Uganda: Can the 11th Parliament Help Revive Uganda’s Economy?

Challenges affecting businesses and the economy today include but not limited to; weak policy implementation, dampened levels of demand in the economy, high cost of credit and unprogressive tax policies.

This is in addition to high cost of energy, poor transport infrastructure, rising transportation costs and corruption which continues to hinder execution of service delivery that could boost economic growth and development.

The situation has not been helped either by the effects of the Covid-19 pandemic and its containment measures instituted by the government over the last 13 months.

Analysts across the spectrum, without hesitation concur that Parliament hasn't done much in addressing the aforementioned pressing issues compared to the attention they render to political agenda in the August House.

For example, 60 per cent of the national budget is meant for developmental purposes. Unfortunately between 70- 85 per cent of these resources, according to private sector apex body analysis, do not stay in the economy to stimulate growth yet Parliament through its appropriation and legislation can solve this dilemma.

Further the change of the local procurement preference to have powerful and strong foreign companies benefit equally from the preference schemes means that only a few companies are frequently walking to the bank smiling. The Finance Minister amended the 2017 guidelines in March 2018 and just rendered it not useful to stimulate the private sector as was expected.

As a result, the Private Sector Foundation argues that implementation of the local content policies and regulations is yet to reach a level where investments are prioritised.

Therefore, an enabling environment is required to facilitate the investments of the private sector. This includes necessary government policies, regulations and laws. That is where Parliament's role falls.

According to the Private Sector Platform for Action 2020 report, highlighting Private Sector Opportunities, Weaknesses, Growth Constraints and Proposals for Policy Reform, it takes a long period of time for government, in this particular case the Parliament to enact laws and develop policies that are critically required for the private sector to grow.

Some critical commercial bills such as local content bill, completion bill, and coffee bill, Landlord and tenants Bill and Cooperative bill, among others have been gathering dust for years while some that were enacted continue to require regulations to operationalise them.

Several other desired policies and regulations required by the private sector take too long to be developed. Several other sectors lack policies to govern their operations, all these are things that Parliament should be involved in.

Ease of doing business

The World Bank annually releases the report on ease of doing business within different economies globally. The report covers 190 economies shedding light on their performance across 11 business competitiveness indicators such as starting a business, dealing with construction permits, getting electricity, registering property and getting credit.

It also assess taxes, trading across borders, enforcing contracts, resolving insolvency and labour market regulation.

Last year, Uganda was ranked 116 among 190 economies in the ease of Doing Business report. This should render Parliament 'sleepless nights' because the establishment, growth and survival of the private sector to a large extent depends on government's economic growth strategies in which Parliament has a massive say.

According to the Global Entrepreneurship Monitor (GEM) 2015, Uganda is the most entrepreneurial country in the world, with 28 per cent of adults owning or co-owning a new business. However, most businesses are small-scale and informal, with little employment effect and a high discontinuation rate. Formal sector comprises of about just 25 per cent of the economy, according to PSFU survey.

The Private Sector in Uganda is dominated by micro, small and medium enterprises (MSMEs) comprising about 1,100,000 enterprises and employing approximately 2.5 million people - equivalent to 90 per cent of total non- farm private sector workers.

The sector, according to Uganda Bureau of Statistics, contributes about 75 per cent of the country's Gross Domestic Product (GDP). Most of the businesses are located in Kampala (45 per cent) and central Uganda (21 per cent) and the rest are distributed across the other regions: Western; 14 per cent, Eastern; 13 per cent, and Northern; 7 per cent.

They are spread across all sectors with 49 per cent in service sector, 33 per cent in commerce and trade, 10 per cent in manufacturing and 8 per cent in others. With almost equal ownership distribution of the enterprises between male and female, 47.4 per cent and 52.6 per cent respectively.

Most females are engaged in micro enterprises. 43 per cent of all MSMEs are sole proprietorships and 33 per cent private limited liability companies.

Others include partnerships, 18 per cent are associations 2 per cent and 4 per cent cooperatives. MSME's are predominantly informal and young enterprises, the majority of which are within the bracket of one to five years, suggesting a high closure rate. In general, less than 10 per cent of Ugandan enterprises operate for more than 20 years.

Even at the top end of the spectrum, only a handful of indigenous enterprises have been able to survive the demise of their founders.

These are issues that Parliament, given its platform and constitutional tools avail in its disposal, should be paying attention to because everybody, including the legislators will be winners in this race.

Role of Parliament

Although the role of Parliament of Uganda is clear, the understanding of the functions of the August House remains unclear to many legislators.

In an interview with some former and present Members of Parliament (MPs) across the political divide, the word representation quickly pops up when asked about the function of Parliament. This is followed by enactment of laws and lastly, the oversight function.

All the above are constitutional roles of the Parliament of Uganda, the country's legislative body.

However, most legislators interviewed ended up narrowing the mission of the parliament to a limited legal understanding, rotating around oversight, lawmaking and representation.

As a result, many MPs have difficulties linking the legal interpretation of the role of parliament to real societal issues that Parliament should be concerned about such as the performance of the economy, let alone service delivery.

