During the Uganda Economics Forum on the 2016/17 National Budget, Andrew Rugasira tasked the government to take up the role of a venture capitalist. Rugasira a founder of Good African Coffee represented the Private Sector at the Budget debate. We share a summary of his speech:
· Orientation of the economy (export led/oriented) – there is a failure to connect ambition to how. Competitiveness is a function of capital, technology, productivity and intellectual property. For the economy to be export led, the budget should address issues which hinder competitiveness (cost and access to capital, technology transfer, etc.).
· Agriculture – farmers are entrepreneurs. How do we unlock incentives for small scale producers? Small scale farmers will not transform the rural economy, but agri-businesses (value chains) will.
· Industrialisation – investing in infrastructure (roads, dams, etc.) without thinking about users will not help. No transformed economy has been built by foreign investment alone, without incentivised local investors. In 2015, most FDI went to extractive industries which are not good in producing mass jobs, but are good in repatriating profits and tax evasion. Every year US$ 100 billion in profits/tax evasion is repatriated by MNCs.
The reason capital is expensive in Uganda is the high interest rates on treasury bonds/bills. In every country that has developed, government has become a venture capitalist.
· Management and execution – there is need for convergence between what we need to do and what is actually done. Priority setting is a problem.