Export Diversification and Industrialization- A case for Sector Institutions “ Implications for Policy Makers”

1. Export Diversification and Industrialization- A case for Sector Institutions“Implications for Policy Makers” The Uganda Experience Florence Kata Executive Director Uganda Export Promotion Board f.kata@ugandaexportsonline.com florencekata@yahoo.com

2. Uganda: A Synopsis * • Population, thousands (2002 census): 24 442 • GDP per capita, $ (2001): 238 • GDP growth rate (last 5 years’ average): 5.7 • Life expectancy, (2001 – 2005): 46.0 • Illiteracy rate (2001): 39 • Inflation rate (single digit): 6.5 • Exchange rate (5 year average): US$1 = Shs 1760 ** Source: Key Economic Indicators, 59th Issue, Uganda Bureau of Statistics

3. Uganda: A Synopsis continued * Source: Bank of Uganda 2004/05 annual report

4. POST-1986; Economic conditions: • Policy shift from a state-controlled to a market led economy (macro-economic recovery and reform program early 90’s) • Divestiture and reform of government institutions (Marketing boards were closed; Coffee, Lint, etc - Deregulation of prices) • External sector & Foreign exchange liberalisation • price de-controls (to full price mechanism) • Rehabilitation of basic infrastructure and return of Departed Asians Properties • Privatisation of state enterprises * • Late 90’s to date – Realisation of the need for institutions in the framework of public private sector partnerships • Government divestiture reforms and the overestimated confidence in the private sector as “engine of growth for an export led, private sector driven, poverty eradicating economic philosophy” • Expanded and diversified export sector (indication in the next slide) • Establishment of more SSI’s strategically selected to oversee the fast growth of the diversification sectors See http://www.perds.go.ug/

5. Uganda: Export Diversification Trends Uganda Bureau of Statistics

6. The Argument for Sector Specific Institutions Vs Economy wide approach Our view is affirmative as SSI’s in weak government economies and a fledgling private sector have been seen to: • Spur export processing (e.g. Export Processing Zones) • Accelerate export development and promotion (UEPB) • Streamlining tax regimes and investment incentives (UIA) • Assistance with standards compliance (UNBS) • Accelerate trade with the USA (AGOA) • Support development of tourism and conservation sites (UTB) • Offer agriculture extension support services (NAADS) • Promote investment in commercial forests and conservation (NFA) • Spearhead the development of prototypes (incubation) and support mechanisms for Industrialisation (UIRI) • Engage in effective research and development (NARO) • Initiate the process of commercial law reform (CLR) • Introduction of the warehouse receipt system to improve collateral for access to finance (UCE) • Increase access to micro-finance (MFIU) • Spearhead aqua culture development, landing sites management, and enforcement of industry standards (Fisheries unit in MAAIF)

7. The Argument for Sector Specific Institutions (Cont’d) Who are the drivers of the diversification process? • In Uganda, diversification is advancing at a rather slow pace. The private sector does not have the sufficient thrust to accelerate the diversification. The SSI’s are ill equipped and under resourced • Accelerated diversification requires agro-industry and value addition for competitiveness which in turn requires infrastructure and reduced cost of doing business • The structure and management of these SSI’s should espouse a strong public-private partnership if export diversification is to be increased. Private sector is often weary of dealing directly with government. The SSI provide an intermediating platform.

8. Quality and Capacity of Institutions • Must be technically efficient • Must be well resourced and equipped • Must have effective service delivery mechanisms • Strong vertical and lateral participatory mechanisms • Have the capacity for being the proactive “eyes and ears” for the sector they represent • High degree of innovativeness for solutions • Exercise transparency and equity • Strong regulatory responsibility and/or authority

9. Way forward and Implications for Policy Makers Well managed and resourced sector specific institutions can serve as a catalyst for export diversification and economic growth • Resource mobilization • Positively influence policy • Advocacy forum/platform • Enhance public/private partnerships • Energies for entrepreneurship

10. Thank you for your attention Ladies and Gentlemen