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Uganda and India Deepen Diplomatic Relations Through New Forensic Science University and Strengthened Trade and Military Cooperation

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Uganda and India Deepen Diplomatic Relations Through New Forensic Science University and Strengthened Trade and Military Cooperation

 

Uganda and India Deepen Diplomatic Relations Through New Forensic Science University and Strengthened Trade and Military Cooperation

World Business Journal talks to the High Commissioner of India in Uganda, H.E. Upender Singh Rawat, about trade between the two countries and joint work in academia and the military.

How have India-Uganda bilateral relations evolved in recent years?

India-Uganda bilateral relations have witnessed significant progress and collaboration. In 2023, our External Affairs Minister visited Uganda, culminating in signing a memorandum of understanding (MOU) for establishing India’s National Forensic Science University’s first overseas campus in Jinja. This university specialises in cybersecurity and forensic sciences, and the 2024 academic program is now open.

India actively engages in development partnerships with Uganda, particularly in skill development, through the India Technical and Economic Cooperation Program (ITEC). Offering 125 scholarships annually, ITEC covers diverse fields and involves courses in India’s 300+ institutes spanning science, technology, IT, agriculture, administration, and media.

We support Uganda’s defence capabilities with 77 annual scholarships for military personnel in extended programs in India. Meanwhile, the Indian Military Advisory and Training Team (IMATT) has been active at Uganda’s staff college in Jinja since 2010, with six rotating teams in the past 13 years.

Cultural ties are strengthened through the Indian Council for Cultural Relations (ICCR), offering 32 scholarships each year for regular university courses in India.

India is the second-largest investor in Uganda, with investments totalling over 1 billion dollars in the last two decades. This reflects our commitment to fostering economic and growth ties between our nations.

What is the current trade landscape between Uganda and India?

In terms of trade, the India-Uganda Trade Agreement, signed in 1965, grants both countries “most favoured nation” status. Uganda also benefits from the Duty-Free Tariff Preference (DFTP) scheme. Since 2004, a double taxation agreement has been in effect between the two nations, fostering deep engagement in the private sector to boost Uganda’s business with India.In the fiscal year from April 2022 to March 2023, India exported USD 560 million to Uganda, while imports were approximately USD 492.8 million. This adds up to a total trade volume of USD 1,053 million, a significant figure considering the geographical distance between the two nations.

In which sectors do you foresee a rise in collaboration and investment opportunities?

Uganda’s commitment to economic growth is underscored by its robust support for foreign investment, fostering an environment for sustained Indian engagement. Major Indian companies actively explore opportunities to initiate or expand operations in Uganda, capitalising on the favourable government stance.

The National Payments Corporation of India is currently exploring collaborations for Uganda’s digital payment infrastructure. Indian companies, exemplified by Tata Consultancy Services, play an active role in digital solutions, contributing notably to areas like tax revenue collection through software employed by the Ugandan government.

Considerable growth potential is observed in agro-processing and supply chain infrastructure, with Indian companies expressing keen interest in investment. Additionally, Uganda’s abundant minerals, particularly iron ore and gold, present substantial investment opportunities in the manufacturing sector. Given India’s position as the world’s leading consumer of gold, these sectors hold promising prospects for collaborative growth.

International Interest for a Growing Graphite Mining and Production Industry

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International Interest for a Growing Graphite Mining and Production Industry

International Interest for a Growing Graphite Mining and Production Industry

World Business Journal talks to Nabil Alam, Country General Manager of Blencowe Resources, about the bright prospects for graphite mining and material purification in the country and potential buyers for this versatile material in the US and China.

What progress has been made at the Orom Cross Graphite project in the last year?

