ELEVATED CLUSTERS & PRODUCT TRANSPARENCY

ELEVATED CLUSTERS & PRODUCT TRANSPARENCY

Introduction

In the past few decades, the Ugandan economy has grown steadily, and it has experienced some economic transformation. The Ugandan manufacturing sector is dominated by Agro-Processing, food and beverages, household products, construction materials and fast-moving consumer goods. Most firms are small and medium enterprises concentrated in the Kampala and Central region. Most of the manufactured goods produced in Uganda are aimed at domestic consumption, and exports are limited to the regional markets (which include Rwanda, Burundi, South Sudan, and Democratic Republic of Congo (DRC)). Exports to global markets are mainly unprocessed primary products and natural resources.

In most EAC countries, manufacturing value chains are not optimized and still fragile. Many public and private key stakeholders are not working hand-in-hand along value chains. The COVID-19 pandemic has shown how fragile these chains are; there were no support schemes in place to assist to stabilize related value and supply chains.

While larger companies in EAC have already begun to react to this problem and optimize their supply chains with a wide variety of approaches, small and medium-sized Argo-processors have not had the opportunity and capacity to do so at the same pace.

Main objective of the project:

To establish and elevate three clusters in key sectors that contribute to improved competitiveness of various actors along these value chains. The cluster development shall lead to increased product quality and market access of the SMEs involved and contribute to job creation through networking, cooperation and innovative cluster services. Ultimately, this will result in improved cooperation of key actors along such chain

Target:

Focus shall be given to such sectors that are of high relevance for the Ugandan economy, but also of high interest for USSIA:

• Food and Beverage (Specialty Coffee and Tea, High value Fruits and Nuts)
• Agro-processing (Fruit Juices & Natural Cosmetics)
• Metal fabrication
• Construction

Up to 15 USSIA members can be supported in each of the three cluster approaches

In addition, up to 100 USSIA members from the Agro-processing sector can be supported to digitize their supply chain and to improve their transparency efforts along their supply chains.

Why Clusters?

Clusters are promising environments for SME development. Due to their small size, SMEs individually are often unable to realize economies of scale and thus find it difficult to take advantage of market opportunities that require the delivery of large stocks of standardized products or compliance with national and international standards. They also tend to have limited bargaining power in inputs purchase, do not command the resources required to buy specialized support services, and have little influence in the definition of support policies and services.

Clustering will enable SME manufacturers in COVID-19 times to remain embedded in manufacturing value chains and/or keeping them operational. Furthermore, clustering will facilitate knowledge and information exchange, trust building, increased value-added production and mutual cooperation.

Benefits for the participating USSIA members

• Individual, demand oriented firm-level support
  • Improved product and process quality
  • new product development
  • Improved capacity to develop and sustain domestic and East African Markets
  • Improved transparency of products and processes (especially for Agro-processing firms)
  • networking and experience exchange
  • Skills development
• Increase visibility of the cluster actors
• Increased awareness of importance of clusters and value chain development among the USSIA members