Create more labour-intensive industries — Kasekende

By John Odyek

Uganda and other sub-Sahara African economies need to raise private investment in labour intensive industries such as agro processing, light manufacturing and service industries to absorb the plentiful labour force, Dr. Louis Kasekende, the deputy governor of Bank of Uganda has said.

Kasekende said this during a dialogue themed: “Africa: opportunities and challenges.” It was held at Statistics House in Kampala this week and was organised by the IMF and Bank of Uganda.

“It is important to attract more private investment into labour-intensive traded goods industries for two reasons.

 The traded goods sector is usually the source of much more rapid productivity growth than the non-traded goods sector and the growth of the traded goods sector is not constrained by the small size of the domestic market.”

He observed that Uganda faces the task of achieving structural transformation and addressing constraints such lack of power and poor road and rail network.

Kasekende said the economic growth over the last decade has been propelled by a shift of labour out of agriculture into services and construction.

He said: “In Uganda companies employing more than 100 workers fell by 40% in the first decade of the millennium. Their share of the formal sector workforce fell from 20% to 10% between 2000 to 2010.”

“Labour productivity in medium and large firm increased rapidly since the turn of the millennium, with these firms investing in new capital, much of it labour saving.

But these firms have not expanded fast enough and there have been too few new medium and large firms set up in Uganda because the economy is not generating high productivity jobs in the formal sector,” he said.

Kasekende said the stagnation of employment growth in the medium and large scale firms reflects the shortage of private sector investment in Sub Sahara Africa.

He noted that most of the private investment which took place was in capital-intensive industries or in real estate which are not labour intensive.

 Roger Nord, the IMF deputy director of the Africa department said despite high economic growth rates in the last decade in Uganda and sub-Sahara Africa, many problems such as infrastructure deficit, low agricultural productivity, low energy production and unequal distribution of wealth still exist.