Zebras graze in Lake Mburo National Park in western Uganda. Government has turned its focus to tourism saying the sector is capable of making more money if concentrated on.
Kampala. Although Uganda’s economy has been described as resilient, there is consensus among technocrats and economic analysts that it is not growing as fast as it should.
The economy is projected to grow by about 5 per cent after being revised downwards from 5.8 per cent.
Speaking on Tuesday during the 6th annual high-level policy dialogue on the Budget, organised by Advocates Coalition for Development and Environment (ACODE) in Kampala, ministry of Finance permanent secretary and secretary to the Treasury Keith Muhakanizi said now is the time to find the magic bullet that will turn around the economy.
And according to him, the magic bullet is concentration on the tourism sector which for long has been pushed to the periphery.
In his presentation, Mr Muhakanizi said: “Our import bill is growing at a faster rate and we need to do something about that instead of crying.”
He continued: “In the last two or so years, instability in South Sudan has not helped our exports. And our focus is going to be on sectors such as tourism, where we can make more money.”
In the approved Budget estimates, the tourism, trade and industries total allocation was raised to Shs81b up from Shs63b last year. This translates into a 21 per cent increase.
Out of this, Tourism, Wildlife and Antiquities ministry will receive Shs19.4 billion up from Shs11.8 billion. Uganda Tourism Board (UTB)’s allocation was also increased from Shs6.4 billion up to Shs11.4 billion.
Tourism employs more than one million people both directly and indirectly, mainly in accommodation facilities, food industry, entertainment and transport industry.
Currently, tourist arrivals into Uganda have reached 1.3 million as of 2014 records up from 600,000 the country received in 2006. As a result, these numbers have seen the country’s earnings from tourist arrivals go up to $1.4b (Shs3b) in 2013/2014 up from $600,000 (Shs1.2b) earned in 2006. The sector contributed Shs6.3b to GDP in financial year 2014/15
In his presentation, former Finance minister Ezra Suruma predicted that foreign exchange volatility will remain high just as the economy remains sluggish at least for sometime.
He said interest rates will remain high as commercial banks have refused to heed the Central Bank call to reduce interest rates even after having the lending rates (CBR) lowered to 16 per cent. This, he said, will impact on private sector who will find it difficult to borrow at the high lending rate, ranging between 25 and 30 per cent.
According to Mr Suruma, the cost of communication will get better as the internet revolution continues to take shape in the country.
However, the cost of transport is not about to get better until the Standard Gauge Railway (SGR) development is done with.
In his submission, Mr Fred Muhumuza of School of Economics Makerere University, said if Uganda is to steadily develop, its rate of economic growth should not be below 10 per cent. He was also of the view that the country has overstretched its priorities amid tight Budget.