This perhaps explains why comparison between the country's Parliament and national theatre, both adjacent to each other, is often cited as way to criticise the superficial way the August House goes about businesses that affect livelihoods.

"It is peoples' Parliament and so should reflect the aspiration of the people," says the Makerere University School of Economics Lecturer, Dr Fred Muhumuza in an interview last week.

He continued: "Parliament responds to pressing challenges, many of which are in form of "bread-and-butter" issues. Parliament also deals with things that affect everyday people like tax rates, escalating prices, broken bridges, or bad roads, which are all issues that either shape or have an impact on the economy."

In another interview with Ms Susan Khainza, a Chartered Financial Analysts (CFA), it emerged that while Uganda is blessed with natural resources and has an abundance of talented citizens, there are several key requirements for economic growth that it needs, and Parliament has a role to play in each.

She said: "Parliament passes laws to ensure governance and Uganda needs a well-functioning legal and regulatory system and respect for property rights. Protection of private property, including intellectual property means that households can feel confident to save and invest."

According to the Chartered Financial Analyst, If the laws on intellectual property such as copyrights, patents, trademarks and trade secrets were well defined, the country would be able to invest in research in new ideas--all good for the economy, considering that Investment in research encourages innovation.

Ms Khainza argues that by Parliament voicing the challenges faced by individuals all around the country, in essence the August House is preventing social unrest and political instability which discourages both local and foreign investment.

Constitutionally, Parliament is required to approve the National Budget, and while doing so should ensure fair distribution of resources and adequate expenditure on productive sectors of the economy such as education, health care and agriculture. If this is properly done, the result will be obvious.

She is also of the view that a highly skilled workforce attracts investors, citing both China and India for having invested in education in engineering and technology, improving the quality of their workforce while utilising their own resources and attracting foreign investors, something she says our Parliament can take a cue from.

Besides, she notes that Parliament monitors expenditure, ensures transparency and accountability. They approve the country's borrowing. The proper use of money allows development projects to take place and money to be used for its intended purpose. The country's debt position affects its stability and independence.

Parliament also approves taxation and regulatory systems which may discourage entrepreneurship instead of fostering growth.

According to Mr Nathan Nandala Mafabi, a senior legislator and the former Chairman of the Public Accounts Committee (PAC), not many members of Parliament are aware of the strength that the August House has in shaping the economy's fortune.

"Parliament can drive the economy of this country because it has the constitutional duty as well as the moral obligation to do so, but I don't think the honourable men and women in this Parliament realise that Parliament is the best trigger for development.

"Parliament can use laws it makes and the budget it appropriates to trigger economic growth. For example, the budget it passes can be invested in productive sectors and not consumptive ones. With a good parliament, this country can be out of poverty within A few years," Mr Mafabi, the Budadiri West County representative who also served as the chairman of parliamentary committee on the Economy and Finance says.

Poverty rises

The number of poor Ugandans during the 2019/20 financial year increased from 8 million to 8.3 million according to the Uganda National Household Survey, 2019/20 with majority of these living in Busoga, Bukedi and Acholi sub-region.

As for researcher Corti Paul Lakuma, Parliament's constitutional mandate to make laws is its silver bullet. The Economic Policy Research Centre Fellow noted that it is impossible to do business or own property without the protection of the law which is a function of Parliament.

He says Parliament is key in lowering the cost of doing business by making laws that enhance the economy.

"But is Parliament playing this role effectively?" he asks rhetorically.

Researcher Lakuma cites capacity issues as one of the key challenges Parliament is grappling with in understanding business laws among other things. There are also delays in enacting enabling legislations. This is in addition to voting along party line, even when an issue is of national importance. This calls for maturity, "especially on matters that affect us all as Ugandans, regardless of our political persuasion".

When contacted, the former Vice Chairperson, Committee on National Economy, Mr Lawrence Bategeka, it became obvious that Parliament can only do so much.

He said: "It all depends on the executive arm of the government because it implements its manifesto using taxpayers' revenue and not the Parliament.

"Although I agree that Parliament can redirect the economy in the right direction, on its own it cannot do much. When it comes to the appropriation function, the National Budget belongs to the executive arm of government which has numbers in the House to push for their agenda," Mr Bategeka told Prosper Magazine last week.

He continued: "When you talk about passing laws which is a key responsibility of Parliament, these laws, some of which have a bearing on businesses,are developed by the executive arm of government. When it comes to the oversight function, most times Parliament does the 'postmortem' and this is not the best way to develop an economy."

Functions of Parliament include:

1. To pass laws for the good governance of Uganda.

2. To provide, by giving legislative sanctions to taxation and acquisition of loans, the means of carrying out the work of Government.

3. To scrutinise government policy and administration through the following:

(a) Pre-legislative scrutiny of Bills referred to Committees of Parliament;

(b) Scrutinizing of the various objects of expenditure and the sums to be spent on each;

(c) Assuring transparency and accountability in the application of public funds; and

(d) Monitoring the implementation of Government programmes and projects.

Source: The Monitor


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