The Uganda Electricity Distribution Company Limited’s (UEDCL) recent 14% reduction in power tariffs has been welcomed throughout the country’s manufacturing sector.
Manufacturers welcome the move by the entity under Paul Mwesigwa’s stewardship, which is seen as a significant step towards boosting local production, enhancing competitiveness, and driving economic growth.
New Era for Manufacturing
The reduction in power tariffs comes at a time when the country is transitioning to a new national power distributor, with UEDCL taking over from Umeme on April 1st, 2025. This change has brought with it a renewed sense of optimism among manufacturers, who have long been grappling with high production costs. According to Aga Sekalala Jr., Chairman of the Uganda Manufacturers Association (UMA), the tariff reduction is a game-changer for the sector.
Reducing Production Costs
The 14% reduction in power tariffs translates directly into lower production costs for manufacturers. As Sekalala notes, power is often one of the biggest costs of production in industries, and this move will significantly alleviate the financial burden on manufacturers. With reduced production costs, manufacturers can now focus on increasing output, improving product quality, and expanding their market reach.
Trickle-Down Effect
Sekalala explains that the benefits of the tariff reduction will not be limited to manufacturers alone. The reduced production costs will have a trickle-down effect, ultimately benefiting the end-user. As manufacturers pass on the savings to consumers, prices are expected to become more favourable, making goods more affordable for the average Ugandan.
Regional Competitiveness
One of the significant challenges facing Ugandan manufacturers has been their inability to compete effectively in the regional market due to high production costs. The reduction in power tariffs will enable manufacturers to compete more favorably, increasing their exports and expanding their market share. This, in turn, will contribute to economic growth as manufacturers increase production to meet growing demand.
Economic Growth
The UEDCL’s decision to reduce power tariffs is a strategic move that will have far-reaching consequences for Uganda’s economy. By boosting local production, enhancing competitiveness, and increasing exports, the move will contribute significantly to economic growth. As manufacturers expand their operations, create new jobs, and increase output, the country will benefit from increased economic activity, ultimately leading to improved living standards for its citizens.
In conclusion, UEDCL’s reduction in power tariffs is a welcome development for Uganda’s manufacturing sector. By reducing production costs, enhancing competitiveness, and driving economic growth, this move has the potential to transform the sector and contribute significantly to the country’s economic development. As manufacturers continue to grow and expand, the benefits of this decision will be felt throughout the economy, ultimately leading to a brighter future for Uganda.