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“Low and in some respects eroding institutional strength will challenge the government’s capacity to manage the rising debt burden,” the analysts said.
Perhaps basing on happenings in 2016, some business captains appear not to share Mutebile’s upbeat views on 2017. Maggie Kigozi, a former head of the Uganda Investment Authority who is a respected director at Crown Beverages Uganda Limited, Everest Kayondo, the Chairman of the 200, 000 members – Kampala City Traders Association and Martin Okumu from Uganda National Chamber of Commerce and Industry all say the New Year comes with a lot of uncertainty.
They told The Independent that that they are not sure with what 2017 holds for the economy and the business community. They argue that Uganda’s economic problems remain the same and the relevant authorities pay little attention to address them.
“We will continue to engage the government on possible measures to lower interest rates, foster local content laws in investments and also promote value addition and quality standards to boost exports and strengthen the local currency,” Kigozi said.
The cautious views of Kigozi and others in business are backed by independent researchers like Ramathan Ggoobi, an economist and lecturer at Makerere University Business School. He told The Independent in an interview that there are a number of issues that the government needs to resolve if the economy is to pick up pace.
Overall, the economy has been performing below potential since 2009/10, he said, adding that in the period after 2009/10, average annual economic growth was 5.7% against the target of 7%.
Ggoobi says factors that explain the recent downturn in economic performance include the effects of the 2008 global financial crisis, exchange rate volatility, and the unfavourable weather conditions for agriculture.
“If the government fails to address this issue of weather vagaries to increase food production and increase on our exports, we are likely to continue performing poorly,” he said.
Ggooobi said the authorities are underreporting the situation of Uganda’s economy, including that it has in the past six years been undergoing a crisis that was deeper than reported.
Global economy to weigh down growth
Mutebile alluded to some of the issues that Ggoobi talks about, including new challenges emanating from the uncertain global economic developments.
“The economies of some of our trading partners are expected to grow at a slower rate than previously assessed, which will continue to weigh on Uganda’s exports,” Mutebile said.
He added that the exchange rate that rapidly depreciated by 4.7% in the last three months of last year had experienced sharp adjustments and significant volatility due to continuing uncertainties in global economic and policy environment.
But Stephen Kaboyo, a former longtime manager at Bank of Uganda and now serving at his private firm, Alpha Capital Partners as CEO, told The Independent that while there are short term challenges, medium prospects look promising.
Kaboyo said growth is projected to bounce back primarily driven by the multibillion dollar investments in power, railway, roads and oil related infrastructure.
“This will offset the effects of the weak external sector and put the economy on good footing in 2017,” he said.
Long term solution to sustain growth
Going forward, Lawrence Bategeka, a former research fellow at the Economic Policy Research Centre at Makerere University and now the Committee Vice Chairperson of National Economy in Parliament said the government and other players need to heavily invest in irrigation farming to mitigate natural hazards like drought, put more emphasis on value addition and quality production of goods and services as a “passport” to earning more dollars in the economy and lessening our import-export deficits.
“Now that the elections are behind us and we are politically stable,” he said “We can now get our hands dirty and contribute something towards the realization of Vision 2040.”
He said the government’s investment in heavy public infrastructure like energy and roads will lessen cost of production and promote economic growth.
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editor@independent.co.ug
