NPA boss says the country has undergone structural change but not structural transformation
Kampala, Uganda | JULIUS BUSINGE | Patronella Namubiru, the associate director in charge of tax at the audit firm, Deloitte Uganda, spoke passionately about the prospects of Uganda’s economy at the 7th CPA Economic Forum held at the Imperial Resort Beach Hotel, Entebbe on July 17-19.
She said the government and the private sector must harness key growth sectors of agriculture and agro-industry, tourism, oil and gas and minerals; promote high capital development, strengthen public sector investments, improve governance and sustain security so as to create opportunities for further growth of the economy.
She said developing a financing framework anchored on both effective domestic revenue and a responsive debt management would support government business and private sector growth.
She said there is need for action when it comes to recapitalisation of Uganda Development Bank to enable businesses access affordable credit.
The government has in the previous financial years recapitalised UDB with the intention of giving low-interest loans to manufacturers and those in the agriculture sector.
President Yoweri Museveni has always said the move to invest an additional Shs500 billion over a period of time in the bank is to speed up government efforts to modernise agriculture and boost growth of the country’s manufacturing sector.
The Capital Markets Authority needs to establish a centre to facilitate access to long term domestic and foreign capital on the stock exchange, Namubiru said, adding that there is need for the government to also support farmers through linking them to entrepreneurs along the value chain.
She said commercialising agriculture through the use of modern farming practices, advanced agricultural inputs and technology, post-harvest storage and enhancing market access will lead to growth of the sector.
Uganda’s agriculture sector employs more than 70% of the population and contributes 24% to the GDP yet it has been growing at average of 3% over the last five years.
Namubiru said there is also need for a legal and regulatory framework for the operation of private equity funds to attract more investment into Uganda’s private sector.
This call comes at a time the private sector in Uganda is facing dozens of challenges relating to access to affordable capital where commercial bank interest rates remain high at 22%.
The other challenges relate to limited access to good markets, skilled labour, corporate governance, corruption and unmanageable bureaucracies in government.
What more should be done?
Namubiru said there has to be proper implementation of agency banking, bancassurance, Islamic banking and enhanced access to credit reference bureau services to support key sectors of the economy.
She, however, said that part of the solutions to the challenges the private sector face is to leverage on the available technology to support work processes to be more efficient, especially on issues around information sharing and flexible work arrangements enabled by technology.
No structural transformation
While delivering a keynote address at the forum that attracted approx. 500 accountants, Joseph Muvawala, the executive director at the National Planning Authority said Uganda has undergone structural change but not structural transformation.
He said this is because there has been a shift from agriculture to services in terms of contribution to the GDP but “this has not been followed by the shift in terms of labour force from agriculture to industry or service.”
Muvawala said that industry which is contributing 19% to the economy (GDP) and is critical for causing transformation is not doing enough as services continue to contribute highly at 54% but taking up a small section of Uganda’s labour force.
He said productivity levels are not growing either especially in agriculture as the sector’s structural transformation is still an ongoing process that should be emphasised for significance gains.
“Structural transformation can be done through targeting the majority of the people in the agriculture sector through the agro-industralisation strategy,” he said, adding “If done efficiently, this will lead to the desired transformation levels and significant levels of socio-economic empowerment.”
Derick Nkajja (CPA) and chief executive officer of the Institute of Certified Public Accountants of Uganda (ICPAU) said the government should increase the national budget allocation for flagship economic activities like agriculture given that the country is endowed with favourable climate and abundant natural resources.
“Agriculture is perceived to possess the potential to drive majority of Ugandans out of poverty as many can easily be absorbed in it,” Nkajja said.
He said government also needs to increase funding for value addition and incubation projects. For instance, he said that the Presidential Initiative on Banana Industrial Development project should be replicated for other crops like sorghum, millet and peanut.