 Payment for B.O.D allowance for sitting on 30th May 2018

18007187 350,000

HM-UEPB2018-500 Payment for allowances for B.O.D meeting held on 17th May 2018- Minute Secretary

18000025 77,000

HM-UEPB2018-430 Payment for allowances for B.O.D Technical Committee meeting held on 11th April 2018- Minute Secretary

17433352 77,000

HM-UEPB2018-499 Payment for allowances for B.O.D meeting held on 17th May 2018

18000026 350,000


18000019 350,000

HM-UEPB2018-436 Payment for Contracts Committee Sitting Allowances

17433349 252,000


17433354 350,000


18000018 350,000


18007188 350,000


18007192 525,000

HM-UEPB2018-547 Payment for supply of Tonner Catridges 18058888 4,365,000


17433348 63,000


17433347 490,000

HM-UEPB2018-438 Payment for Allowances for Valuation Committee for Disposal of Assets

17433347 540,000



18000016 350,000

HM-UEPB2018-551 Payment for wages for Volunteers 18108038 3,696,000


17433342 350,000


18007191 350,000

HM-UEPB2018-518 Payment for allowances of Audit & Risk committee of B.O.D

18007187 350,000

HM-UEPB2018-629 Payment for supply of office stationery 18359913 3,665,254

HM-UEPB2018-328 Payment for purchase of 01 tonner for Ky-ocera printer to help in the printing of online applications received

16690394 835,000


18000020 525,000

hm-uepb2018-514 Payment for B.O.D allowance for sitting on 30th May 2018

18007190 350,000


17433340 350,000


18000017 350,000

Total 20,010,254


Appendix V: Diversion of funds released for training

Invoice Number Description EFT / Check Number Distribution Amount

Diversions for FY 2016/17

HM-UEPB2017-620 Payment for the Executive Director office operations

14311943 2,000,000

HM-UEPB2017-524 Payment for Executive Director Office operations

13743913 911,200

HM-UEPB2017-448 Payment for E.D Office operations 13330611 2,636,700

HM-UEPB2017-366 Being payment for office operations for the Executive Director

12736304 1,638,500

Total 7,186,400

Diversions for FY 2017/18

HM-UEPB2018-388 Payment for special allowances 17302896 4,440,000

HM-UEPB2018-352 Payment of special allowances for extra duty work

16775922 1,680,000



HM-UEPB2018-351 Payment of special allowances for extra duty work

16775928 2,400,000

Total 15,320,000

Audit House, Plot 2c ApolloKaggwa Road,P.O. Box 7083 Kampala,Tel: 041-7-336000,Fax: +256-41-435674,Email: [email protected],Website: www.oag.go.ug