Research Theme 3

EPRC is aware that despite the increased role of the state in economic growth and development particularly in the provision of public goods and strategic investments, the private sector remains a key engine of economic growth.

However, Ugandan firms face various growth and survival constraints which undermine the private sector led growth such as limitations to competitiveness and high cost of doing business which negatively impact on productivity.

Some of these impediments and their implications are not obvious often leading to conflicting government policies and initiatives. EPRC through is working to provide insights into the role of the state vis-à-vis private sector in building a competitive economy.

Sub-themes 

 3.1 Private Sector Competitiveness, Regional Integration and Access to Finance

Under this subtheme we explore what is generally impeding competitiveness in the private sector and what is the relative role of infrastructure, access to finance and cost including issues of risk ratings.

  • What is the impact of lack of availability of term development financing where most projects of a developmental nature are financed through commercial credit often at very high interest rates?
  • What factors are preventing bank credit from being channeled to productive sectors of the economy such as agriculture, manufacturing etc. and what are the incentive structures that can help attract credit in these areas?
  • Are the credit institutions in Uganda structured in a manner that promotes long term private investment and what role can the state play in redirecting credit to productive sectors?
  • What is the potential of savings and pension reforms in promoting access to finance?
  • What are the critical issues for private sector access to markets, global and regional, how can Uganda deal with issues in customs union (such as non-tariff barriers) and the planned monetary union in order to be competitive within the EAC?

3.2 Policy Framework and Initiatives to Promote SMEs 

  • What are the policies and complementary initiatives that would promote SMEs in value addition in key sectors such as agriculture, and what are the relative important of cost drivers in the SME sector.
  • What are the necessary skills development requirements and how best to address the currently very low productivity due to lack of relevant skills among SMEs?
  • What are the roles of the state and the private sector in bridging skills gaps?
  • What are the implications of regulation and deregulation, as well as the broader governance issues, such as corruption, on the private sector?
  • What kind of technology is most suitable for Uganda's private sector and what are the impediments to technology transfer and incubation by SMEs?

3.3 Institutional Behaviour and Private Sector Development

This examines issues of budget allocation to productive sectors that will propel growth. 

  • What alternative options are available to expanding the tax base and what are the trade-offs for private sector competitiveness and development? For example, what are the costs and benefits of tax holidays and exemptions to large firms which are on average employing a decreasing number of the workforce, to the alternative of investing tax revenues in areas which enhance competitiveness for the private sector as a whole particularly SMEs which have a higher employment potential?
  • What are the required institutional reforms required to promote private sector development including in ensuring quality and standards, boosting volumes for export market guarantees, easing access to markets, and supporting packaging and marketing for value addition?
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