Kampala — A TOTAL of 15 factories closed in 2008 due to the high cost of doing business, the Uganda Manufacturers Association's (UMA) chairman, James Kalibbala, has revealed.

"The high costs escalated the cost of business operations throughout 2008. A total of 15 companies closed. These were mainly dealing in fish processing and leather. Others were dealing in grain and tobacco," he said.

"Fish processing plants were more affected because of a reduction in fish stocks due to the Government's failure to control over-fishing," he said.

"Twelve more others that are manufacturing polythene are also about to close due to high taxes that were imposed on polythene production. They pay 120% as excise duty," Kalibbala told a press conference at the UMA boardroom in Lugogo, Kampala.

He said a review of economic developments during 2008 reveals major business challenges and market distortions.

These include a rise in fuel prices whereas the international price of a barrel of oil has fallen from $147 to $40.

"During the Kenyan crisis, we proposed to the Government to start using the southern route for transportation of fuel products and utilise oil reserves. This has not been adhered to, hence the fuel crisis," Kalibbala explained.

Other challenges include the high inflation rate, exchange rate fluctuations that are affecting imports and exports, difficulties in getting raw materials plus poor roads, railways and waterways.

The association's executive director, Gideon Badagawa, said the situation had been aggravated by the global financial crisis.

"The crisis has had a huge impact on manufacturers and the business community, especially importers of raw materials. This will increase prices and discourage further investments," Badagawa predicted.

He said aid-dependent countries like Uganda were likely to suffer since development partners like the US Agency for International Development and the World Bank would reduce financial support for infrastructure, energy and the private sector.

"There are likely to be fewer tourists. That will affect trade and investment since tourism is the biggest promoter of growth and investments," he said.

"This year, the Government should work more with the private sector to address the high cost of doing business."