Uganda’s Path to Full Economic Monetization: Advancing Industrialization and Market Access
By UMA
Kampala -Uganda. Themed “Harnessing the Power of Commercial Agriculture, Industrialization, Service Expansion, Digital Transformation & Market Access to Fully Monetize Uganda’s Economy,” the FY2023/24 Uganda National Budget heralds the country’s strategic direction towards full economic monetization, with a strong emphasis on industrialization.
In this regard, the Uganda Manufacturers Association in partnership with NCBA Bank and Uganda Insurers Association (UIA), hosted the second edition of the Manufacturing Sector Dialogue at Kampala Serena hotel that sought to analyze how the National Budget will shape Uganda’s national and regional competitiveness.
Whilst delivering his opening remarks, the Minister of State for Industry, Hon. David Bahati noted that government seeks to build an integrated and self-sustaining economy through value addition, with a substantial amount of money dedicated to build 22 industrial parks.
The Minister also reiterated Government’s commitment to secure markets for manufacturers through leveraging trade agreements such as the African Free Continental Trade Area (AfCFTA) that presents a vast market of more than 1.3 billion people.
UMA Chairman, Deo Kayemba also noted that the budget highlights significant figures, with the Government of Uganda’s Development Expenditure amounting to Shs.6.1 trillion, external project support financing totaling Shs. 8.3 trillion, and domestic arrears standing at Shs.215.8 billion. According to him, these substantial amounts indicate the potential for exponential economic growth.
The dialogue delved into the need to create a robust base for market access information, through aggregation of information given the $163billion EAC market size. Despite the relentless market challenges at EAC level, it is imperative for us to appreciate that Uganda has since become a surplus producer of agro commodities and manufactured goods meriting steady market establishment.
Speaking at the dialogue, the Chairman Economic Board Committee at UMA, Mr. Richard Mubiru, highlighted the need for prudent market regulation and long-term policy harmonization to support manufacturing sector growth in Uganda.
He also revealed the unfair credit lending by commercial banks, which heavily affect the growth of industries. According to Mubiru, countries that have fully industrialized have 100% credit accessibility from Development Banks that have patient capital, alongside pension funds.
Mubiru re-echoed that the sector is further strained by the fact that Kampala Stock Exchange remains too inactive to optimally attract local investment into companies listed. There is need to rethink and re-tweak the Public Private Partnerships Unit (PPP) under the Ministry of Finance to spur investments in strategic sectors where there has been total market failure to attract the desired investments.
Action Points and Way Forward:
Throughout the dialogue, several action points and strategies were identified to address the challenges faced by the manufacturing sector and enhance its competitiveness;
- MoFPED to provide feedback on UMA’s budget proposals and comparative analysis.
- Strengthening institutional capacity of the insurance sector and enhancing stakeholder engagement.
- Institutionalization and operationalization of the PPP Unit to facilitate private sector needs for public-private partnerships.
- Focus on market access and export promotion for Ugandan manufactured products.
- Harmonization of specifications and standards for various industries to improve efficiency and competitiveness.
- Leverage South-to-South cooperation for vocational training to address the skilled labor shortage in the manufacturing sector.
- Enhance market electricity as a commodity and regulatory measures for power tariffs.
- Improve collaboration between the government and the private sector is essential to foster drive economic growth effectively.
- Strengthen stakeholder engagement and management in the insurance industry to enhance its contribution to the economy.
- Expand umbrella associations and improve data collection to provide valuable insights to inform budgeting decisions.
- Simplify regulations, improving cooperation among economic actors, and harmonizing product specifications based on standards to promote a conducive business environment.
- Leverage digital transformation to increase efficiency and reliability across sectors to enhance economic growth.
- Support the growth of the manufacturing sector through investments in the capital markets to foster long-term development.
- Focus on commercial diplomacy to enhance market access for Ugandan products both regionally, on the continent and internationally.
With strong government support, collaborations with stakeholders, and a focus on long-term development, Uganda is poised to propel significant economic growth and enhance its regional and global competitiveness.
