What it takes to shift to a green economy

A green economy is defined as low carbon, resource efficient and socially inclusive. Over the past decade, the concept of the Green Economy has emerged as a strategic priority for many governments.

In a green economy, growth in employment and income are driven by public and private investment into such economic activities, infrastructure and assets that allow reduced carbon emissions and pollution, enhanced energy and resource efficiency, and prevention of the loss of biodiversity and ecosystem services.

Speaking during the 2023 Economic Mkutano on February 23, the State minister for Trade, Mr David Bahati said for the Uganda to realise a sustainable green economy, all factories/industries should be built in the industrial parks. Mr Bahati said industrial parks will take care of the green economy because key infrastructure has been built in these parks such as electricity, roads and the water systems.

Industrial development at infancy
While Uganda’s industrial development is still at its infancy stage, Mr Bahati said the number of factories have grown from 186 in 1986 to the current number of 8,604 factories and it is helping the country to mop down the imports.  

Green growth provides for the incorporation of the environment and natural resources into the national accounts to ensure that prices and economic growth metrics reflect the corresponding effect of production processes on the environment.

In this regard, Mr Bahati said: “There are great opportunities for industrial development in Uganda, however, industrialisation must be sustainable and we must protect the environment so that we can have a green economy in place.”

Uganda’s population currently stands at 44.9 million people according to Uganda Bureau of Statistics. By 2050, Uganda will have 100 million people which calls for more industries in the country.  Mr Bahati said the East African Community region has a population of 400 million people, Africa as a whole has a population of 1.2 billion people and by 2050 it will have 2.5 billion people.

“Industrial infrastructures are key. Kigezi region has 312 million tonnes of iron ore which must be exploited. This is why energy policy for industrial development is very important. In the next five years, the government will establish 22 industrial parks in different regions,” he said.  

 Mr Bahati said Uganda currently has electricity installation capacity of 1,800 mega watts compared to small country Iceland which has 42,000 mega watts. That means Uganda should continue building the energy sector.  

Special economic zones (SEZs) are spatially delimited areas within an economy that function with administrative, regulatory, and often fiscal regimes that are different (typically more liberal) than those of the domestic economy.

Operating through a variety of different forms—such as export processing zones, economic processing zones, free zones, and foreign trade zones—SEZs aim at overcoming barriers that hinder investment in the wider economy, including restrictive policies, poor governance, inadequate infrastructure, and problematic access to land.

SEZs have been an important policy instrument for many governments seeking to attract foreign investment, promote export-oriented growth, and generate employment. Their popularity has grown enormously in the past 20 years: in 1986, the International Labour Organisation’s (ILO’s) database reported 176 zones in 47 countries. By 2006, it reported 3,500 zones in 130 countries. This huge growth of SEZs comes despite many zones failing to meet their objectives.

Special Economic Zones (SEZs) have been established in many countries to attract foreign direct investment, accelerate industrialisation and create jobs. Not all SEZs have been successful, and a review of experience indicates factors that contribute to success.

The operation officer of the International Finance Corporation (IFC) for Eastern and Southern Africa, Africa advisory service international, Ms Sarah Ochieng in her zoom presentation from Nairobi said most African economic zones need to improve their approach to social and environmental compliance issues.

Ms Ochieng said economic zones are an opportunity to experiment with policy innovations. There should be strong regulatory regimes, efficient licensing and proper planning for the free economic zones for Uganda to benefit.  

“Many African countries continue to struggle to compete in industrial sectors and integrate into the global value chains that generate the goods and services that are demanded by consumers around the globe. SEZs offer a potentially valuable tool to overcome some of the existing constraints to attracting investment and growing exports,” she advised.