Economists to govt: Fund businesses for long-term

Tuesday June 26 2018

 

By Martin Luther Oketch & Rainher Ojon

A section of the public wants government to offer long-term funding to improve Micro Small and Medium Enterprises’ access to credit lines.
Over the Mid Term, the Uganda Development Corporation (UDC) going by its draft strategic plan, needs at least Shs500 billion to fund the establishment of joint ventures with the private sector in agro-processing and manufacturing Enterprises, a move which economists support.

“We have to review our position in respect to how we manage the economy. We know of some countries where their Governments are strongly involved in the economy by way of direct investments and management,” reasons Mr Emmanuel Mutahunga, the executive director of UDC.
Among other ventures that Government, through the UDC, is seeking to either revive or start are in the Moroto Ateker Cement Company Limited, Lake Victoria Glass Works Limited, Katwe Salt Project, Isingiro Fruit Factory, Soroti Fruit Factory and Kiira Motors Corporation.
Just last month, during the eighth national competitive forum, Finance Minister Matia Kasaija launched the National Strategy for Private Sector Development.

“All sector contributions to GDP (Gross Domestic Product) have been declining except that of services. We expect all Ministries Departments and Agencies of government to actively ensure all private sector priorities are captured in their work plans. Programme-Based Budgeting will enable us achieve uniform growth of the economy with active private sector involvement,” Mr Kasaija said.
Mr Kasaija, said government was already securing equity stakes in selected enterprises with bias on social economic growth.
“We are doing this with businesses that promote national development and enhance jobs for our youth and women. We have since acquired a (10 per cent) stake through UDC in the Atiak Sugar Factory.”

Economists have been asking government to re-initiate state-owned enterprises, previously the case until the early 1990s, when government opted to privatise them in their hundreds.
“ It’s only government that can access some billions of money to invest in projects, employ more Ugandans, who by virtue of their fresh income could also stimulate demand for goods and services within the economy,” argues Mr Fred Muhumuza, a senior lecturer at Makerere University’s School of Economics.

Private sector actors want the state involved in areas such as construction of collection centres and cold rooms for horticultural products for export to ease the cost of business while growing export earnings.
“At an average of $100,000 [Shs386m] on a lower side for constructing a cold room, it is not easy for most of us to have that kind of money,” said Ms Suzan Ndagire, an exporter at KK Fresh Producers and Exporters Limited.

Checks and balances
Some observers believe Uganda’s liberalised economy needs some checks and balances.
“There are countries such as South Africa, where you will not just throw your dollars if not any other currencies around. Other countries even sieve how much outflows of cash a foreign investor or company can repatriate. We need to manage our territory,” says Mr Ramathan Ggoobi, an economics lecturer at Makerere University Business School.

DIALOGUE

The executive director of Private Sector Foundation Uganda, Mr Gideon Badagawa said many people in government do not understand how private sector works. “You will not get employment and expansion of the tax base without talking to the private sector,” he said.

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