Museveni to face power cuts, huge administration hurdles
Mar 01, 2006
RE-INTEGRATION the north into the economy, local resource mobilisation and cutting back on public administration expenditure join persistent power outages and drought as the most pressing challenges to the economy under the new Yoweri Museveni presidency
By Paul Busharizi
RE-INTEGRATION the north into the economy, local resource mobilisation and cutting back on public administration expenditure join persistent power outages and drought as the most pressing challenges to the economy under the new Yoweri Museveni presidency, observers of the economy say.
Over the weekend, the Electoral Commission declared Museveni winner of the presidential elections.
Power will top the agenda for the new administration’s economic planners.
At the beginning of last month, power distributor, Umeme, announced that it would step up the loadshedding schedule as the decreasing water levels on Lake Victoria could not allow for maximum generation by the two dams on River Nile.
As a result, business has been crippled and some analysts warn economic growth will be slower than the projected 6.1% and a wave of business closures is imminent.
“The Government should embark on resolving the power issue as a priority,†Uganda Manufacturers’ Association’s chairman Abid Alam said.
“Over the last few years, the country has made progress economically and failure to address this issue with the seriousness it deserves could mean backward movement in our economic development,†he said.
In addition to promotion of agro-industries, Alam thinks opening up the north to trade and commerce would help the economy maintain its high growth record.
“The Government should secure the north and open it up for economic activity. Without war, there is a huge population that cannot only serve as a market for goods but can provide a lot of raw materials for local industries,†he said.
However, questions are being raised about the cost of the bureaucracy to the tax payer and its ability to formulate and implement policy.
“Something has to be done about the huge public administration otherwise we could have a situation where more funds are channelled there than to other productive sectors like infrastructure development,†Makerere University’s Economic Policy Research Centre’s fellow Fred Muhumuza said.
Last year’s aid cuts arising from the donor community’s displeasure at the way the political process was moving highlighted the need to wean the country from donor dependency.
Establishment of the Uganda Securities Exchange (USE) and activation of the bond market has been used by the Government to borrow billions of shillings to control inflation.
But before the Government can fully exploit this avenue of resource mobilisation, certain legislation has to be in place.
“We want legislation on the pension sector reform out of the way as well as the law on the Central Depository System (CDS) and amendment of the Company Act,†USE’s chief executive officer Simon Rutega said.
“In addition, we need tax incentives for long term contractual savings and we want to see greater private-public partnerships in infrastructure financing,†Rutega said.
Pension sector reform will allow workers save for retirement with other pension providers other than the National Social Security Fund. These long term funds can be used to finance long term projects.
The Company Act has remained unchanged since 1948 while the CDS will smoothen transactions on the stock exchange, making it more attractive for companies to source funds from the market.
“Increasing tax revenue is important but local mobilisation of resources can be done through the capital markets as well … it seems the current policy makers are so set in their ways and therefore cannot get their minds around this thing called the stock market and how it can be leveraged for national development,†a banker said.
RE-INTEGRATION the north into the economy, local resource mobilisation and cutting back on public administration expenditure join persistent power outages and drought as the most pressing challenges to the economy under the new Yoweri Museveni presidency, observers of the economy say.
Over the weekend, the Electoral Commission declared Museveni winner of the presidential elections.
Power will top the agenda for the new administration’s economic planners.
At the beginning of last month, power distributor, Umeme, announced that it would step up the loadshedding schedule as the decreasing water levels on Lake Victoria could not allow for maximum generation by the two dams on River Nile.
As a result, business has been crippled and some analysts warn economic growth will be slower than the projected 6.1% and a wave of business closures is imminent.
“The Government should embark on resolving the power issue as a priority,†Uganda Manufacturers’ Association’s chairman Abid Alam said.
“Over the last few years, the country has made progress economically and failure to address this issue with the seriousness it deserves could mean backward movement in our economic development,†he said.
In addition to promotion of agro-industries, Alam thinks opening up the north to trade and commerce would help the economy maintain its high growth record.
“The Government should secure the north and open it up for economic activity. Without war, there is a huge population that cannot only serve as a market for goods but can provide a lot of raw materials for local industries,†he said.
However, questions are being raised about the cost of the bureaucracy to the tax payer and its ability to formulate and implement policy.
“Something has to be done about the huge public administration otherwise we could have a situation where more funds are channelled there than to other productive sectors like infrastructure development,†Makerere University’s Economic Policy Research Centre’s fellow Fred Muhumuza said.
Last year’s aid cuts arising from the donor community’s displeasure at the way the political process was moving highlighted the need to wean the country from donor dependency.
Establishment of the Uganda Securities Exchange (USE) and activation of the bond market has been used by the Government to borrow billions of shillings to control inflation.
But before the Government can fully exploit this avenue of resource mobilisation, certain legislation has to be in place.
“We want legislation on the pension sector reform out of the way as well as the law on the Central Depository System (CDS) and amendment of the Company Act,†USE’s chief executive officer Simon Rutega said.
“In addition, we need tax incentives for long term contractual savings and we want to see greater private-public partnerships in infrastructure financing,†Rutega said.
Pension sector reform will allow workers save for retirement with other pension providers other than the National Social Security Fund. These long term funds can be used to finance long term projects.
The Company Act has remained unchanged since 1948 while the CDS will smoothen transactions on the stock exchange, making it more attractive for companies to source funds from the market.
“Increasing tax revenue is important but local mobilisation of resources can be done through the capital markets as well … it seems the current policy makers are so set in their ways and therefore cannot get their minds around this thing called the stock market and how it can be leveraged for national development,†a banker said.