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Beyond drought and limited unstable markets in South Sudan and DRC, Nkuutu said there are other underlying challenges responsible for the sector’s slow growth.
He mentions unstable power supply, high cost of electricity which accounts for around 40% of total costs of production; high cost of credit noted at over 17% for years; unfair competition posed by cheaper imports from bigger markets and poor infrastructural network especially in rural areas.
“We cannot be competitive when we are faced with such challenges,” Nkuutu said, “Our role has and will always be to engage government on policy interventions to make the situation favorable for us.”
Nkuutu said UMA is optimistic that the recently approved Buy Uganda Build Uganda Policy and current local content legal provisions and policies would boost manufacturing growth numbers going forward.
Tough times, tough choices
Mark Ocitti, the managing director at Uganda Breweries Limited, makers of beer and other beverages told The Independent that the first half was tough for their operations but were able to remain in operation normally.
“Because of drought the supply of sorghum and other raw materials was limited last year,” Ocitti said, “ the costs went up and towards the end of the year we were buying sorghum, wheat and burley at a much higher price than we were buying them at the beginning of the year.”
He, however, said they were able to absorb high prices of raw materials without passing the additional costs to the customers as a result of good quantities sourced from brokers who buy in large quantities and store for future business.
Adam Mugume, the executive director for research at the Bank of Uganda said that the sector’s troubles have contributed to huge decline in export earnings from Uganda’s largest external market, South Sudan, where earnings have declined by half from approx.US$41 million five years ago to US$21 million per month today.
Positive outlook
Mugume hopes that the current rains would boost agricultural harvest that will ultimately see manufacturers especially those engaged in agro-processing increase production.
He also hopes that important markets for Uganda’s exports such as South Sudan would stabilise to increase on the export volumes.
He also hopes that BoU’s decision to ease monetary policy would ultimately see commercial banks reduce further lending rates to lower cost of credit.
And beyond the effects of conflicts in South Sudan and other challenges experienced in the first of the year, the government is implementing critical policies to increase production and productivity in manufacturing and general sector activities.
President Yoweri Museveni said in his New Year message that Uganda was selling jobs to other countries by not increasing production and productivity.
He said implementation is now focusing on pillars such as provision of sufficient electricity, better roads, educated workforce, building of the information and communication technology backbone and the undersea cable which would support industrialisation drive.
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editor@independent.co.ug
