For many this holiday season has not been a restful one. Business leaders fear that the same problems that dragged them down in 2011 will continue to haunt them in 2012. Inflation, exchange rate instability, high interest rates, power shortages, and a general economic downturn, are major concerns. Heads of private firms and government agencies told The Independent’s Julius Businge that prosperity in this year is highly uncertain, and will depend largely on government’s ability to step up and stabilize the economy:
Fabian Kasi, Managing Director, Centenary Bank
We are waiting to see whether inflation goes down or remains up. It will guide our work, especially our lending rates. Last year in November and October we kept our prime lending rate unchanged at 23 percent because we wanted to reduce the burden on customers, and we hope to continue to keep our rates as low as possible.
We hope to introduce new products like micro-mortgages to enable low income earners and customers to buy land and houses. We also intend to increase our branches from 45 to 50 this year.
Andrew Seguya, Executive Director, Uganda Wildlife Authority
Lonely planet ranked Uganda as number one tourist destination for 2012. We are more than ready for this. We expect an increase in local and foreign visitors. We currently receive approximately 880,000 foreign visitors a year and I’m sure this number will double in 2012. We will continue to put up cheap accommodations in national parks and game reserves, construct roads, protect our wildlife by ensuring there is no poaching in tourist areas, and above all we are going to intensify marketing our beauty to the outside world. We also intend to make transport to tourist areas easier by availing schedules for bus and plane services.
We are working on issues of hospitality, especially in Bwindi, Mugahinga and Lake Mburo National Park. We also intend to launch an online booking system so that people can book permits to the parks online. We also intend to introduce an access card where money can be loaded and given to tourists who will just present it and enter the park. This will ease the payment system and tourists’ access to our areas. We are also going to participate in international fairs in South Africa and Europe to show-case Uganda.
Geodfrey Mutabazi, Executive Director, Uganda Communications Commission
We are going to watch closely the quality of operations of telecom operators and will ask those who can’t provide quality to give space to those who can.
Last year Uganda Telecom Ltd faced problems and couldn’t meet interconnection fees for other operators. They argued that instability in Libya was a major cause. But now we are saying that shouldn’t be an excuse because it is not provided for in the law. We hope they will reorganize this year and do well and simplify our work.
Regulating mobile money will also be a major issue. We were supposed to meet at the end of last year about this but we didn’t because Central Bank officials were too busy. But we hope to meet early this year to determine a framework for regulating this facility. We are concerned because we regulate the telecom sector which operates mobile money, yet telecom operators have formal agreements with commercial banks which are regulated by the Central Bank. We are concerned with public complaints about the safety of people’s money and we all share the blame when things go wrong.
I urge operators to take all measures to secure their property across the country and not raise issues of vandalism as the main cause of bad networks. It is their duty to do that. If they can’t afford it, they should give way to other operators who can.
Last year operators faced the challenge of power cuts which increased the cost of doing business, and eventually call tariffs, which hurt many customers. We appeal to UMEME to solve this. We can’t demand quality from telecoms when we are not supporting them.
Paul Kyeyune, Head of Corporate Affairs, Uganda Revenue Authority
We set the revenue target of over Shs 6.129 trillion, which we are looking forward to hitting. We plan to implement taxpayer expansion programs with emphasis on rental income tax, stamp duty and motor vehicle transfers. We want to integrate systems with key national and regional stakeholders to foster information exchange with bodies like Kampala City Council Authority, regional revenue authorities and financial institutions. We will implement the national audit plan to increase audit coverage (825- 1500), monitor and enforce payments of arrears. We want to improve our ICT infrastructure to support 24-hour self services; enhance monitoring and surveillance of transit cargo; strengthen information exchange for valuation, rules of origin and classification management; and strengthen Post Clearance Audit Functions, among others.
Instability of power increased the cost of doing business last year, but hopefully it will stabilize if Bujagali dam is commissioned. But we are hopeful that in this second half of our financial year, the business environment will improve. The Stamp Duty and motor vehicle registration module will go live end-January 2012, to allow clients to self-serve from the URA web portal; www.ura.go.ug and process transactions at any border station or Domestic Taxes Department station.
We know there will be challenges like low compliance, inadequate operational budget for tax administration. But we are intensifying tax education initiatives to make the public appreciate their tax obligations.
James Tumusiime, Managing Director, Fountain Publishers
We expect a big increase in book sales. Last year people claimed they didn’t have money and our sales were bad. We intend to change that by increasing the number of our publications on market and strengthening our market strategy. The political turmoil in 2011 sacred away tourists who are big buyers of our books, so we hope a more peaceful 2012 will be good for us.
There is another reason for us to be optimistic about 2012 - we mark Uganda’s 50th Independence Anniversary. We plan to use the occasion to raise the number of our publications from 1,500 now to 2,000.
