Tuesday, January 18, 2011
HOW IS UGANDA’S GLOBAL COMPETITIVENESS POSITION?
HOW IS UGANDA’S GLOBAL COMPETITIVENESS POSITION?
Source: Competitiveness and Investment Climate Strategy (CICS), 2006 – 2010
By Ministry of Finance Planning and Economic Development - December 2007
Competitiveness can be measured by among other things, the cost of doing business, a country’s positioning within targeted international markets and the level of diversification of products, services and markets.
Improvements in the competitiveness of Uganda’s productive sectors and investment climate will result in increased investment levels and export earnings. However, to compete in the international market, Uganda must compare favourably with other investment locations, particularly within the East and Central African region.
The 2008 Global Competitiveness Survey report indicates that Uganda’s overall Competitiveness ranking declined to 120th out of 131 countries in the 2007 survey. The key areas responsible for Uganda’s poor performance relate to the performance of Uganda’s public institutions particularly cost and access to financing, inadequate infrastructure where Uganda is ranked 108th out of 131 countries; corruption and tax rates. The failure to make significant improvement in these basic requirements will continue to dent Uganda’s economic prospects. The implication therefore is that Uganda needs well performing public institutions, a stable macro-economic framework, appropriate infrastructure and a healthy and literate workforce
UGANDA DROPS IN GLOBAL COMPETITIVENESS RANKINGS
Source: Daily Monitor
KAMPALA Uganda has dropped eight places in the latest global growth competitiveness rankings.
According to the Global Competitiveness Report 2005-2006 released by the World Economic Forum (WEF) on Wednesday, Uganda dropped from 79th position in 2004 to 87th in 2005 among 117 countries.
Its East African counterpart, Tanzania, climbed 11 places from 82nd to 71st position to become the most competitive economy in the region. Kenya is ranked third at 87.
The index is designed to measure the set of institutions, market structures and economic policies supportive of national prosperity.
However, Uganda was cited as having the 11th best macro economic environment in Africa out of 25 countries surveyed (71st in the world), putting her higher than Tanzania and Kenya which are placed in the 76th and 77th positions respectively.
In the public institutions index, Uganda ranked lower than Tanzania at position 84 in the world, while Tanzania stood at position 59 and Kenya further behind at 92. However, Kenya is a giant in the technology index at number 8 of the 25 countries surveyed in Africa with Uganda and Tanzania coming behind in 10th and 12th positions respectively.
"By highlighting the strengths and weaknesses of an economy, policymakers and business leaders are offered an important tool to assist them in the formulation of improved economic policies and institutional reforms," said Mr Klaus Schwab, the Founder and Executive Chairman of the WEF.
He said the Report is a contribution to enhancing understanding of the key ingredients of economic growth and prosperity.
Finland remains the most competitive economy in the world, topping the rankings for the second consecutive year. The United States of America is in the second position, followed by Sweden, Taiwan, Denmark and Norway, consecutively.
South Africa is the continent's best-ranked country at position 41. Other African countries that have shown good performances in the rankings are Botswana (46th) and Mauritius (52nd).
The study is one of the leading monitors of the competitive condition of economies worldwide. WEF has been producing competitiveness reports for 26 years.
The rankings are drawn from publicly available data for each of the economies studied and from a comprehensive evaluation conducted by leading research institutes and business organisations in the countries covered by the report. The survey questionnaire was designed to capture a broad range of factors affecting an economy's business environment and that are key determinants of sustained economic growth. Particular attention was placed on elements of the macroeconomic environment, the quality of public institutions, which underpin the development process, and the level of technological readiness and innovation. A World Bank 'Ease of doing business," study showed that globally, Uganda was in 74th place while Kenya 68th and Tanzania 136th in terms of ease of starting and running new businesses.
TRACING COUNTRY'S BOTTLE NECKS TO GLOBAL COMPETITIVENESS
SOURCE; THE MONITOR
20 October 2009
Uganda has business potential because of her natural resources like oil and gas. However, she remains largely unattractive to essential foreign exchange and investments that should position her among the world's leading destinations of transacting business.
Uganda is ranked 112th out of the 183 economies in the 'Doing Business 2010' report on the overall ease of doing business index of the World Bank. In comparison, Asian economy Singapore is ranked number 1, Rwanda number 67 while Kenya rests at 95. Yet, during the colonial times, Uganda was almost as good as Singapore. Worse still, Uganda is ranked as the world's 108th least competitive nation out of the 133 countries in the world.
A higher ranking on the indices, done by the World Bank, projects that a nation has better and efficient regulations for doing business and facilitating cross-border investment and trade.
The nation's performance, although improving, remains "unimpressive" as Ambassador Vincent De Visscher, the head of the European Delegation in Uganda, put it last Friday. This is because its investment climate and economic structure are largely damaged by major problems like corruption, poor infrastructure and energy deficiency, which limits the productivity and competitiveness of a country.
To improve its performance, Mr Visscher said Uganda needs to expedite reforms in all key areas of the economy like enacting the commercial law, and passing the Counterfeit Bills. The nation currently has out-dated commercial laws, which increase business costs that called for their amendment. "Uganda needs to put in place all the necessary regulations that will ensure a transparent, predictable and secure business environment to trigger the much needed investment and boost the competitiveness of the economy," the Ambassador told participants at the 4th National Consultative Forum, which was held in Kampala.
