Informal sector now growing faster, says Ubos
Posted Friday, February 14 2014 at 02:00
Sector hard to tax since there are no records to track operations.
The informal sector is the fastest growing segment of the economy, according to a recent report by the Uganda Bureau of Statistics.
According to the report, the number of businesses operating informally is multiplying at a speed that is far greater than the pace of enterprises that mutate into formal operations annually.
And if the trend is not checked, economic analysts warn its impact on the economy could be grave as the government will be short of resources to fund its (national) budget.
“Informal sector is the fastest growing sector in Uganda, accounting for 43 per cent of the total economy,” reads in part the Uganda Bureau of Statistics (UBOS) data.
This is worsened by the stagnant revenue contributions of 12.7 per cent to the economy, which is the lowest in sub- Saharan Africa with average of 17 per cent.
In an interview earlier in the week with the Makerere University Professor, Prof Augustus Nuwagaba, it emerged that this development is twofold.
He said: “The informal sector does not require a lot of income. It has a lot of customers. And the products are cheap. Its only problem is that it’s not a registered entity and therefore the government cannot locate them.”
The Private Sector Foundation Executive Director, Mr Gideon Badagawa, when asked about the matter, said he was not surprised by the report. “This is expected. Just look at agriculture, transport and construction, all these are the fastest growing sector, but some of them are still informally managed,” he said an interview on Tuesday.
About the sector
The government defines informal sector as segment that consists of all economic activities and income derived that would otherwise escape government regulation, taxation or observation.