Championing for the promotion of industrialization through supporting local manufacturers and investors by providing tax incentives and financial support, was among the leading topics of the Uganda Development Corporation (UDC) and United Nations E-Conference on the Economy.
The two-day conference that aims at discussing how Uganda’s economy can be revived, started today May 28 and will end tomorrow May 29, televised live on NBS Television.
Ramathan Ggoobi, a senior economist and policy analyst who co-moderated the forum, said that only five percent (5%) of Ugandans work in the industrial sector out of which one percent (1%) work in light and heavy industries.
“The remaining four percent work in agrochemicals which is considered to be the least industries. We have been singing that industrialization is the future but I think it’s time to realize that industrialization is the present,” said Ggoobi.
Mr. Richard Mubiru, one of the panelists, who is one of the board members at the Uganda Manufacturers Association (UMA) and the Director Board members of Nyanza Textile Industries (NYTIL), said that unless the government spearheads the campaign, industrialization will not be achieved,
“Industrialization will happen when the government chooses and starts leading from the front,” he said.
Mr. Mubiru said that one of the major problems facing local manufacturers is the cost of production where 90% are in commercial borrowing and contracting regional export markets.
“When you have 90% of borrowing commercial, it means that most of our competitiveness is impaired which is contrary to areas where 90% of borrowing is purely development-financing,” Mubiru added.
According to Mubiru, the regional markets which have been affected by the challenges for example in South Sudan, the Democratic Republic of Congo, and Rwanda have suffered a decrease in their export, a weakening in their industrial muscle.
“There is too much risk for exports and what we should try and get is an export guarantee scheme, where a trader exports his goods in Congo without fear.”
In his study titled: ‘From Paper to Practice-Implementation of Uganda’s Industrialization Agenda’, which he conducted and released in December 2019, Mr. Ggoobi questioned the industrial strategy of Uganda.
The study revealed that the model in which the industrial parks were adopted was not clear,
“No study on the appropriateness of the model vis-a-vis other industrialization models was done. Neither were any feasibility studies conducted to inform the location of the parks,” reads part of the report.
The study further revealed that although everyone was talking about industrialization, there was no clear and agreed-upon plan, strategy, focus or policy framework to guide the implementation of the agenda.
“We are not focused at all. We have not structured the policy to inform the industrialization process. It is not clear what we want to do, how we want to go back, and how we should not. If someone comes and says I want to make cars, we jump in, even where value addition is zero. We need to go back and agree on the items where we have a comparative advantage or where we may gain comparative advantage,” the report adds.
Mr. Andrew Rugasira, a board member at Uganda Development Corporation (UDC), one of the panelists expressed UDC’s readiness in implementing the industrialization agenda, citing funding as the major challenge.
“We already have an industrial development fund which can be capitalized and I think this is the great moment,” Rugasira said.
“We have a pipeline of projects that are there. We have a mandate and have established a team of people who shall implement those projects. What we need is the deployment of capital in order to make those investments,” he added.
Last week, President Museveni advised local manufacturers to borrow from Uganda Development Bank (UDB) after the government recapitalizing it with Shs 1 trillion.
Mr. Mubiru, however, questions consistency in the availability of the funds at UDB. “The challenge is how much of this money is to be availed to UDB? For example, I will give you the textiles which I understand better, for you to be able to produce 25 sounding mills, you require $25m which is about Shs 120bn. Will you be recapitalizing UDB for three consecutive years?” he paused.