We completed the pre-feasibility stage, which involved product pre-qualification, testing, finalising the resource base, and establishing graphite quality and quantity. Encouraged by positive results from the pre-feasibility study (PFS), the project transitioned into the definitive feasibility study (DFS) phase. A significant aspect of the DFS is establishing the spherical purified graphite (SPG) plant. This complex process enhances the value of graphite concentrate with purity levels up to 99.97%. Collaborating with the government is pivotal for studying the plant’s economics, addressing power consumption, and determining power sources. The primary goal is to direct a portion of the graphite concentrate to the SPG plant, adding substantial value—a feature nearly unique in African graphite mining. All but one company focuses on exporting concentrates. Aligned with the government’s emphasis on value addition, this commitment has garnered support from the United States Development Finance Corporation, reinforcing an optimistic outlook on successful implementation. With a focus on product pre-qualification, a 100-ton bulk sample sent to China generated significant interest, leading to requests for larger-scale testing. To meet this demand, the project is exporting another 600 tons of ore, aiming to produce around 30 tons of graphite concentrate for extensive testing by potential buyers. The project aims to complete the DFS in Q4 of this year.

In what manner do you anticipate the project addressing the graphite demand?

Our strategic graphite sourcing positions it as the greenest and safest supplier compared to peers in Tanzania and Madagascar. Our reliance on hydroelectric power, combined with a secure country, supportive government, and high-quality graphite, places us in an advantageous position. Potential buyers prioritise sustainability, renewable energy, and positive community impact, which are crucial in decarbonisation. The project is well-positioned to meet global demand, anticipating increased activity in graphite mining over the next decade. With a starting capacity of 50,000 tonnes, our four-stage expansion plan aims to reach 200,000 tonnes per annum within 4 years, anticipating potential production increases beyond conservative forecasts.

Given the 5 million DFC grant, what additional investments are being explored beyond the planned feasibility study?

The DFC grant is dedicated to supporting the development of the graphite mine, extending beyond funding for a feasibility study. With a first right of refusal to invest in the full-scale mine, a comprehensive DFS is imperative. This ensures a 100% confirmation of results, the existence of offtake agreements, and a ready market. This collaboration is a valuable option for final project funding, estimated at around $180 million in the initial phase.

 

 

Tembo Steels: Setting the Standard with In-Country Manufacturing Across All Steel Verticals

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Tembo Steels: Setting the Standard with In-Country Manufacturing Across All Steel Verticals

Tembo Steels: Setting the Standard with In-Country Manufacturing Across All Steel Verticals

World Business Journal talks to Sanjay Awasthi, Chairman of Tembo Steels, about recent innovations, expansion plans, and the journey of manufacturing authentic ‘Made in Uganda’ products from iron ore to steel.

What are the most recent expansions undertaken?

In 2023, we introduced Thermax-powered (TMX) steel TMT, a state-of-the-art product incorporating German technology, produced through a carbon-neutral process. This innovation significantly enhances steel properties, optimising the strength-to-weight ratio and effectively reducing steel consumption. This year, we plan to commission our second direct reduced iron (DRI) plant with a 250,000-ton capacity, which sources raw material from Kabale. Our pioneering production of 4.5mm wire rods, the first of its kind on the continent, enhances our product portfolio. Manufacturing wire rods directly from liquid steel through primary steelmaking exemplifies our commitment to 100% made-in-Uganda products, setting new industry standards, and establishing a global precedent through real-time advancements in Uganda.

What advantages does direct reduced iron offer?

 DRI offers an environmentally sustainable steel production technology that has been proven to reduce CO2 emissions by up to 70%. Compared to traditional blast furnaces emitting 2.2 tons of CO2 for every ton of steel produced, DRI scrap routes are becoming the new norm globally, particularly in the West. The shift to greener steel making through DRI is evident in Europe and China, with the dismantling of approximately 100 million tons of blast furnaces and Tata Steel’s recent closure of blast furnaces in the UK. Greener steel production will increasingly depend on the DRI scrap route, surpassing outdated and emission-heavy blast furnace technology for primary steelmaking.

What is the current production capacity of Tembo Steels?

 As the sole company on the continent covering all four steel verticals (wire rod, rebar, HRC, and structural steel), we meticulously oversee the entire production cycle, ensuring a 100% self-sufficient process and complete in-country manufacturing. Our production capacity reaches nearly 1.8 million tons of primary/secondary steel products.

However, realising our full potential encounters challenges, mainly stemming from policy constraints that warrant amendment. The influx of cheap imports significantly hampers our production capabilities. Over 70% of the total steel production cost is attributed to raw materials, with an additional 20% allocated to electricity, constituting 90% of overall expenses. Despite being the largest electricity consumer in the country, the elevated electricity cost remains a considerable obstacle. We operate at 10% to 15% of our total capacity, primarily due to these two main obstacles.

