The Ministry of Finance, Planning and Economic Development, together with the International Growth Center hosted the 7th high-level Economic Growth Forum (EGF) under the theme: Strengthening Uganda’s Competitiveness to Foster Accelerated Economic Growth earlier this year in August.
The Forum brought together experts from various fields who facilitated knowledge sharing and debate on how to secure a sustainable future for the people of Uganda.
The discussions at the 7th EGF focused on Global Economic Developments and Economic growth in Uganda; Domestic Revenue Mobilization; Boosting Exports & Firm productivity; Climate Change and Growth as well as Technology as a driver of Productivity and Growth. The Minister of State for Planning Amos Lugoloobi who opened the Forum on behalf of Finance Minister Matia Kasaija said Uganda’s economy is now recovering from the effects of Covid-19.
“One of the major drivers of this recovery has been continued government support to the private sector through various programs like Emyooga, Small business recovery fund, continued funding to Uganda Development Bank as well as support to development of necessary infrastructure like road, industrial parks and electricity,” said the Minister
The Permanent Secretary and Secretary to the Treasury ( PSST), Ramathan Ggoobi in his remarks on strengthening Uganda’s competitiveness to foster accelerated economic growth said Uganda is not just focused on achieving high top-line growth; but growth that is inclusive and green.
“Uganda’s economy continues to show remarkable resilience even in the face of significant domestic and external headwinds. We’ve arrested inflation and reduced it to below the target. This has happened not because of good luck. It has reduced because of our well-coordinated policies that targeted the causes and addressed them,” said the PSST.
He said government has avoided new taxes, kept exports and imports flowing, worked hard to reduce short-term interest rates and desisted the temptation of replacing consumer preferences with planner preferences. Ggoobi said government has also avoided populist policies and responded to the mounting risk of climate change.
Speaking about Uganda’s economic growth performance pre and post Covid-19: challenges and opportunities – new sources for growth, the Commissioner Macro-Economic Policy at the Finance Ministry Dr. Albert Musisi said although Uganda’s economic growth has been above the SubSaharan average growth at (3%), it’s below what was achieved in the previous decades.
Musisi said economic growth over the last 30 years (1993/94-2022/23) has averaged at 6.6% but has slowed down to 4.7% in the recent years.
He however, noted that Uganda (with 7.5% projected growth) is among the 5 Countries including China (5.82%), Vietnam (5.56%), Indonesia (5.64%) and Tanzania (5.87%) projected to be the fastest growing economies in this decade by researchers at the Growth Lab at Harvard University.
Global Economic Developments and Economic growth in Uganda
It was noted at the Forum that economic growth had in the last decade slowed and some of the binding constraints include; low productivity in key production sectors characterized by reliance on subsistence production in agriculture and low productive sectors, increased exportsdominated by primary productsvulnerable to world market prices and climate change.
Other constraints include; internal and external shocks including climate change, costly local and foreign finance and public sector inefficiencies and ineffectiveness with inadequate coordination between government ministries, agents and departments.
Some of the policy solutions suggested at the Forum include; enhancing domestic revenue mobilization, managing climate change volatility, merging agencies that have related functions and effective monetary policy management to maintain price stability and favorable investment environment in addition to coordination between monetary and fiscal policy.
Domestic Revenue Mobilization
The Minister of State for General Duties, Henry Musasizi led the discussion on revenue mobilization with a special focus on mobilizing finance for economic development in Uganda.
He highlighted the low tax revenue to GDP averaging to 13.8% for Uganda, adding that compared to some African countries, Uganda’s tax revenue to GDP is among the least only above Tanzania.
Key policy proposals recommended to enhance tax revenue include; Use of modern technology to enhance VAT collection, collection of relevant information to inform the nature of taxes, removal of VAT exemptions and restricting the deemed VAT regime to only extractive sector as well as charging optimum taxes/ considering minimum lower tax rate and improving tax administration.
Boosting Exports and Firm Productivity
On trade and growth in Uganda, it was noted that up to 25% of Uganda’s per capita growth is due to imports of new varieties of goods. Services account for a larger share of employment and value addition and contributes to productivity more than manufacturing. It was also noted that across all sectors, many firms are net importers.
A number of trade opportunities to exploit for Uganda were identified and these include; Uganda being a member to many regional trade arrangements, such as EAC, AfCFTA and SADC.
It was recommended at the Forum that government should facilitate inward foreign direct investment (FDI) including FDI in services to improve access to services inputs, in addition to improving collaboration between government agencies and investors to identify opportunities for Ugandan firms to contribute higher value-added activities in multinational supply chains.
Government was also encouraged to intensify implementation of trade facilitation initiatives to reduce trade costs for firms, work with exporters to identify non-tariff measures and regulatory regimes that impede trade, including regionally – e.g., rules of origin; data protection regulation in addition to participating in trade promoting international initiatives (e.g. e-commerce in World Trade Organization (WTO).
It was agreed at the Forum that adapting to climate change and mitigating its impacts are inseparably linked to achieving sustainable economic growth and poverty reduction.
Uganda’s GDP has been negatively impacted in the past and estimated future impacts are also significant. Productivity has reduced because of lives and finances lost. Climate change affects public finances – by increasing government expenditure and public debt in addition to reducing government revenues.
To stabilize climate change, global collective action was recommended and all countries must contribute to net zero. Other options include; Investing in climate smart infrastructure, making financing options more accessible, investing in early warning systems and setting up a dedicated climate fund.
Technology as a driver of Productivity
To harness technology as a driver for productivity and growth, it was recommended that Uganda should fast-track reducing the cost of internet to facilitate trade, avoid internet shutdowns and also facilitate procedures for certification of ICT goods in addition to avoiding blocking of commercial web content among other measures.
Lastly, discussions on transition to the monetary economy: Leveraging the Parish Development Model focused on moving the 39% of the households from the subsistence economy into the money economy.
It was noted that connecting farmers to market opportunities and value chains was very critical in empowering the farmers in addition to leveraging extension officers in supporting farmers and farmer groups to have concrete action plans.
It was agreed that households are key in decision making and planning to ensure that interventions are tailored to their needs to foster ownership and commitment.
The 7th Economic Growth Forum was closed by the Minister of State for General Duties, Henry Musasizi who said Uganda’s economic blue print must reflect its aspirations for a competitive and dynamic nation.
“To seize the opportunities of a rapidly changing landscape, we must cultivate an environment that fosters innovation, efficiency and adaptability,” said Musasizi adding that Uganda possess an array of competitive strengths, ranging from its vibrant industrial spirit to its rich natural resources.
This article is written by the Ministry of Finance, Planning and Economic Development (MoFPED) Communications Team.