5th Economic Mkutano Business Forum sheds light on Green Economic

February 26, 2023 0 Comments

The 5th Economic Mkutano Business Forum has fronted the Green Economic Zones programme as a promising opportunity for the private sector. The forum was held in Kampala, Uganda in February 2023, under the theme: ‘Unlocking the Green Economic Zones; Opportunity for the Private Sector.”

Representing government, the Minister of State for Trade, Cooperatives and Industry, Hon. David Bahati revealed that cabinet under the leadership of President Yoweri Museveni by is deliberating on ways in which to further support growth of the private sector, an engine for Uganda’s economy.

Bahati pointed out electricity availability as one of the issues being discussed. “Cabinet is discussing how much power we can generate to sustain supply and meet demand,” he said. Currently, the country’s power generation capacity is approx.1,346 with demand at 800 MW, leaving a surplus of 546 MW. “But with the creation of industrial parks and the ever-increasing number of new industries and other new customers, a discussion on increasing electricity supply to power industries and meet customer demand has to be part of regular cabinet discussions,” he said.

Relatedly, Bahati revealed that government continues to invest heavily in new industrial parks with connected infrastructure (roads, electricity, and water) to boost private sector investment and performance. He also said that government continues to offer tax incentives to industrialists in the selected industrial zones while no new taxes have been introduced. All these efforts are geared toward mainly supporting private sector growth.

Commenting on theme, Bahati urged all private sector players to design their business plans with a component of sustainability that links to environmental conservation. “President Museveni will soon deliver a major speech on this. There is no factory that will be allowed to operate in a wetland. Green technology will be key for whoever is starting a factory to enable us to grow the economy while at the same time protecting our environment,” he said. He also urged commercial lenders to offer credit at affordable interest rates to enable borrowers to break-even. He said, most private sector companies are borrowing at between 20-22% per annum yet most of them register 14% as return on investment.

Hez Alinda Kimoomi, the executive director for Uganda Free Zones Authority (UFZA) sent a message to his colleagues in government and the private sector saying, economic growth going forward has to be achieved through promotion of export-oriented investments, favourable economic management policies, controlling inflation and interest rates and implementation of export-led industrial policy. “I urge private sector players especially those in the industrial sector to join the free economic zones and benefit from tax incentives. Competitive markets are now being driven by high standards in terms of goods produced and packaging,” he said. He added, “…for as long as your business is going to create jobs; and not going to adversely affect our environment, you are free to join the free economic zones.” Alinda’s views were seconded by Ms. Damali Ssali from the Private Sector Foundation Uganda.

Other panelists like Spencer Sabiiti, the Chief Executive Officer for Stanbic Properties Limited said that building appropriate infrastructure in different economic zones would easily boost production and development of properties hence reducing pressure on service delivery in cities like Kampala.

He noted that the discussion about infrastructure development be linked to the cost of funding which remains high compared to some ‘favoured’ sectors like agriculture that enjoys cheaper credit of about 10% per annum under the agriculture credit facility. In line with the theme, Sabiiti said: “Economic zones development will only benefit companies that are compliant to policies that protect the environment. Most big funders are now looking at the sustainability (ESG) aspect of companies before offering any form of support.”

David Bikhado Ofungi, the curator of the Economic Mkutano said that this year’s theme was deliberately chosen given that the entire world economy is being driven to that direction. He said, Green Economic Zones (GEZ) offer private sector investors a unique opportunity to invest in sectors such as renewable energy, sustainable agriculture, eco-tourism, and sustainable industrial practices. Going forward, Ofungi said, they will deliver a detailed paper containing the outcome of the event to guide policy design and implementation.