How has the implementation of the BUBU policy influenced your business operations?

 While the commendable Buy Uganda, Build Uganda (BUBU) policy is in place, there’s a potential misconception. Adopting the BUBU narrative without examining the percentage of Ugandan components in a product falls short. Some entities import significant portions of steel, adding minimal value. In contrast, we achieve complete import substitution, following an integrated process from iron ore to the production of various steel products. A more precise BUBU framework is essential, reserving the BUBU logo for products entirely made in Uganda. For items with lower percentages of local content, a distinct set of incentives, possibly through a gradual scheme, would encourage increased contribution to the local economy. For example, if a product has only 10% or 20% Ugandan content, it becomes crucial to differentiate it from products with 100% local origin, aligning incentives with the proportion genuinely made in Uganda.

State House Investors Protection Unit (SHIPU): Guarding the Interests of Investors

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State House Investors Protection Unit (SHIPU): Guarding the Interests of Investors

State House Investors Protection Unit (SHIPU): Guarding the Interests of Investors

 

World Business Journal talks to Col. Edith Nakalema Asizua, Head of Unit, State House Investors Protection Unit (SHIPU), about establishing accessible reporting channels for investors to address concerns and mitigate risks associated with misconduct.

What prompted the creation of the SHIPU, and how does it collaborate with the Anti-Corruption Unit?

Established by H.E. President Museveni, the State House Investors Protection Unit (SHIPU) began operations in July 2023. It was formed as a direct response to the need to prioritise and provide specialised attention to investors, acknowledging their critical contribution to national development. Unlike the State House Anti-Corruption Unit (SHACU), which addresses all corruption-related cases, SHIPU focuses exclusively on cases affecting domestic and international investors. This initiative stems from the President’s directive to furnish investors with genuine information to safeguard them against fraudulent activities and to ensure coordination among government entities to eliminate undue delays. While distinct in their roles, the operational synergy between SHIPU and SHACU is unified in their mandates and scopes, demonstrating a combined effort in handling investor-related issues. When investor concerns are reported to either unit, there is an immediate collaboration with relevant Ministries, Departments, and Agencies to find a resolution. Our united goal is to cultivate a prosperous investment environment in Uganda, realising this vision through cooperative endeavours with all stakeholders to promptly address and resolve complaints related to investors.

What are your objectives for the first year?

We prioritise the President’s directives, the Manifesto, and the National Development Plan, ensuring diligent implementation within specified timeframes through collaborative coordination with various agencies. Recognising the vital role of investment in national development, we value investors for their contribution to economic growth, job creation, and revenue generation. We aim to increase investors’ confidence by offering a dependable destination when uncertain about the proper authorities.

Which areas pose potential challenges that investors should be cautious about?

Numerous reports indicate that corrupt individuals masquerading as high-ranking government officials, including Ministers and Permanent Secretaries, have misled foreign investors. This leads to a pressing need for heightened awareness about legitimate authorities within government Ministries, Departments, and Agencies. These impostors have resorted to forging signatures to deceive investors, underscoring the critical necessity for increased sensitisation to thwart these dishonest practices. It is imperative to safeguard investors against falling prey to fraudulent schemes perpetrated by such fraudsters, emphasising the importance of distinguishing between authentic and false representatives.

Seco Marine is Building a Ferry to Halve Travel Time to Tanzania

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Seco Marine is Building a Ferry to Halve Travel Time to Tanzania

Seco Marine is Building a Ferry to Halve Travel Time to Tanzania 

World Business Journal talks to Mohanlal Pillai, Project Director at Seco Marine, about the new roll-on-roll-off ferry from Uganda to Tanzania and training local talent in marine-related skills. 

Could you provide updates on the recent construction progress of the 96-meter-long roll-on-roll-off ferry?

The project involves constructing a Roll-On/Roll-Off (Ro-Pax) ferry for vehicles and passengers for the East African Maritime Transport Company (EAMT) between Port Bell, Uganda and Mwanza, Tanzania.

