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The growth of the Uganda Manufacturing Sector

According to the PWC report dubbed Uganda Economic Outlook, the government is projecting the economy to grow by 5% this year. It indicates that this growth will be determined by investment in public infrastructure projects which will boost manufacturing, as well as services, notably tourism; a rebound in private sector credit and consumption. “New investments in the oil and gas sector, an increase in productivity of both the agriculture and industry sectors, as well as the expected recovery in the global and regional economies should also help to grow the economy over the medium term,” notes Francis Kamulegeya the Country Senior Partner at PwC Uganda and a member of the PwC Africa governance board. The report indicates that Uganda’s economy lags behind compared to other East African countries because of the political and economic uncertainties. Research released by the Institute of Chartered Accountants in England and Wales’ (ICAEW) named Economic insight in 2016 revealed that Africa is the most commodity-dependent continent. Challenges Joan Magezi a business woman points political unrest as the sole hindrance of economic growth in the country. To her the government should aim at providing a good political environment which will entice potential investors. She adds that for a country to have a sustainable economy there should be increased investment to create employment. Oxford Scholarship Online says that while the level of GDP growth has been impressive over the last two decades, the economy still relies on agriculture and low value-added industrial output for job creation, public finance, and exports. “Uganda appears to have failed to industrialize, contrary to the promises of pro-market policies and macroeconomic stabilization. The industrial sector is populated by small-scale firms with limited manufacturing value addition,” the report notes. The Oxford Scholarship Online report notes that the manufacturing sector in Uganda remains relatively small and is dominated by subsidiaries of multinational corporations. The sector faces high costs of electricity, strong competition from imported products, and poor purchasing power in the domestic market. Contribution to total value added is small, averaging about 7.5 per cent over the period 1988–2009. “This can be attributed to increased import competition following the premature adoption of economic liberalism in the 1980s and 1990s, the signing of the East African Community (EAC) treaty, as well as excess capacity at plant level owing to infrastructural constraints,” the report says. Chris Asiimwe a financial expert notes that that high taxes are a great challenge in Uganda today since entrepreneurs spend most of their profits on taxes. “The small companies here are over taxed and the big ones are given tax holidays something that makes it hard to stand in business,” he adds He adds that unprofessionalism and providing fake products and services has eaten up Ugandan businesses sector. “Ugandans are after making money and will boldly feed people on fake products to earn. This in the long run brings loss of trust which will lead to down fall due to lack of support,” he adds. What should be done The PWC report indicates that growth will be driven mainly by accelerated public infrastructure projects which will boost manufacturing, as well as services, notably tourism; a rebound in private sector credit and consumption, new investments in the oil and gas sector, increase in productivity of both the agriculture and industry sectors, and a recovery in the global and regional economies which will in turn support Uganda’s export growth over the medium term. “We expect the Government to continue with its ambitious infrastructure investment plan which is aimed at addressing some of the country’s major structural bottlenecks,” it says. What has been done Though there are still a couple of challenges in the sector, the country has laid certain strategies to boost the manufacturing sector. The government has introduced buy Uganda, build Uganda notion which helps promote and encourage people to buy Ugandan commodities. To entice potential investors, the country provides tax holidays to big investor compqanies. Producer Price A report produced by Uganda Bureau of Statistic named Key Economic Factors, Producer Price Index (PPI) measures the general change in prices received by domestic producers for their output. It is categorized into PPI for export market, PPI for local market and a combined PPI for both markets. “The PPI for both local and export markets of manufactured goods (combined PPI) increased by 1.6 percent in Q1 2016/17 following a decline of 0.4 percent (revised) registered in Q3 & Q4 2015/16. The main drivers were; food processing which increased by 0.4 percent following a decline of 0.8 percent registered in Q4 2015/16 and chemicals, paint, soap and foam products  which increased by 1.6 percent in the first quarter 2016/17,” says that report.
Growth of the Manufacturing industry will create more jobs

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