Uganda’s business environment should be freed up from a tangle of red tape for the economy to become competitive.
This view resonates with a cross section of the private sector, academicians and researchers who want government to abolish bureaucratic habits, carry out tax reforms implement policies that will attract investment to Uganda.
These experts believe that if the state institutes effective policy reforms in business regulations, implementation of new policy actions and well-functioning infrastructure particularly railway transport and lower costs of hydroelectricity will offer Uganda a good business environment. This will translate into increased investment in the economy and competitiveness.
Competitiveness is considered as a key criterion for assessing the success of countries, industries and companies. World Economic Forum defines competitiveness as the set of institutions, policies and factors that determine productivity.
The strength of competition depends on both the conduct of firms and the external business environment in which they compete, the state of infrastructure, legal framework and the effectiveness of the financial system.
Speaking during the 10th National Competitiveness Forum held early this month under the theme: Enhancing Competitiveness in Uganda’s Agro-Industry at Mestil Hotel, Mr Anile Patel, managing director Grant Thornton, said effective policy implementation across all sectors of the economy and infrastructure development will make Uganda competitive.
Mr Patel said investors’ incentives ought to be analysed to find out jobs created, investment made, income tax lost and results of sector performance.
In the current Doing Business Report by the World Bank, Uganda is ranked 116th out of 190 economies, a position that lags far behind in terms of attracting private sector investment.
“Uganda must improve in policy implementation, abolish bureaucracies and barriers to ease starting a business, creating an environment that encourages investment and compliance is needed,” he explained.
Agriculture has the potential to drive Uganda into the middle-income status while supporting Uganda’s competitive advantage in the global economy.
Competitiveness also in with investments in research and development, while innovation and other types of knowledge capital improve a company’s product quality and reduce production costs.
Invest in research
Speaking on the subject of boosting innovation and knowledge along selected value chain, the chief executive officer of Stanbic Bank, Mr Patrick Mweheire said Uganda’s ranking in different elements of competitiveness is mix in that in areas, the countries the country ranks fairly while in other parameters, it ranks poorly.
“Firms are more likely to succeed within healthy innovation ecosystems. These ecosystems are made up of human capital, research and development institutions, financial capital, the industrial base, the legal and regulatory environment, business and innovation culture and the quality of networks,” he said.
Mr Mweheire said government should prioriitse investment in research and development to boost innovations in the country.
“Uganda’s current spending in research is 0.2 of the GDP, which is very low compared to Kenya’s spending in the research of 0.8 per cent. It is also six times higher than Uganda’s,” he said.
Uganda government has designed a National Content Policy with the aim of reserving projects for local companies.
Mr Mweheire said: “The Local Content policy is important for Ugandan companies.”
He said out of $3.5 billion that has been invested in Oil and gas, $900 million has been spent on local firms that provided the services in the sector.
Contributing to innovation, which is key to competitiveness, the executive director of Uganda Industrial Research Institute (UIRI) Professor Charles Kwesiga said: “There must be value chains at every stage of production in Uganda for the country to compete.”
Professor Kwesiga advised that as Uganda positions herself to become an industrialised country, the government should invest in Uganda Industrial Research Institute to drive innovations and industrialization.
Innovation has become one of the driving forces for countries’ competitiveness because it leads to new ways of doing things in a more cost-effective way.
Professor Kwesiga said innovation goes in hand with human capital development, application of machines and industrial development.
The State Minister of Finance General Duties, Dr Gabriel Ajedra Aridru said Uganda has all that is required for competitiveness but technocrats in agencies and government are not doing what is required properly.
“The solutions are within the reach. But what is the problem? We are in the fourth industrial revolution, if we don’t contribute to it we shall be left behind and miss out in it. So I appeal to you (Ministries, Agencies and Departments), please go back and address these challenges,” he said.
With funding from the World Bank, the government is constructing a one-stop centre at Kololo, which will house many agencies to provide services needed by the private sector regarding business documentation.
The World Bank’s latest ‘Doing Business’ report 2020 looks at domestic small and medium-size companies and measures the regulations applying to them through their life cycle. It also reviews 190 economies across 10 business regulatory areas of: Starting a Business, Dealing with Construction Permits, Getting Electricity, Registering Property, Getting Credit, Protecting Minority Investors, Paying Taxes, Trading across Borders, Enforcing Contracts and Resolving Insolvency.
Uganda’s worst performance areas include: starting a business in Uganda which ranked 169, registering property (135) and trading across borders (121).