Private sector presents proposals for economic recovery

As part of its recommendations for economic recovery and speed growth for Uganda's economy, Private Sector Foundation (PSF) wants the Government to empower local firms to significantly benefit from the trillions allocated towards infrastructure projects.

Making a presentation titled ‘Boosting Local Content for Economic Recovery' during the eighth Certified Public Accountants Economic Forum which ended last Friday, PSF's manager for the COVID-19 Economic Recovery and Resilience Response Programme, Allan Ssenyondwa, said all the contracts for the big infrastructure projects in Uganda have been given to foreign firms.

"In the last five years, infrastructure projects above sh50b were totalling sh15.9trillion. 84% of these projects were awarded to Chinese companies, 6% to Israeli and Turkish firms with the remaining 10% being shared by those from Portugal, India and Serbia," Ssenyondwa said.

He argued that whereas the heavy investment in infrastructure will greatly help the country to lower the cost of doing business, the country loses a lot of money that is repatriated by foreign firms which are dominating the infrastructure projects.

Local firms

PSF proposes the empowerment of local firms to form consortiums and joint ventures to enable them compete with foreign firms for big projects involving huge sums of money.

Ssenyondwa called for the expeditious enactment and implementation of the Local Content Bill so that priority is given to local firms. PSF expressed dismay that the presidential directive on stopping the importation of locally produced goods has taken long to be implemented.

Ssenyondwa pointed out the high interest rates in Uganda as one of the major impediments to the progress of local firms. He attributed the high interest rates to the fact that most of the commercial banks in the country are foreign-owned.

Commenting on PSF's proposals, the Makerere University Business School Principal Prof. Waswa Balunywa said: "On the interest rates, it is something that we surely have to address as a country if we are to make significant progress. We can never be competitive in the global market as long as our interest rates continue to be high. We need to carry out a study driven by Bank of Uganda, Makerere University's Economic Policy Research Centre and a collaboration of all local banks in order to find a solution."

On the PSF's proposal for empowering local firms, Prof. Balunywa said: "In implementing import substitution which government talks about these days, it is important to empower local firms but it is not easy in the prevailing circumstances.

If local firms are borrowing at 17%, 18% and 20%, they cannot compete with foreign firms which are borrowing at less than 10%."

Considering that multinational companies would be fighting the private companies, Prof. Balunywa said some areas of import substitution require the establishment of government-owned firms but expressed concern that the current high rate of corruption in government entities could fail the state-owned industries.

Progressive

On empowering local firms to become competitive, Makerere University economics lecturer Bernard Wabukala said: "The Government's efforts, given its narrow fiscal space, are progressive, positive and optimistic.

Deferment of tax payments, low-interest loans, and public private partnerships funding through Uganda Development Corporation are necessary for business recovery and competitiveness."