Tuesday, August 21, 2012
THE 2ND COMPETITIVENESS AND INVESTMENT CLIMATE STRATEGY TO MAINSTREAM COMPETITIVENESS
Source: 5th National Competitiveness Forum - Forum Report (3rd November 2011) at Sheraton Hotel Kampala. President Museveni Launched the Competitiveness and Investment Climate Strategy (CICS II), 2011 – 2015 Over the last 15 years, the Government of Uganda has implemented policies and programmes aimed at improving competitiveness. In 2000, a five year Medium Term Competitiveness Strategy (MTCS), 2000 – 2005 was launched with a focus on institutional reforms especially in the energy, financial sector and export sectors of the economy. In 2006, implementation of a successor strategy, the Competitiveness and Investment Climate Strategy (CICS), 2006 – 2010 took off. This strategy aimed at triggering productivity in the productive sectors of Agriculture, Manufacturing, Services and Tourism, Improving business environment; and improving Uganda’s competitiveness within the regional context. While the above strategies have contributed significantly to improving the business environment, the National Development Plan (NDP) 2010 identifies key binding constraints that need to be unlocked in order to further improve Uganda’s business environment. It is in light of the above challenges that the 2nd Competitiveness and Investment Climate Strategy (CICS II) 2011 – 2015 has been developed with a priority focus of mainstreaming competitiveness as a driver of growth and prosperity. The Launch of the CICS II, 2011 – 2015 was presided over by President Museveni. At the Launch, Mr. Eric Kacou made a presentation where he outlined the background to the CICS II. He informed the forum that over the past 10 years, Government has initiated efforts to improve competitiveness of the country. However, challenges have persisted while others have emerged that led to lack of trust, inequity, lack of planning and defensiveness in our approach. This has necessitated a new approach to tackling competitiveness short comings in the country. To overcome the challenges, the co-Chairman of the CICS Steering Committee, Mr. Keith Muhakanizi (Deputy Secretary to the Treasury), appointed a Multi- Sector Taskforce which included members from the Government, private sector and development partners as headed by Mr. Gideon Badagawa, the Executive Director of the Private Sector Foundation of Uganda (PSFU), to formulate the next 2011 – 2015 competitiveness agenda. The agenda was aimed not only to reduce poverty but to make Ugandans prosperous in the long run. The Strategy focused on five key areas namely; UNLEASHING GROWTH CLUSTERS; Cluster selection allows resources to be focused on sectors that will have the most significant impact on Uganda’s economic objectives which include employment creation and income generation. Using a detailed selection process, seven clusters were identified and they include; Tourism, Business Processing Outsourcing (BPO), Agriculture, Coffee, Horticulture, Edible Oil, Grains and Pulses and Fisheries. FOSTERING COMPETITIVENESS MIND-SETS; This requires sustained leadership and support at the highest level of government to ensure focused and sustained execution of programs. The public and private sector should escape from ‘the Survival Trap’ mentality of doing business. INCREASING FIRM LEVEL CAPABILITIES; Through provision of business development services (BDS) and empowerment of the private sector to innovate, produce high value and sophisticated products for the modern consumer. IMPROVING UGANDA’S BUSINESS ENVIRONMENT; This could be guided by both the World Bank Doing Business Report and World Economic Forum Global Competitiveness Surveys that are helpful in benchmarking Uganda against other countries through improvement in the ‘hard’ and ‘soft’ infrastructure, and; DRIVING FOCUSED EXECUTION – Through a reinforced CICS Secretariat to make it more pro-active in carrying out its monitoring, coordination and facilitation roles across different units of Government. To escape the ‘Survival Trap,’ the strategy outlines 23 programmes with a budget of eleven billion Uganda shillings (11 bn). The CICS II intends to promote private sector competitiveness by focusing resources on priority clusters to maximize impact. Rather than spreading resources thinly across many sectors, a value chain approach will be employed for the selected high impact clusters. The strategy also calls for a shift in mindsets to drive implementation of identified activities. This holistic approach will ensure that appropriate investments are made in the right sectors so as to optimize overall private sector performance. In his key address, the President informed the forum that there are challenges facing the country. Inflation undermines investment and the business environment while liberalization would help spur business and exports. Other challenges include the level of power available per capita in Uganda compared to those in developed countries together with a poor railway infrastructure, roads, ICT and piped water. These challenges affect the country’s capacity to attract Foreign Direct Investment (FDI). The President said that the private sector is the engine of growth and prosperity. A private sector – led growth should be supported and nurtured. Government should provide the necessary legislative and policy environment to enable the private sector to access the domestic, regional and international markets. This should be coupled with the development of the skilled manpower. He said that competitiveness can only be achieved if the private sector can produce the right quality, quantity and in timely and sustainable manner. He outlined 15 Stimuli needed for doing business in Uganda: Peace and Security; Law and Order; Macroeconomic stability and Liberalization; Infrastructure; Serviced land; Private Sector – led growth; Regional Integration; Mind – set and attitude change; Anti-corruption initiatives; Human resource development; Strong Government regulation; Disease control for crops and livestock; Salesmanship and promotion; Research; Prioritization and Execution. FORUM DISCUSSION In the discussion that followed the launch of the CICS II, the following issues arose: Uganda needs to embrace biotechnology. This will help to increase the level of productivity and efficiency of resource use that will lead to the development of the right quality and quantity of goods in a timely manner to enable private sector compete domestically, regionally and internationally. However, the Biotechnology and Bio-safety and Plant Variety Bills that provide the enabling legislation for the development of better plant and animal varieties were yet to be enacted. Uganda should not confine itself to small regional markets with limited consumption due to low incomes. Firms should aim at developing products that can compete internationally in the world market. The country needs to put in place a regulatory framework to attract higher caliber investments that can serve as anchor firms for further Small and Medium Enterprise (SME) development. Delegates stressed the need for promotion of cooperatives in key sectors to encourage the production of the necessary quantity and quality of goods that can attract higher prices and ensure increased incomes for firms and individuals. Corruption destroys trust, creates inequity in firm level development and leads to decline in the level of competitiveness in the country. Delegates called for concrete action to eliminate corruption in the country.