Download A Case for Sector Institutions

Export Diversification and
Industrialization- A case for
Sector Institutions
“Implications for Policy Makers”
The Uganda Experience
Florence Kata
Executive Director
Uganda Export Promotion Board
[email protected]
[email protected]
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
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Exchange rate (5 year average): US$1 = Shs 1760
** Source: Key Economic Indicators, 59th Issue, Uganda Bureau of Statistics
Uganda: A Synopsis continued *
2001/02
2002/03
2003/04
2004/05
Goods Account (Trade Balance)
-530.26
- 622.76
- 663.16
- 821.47
Total Exports (fob)
474.04
507.91
647.18
786.32
Total Imports (fob)
-1,004.30
-1,130.68
-1,310.34
-1,607.79
Source: Bank of Uganda 2004/05 annual report
POST-1986;
Economic conditions:

Policy shift from a state-controlled to a market led economy (macro-economic
recovery and reform program early 90’s)
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Divestiture and reform of government institutions (Marketing boards were
closed; Coffee, Lint, etc - Deregulation of prices)

External sector & Foreign exchange liberalisation
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price de-controls (to full price mechanism)
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Rehabilitation of basic infrastructure and return of Departed Asians Properties

Privatisation of state enterprises *
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Late 90’s to date – Realisation of the need for institutions in the framework of
public private sector partnerships
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Government divestiture reforms and the overestimated confidence in the
private sector as “engine of growth for an export led, private sector driven,
poverty eradicating economic philosophy”
Expanded and diversified export sector (indication in the next slide)
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Establishment of more SSI’s strategically selected to oversee the fast growth
of the diversification sectors
Uganda: Export Diversification
Trends
Uganda Exports by Value, US$ '000 (1997-2005)
1997
1998
1999
2000
2001
2002
2003
2004
2005
Traditional
381,618
353,870
341,464
211,343
173,213
182,700
199,344
244,955
267,522
Non - Traditional
213,010
182,877
137,286
190,302
278,552
284,905
334,762
420,134
545,335
594,628
536,747
478,750
401,645
451,765
467,605
534,106
665,089
812,857
Uganda Bureau of Statistics
Uganda: % Contribution to Value of Total Exports
(1997 - 2005)
80%
70%
Percentage
60%
50%
40%
30%
20%
Traditional export
10%
0%
1996
Non-traditional exports
1998
2000
2002
Years
2004
2006
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:
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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)
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.
Quality and Capacity of Institutions
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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
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
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Positively influence policy
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Advocacy forum/platform
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Enhance public/private partnerships
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Energies for entrepreneurship
Thank you for your attention
Ladies and Gentlemen