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Uganda: Govt Wants to Ease Cost of Doing Business
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New Vision (Kampala)
12 June 2008
Posted to the web 13 June 2008
Sylvia Juuko
Kampala
THE Government plans to construct an alternative highway between Kampala and Entebbe as part of wider efforts to improve infrastructure that is critical to boosting production and competitiveness of the private sector.
A finance ministry document says critical investments will also be undertaken in the medium-term to build the Northern transport corridor into a dual carriageway from Busia/Malaba to Mbarara.
"The development of these projects will be undertaken through both globally-financed bonds and public/private partnerships. The budget allocation for roads' maintenance will be increased in order to eliminate the backlog on road maintenance at national, district and community levels," the background to the Budget for the fiscal year 2008/09 said.
Fitch ratings agency, which recently awarded Uganda a 'B' rating, confirmed the Government was eyeing issuance of a Eurobond to finance infrastructure.
What will come as a relief to the business community are government plans to develop a master plan for development of the national railway network.
"It is envisaged that construction of new rail links between northern Uganda and southern Sudan, western Uganda and the eastern Democratic Republic of Congo will be developed. Plans for re-opening the railway between Tororo-Gulu-Pakwach, and between Kampala and Kasese, will be prepared," the document says.
The Government will also develop an alternative route through the port of Dar-es-Salaam by rehabilitating wagon ferries on Lake Victoria.
"Resources have also been allocated for the purchase of a new ferry to replace the MV Kabalega, which sank in 2004. Consideration is also being given to developing the Tanga-Moshi-Arusha- Shinyanga rail link to operationalise further alternatives for access to the sea."
These new routes are expected to provide an alternative to the historical gateway to the sea through Mombasa. The route has been characterised by a surge in costs of transporting goods into the country recently.
Small and Medium Enterprises (SMEs) are big beneficiaries in this year's Budget following interventions to improve their business environment.
Figures from the finance ministry show that there are about 1,069,848 SMEs in urban and rural areas, which account for 90% of the private sector enterprises.
This sector contributes 75% to Uganda's Gross Domestic Product and employs more than 2.5 million people, making it a critical source of new jobs and income generation.
However, they have been weighed down by lack of power, poor road network, expensive telecommunications, lack of entrepreneurial skills in management plus poor terms and cost of finance.
Government interventions include establishment of a private sector-led SME development steering group with Enterprise Uganda as its secretariat to oversee proposed SME interventions.
Members of this group will include the Uganda Development Bank (UDB), Private Sector Foundation (PSFU), Uganda Manufacturers Association (UMA), National Agricultural Advisory Services (NAADS), Uganda Industrial Research Institute (UIRI), Uganda Export Promotion Board (UEPB) and the finance, agriculture, trade and industry ministries.
The steering group will be tasked with identification of target sub-sectors that will enhance SME development. The sub-sectors will in turn identify target sector interventions such as agricultural production that will be delivered by NAADS while UIRI, Uganda National Bureau of Standards and UEPB will address the aspects of value-addition and marketing.
UDB will play a leading role in provision of appropriate financing products including medium-term loans and credit guarantees.
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The Government also plans to issue a sh20b industrialisation bond for UDB to provide guarantees for lending, especially to the agriculture sector.
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