As the 2017 curtains falls, it is no longer news that the economy didn’t do well over the last 12 months.
Going forward, economic analysts are not as optimistic although some predict a somewhat improved economic environment in the coming New Year, about a fortnight away.
Even then, that will greatly depend on the weather conditions, considering that farmers here entirely rely on rain-fed agriculture.
Should the misfortune of weather vagaries befall again as it has always been the case in recent years, then the country will endure another long and hard 2018.
According to Uganda Revenue Authority Revenue (URA) performance report for the period July to September 2017, only a handful of economic sectors are vibrant enough.
As a result, the economy was not able to generate sufficient revenue, explaining the Shs132 billion deficit that the tax body opened its financial year 2017/18 first quarter accounts with.
There are more than 20 economic sectors that the economy boasts of. But according to the URA report, the 82 per cent of the total revenue was realised from five sectors during the first quarter of the financial year 2017/18.
Wholesale sector was the best contributing sector with 34 per cent followed by the manufacturing sector at 27 per cent.
“The two sectors collectively generated over 61 per cent of the total revenue during the first quarter FY201718,” reads the tax collector’s report on the performance of the major economic sectors.
Looking at year to year growth rates the top sectors registered a marginal growth during the first quarter of the financial year 2017/18 compared to the same period last year.
However, information, financial, electricity, public and mining sectors all registered declines in their revenue collections, an indication of how hard the economic environment has been for the greater part of the year.
State of economy
According to the minister of State for Finance, Planning and Economic Development, Mr David Bahati, while summing up his remarks at the National Budget Conference held recently in Kampala, the economy is “doing just fine.”
Mr Bahati, who presented the government position on behalf of his senior minister Matia Kasaija, who at the time was out of the country, disagreed with the gloomy assessment presented by both economic sector analysts and industry players.
In his presentation, Mr Bahati argued that the economy is picking up, saying prices of food are dropping, and that inflation is easing, let alone resurgence of investor confidence.
He said: “The near term prospect is therefore promising. Growth for this financial Year 2017/18 is projected at five per cent and will move up to about seven per cent in the medium term as the dividends from infrastructure investments and associated commercialisation in agriculture and petroleum sectors become realised.”
Apparently, the government seems to be the only one with the view the economy is actually doing fine.
The private sector statement on the Financial Year 2018/19 budget, issued by the Private Sector Foundation Uganda (PSFU), was critical of the economic outlook, demanding more be done in empowering the population ability to purchase.
“The current stance depicts a slow economic activity strongly correlated to the population’s weak purchasing power which is driving financial distress and moral decay in the population hence discouraging investment by reduced production, productivity and inefficiencies,” reads the PSFU statement, in part.
Civil society speaks
As a result of the gloomy economy, the civil society is doubtful that the aim of transforming the country into a middle-income economy by the year 2020 will be realised.
“It remains highly unlikely that this target will be met,” the executive director of the Uganda National NGO Forum, Mr Richard Ssewakiryanga, said in his presentation.
Mr Ssewakiryanga, who represented the civil society, said: “The economy is estimated to have grown at a rate of 3.9 per cent during the FY2016/17 which was slower than the 4.1 per cent recorded in the previous year.”
According to the CSOs paper, the slower growth recorded during Financial Year 2016/17 was attributed to the sustained decline in the performance of agriculture due to prolonged drought and delays in public development investment growth.
Now, the fight against counterfeit and substandard products is not a war that can be ended by one single person or an entity.
Probably there has never been a political head at the ministry of Trade that has fiercely fought for quality and better standards than current minister Amelia Kyambadde.
She has ensured that imports coming into the country are checked for quality and right specifications.
She has also ensured that programmes to improve quality and standards and how the Small and Medium Enterprises can acquire that capacity has not remained in the shelf at the ministry.
Of course there are still challenges, but at least there is something being done about that.
The case for BUBU
For Buy Uganda Build Uganda (BUBU) policy, it is difficult to isolate it from the ministry of Trade, thanks to the political leadership there.
Already there are efforts for BUBU to be rebranded into ‘Zimba Uganda’.
As we wait for the rebranding to happen, the unanimous consensus across the private sector leadership is that BUBU is the best thing, so far, that has happened to the economy in 2017.
And should it be implemented properly, then there is no doubt that the economy will be headed towards the right direction. With BUBU, a small portion of domestic resources will be retained in the economy.
‘Buy Uganda Build Uganda’ policy aims at giving prominence to goods produced locally. It also gives guidance to policy makers to ensure promotion of consumption of locally produced goods.
According to the policy, deliberate interventions will be made to ensure locally produced goods are considered while government is procuring items and that the products will be in supermarkets with minimum or no hassle at all.
Weather-dependent agriculture. Economic analysts are not as optimistic although some predict a somewhat improved economic environment in the coming New Year. Should the misfortune of weather vagaries befall again as it has always been the case in recent years, then the country will endure another long and hard 2018.
Kenya’s political effect
Developments in Kenya, including months spent in electioneering period impact on the country’s economy in one way or the other.
The uncertainty that shrouded the political event at one point was scary.
Uganda is a landlocked country and also a net importer. Kenya offers a shorter and cheaper route through which Uganda imports her products from, including raw materials for her nascent industries. It is for this reason that Kenya becomes almost a heartbeat of Uganda’s economy.
Even as the year closes, the nervousness is still being felt as political contestation evidenced by several clashes between police and a section of population moves from the courts of law to the streets of Nairobi.
The South Sudan factor
According to data from the Trade ministry, South Sudan became Uganda’s leading export destination in 2008 following the signing of the Comprehensive Peace Agreement (CPA) in 2005.
Just three years later (in 2008), total exports (both formal and informal) peaked at $1.18 billion (nearly Shs4 trillion). About five years down the road, the gains were quickly eroded as the environment quickly degenerated into chaos.
“However, the fighting that broke out in December 2013, sparking off a civil war in South Sudan, caused a steady decrease in Uganda’s exports from $414m (Shs1.3 trillion) in 2013, to $385m (Shs1.2 trillion) in 2014 and $353m (Shs1.1 trillion) in 2015,” Ms Amelia Kyambadde said earlier .
Uganda’s leading exports to South Sudan are cereals, milling products, sugar, iron and steel, cement, beers and soft drinks, motor vehicle re-exports, vegetable oils and soap lubricants.