2013: change tact to improve economy
Posted Wednesday, January 2 2013 at 02:00
Let us focus on solving the problems that hurt businesses in the country, remembering that improving the global competitiveness ranking is no guarantee to a better economic growth.
A critical examination of the economy shows that 2012 was a difficult year. With a slump in economic growth, a general slowdown in business as the wave of an unpredictable economic environment took its toll on Ugandans. The ripple effect was replayed when Bank of Uganda cut its earlier projection of growth from 5.4 per cent to 5 per cent in November 2012, before lowering it further to 4.3 per cent in December.
A few months ago, there was some reason for optimism when inflation started declining. However, latest figures from Uganda Bureau of Statistics (Ubos) released on December 31, show that it is trending northwards.
Inflation has increased to 5.5 per cent, up from 4.9 in November and 4.5 per cent in October. The reason: an increase in some commodity prices. This increase justifies that things are not getting any better soon.
Donors were also exposed to the corruption vice—with millions of dollars misappropriated—forcing them to cut development aid to Uganda. So far, about $300 million— 7.1 per cent of the annual budget— has been suspended to Uganda for at least six months.
In this New Year address, President Museveni noted that his administration has been able to regain and maintain success in strategic areas such as electricity, although power black-outs still hurt businesses.
That aside, little progress has been made in bringing the banking system under control; with interest rates remaining high, making it difficult for people to get loans or even repay them.
The economy’s direction can only be shaped by implementing the policies already in place. Industrialisation could be the solution to the country’s twin problems of unemployment and poverty.
Let us focus on solving the problems that hurt businesses in the country, remembering that improving the global competitiveness ranking is no guarantee to a better economic growth. Countries that perform better in the ranking might not necessarily do well in terms of economic growth.
The new year 2013 can only get better if we harness the available opportunities and explore new territories as mountains become springboards to greater horizons.