Business environment reforms to enhance Uganda’s competitiveness

What is competitiveness and why is it important?
Competitiveness is the set of institutions, policies, and factors that determine productivity of a country.

A competitive country should be able to produce goods and services, which meet the test of both local and international markets, outperforming others, and at the same time creating wealth that improves the wellbeing of the citizens. Simply put a competitive country is a productive one. Productivity is important, given that it drives growth, income levels and wellbeing.

However, competitiveness does not happen by accident, but through deliberate actions undertaken to tame the environment which is dynamic.
CEDP is one of such initiative that government has instituted to ensure that the country becomes competitive so as to entice local, regional and international firms to invest and conduct business here.
Increasing competitiveness means prosperity, and it is therefore in sync with the country’s aspirations under Vision 2040.

How is CEDP contributing to the improvement of the business environment and competitiveness?
A number of studies and surveys of Uganda’s private sector have all led to the conclusion that the business environment is not sufficiently conducive for private sector development, yet, it is the engine of growth and development of any country.
A number of constraints have been identified that need to be addressed. These include among others access to land, difficulties in starting a business, acquiring licences and access to electricity.

CEDP is tackling some of the constraints through support towards implementation of land administration and management reforms, business registration and licensing reforms.
The interventions under CEDP have eased, simplified, quickened and made it less costly for enterprise creation and growth. The land reforms, are unlocking the potential of land as a catalyst for commercialisation of agriculture, facilitating flows of private investment into industries, creating employment with its accrued benefits.

We are also supporting private sector enterprises operating in four priority productive sectors which include, agri-business, tourism, fisheries and ICT under the Matching Grant Facility. The interventions being supported at firm level will ultimately improve productivity, incomes, create employment and enable our enterprise to compete favourably.

According to a recent World Bank business report, Uganda is ranked 122 from 115 in doing business despite the ongoing reforms. What is your comment about this performance?
There was a decline in the rating but this does not mean that we are doing nothing as a country. Just like all other countries, Uganda is continuously making strides towards improving its competitiveness.

However, the nature, pace and impact of the reforms being undertaken, determines the difference. For example, for the period under review, Uganda only carried out one significant reform impacting on trade across borders, while Kenya and Rwanda each carried out five reforms and are ranked 91 and 58 respectively. So, we still need to do much more as a country but also quickly.

What should we to do to improve our competitiveness?
We need to heighten the pace of implementation of reforms. It is taking a while to review and enact key legislations affecting business. Even when enacted, the regulations to operationalise them takes time. The administrative and technological reforms need to be backed legally if they are to be effective.

There is also need for synchronisation of all reforms across government. We need to dismantle the silos and “the mandate” syndrome that derail progress of reforms.
Government agencies need to work concertedly and in a more collaborative manner rather than pursue institutional/agency agendas. Last but not least, is the need for mind set and attitude change as well as investment in human capacity development.

What has CEDP achieved so far?
Reforms under the project have improved service delivery in the respective sectors. This is demonstrated in terms of the time taken to register a business or undertake land transaction, which has significantly been reduced.

We have built human and technology capacity. For instance, the land information system and the business registration and licensing systems are trail blazers and evidence that with proper support, government can offer excellent service to its citizens.
Number of businesses registered and land transactions are increasing. We are progressively reducing the informal sector with a number of enterprises registering business, and also titling and improving security of land tenure.

Though, we did not deliberately set out to increase government non-tax revenue (NTR), with the automation of processes under Ministry of Lands, Housing and Urban Development (MLHUD) and Uganda Registration Services Bureau (URSB), we are noticing a significant increase in NTR demonstrating that inefficiencies, do not only affect competitiveness, but also cause significant loss of government revenue.

The technology platforms established at MLHUD and URSB, will enable linking these two entities operations to other government agencies to ease information sharing, eliminate duplication and further ease service delivery.

You recently had the ground breaking ceremony for the Uganda Business Facilitation (UBFC). How will this infrastructure development contribute to the project objective?
The UBFC which is expected to be ready in 18 months’ time will house three government agencies; URSB, Uganda Investment Authority and Capital Markets Authority.
It will also have a dedicated floor for the government one stop centre, with service points for 15 government agencies.

The UBFC, will therefore, provide physical and technological proximity and enable delivery of real time efficient and effective services to the citizens.
This is in line with government aspiration for increased collaboration among its agencies that will see a reduction in cost of public administration. Already government is in advanced stages of further rationalising its agencies for the purpose.

What progress have you made with the other project components?
The project is also supporting tourism competitiveness development. Tourism is currently the leading export earner for Uganda, whose potential has not been fully exploited. The project is supporting interventions in policy development, product development, packaging and promotion, capacity building and tourism enterprises support.

Last year, we engaged three destination public relations and marketing agencies to market Uganda in key source markets of Germany speaking Europe, United Kingdom and America for a period of one year.

Through this engagement, the visibility of Uganda as a preferred tourism destination increased, demonstrated by the gradual increase in tourist numbers. Building on the achievements, government has furthered the engagement of the three firms, but is also pursuing engagements of an additional three destinations inChina, Japan and the Gulf States.

As already mentioned, human capacity development is key for competitiveness. The project is funding the revamping of the Uganda Hotel and Tourism Training Institute (UHTTI), through construction of a new structures, furnishing, equipping, and training of instructors.

The target is to have a centre of excellence established in Jinja by project closure to provide quality labour force for this important sector. Under the Matching Facility (MGF) component, we have supported 514 MSMEs operating in the four priority sectors namely: Agri-business, Tourism, ICT and Fisheries. All the enterprises supported have demonstrated improvement in productivity, sales, revenue and employment.

In terms of competitiveness, where do you see Uganda post implementation of CEDP?
Uganda is headed for better performance and CEDP is a step in the right direction. Though we still need to do more as a country, we ought to be resilient to maintain and consolidate the achievements so far attained under the project.
There is also urgent need to heighten the pace of action in executing reforms, a radical change in mind set and attitude as well as creativity and innovation in tackling the dynamic business environment.

KEY PROJECT OUTPUTS

• Ten new Ministry Lands Zonal offices (MZOs) (Mpigi, Luwero, Mityana, Kabale, Rukungiri, Tororo, Soroti, Moroto, Mukono and Wakiso).
• UBFC home to three government agencies (URSB, UIA, CMA) and a government one stop centre.
• A three-star application hotel fully furnished and equipped at UHTTI.
• Enhanced land information system installed in the 21 MZOs countrywide.
•Online business registration system for URSB.