Investment Reforms key to Uganda’s Growth and Competitiveness

May 14, 2013

World Bank’s $100 million to support 1,000,000 people by increasing jobs, tourism and non-traditional exports

WASHINGTON, May 14, 2013 – The World Bank has approved $100 million for Uganda to improve its growth and competitiveness.

The International Development Association (IDA)* credit for Competitiveness and Enterprise Development Project (CEDP), which was approved by the Bank’s Board of Executive Directors on May 9, 2013, will improve the competitiveness of enterprises in Uganda by providing support for: (i) the implementation of business environment reforms, including land administration reform; and (ii) the development of priority productive and service sectors.

“Uganda has considerable potential to achieve higher growth and create new jobs, but faces serious constraints in access to land, licensing procedures and construction permits, which significantly increase the cost of doing business,”  says World Bank Country Manager for Uganda, Mr. Ahmadou Moustapha Ndiaye. “Through this operation, the Bank will support reforms in priority sectors with potential high rates of return to improve prospects for economic transformation and structural change.”

The new project aims to reduce the burden of businesses in dealing with registration and licensing procedures by limiting the scope of application and streamlining the issuance processes through the creation of a one-stop-shop for registration and business licenses, which will also be accessible online.

Land administration reform has the potential to transform Uganda’s economy by easing the presently cumbersome land policies and weak land tenure security which frustrate investors. It will also reduce inefficiencies in business registration and licensing hence, facilitating flow of investments to high growth sectors, including commercial agriculture.

Over the next five years, it will directly benefit over one million people, create 75,000 new jobs in the tourism sector and enable Uganda to increase the value of non-traditional exports by 10 percent. It will also create initiatives for tourism development and a matching grant facility for micro, small and medium enterprises to procure business development services that will benefit entrepreneurs in priority subsectors.

“Improving the legal, regulatory, and supervisory environment will help to enhance the probability of long term stability and growth of Uganda’s economy and ultimately make Uganda more attractive to potential investors,” says Moses K. Kibirige, the Project’s Task Team Leader, “We look forward to a speedy implementation of the new project that will bring long-term economic and social benefits to the Ugandan people.”

The new initiative will scale up the gains realized under the Second Private Sector Competitiveness Project, which enabled the Ugandan authorities to digitize close to half a million land titles and reduce the time taken to register transactions from 3 - 5 years to the current 3 – 21 days. A great deal more needs to be done given that only 18 percent of Uganda’s land is registered, with registration in rural areas as low as five percent, and land administration is highly inefficient and susceptible to corruption.

Reducing investment risks for both investors and local communities will create opportunities for MSMEs in agriculture and private sector to access sustainable land market development and open up significant opportunities for investment and job creation. These enterprises are the major sources of employment in Uganda but, majority of them face severe resource constraints, and contribute modestly to economic growth and exports. Although wages are low, productivity is even lower and, as a result, it is difficult for firms to compete in regional and international markets.

About IDA

* The World Bank’s International Development Association (IDA), established in 1960, helps the world’s poorest countries by providing loans (called “credits”) and grants for projects and programs that boost economic growth, reduce poverty, and improve poor people’s lives. IDA is one of the largest sources of assistance for the world’s 81 poorest countries, 39 of which are in Africa. Resources from IDA bring positive change for 2.5 billion people living on less than $2 a day. Since 1960, IDA has supported development work in 108 countries. Annual commitments have increased steadily and averaged about $15 billion over the last three years, with about 50 percent of commitments going to Africa.

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