It’s backed by stakeholders InfracoAfrica, part of the Private Infrastructure Development Group (PIDG), and Grindrod, South Africa. 

The contract was finalised in November 2021, and the notice to proceed was issued on December 21, initiating a 28-month delivery period. Bureau Veritas, an international classification society, oversees the design and construction. The main hull construction is complete, and the ship’s launch is scheduled for 2024.

We are starting the second phase of infrastructure development, including a second slipway for vessel repair and maintenance, requiring an investment of $3-4 million. Each vessel can carry up to 1,000 tonnes, accommodating around 21 trucks and 60 passengers, not including the crew. The journey from Port Bell, Uganda, to Mwanza, Tanzania, will take approximately 11 to 13 hours, significantly less than the 24-hour road journey. This vessel will reduce transportation time, offering a faster, more cost-effective option, especially for Uganda’s agricultural and perishable goods, enabling quicker market access in Tanzania or Kenya.

What impact does the project have on local talent and maritime education?

Around 70% of our workforce consists of local talent, highlighting our commitment to knowledge transfer. We’re focused on advancing technical skills and have recently signed an MOU with Busitema University, which is establishing a maritime institute. This partnership will offer practical training for marine-related fields and integrate expert lectures into the curriculum, bridging the gap between theory and practice.

In 2024, we plan to launch a Skill Development School, aiming to train about 100 individuals annually in fabrication, welding, and similar skills. This program will provide certification and aims to recruit and retain the most skilled individuals.

What transformative effects will this project have on a landlocked nation like Uganda?

Landlocked countries like Uganda face challenges with costly air transport and congested roads. Maritime transport offers a cost-effective, eco-friendly trade alternative. Considering vessels for tourism could open opportunities to explore Lake Victoria’s islands from Entebbe airport. With the lake underutilised, expanding maritime infrastructure could improve transportation options, benefiting business and tourism while promoting economic growth and enhancing regional tourism experiences.

CTC Conservation Center: Where Visitors Can Get Up Close and Personal with Wildlife

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CTC Conservation Center: Where Visitors Can Get Up Close and Personal with Wildlife

CTC Conservation Center: Where Visitors Can Get Up Close and Personal with Wildlife

World Business Journal talks to Thomas Price, Founder of CTC Conservation Center, about his mission to connect humans and wildlife through a unique, globally rare experience that benefits both conservation and tourism.

How did the CTC Conservation Center come into existence?

In 2015, driven by a profound love for animals, CTC Conservation Center embarked on a journey to create a unique destination where visitors could engage in up-close and personal interactions with wildlife, transcending mere observation. Here, amidst natural beauty, guests can feed zebras, walk alongside lions, and connect with various animals, including impalas, chameleons, baby crocodiles, and lemurs from Madagascar. We have the largest lion enclosure in tropical Africa (excluding South Africa) and plan to introduce black rhinos and establish an elephant orphanage in the future. We offer an experience found in only a select few locations worldwide. With a $2 million investment, we’re committed to expanding our acreage from 57 to 200 by the third quarter of 2024 and adding cottages and essential infrastructure, including a restaurant.

What’s your approach to enhancing the bond between visitors and wildlife?

It’s about connecting with wildlife, telling their stories, and promoting conservation. The interactions enrich our animals’ playtime. We want to show that these animals aren’t just wild beings in nature; they have emotions and unique personalities. Our guides play a vital role in educating visitors, offering insights into animal behaviour, such as the hierarchical structure within lion pride, and talking about their natural habitat, nutrition, and status of animals in the wild. Visitors, including families, depart with a stronger bond and understanding of the wildlife.

How do you balance animal welfare with tourist satisfaction?

We limit interactions to prevent stress, which can negatively impact happiness, breeding, and overall welfare. For instance, with our lions, this amounts to an hour in the morning and an hour in the afternoon. That way, playtime continues to be a genuine source of joy for them and our visitors, forging a deep connection through shared moments.

What was the most significant challenge you encountered?

Despite ongoing efforts over four years, we still need to work with wildlife authorities to address and remove regulatory barriers, such as securing licenses to introduce new animal species like giraffes. It appears counterintuitive to consider importing animals from South Africa when Uganda’s Murchison Falls National Park houses a substantial giraffe population. We aim to resolve bureaucratic challenges to enhance our conservation and ecotourism ventures.

