Uganda’s tax on galvanised coils threatens regional steel exports

Countries including Rwanda, Burundi, the Democratic Republic of Congo (DRC) and Southern Sudan could all be affected after imposition of 10 percent imposition on the product The supply of steel products in the Great Lakes Region is likely to be hampered by Uganda’s imposition of 10 percent import duty on galvanized steel coils. The coils are a raw material used in manufacturing corrugated iron sheets, expanded metal angles and other steel products. The imposition of this tax has been in the pipeline for the last 10 years and it is a means to protect locally manufactured galvanized coils according to government officials. The decision was contested by leading steel manufacturers in Uganda, causing a deadlock between the key players in the steel manufacturing industry and the tax body. A recent meeting held in Kampala by aggrieved leading producers of steel products in Uganda including Roofings, Tororo Cement, East African Roofings Systems, Sembule, Megha, decried the import tax saying that it will hamper the supply of steel products both locally and in the region. Countries including Rwanda, Burundi, the Democratic Republic of Congo (DRC) and Southern Sudan could all be affected. Under the East African Community (EAC), imported galvanized coils have a 25 per cent tax which Kenya and Tanzania have already implemented but Uganda was given a 5 year period up to 2010 to implement the tax. Uganda Baati, the sole manufactures of galvanized coils have appealed to the Government to impose at least a 10% Import duty on Galvanized coils, which are currently imported tax free, so that they can protect the locally manufactured coils, like Kenya and Tanzania, a decision which other steel manufacturers have strongly contested, citing market monopoly as the underlying reason Uganda Baati is lobbying for the duty tax. Among other things Ugandan Steel Manufacturers argue that Uganda Baati which recently opened a plant in Rwanda has not yet attained the capacity to satisfy the Ugandan market and the regional market. They argue that Uganda Baati only produces 28.000 Metric tones per annum yet the regional demand goes above 150.000 Metric tones with the Ugandan market requiring over 70.000 Metric tones annually. “We definitely think that this tax will affect our output and limit our capacity to supply the regional market and the monopoly of Uganda Baati will adversely affect the quality and service delivery of corrugated iron sheets and other still products in the region” said Deo Kayemba, the Managing Director of East African Roofings Systems. Uganda Baati has been since 2000 been asking for this kind of protection but the Uganda National Bureau of Standards and the Ugandan Manufacturers Association to first up their capacity, quality output and competitive prices before it gets it, a thing which other producers say it has failed to achieve since. Ends

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Uganda’s tax on galvanised coils threatens regional steel exports