Monday, November 7, 2011


The competitiveness of a nation refers to the ability of its companies to win and maintain market share in the global market.

The concept of competitiveness is important because the poverty of nations has a direct connection to the lack of competitiveness of its companies and vice-versa.

That is why Singapore a rock in the ocean off the coast of Malaysia at independence in August 1963, has a GDP -- total economic activity, of over $200b. This from a population of about five million on an island the area of land that is less than distance from Kampala to Entebbe squared.

Uganda, which was ahead of Singapore at independence on the other hand, has a GDP of $17b with a population of 34 million in a land size that is 340 times the size of Singapore.

But we shouldn’t feel so bad the per capita GDP of Singapore is twice the total of the comparable figure of Mauritius, South Africa, Botswana and Egypt combined.

It goes back to the basic truth – confirmed with the collapse of the Berlin wall, a country is only as viable as its private sector.

The private sector generates wealth by paying workers and making profits. And performance of the private sector has a direct bearing of the size of a country’s domestic revenues.

However the private sector is only as vibrant as the government that oversees it.

Beyond creating a stable macroeconomic environment there should be a systematic means of promoting private sector development through formulation of national business-centered strategies, provision of efficient infrastructure and human resource development.

During the 5th National Competitiveness Forum last week, a host of experts said this in very many words.

In a more than candid admission, Keith Muhakanizi, deputy Secretary to the treasury said that ministry officials commit more energy to dealing with donor officials than with private sector leaders, despite the fact that the private sector carries 80 percent of Uganda’s budget.

To get competitive there has to be a total mind shift from people working in their own little silos oblivious to what’s happening around them to shared competitive mind set.

One of the things government can do is actively promote business clusters, these are groups of inter-related businesses enjoying mutual benefits from associating with each other.

A possible cluster in Uganda for instance could be the commercial printing industry concentrated around Nkrumah road. Importers of paper, inks exist side by side with stationary shops, printers and graphic designers. Their close proximity encourages specialization adding to their combined efficiency.

So there should be initiatives to develop a sector strategy to encourage this cluster, help these entrepreneurs improve their business skills and find ways to give them other concessions that will boost the businesses and strengthen the sector. This should be part of a wider strategy with linkages to the transport, financial and education sectors.

A similar strategy has worked in Rwanda. Where at the start of century tourism was identified as a sector in which the small central African nation could carve out a competitive niche for itself.

Between 2003 and 2010 Rwanda invested $103m in standardizing facilities and infrastructure, marketing and promotion and institutionalization of various initiatives.

Government and private sector invested in upgrading rooms outside Kigali, rehabilitation of historical sites, training guides and drivers and incorporate basic tourism training in schools.

As a result of this initiative Rwanda now has a seven day tour that incorporates the country’s history -- the old kingdoms, the colonial era, the genocide and the RPF’s guerilla war.

It is estimated that tourists spend $320 a day for the duration the tour. As a result during the period of the investment total revenues to the sectors have come in at $345m and tourism numbers to these sites have gone up almost five fold to 70,000 in 2010.

Is it any surprise then that Rwanda overtook Uganda in per capita GDP terms last year?

There is no way around it we have to go beyond providing lip service to private sector led growth , understand the concept of competitiveness—especially as a key driver of poverty eradication and commit to it.

Easier said than done? Well in 1986 the NRM inherited empty coffers, a broken economy and an unstable country, they have made something of that basket case but clearly it is not time to rest on their laurels.

We will be served well by remembering Nelson Mandela’s words, “After climbing a great hill, one only finds that there are many more hills to climb.”

No comments:

Post a Comment