Participants included; Oxford University's Prof. Paul Collier, a renowned economist, the Minister of Finance Syda Bbumba, Bank of Uganda Governor Emmanuel Tumusiime Mutebile and members of the private sector. Mr Visscher called for tough actions against corruption by moving beyond declarations. He welcomed the move by President Yoweri Museveni to declare his intentions on tackling corruption in the economy because it is an impediment to Uganda's competitiveness.
"Uganda must go beyond declaration of intent to take action," he said. According to the World Economic Forum, Uganda is ranked 126th out of 133 countries, as one of the countries where "diversion of public funds" is most likely to occur. Corruption is listed as the second most problematic factor for doing business in Uganda in the 2009/10 Global Competitiveness Report.
Prof. Collier, the author of the "Bottom Billion", put emphasis on transparency in Uganda's oil and gas industry. He said disclosing details of oil mining contracts and revenues from the commercial oil and gas production was relevant for Uganda to prosper from the natural resources.
Tullow Uganda, Heritage Oil, and Dominion Petroleum Limited are the oil companies with contracts to mine oil in the districts of Hoima, Buliisa and Amoru.
Through its exploration, Tullow alone has confirmed up-to 800 million barrels of oil with an estimated total value of Shs95 trillion ($50 billion. However, the total find by all the companies is estimated at 2 billion barrels meaning revenues should be a lot higher.
Prof. Collier, a former advisor to Tony Blair's Commission in Africa, said: "Awarding contracts by "auctioning" as opposed to secret deals as the government has done with oil exploration companies, would enable Uganda get the best deals in the world. Auctioning reveals the real value of resources," he said at the forum, which sought to find ways of repositioning Uganda in world business ranking.
Commenting on the "unseriousness" with which the government has carried on with the oil resource, Prof. Collier said: "Oil has the potential for prosperity and the potential to destroy you." He said rewarding contracts by auctioning and publishing material about oil revenues will help in avoiding oil revenue-related-corruption, wars, and loss of revenue like it has happened in Nigeria.
Ambassador Visscher had earlier on called on Uganda to have a "transparent practical trade regime" that can help Uganda attract investments that can help the nation to "dwarf development aid and drive the economy forward."
Emphasis was placed on oil because when it starts flowing through the production phase, it is expected that incomes from the black gold will help the nation offset its budget deficit, reduce dependence on donor budget aid and boost investment.
The Oxford University economist, emphasised that Uganda must shrewdly save up-to about 70 per cent of its oil revenues like Norway did but the saving must have a domestic dimension. The objective is to ensure that future generations can also benefit from the country's natural resource.
He said Uganda cannot afford to use its oil revenues for public consumption like it is with other tax revenues.
"Oil revenues run out. They are not sustainable revenues because they are coming from depleting a public asset. As you deplete a public asset of oil, you have got to build up an offsetting asset," Mr Visscher said.
"Yes you need to save but the savings should be re-directed into investments like transport and energy infrastructure in the economy."
Local investors have constantly called on the government to invest in infrastructure like roads, airfields, railway line and constant and adequate sources of power, to increase the competitiveness of their factories by lowering production costs. Thin expenditures on production lines help firms quote competitive prices in the regional or global markets.
Giving lessons on how Uganda can cut costs to be more competitive in the global economy, Mr David Bridgman, the head of the International Finance Corporation's Private Enterprise Partnership in Africa, called for innovativeness and the deployment of technology in the investment processes.
"There's a need to reduce paperwork by using technology like Rwanda has done," he said. Comparing Uganda to New Zealand, he said it takes one 25 days to register property while its takes only 20 minutes for one to do the same thing in New Zealand.
Mr Bridgman further stressed the need to learn from getting ideas from the best performing countries like Mauritius and Rwanda in Africa and try to fit in their shoes. "Benchmark yourselves against Mauritius and see what they have done best and follow what they are doing," he said. Mauritius is ranked number 1 in the ease of doing business in Africa.
Bank of Uganda Governor Emmanuel Mutebile, while delivering his speech on competitiveness, also stressed the importance of orienting the national education programmes towards vocational training. "We need skilled work force in the non-oil sector where investment will be because the money we get from oil must be invested in the non-oil sector in order for us to prepare for the time when oil is no longer there," Prof. Mutebile said.
The Governor regretted that almost all vocational training institutions have been turned into universities, which churn out less practical and innovative graduate citizens. "No country has ever developed on the basis of university graduates. We need a skilled vocational workforce," he said adding that the economy needs to be made competitive through a continued stable and sustainable macro-economic environment.
While a lot needs to be done for the nation to become competitive, over the past four years, Uganda has made some significant achievements, which have helped it move up the global competitiveness index by 20 places to its current position.
The the Company and Land Registries have initiated computerisation and automation of records in some areas of registration, a One-stop investment centre has been established at the Uganda Investments Authority, the government also launched the 24-hour week port and border operation to increase efficiency in custom tax clearance for traders.