KCCA Initiates Smart City Campaign for Urban Development

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KCCA Initiates Smart City Campaign for Urban Development

KCCA Initiates Smart City Campaign for Urban Development

World Business Journal talks to Dorothy Kisaka, Executive Director, Kampala Capital City Authority (KCCA), about the progress of major projects and the leveraging of ICT for a more responsive and connected urban landscape.

What does Kampala Capital City Authority (KCCA) have planned for 2024?

This year, we will progress significantly on major infrastructure improvement projects under the Smart City Campaign. These include the Kampala City Roads Rehabilitation Project (KCRRP), where we expect to reconstruct and upgrade more than 80 km of roads. The $288m project is funded by the African Development Bank and the government of Uganda. Implementation of the $610m Greater Kampala Metropolitan Area Urban Development Programme (GKMA-UDP) will also commence in 2024 with a focus on upgrading and constructing roads and drainage, especially arterial roads. As part of our plans, we’re also set to initiate the waste-to-energy project, a public-private partnership, and finalise the design update for the Kampala Bus Rapid Transit (BRT) system and the KCRRP, all geared towards implementation by 2025.

In what ways will the land records registry digitisation process aid KCCA and Uganda moving forward?

The digitisation of the land records registry by the Ministry of Lands, Housing and Urban Development was a major milestone in addressing land management in Kampala and the country. The system has allowed us to have all land titles and the cadastre in digital form. This eliminates double allocations of plots, reduces encroachments, minimises land disputes, and, as a result, reduces the time required to process and obtain approvals for building permits. 

The digitisation of the registry also means that entities, such as us, that provide other value-added services can now build on top of the system to serve the clients better. For example, we are now developing the Smart Permit solution to fully automate the building permit approval process. We expect to reduce the processing time for building permits to less than 14 working days once the solution is fully functional, which will go a long way in the cost of doing business in Kampala.

What’s been KCCA’s standout achievement under your helm, and how has the authority tackled Kampala’s needs?

We rolled out the Smart City campaign, enhancing infrastructure with ICT and focusing on technology, infrastructure, and people’s well-being (T-I-P). The Weyonje app gained international acclaim, offering fast access to sanitation services. Initiating urban maintenance initiatives, we enlisted over 3000 unemployed youth and launched two major projects aimed at improving roads, intersections, walkways, drainage, and lighting infrastructure.

Uganda National Bureau of Standards’ Unified Approach to Food Safety and Certification

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Uganda National Bureau of Standards’ Unified Approach to Food Safety and Certification

Uganda National Bureau of Standards’ Unified Approach to Food Safety and Certification

World Business Journal talks to Patricia Bageine Ejalu, Deputy Executive Director, Uganda National Bureau of Standards (UNBS), about standards harmonisation in the EAC region and globally, the deployment of mobile labs for enhanced coverage and quality verification, and a personnel certification pilot program to improve the country’s testing capacity

How does UNBS ensure harmonisation among Ugandan, East African, and global standards?

The East African Standards Committee, comprising bureaus across the EAC, harmonises trade standards. Uganda Standards are adopted East African Standards, ensuring regional uniformity. Mutual recognition of certification marks within the EAC streamlines market access. EAC’s leadership in harmonisation extends to ARSO, with East African standards often serving as blueprints. International standards are adopted for non-local products to ensure conformity. Membership in the Codex Alimentarius Commission (CAC) ensures adherence to international food safety standards, while membership in global standards bodies like ISO and IEC, coupled with partnerships with national bodies such as ASTM and BSI, provides access to worldwide standards for local adaptation.

What specific efforts are being made to broaden the organisation’s reach?

Operating with headquarters in Kampala and regional offices in Gulu (north), Mbale (east), and Mbarara (west) enhances our nationwide coverage. While our current regional labs are rented, we aim to construct our own for cost reduction and focused expansion in the next five years, especially in strategic areas like the oil and gas region in Hoima and West Nile. Mobile labs will be employed to provide temporary testing solutions in various regions. We promote private sector involvement and specialisation to alleviate the government’s burden, enhancing sector-specific testing through collaboration with private labs. Starting this year, immediate plans involve equipping entry points like one-stop border centres to address food safety and verify produce quality efficiently.

