The new World Bank Country Managing Director Ahmadou Moustapha Ndiaye, plans to pursue the same priorities as his predecessor, focusing on transport and communications, energy, agriculture, education and health. On the sidelines of a media breakfast Ndiaye hosted recently, the bank’s Senior Economist, Ms Rachel Sebudde talked to The Independent’s Julius Businge:
Uganda’s economy faces rising inflation, unstable exchange rate and a high level of uncertainty. What needs to be done to stabilise it?
Bank of Uganda’s tightening of monetary policy to mop up excess liquidity is by far the best measure to bring down inflation in the short term. Inflation is already declining and while the bank’s policy may have raised interest rates, we need to give more time to the central bank to do its job. But we also need to understand that all the factors that drove the spike in inflation - the Euro zone crisis that undermined exports; exchange rate fluctuations that drove up the cost of imports; supply side shocks caused by the long drought, and others, are all easing. We shall definitely see inflation decline to single digits and the economy will stabilise in the near future.
Is BOU handling this well?
Yes, but more needs to be done to coordinate monetary and fiscal policy. Government needs to put more effort in supporting private sector growth in agriculture and infrastructure. On the other hand if government spending is not controlled it can undermine monetary policy. There is need to boost exports to earn foreign exchange, which is vital in strengthening local currency and the economy in general.
Do you think government is doing enough to support economic activity?
Government has spearheaded liberalisation and pro-market policies, maintained a stable macroeconomic environment and sustained private sector-oriented reforms. Growth is still robust even in the face of the current shocks. However, with rapid population growth government must mobilise citizens to produce enough for home consumption and commercial exchange.
Government recently removed electricity subsidies, arguing that they were unaffordable. Do you agree with this?
I agree, government lost a lot of money through subsidies on electricity which will never be recovered. However, this has a negative impact on the end user who is now paying higher tariffs than what they did before and worse, if business people are forced to increase prices of goods and services. We hope that once Bujagali is commissioned, it will boost power supply.
What package does the World Bank have for Uganda?
We are still committed to promoting inclusive and sustainable economic growth, enhancing public infrastructure, strengthening human capital development and improving good governance and value for money. We will also continue to support structural reforms and private sector investment.
Which sectors does Uganda need to prioritise to spur economic growth?
Agriculture should be at the top, since it is the back-borne of Uganda’s economy and employs over 80 percent of the population. Services, especially education, telecoms and ICTs, also employ a large section of the population and earn government revenue. The private sector needs security, infrastructure and sometimes subsidies. Further, growth will be spurred by proceeds from oil in Western Uganda. Countries like Russia, Nigeria, USA, Norway, Iraq, and China have prospered from oil exploitation and we hope Uganda will too.
Recent reports by the World Bank, IMF, UN, Bank of Uganda, warn countries like Uganda to prepare for further contagion effects of the Euro debt crisis and slow-down in America. What strategies should LDCs adopt to become independent?
Most LDCs are rich in resources - minerals, land, water, etc. The overriding challenge is how to manage them. To reap the demographic dividend, Uganda must invest in fertility reduction, quality education and skills development, and job creation. To reap the oil profits, we have to maximize the social benefits through adequate investment and prudent macroeconomic management.
Some analysts have predicted that Uganda could lose foreign aid due to failure to fight corruption. Are you predicting this?
Aid is very vital to any developing country. None can survive or grow without it. However, transparency, good governance and accountability by recipients are a must and Uganda needs to learn to hold public servants accountable.
Subscribe to this comment's feed
written by Michael Kors Outlet, February 17, 2012
-
- +0
-
-
written by Michael Kors, February 17, 2012
-
- +0
-
-
Basically, most brands are offering the same product lines; they only compete with regards to quality and design.