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Uganda’s manufacturing sector slows growth

Sector executives, analysts predict better performance in the second half of 2016/17

The emergence of several structures at the Kampala Industrial and Business Park at Namanve, Uganda’s newest hub for manufacturers seem to give an impressive face of Uganda’s manufacturing sector to whoever glances at it from the Kampala-Jinja Highway.

But this is not the case. The sector’s growth figures released by Uganda Bureau of Statistics (Ubos) at the end of last month indicate that the sector’s growth was printed in negatives – from -4.2% in the first quarter to -2.8% in the second quarter of this financial year.

A similar growth trend was recorded in FY2015/2016 when the sector grew by minus 1.7% in the first quarter before contracting (-5.7%) in the second quarter but improved in second half to post 11.9% growth in the third quarter  and 3.0% in the fourth quarter.

Ben Paul Mungyereza, the executive director at Ubos told The Independent on April 14 that while the manufacturing sector grew, it was at a very slow pace.

In real terms, according to UBOS figures, sector activities in the second quarter of this year recorded Shs 2.647 billion,   down from Shs 2, 630 billion recorded in the first quarter of 2016/2017.  The slow growth of any sector hurts employment, taxes, exports and general economic performance.

In Uganda, the manufacturing sector contributes between 7-10% to country’s Gross Domestic Product and has been growing at an average of 10% for the last three decades, according to the Uganda Manufacturer’s Association. In addition, the sector also contributes 40% of jobs created by the private sector.

Half year minimal growth causes

In a separate interview with The Independent, Chris Ndatira Mukiza, the director for macroeconomic statistics at Ubos said the slow growth in manufacturing was as a result of agricultural supply constraints noted by manufacturers involved largely in agro-processing of coffee, sugar production and other shortfalls recorded in other crops. This was mainly attributed to drought that hit most parts of the country last year.

Mukiza said manufacturing growth numbers measures changes in the volume of goods produced by the manufacturing sector in the economy. They include food processing, beverages, soft drinks and beer, sugar, and tobacco, textiles, clothing and footwear, sawmilling, paper and printing, chemicals, paint, soap and foam products; bricks and cement, metal products and others.

Mubaraka Nkuutu Kirunda, the acting executive director for the 870 members – Uganda Manufacturers Association told The Independent in an interview on April 12 that most processors are currently producing at half capacity due to economic challenges.

Nkuutu said limited raw materials in addition to unreliable markets in neighboring South Sudan and Democratic Republic of Congo forced manufacturers to cut production.

“You cannot blame us for this,” he said, “We are in business and we make sure that we charge prices that reflect market conditions,” he said.

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