.How has the certification application process evolved in the digital age?

Our standards, certification, testing, and calibration departments all have online systems. Certification can be obtained online without a physical visit. However, the challenge lies in the overwhelming demand compared to our limited resources. Government support is crucial to addressing this gap and enhancing our turnaround time. We have recognised 22 laboratories (20 private and two government) to improve the country’s testing capacity, which can feed into the certification process. We are working on a personnel certification pilot program with The Grain Council of Uganda (TGCU), which is targeted to be completed by the third quarter of the financial year 2023/2024. This scheme will allow private sector individuals or companies to conduct initial assessments, reducing the burden on our limited teams. We aim to focus more on surveillance audits, improving our ICT infrastructure, and reducing certification processing time from four months to two.

Access and Facilities Upgraded in Uganda’s Health System

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Access and Facilities Upgraded in Uganda’s Health System

World Business Journal talks to Dr Diana Atwine, Permanent Secretary, Ministry of Health, about the progress made in increasing medical infrastructure and access and the outstanding challenges, such as ramping up home production of vital medical supplies.

What notable changes have marked the healthcare sector’s progress in the last five years?

The health sector has undergone substantial development in recent years. We upgraded more than 300 facilities, which reduced healthcare distance, putting 91% of the population within a 5km reach. The ongoing plan involves establishing basic health centres in every sub-county and constituency.

In the tertiary medical services domain, two specialised hospitals—Pediatric Surgical Hospital in Entebbe and Women’s Hospital—now serve as regional centres of excellence. Additionally, legal frameworks for organ transplants are in place, with two facilities ready for bone marrow transplants and a kidney transplant unit in Mulago.

Our Cancer Institute, the East African Center of Excellence for Oncology, has expanded to regional centres in Gulu and Mbarara. We’re enhancing cardiac care by establishing a standalone heart hospital in Naguru, which will be completed within two years.

We’ve established one of the largest medicine warehouses in Africa, the National Medical Stores.

Delivery indicators show significant progress: maternal mortality nearly halved from 336 to 189, under-five mortality and neonatal mortality reduced, and access to family planning and healthcare increased.

In the context of epidemics, especially with COVID and Ebola, we’ve demonstrated a robust capacity for effective response. The mobile lab quickly and efficiently processed samples, and a streamlined government structure, from local to national task forces, played a pivotal role in our overall success. Despite initial challenges, Uganda’s swift containment of Ebola within 90 days highlights the effectiveness of our established systems.

How have e-health and digitalisation influenced the health sector in Uganda?

We’ve been at the forefront of the digital health rollout, recognising E-health’s efficiency and real-time access benefits. Telemedicine facilitated through a telecenter in Mulago, has enabled consultations and advice from specialists, enhancing productivity and quality of care. Digitalisation is also crucial for efficient responses to epidemics, with our Emergency Operating Center receiving minute-by-minute information.

Our commitment to digitalisation extends to regional referral hospitals, with an ambitious target to fully digitise the health sector in the next five years. Strong regulations, including the recently passed Patient Data Protection and Privacy Law, assure data security. With a well-established Ministry of ICT, NITA-U as a digital regulator, and comprehensive policies on E-governance, the framework, structure, and laws are in place to drive and support our digitisation efforts.

What strategies could Uganda employ to lessen its reliance on imported essential medicines and health supplies?

About five years ago, we initiated engagements with potential manufacturers in the UK, collaborating with the government there and partnering with the Ministry of Finance to develop this sector. There are local manufacturers, but approximately 78% of the medicines used in the country are still imported. To support local manufacturers, the National Drug Authority charges only a 3% verification fee for locally produced medicines meeting standards, compared to a 12% fee for imported counterparts.

Recently, we secured land in Kisozi for a designated industrial park for pharmaceutical companies, working with the Ministry of Finance to ensure its full development. Once completed, we anticipate this industrial park, operational in the next 12-24 months, to be a significant incentive for manufacturers. Additionally, the government offers free land to manufacturers, further enhancing the favourable environment for investors interested in pharmaceutical manufacturing.