Ignie Igundura, Head of Communications, Civil Aviation Authority
2012 will be a growth year for air transport. We expect peace and stability, without the political or economic turmoil of 2011. We expect the oil industry to take off and pull more airlines to Uganda, since the economy will be growing fast as well. Our airport meets all required international standards. We have just rebranded it and have other innovations in the pipeline to make it safer, more convenient. The number of airlines should grow up to 21 this year.
Jimmy Kiberu, Head of Corporate Affairs, Tullow Oil
We intend to continue strengthening our partnership with CNOOC and Total to break through in the oil industry in the Albertine region. Our aim is to achieve our deal. We are working on unlocking the sector to achieve significant exploration. We hope to set up the necessary equipment which we are missing at the moment.
Having three well-reputed international companies in the oil sector is a vote of confidence in Uganda as they bring much-needed the down, middle and upstream skills in the sector.
We intend to continue our corporate responsibility projects in the Albertine region, building schools, health centers, roads, among others. We will continue to play our part in Uganda’s economic and social development.
Kelley MacTavish, Executive Director, Pearl of Africa Tours & Travel Ltd
Worldwide Uganda remains a “blank page”. People just do not know about the beauty of the countryside and the people. We have been voted the Lonely Planet best country to visit in 2012. This is a first step in a long road of work needed to market and develop Uganda’s tourism industry to its full potential.
We have also been fortunate this year to have our own Ministry of Tourism, another great step. If we could have full funding and proper staffing of the Uganda Tourism Board, along with professional marketing materials and placement of qualified people and materials in the various embassies around the globe, the sky would be the limit. I look forward to a private sector-driven tourism development and marketing project focused on the US and European markets.
Tourism generates more than US$ 650 million per year for the government of Uganda and supports about 20 – 25 percent of people in formal employment (both in Uganda and worldwide). There is so much to see and do in Uganda and there are only 52 weekends a year. We all have to work harder to have the time and money to play harder in 2012.
Prof. Augustus Nuwagaba, Economist, Makerere University
There isn’t any signal in what we call ‘fundamentals’ in the economy that suggests 2012 is going to be much better than 2011 was. I have always said that our economic managers operate like ‘witchdoctors’ - they don’t look at the specific measures on which the economy should run. There is too much government expenditure on unnecessary projects, which has caused high levels of inflation; high levels of ‘stealing’ of public money (corruption).
Bank of Uganda’s claim that its monetary policy is working and inflation will reduce to below 10 percent in 2012 is a lie! They say the exchange rate has now stabilized, and that is also untrue. It is the festive season that played a big role in making the shilling appreciate. Many people were coming in for holidays, carrying a lot of dollars with them. This contributed much to the stabilization of the shilling, but I don’t attribute that to the inflation targeting policy. I think Bank of Uganda is wrongly targeting business people. They will never borrow when interest rates are so high and if the situation continues, we are likely to experience a recession.
My advice is that if possible, inflation targeting should be suspended and the bank should focus on other monetary tools like treasury bills and bonds which I think have immediate effects in stabilizing the shilling and the economy.
The government has to increase the level of exports, reduce unnecessary expenditure and stop stealing public money. I see the 9th Parliament doing a great job in the fight against corruption and if they are not interfered with, we may record positives this time. We have to increase production to increase supply on the market and eventually fight inflation. If we work on those fundamentals I am sure the economy will stabilize this year.
Laurence Bategeka, Principal, Economic Policy Research Centre (EPRC) Makerere University
2012 could still be influenced by global factors as was 2011. If the Euro crisis which is characterized by high fuel prices, doesn’t end it could hurt us this year. The shortage of power has to be solved to avoid business losses. If not, the consistently high cost of doing business and high prices of goods and services will keep inflation up. But I also see positives as the business of oil continues to attract foreign investors who pay revenue to government.
The issue of high inflationary pressures is likely not to abate and we are likely to see the central bank further tighten its monetary policy, and interest rates rising. Bank of Uganda’s monetary policy will not work if it is not supported by increased supply, especially of food. To achieve this, government needs to finance commerce, trade and agriculture, if the latter is to increase supply of food both for local consumption and export. But for agriculture to prosper government shouldn’t only look at NAADS but also strengthen the Ministry of Agriculture. Some of these economic issues have fuelled political and economic protests in the country, which negatively affected other sectors like tourism.
But we are a resilient economy. With all the shocks, I am sure we can still produce more maize, cassava and feed local and international markets. Over 70 percent of households are buyers of food, so there is hope. We are also endowed with natural and human resources which we need to utilize fully, not necessarily relying on aid. Our people have the power to produce goods and services. The government should mobilize them. Other issues like corruption have to be fought. Government has to support entrepreneurs who can in turn provide employment opportunities and even pay revenue. If we score highly on these issues, we are likely to experience a prosperous 2012.
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