The government of Uganda has been urged to prioritize agriculture, tourism, mining and prudent debt management if it is to recover from the effects of a three-year global slowdown.
Speaking at the 2023 Stanbic Global Financial Markets Forum in Kampala on Tuesday, economic experts said the government is still handling the four sectors, especially tourism and agriculture, in a rudimentary way.
Dr. Fred Muhumuza, an economist at Makerere University, criticized government approach on modernization of agriculture, saying it is opting for costlier means.
He said while the sector has for long been considered the backbone of the economy and Uganda a food basket for the region, the country actually does not have enough food for itself.
According to Muhumuza, if the government is to use irrigation for areas vulnerable to drought, then a lot of resources have to be applied. He however, says that the cheaper and more sustainable solution should be the introduction of resistant seeds.
He also said the Parish Development Model’s challenge is the limitation of the government budget and conceptualization.
“The conceptualization of the PDM is the seven pillars and all of them are meant to work together, if fund one and not the other, you are going to have a problem,” he said.
Joseline Kateeba, the Managing Director of Crest Foam Uganda, said agriculture is not just for increased availability of food for people to eat, but that it increases the spending power of farming communities which account for the majority of Ugandans.
Dr Micheal Atingi-Ego, the Bank of Uganda Deputy Governor, said they are studying the possible implementation of central bank digital currencies.
In turn, this will lead to high purchasing power for industrial products and boost industrialisation.
Jibran Qureishi, the Head of Research at the Standard Bank Group, urged the government to make it a priority to clear what it owes the Bank of Uganda as demanded by the International Monetary Fund because it will give a wrong image internationally on Uganda’s financial market.
Qureishi hailed Uganda for its cautious borrowing compared to other countries in the region, though this does not mean that it is in a very safe position. He says for example, that Uganda has ensured a lower ratio of commercial loans as part of total debt compared to others like Kenya, Zambia, Angola or even Ghana which announced it was defaulting on debt repayment starting this year. He says if countries like Uganda are to borrow, more of the credit should go towards productive sectors like agriculture.
Qureishi said much as Uganda’s debt level is just around 50 percent of GDP while other countries have already recorded higher figures, it is the ratio of the commercial loans to the total burden which should be worrying.
Currently, such loans account for eight percent of the debt stock, having grown from nil 10 years ago, while Kenya’s has grown from six percent to more than 30 percent.
He warned that the government is acquiring too much expensive debt especially in the form of government treasuries.
Muhumuza urged the government to focus on developing other minerals in Uganda other than oil and gas.
“I am going to suffer to remove my sister Irene Batebe and her bosses from oil and gas so we can talk about other minerals. 2025 is a good target for gold. The refineries for gold came around 2014,” he said.
Anne Juuko, CEO at Stanbic Bank Uganda said: “The most important risk that we must all address ourselves to is the existential risk of climate change. We are one of the few institutions in this country with a fully-fledged sustainability department.”
“In the Old World Order, we knew two things to be certain: death and taxes. In the New World Order, we can add risk. There is always going to be one form of risk or the other manifesting in your business. That is where we come in as your risk management partners,” she added.
Ms Pauline Irene Batebe, the Permanent Secretary in the ministry of Energy, said: “As part of the New World Order there is an aspect that hasn’t been discussed exhaustively and that is the energy transition.”
“As the Ministry of Energy and Mineral Development, we want to emphasize that the energy transition should be tailor-made on a case-by-case basis for countries. As a country such as Uganda where we are predominantly using biomass for our energy requirements, it is on us to push ourselves to transit very fast,” she added.
Dr Micheal Atingi-Ego, the Bank of Uganda Deputy Governor, said they are studying the possible implementation of central bank digital currencies.
“BoU is open to financial innovations, especially those that reduce the cost of transactions,” he said.
He also urged financial institutions to cooperate and fight cybercrime.
“We all know what the pandemic did for digitization. This is good for business growth and operations but also presents risks of cybersecurity,” he said.