Where do you identify the most promising opportunities for pharmaceutical investors?

Our critical need is anticancer drugs, as we import all cancer medications. While we produce some antibiotics, there’s a gap in the entire range. Similarly, we don’t manufacture any vaccines, relying entirely on imports. Specialised care items such as kidney transplant commodities, including dialysis, IV medicines, antibiotics, immunotherapy, and supportive drugs, are all imported.

Currently, our local production covers under 30% of medicines and supplies needed. Investment opportunities exist in essential medical equipment, such as blood pressure machines, glucometers, and cholesterol monitoring devices, which are currently imported. Our goal is to support local manufacturers in producing point-of-care equipment and fostering self-sufficiency in healthcare resources beyond medicines.

Bank of Uganda’s Proactive Monetary Approach Steers Economic Stability

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Bank of Uganda’s Proactive Monetary Approach Steers Economic Stability

Bank of Uganda’s Proactive Monetary Approach Steers Economic Stability

World Business Journal talks to Dr. Michael Atingi-Ego, Deputy Governor of the Bank of Uganda, about the impact of robust monetary policies on inflation, optimistic indicators signalling resilience and growth, and the pivotal role of financial inclusion in advancing the country’s economic development agenda.

What factors contributed to the drop in annual inflation, and what’s the expected trend in the medium term?

We implemented robust monetary measures to counter rising inflation post-lockdown and when the Russian-Ukraine conflict started. These included increasing the Central Bank Rate (CBR) from 6.5% in May 2022 to 10% by June 2023 and a 10% increase in the Cash Reserve Requirement (CRR). Tight interbank liquidity led to increased usage of the Standing Lending Facility (SLF) Window for short-term liquidity needs. Despite recent fuel price increases, annual inflation stood at 2.4% in October 2023, significantly lower than the 10.7% recorded in October 2022. Annual core inflation was at 2.0%, much lower than the 8.9% registered over the same period last year. This moderation in inflation is attributed to effective monetary and fiscal policies, diminishing impacts of drought on food prices, and easing global cost pressures. In the medium term, the downward trend in inflation is predicted to continue, eventually returning to the target. Forecasted inflation is in the 3-4% range in Q4 2024, rising to 4-5% in 2025. The current monetary policy stance is deemed appropriate for maintaining inflation within the medium-term target and supporting economic stability for saving, investment, growth, competitiveness, and socio-economic transformation.

What strategies are being implemented to drive inclusivity and digitalisation within the financial sector?

We’re committed to leveraging digitalisation to drive socio-economic transformation and foster financial inclusion. Through partnerships with financial institutions and fintech firms, we aim to empower individuals at the grassroots level and broaden access to financial services, including micro-savings, loans, and insurance. The 2020 National Payment Systems Act introduces flexible licensing criteria and regulatory sandboxes to encourage innovation while ensuring compliance, alongside Consumer Protection Regulations that enhance digital security and promote fair competition in the financial sector.

Following the issuance of Uganda’s first Islamic banking license last year, what impacts do you anticipate?

Granting the inaugural Islamic banking license signifies a transition towards a profit-and-loss-sharing financial model, indicating diversification within the financial sector. Islamic banking, focusing on asset acquisition, addresses high-interest rate concerns and enhances financial inclusivity, adding a vital dimension to the financial sector.

What factors fueled economic expansion, and what are the growth forecasts for Uganda in 2024?

UBOS reports a 5.3% growth for FY2022/23, exceeding the previous year’s 4.6%, highlighted by a 6.8% surge in Q4 2023. Growth is driven by the services sector, accounting for 42.6% of GDP. The rebound in services and industry, notably in extractive sectors, is propelled by foreign direct investment (FDI), which soared by 80% to US$2.2 billion, 67% of which is linked to oil projects. The economy demonstrated a resilient recovery from the challenges faced in FY2019/20, showcasing a significant expansion of 5.3% during FY22/23 and exceeding the 4.6% growth recorded in FY21/22. Forward-looking projections indicate a robust economic trajectory, anticipating a growth rate of 6% in FY23/24 and 6%-7% over the medium-term.

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