Improving Competitiveness and Increasing Economic Growth in Uganda

The Role of ICT

Activity #	1265
Partners	On the Frontier Group

Summary

How can ICT help to sustain and expand economic growth and opportunity in Uganda by affording Ugandan firms new opportunities to compete in the regional and global economy? How can government, the private sector, the international donor community and other key partners work together to create the conditions for ICT-enabled competitiveness and economic growth in Uganda? A recently completed study, part of infoDev's growing series of country studies on ICT, growth and competitiveness, analyzes the opportunities for and challenges to ICT-enabled growth in Uganda, and makes concrete recommendations for action.

Background / Terms of Reference

During the 1990s, Uganda experienced one of the highest rates of per capita income growth in the world with per capita income growth averaging 3.2% for the decade. This was, at least in part, a supply response to post-conflict rehabilitation, and to the implementation of sound macro and structural policies which have achieved and sustained macroeconomic stability, and a market-friendly business environment.

Since 1999, Uganda’s average annual rate of economic growth has started to slow, averaging around 2% in per capita terms. Much of this slowdown is explained by sharply deteriorating terms of trade. Nevertheless, the task of maintaining Uganda’s still respectable per capita growth rates is getting more difficult, and it's uncertain whether Uganda can maintain high growth. Looking to future growth prospects, Uganda’s already limited domestic manufacturing, which is mostly limited to serving the domestic market, will face greater import competition from trade liberalization with Kenya and Tanzania under the East African Community’s common market.

Unlocking Uganda’s full potential in service exports, particularly in IT-enabled services (ITES), and stimulating high value and low bulk agro-processing for traditional and new markets, would seem to offer the greatest opportunities for success in terms of exports and growth. Both will involve tapping knowledge-rich markets, which will require a solid ICT network to underpin growth.

The Government of Uganda can play an important role in creating the environment for ICT-enabled innovation, not only by appropriate policy, regulation and investment, but also by its own intelligent and widespread use of ICT as a tool of efficiency and transparency. By understanding the role of ICT in improving private sector competitiveness and economic growth in Uganda, the Government can take the necessary steps to create the appropriate enabling environment and address the skills gaps in the economy.

As part of its series of country studies on ICT, Growth and Competitiveness, infoDev, in close cooperation with the World Bank Group and other donors, has commissioned a study to address these challenges and opportunities facing Uganda in seeking to capture the opportunities for growth and competitiveness made possible by ICT. The study includes:

A review of the position of Uganda’s economy within the international business environment and the growth opportunities and challenges in several sectors
An assessment of priority actions to be taken with respect to the regulatory and institutional environment, ICT infrastructure, and other constraints facing entrepreneurs and firms in Uganda
An in-depth firm-level survey and analysis of ICT use and its impact on productivity in Uganda, based on a representative sample of firms from key sectors and across the country
Recommendations for appropriate actions to address constraints and to support the realization of Uganda’s growth potential in these emerging sectors, and in harnessing ICT for sustainable development.

The study will be published in fall 2006.