Understanding Italy, Uganda renewed business engagement
State Minister for Agriculture Fred Mwino Kyakulaga (left) and Mr Matteo Zoppas, the president of the Italian Trade Agency, sign a memorandum of understanding on the sidelines of the International Agricultural Machinery Exhibition in in Bologna, Italy on Wednesday. Photo Samuel Ssettumba
What you need to know:
- Italy wants to exploit quality issues existing in Uganda’s agricultural machinery sector, to penetrate a market that is largely dominated by Indian and Chinese products
Uganda, through Ministry of Agriculture walks away from this year’s international Agricultural Machinery Exhibition with a commitment from Italy to establish an agricultural mechanization training centre in the eastern district of Iganga next year.
The centre is estimated to cost about Shs2.6b.
The project, anchored by a memorandum of understanding between the Italian Trade Agency and government of Uganda, denotes a bigger Italian trade and investment effort that has started to unfold encompassing 23 countries across Africa.
“The Italian government has come in to support with equipment and trainers for, especially the youth on how to use and maintain the agricultural equipment,” state minister for Agriculture Fred Bwino Kyakulaga, told Monitor after signing the MoU with the Italian Trade Agency on the sidelines of the 24th International Exhibition for Agricultural Machinery in Bologna, Italy on Wednesday.
But after mainly engaging under the European Union with Africa, why is Italy shifting its approach?
Consider the facts in the case of Uganda. Uganda exports $290m and imports $76m worth of goods to Italy, according to United Nations Trade website, Comtrade.
Trade balance is more than three times in favor of Uganda with coffee occupying the biggest chunk at $260m.
So, from the Italian standpoint, exports of agricultural machinery to Uganda make perfect sense beyond anything else.
Indeed machinery dominates the more than $70m in Italian imports to Uganda.
In the big picture though, Italy pledged $5b towards African development during the Italy-Africa Conference early this year.
“The first problem I noticed when I arrived here in 2018 was the arrival of African immigrants via the sea to Italy,” says Elizabeth Napeyok, Uganda’s ambassador to Italy in an interview.
Italy would, therefore, by its policy towards Africa hope more Africans will not seek illegal immigration into Europe.
There is also evidence that Italy too is serious about doing business with at least some countries in Africa, as in the case of Uganda.
Ms Napeyok told Monitor that there are increasing investor inquiries about Uganda in Italy and from less than 100 tourists in 2018, there are at least 1,000 visas issued to Italians coming to Uganda annually today.
Trade balance
Italy thus intends to try and reduce the trade deficit with Uganda with its best foot forward in agricultural machinery.
However, it will have to compete with China and India on price.
“China is growing but it is still far away from Western technology. We sense a change in the attitude of African farmers who want to use better technology in agriculture,” Mr Fabio Ricci, the director general of the Italian Federation of Agricultural Machinery Manufacturers, said.
But speaking to some Ugandan visitors to the International Agricultural Machinery exhibition in Bologna Italy, it was clear that the price question, quality notwithstanding, is valid.
“Accessing capital to buy these machines is expensive. So if they are on the ground in Uganda, they can partner with local financial institutions to provide credit,” Mr Samuel Sekyondwa, a dealer in solar irrigation equipment,” said.
