Government good at policy formulation, poor at implementation - Badagawa

How would you compare the private sector now and then?
The private sector has expanded beyond our expectation over the last 20 years. Today, it is employing more Ugandans, paying more in taxes and exporting more goods and services. We have now been rated as the most entrepreneurial country by Global Entrepreneurship Monitor.

The private sector is described as the engine of growth. How has PSFU worked towards this sentiment?
Private Sector Foundation Uganda (PSFU) has offered support to the formulation of public policy and programmes including the poverty eradication action plan, plan for modernisation of agriculture, the medium term competitiveness project, and strategic export programme, among others. We have initiated public-private dialogue with government and formulated programmes, plans and priorities together.
Over the 20 years, PSFU has handled four or five projects of the World Bank to improve the business environment. We have also managed several projects on behalf of government.

What are some of the challenges PSFU has gone through?
Low level of implementing reforms and the slow decision-making process in government is challenging. It is incredible that public servants do not take decisions even when they have the mandate to do so. The other challenge is the huge informal sector. More than 70 per cent of this economy is informal and it is difficult to support such enterprises using government programmes.

Due to this informality, it is difficult to identify the gaps. Many people are participating in the economy but are outside the tax bracket. Few people are paying tax and statistics show that less than 20 per cent of the private sector is paying more than 80 per cent of the tax revenue in Uganda. What a tax burden!

What is required for the private sector to overcome its challenges?
Government needs to revisit its policy on liberalisation. The private sector was ill-positioned to take on the mantle of leading economic growth. No government anywhere in the world has completely weaned itself out of business.

Government has now woken up to this reality and established Uganda Development Corporation but also passed the Public-Private Partnership law to work with the private sector to co-invest. The other is poor enforcement of regulations and laws. Uganda is good at policy formulation, making good laws, and designing good programmes but poor at implementing them. We must do a comprehensive civil service reform in Uganda.

Where do you want to see PSFU in the years to come?
It is about competitiveness; working with the public sector and development partners to promote investment and local entrepreneurship to be able to engage markets locally, regionally and internationally. That involves a number of things including training, improving the business environment, and getting the macro-economic environment right. But the key words are partnerships and competitiveness. That is our vision in the next five to 10 years. Our vision is to get all the informal businesses into the formal economy and promote meaningful inclusive growth.

Uganda’s import based economy has seen us suffer especially in relation to the recent global strengthening of the dollar that has left the Shilling weak. What can help the country get out of this bondage?
Boost exports. This is key in managing the current account and restoring stability in the forex market. An export drive that promotes and supports production, value addition and market development for key export sectors in agriculture and tourism will provide the medium to long-term solution.

The immediate resolve could come from tightening expenditure with sufficient focus on local production – import substitution through the ‘Buy Uganda Build Uganda’ policy.
Take the hard decision to reduce government spending and focus on sectors that create wealth, grow the tax base, support job creation and drive exports.