Supporting Uganda’s Business Environment and Private Sector’s Competitiveness

by Business Times
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The Private Sector Foundation Uganda (PSFU) has presented key strategic focus areas on supporting Uganda’s Business Environment and Private Sector Competitiveness to H.E. GEN. (Rtd.) Yoweri Kaguta Museveni, the President of the Republic of Uganda. The document details the following information.

As Uganda’s apex body for the private sector, PSFU embodies over 320 associations and corporate bodies, representing over 3.5 million business enterprises. Our key roles can be described as fourfold: policy advocacy with the Government, creating employment, business development services, and training for our members, and strengthening our member organizations. We’ve partnered with the Government since 1995 across 12 key sectors.

PSFU aligns with Vision 2040, committed to supporting Uganda’s transformation by 2040. This emphasizes the private sector’s role in creating 77% of formal jobs, contributing 80% to GDP, and generating 80% of domestic revenue.

To achieve this, we urge the Government’s assistance in key Strategic Focus Areas:

1. Tax Regime Stability:

PSFU requests that the Government maintains tax regimens for five-year cycles. Harmonize 12 tourism-related taxes and license fees and reduce them. Ease the financial burden on startups to promote youth investment.

2. Digital Tax Stamps:

Re-evaluate the DTS regime due to high costs burdening manufacturers. Propose that the government absorbs the costs.

3. Domestic Arrears:

Highlight the issue of delayed payments, amounting to UShs. 2.5 trillion. Urge the government to allocate sufficient resources for clearance and timely payments to suppliers.

4. Late payment of local suppliers in the oil and gas sector:

Note the extended waiting period for tier one contractors to pay local suppliers. Propose creating a Petroleum Fund in the Bank of Uganda to support Ugandan suppliers in the oil and gas sector.

5. Affordable Credit:

Identify the high commercial bank lending rates in Uganda. Recommend government investment in vehicles that can avail patient capital to the market. Propose the capitalization of UDC to enable them to buy equity in private companies.

6. Standardisation and Trade Laws:

Highlight the prevalence of fake agricultural seeds, herbicides, and pesticides in the market. Urge the enactment of an anti-counterfeit bill and strengthened enforcement of standards to protect against counterfeit goods.

7. Enforcement by URA:

Express concern over URA’s practice of issuing agency notices against businesses. Propose dialogue first with taxpayers to ensure cooperation is sought in a reasonable manner. Specific  Sectoral  Issues  and Recommendations. Trade and Commerce Sector

1.Persistent Tariff and Non-Tariff Barriers (NTBS) on Ugandan Products:

Address Kenya’s ban on Uganda’s milk and its impact on prices and job losses. Highlight losses due to South Sudan’s blockage of trucks carrying Ugandan maize. Recommend engagement with the Government of Kenya and encouraging South Sudan to recognize testing results. Transport and Logistics Sector

2. Improving the state of Uganda’s logistics industry:

Address Uganda’s ranking in the Logistics Performance Index. Recommend leveraging Public-Private Partnerships to invest in trade-facilitating logistics. Agriculture Sector

3. Reduction of Uganda’s high import bill of agricultural seeds semen, eggs, ova, embryos:

Present statistics on Uganda’s agricultural seed import shipments and dependence. Recommend increased funding to NARO and NAGRC&DB to boost domestic production.

4. Low prices of Ugandan tea due to overreliance on the Mombasa auction market:

Highlight the challenges faced by Uganda’s tea industry. Propose the establishment of a tea policy and bilateral agreements with key countries.

5. Need for consistent agriculture production and productivity:

Discuss the limitations of the current irrigation model. Recommend prioritizing investment in water infrastructure for production.

6. Improve agriculture extension services:

Address the current extension worker to farmer ratio. Recommend allocating resources for non-wage operational grants to support agricultural extension services. Culture and Creative Arts Sector

7. Limited attention paid to the creative and arts industry:

Evaluate the value of Uganda’s creative industry. Recommend the establishment of regional common user hubs/facilities and the expedited passing of the copyright law. Oil, Gas, Minerals, and Energy

8. Increase Uganda’s fuel reserves:

Present the current limitations of Uganda’s fuel reserve infrastructure. Recommend fast-tracking the construction of the Kampala Storage Terminal.

9. Underutilization of Uganda’s mining potential:

Present the value of Uganda’s minerals investment opportunity. Recommend fast-tracking the establishment of the national mining company and enforcing licenses issued to private players.

10. Access to power challenges:

Address challenges regarding access to power. Recommend expediting the implementation of the Electricity Access Scale-up Project. Tourism and Hospitality Sector

11. The poor state of strategic tourism infrastructure:

Highlight the need for improvements in tourism infrastructure. Recommend freeing up resources for UNRA to ensure the construction and maintenance of tourism roads. Human Resources (Skills, Health, and Education)

12. Investing in sports infrastructure:

Address resource constraints in the education sector for nurturing talent in sports. Recommend attracting domestic and FDI investments in sports sector infrastructure.

13. National Health Insurance Scheme:

Discuss constraints faced by private health businesses. Recommend fast-tracking the national health insurance scheme. Information Communication and Technology (ICT) Sector

14. Increase access to fiber network to the last mile:

Address challenges in Uganda’s fiber network and internet penetration. Recommend expediting plans to extend broadband connectivity.

15. Double taxation of Business Process Outsourcing (BPO) Services:

Discuss the issue of double taxation on BPO services. Recommend imposing VAT only on management fees. Construction and Real Estate

16. Need to review the Rental Income Tax regime:

Discuss the challenges faced by the construction sector under the new tax regime. Recommend changes to the tax regime to support the industry.

PSFU appreciates the government’s receptiveness to our proposals and stresses the importance of implementing clear monitoring and evaluation mechanisms to ensure effective policy actions and promote private sector growth. We believe that together we can transform the economy of Uganda and improve the livelihoods of all its citizens.

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