By John Oketcho.
Uganda has a new Industrial Policy that provides the groundwork for pro-competitive policies towards sustainable industrialisation.
The 2021 Industrial Policy, developed by the Ministry of Trade, Industry and Cooperatives, provides direction to Uganda’s future industrialisation efforts.
It is hoped that this new policy if successfully implemented, shall lay the foundation of a dynamic and productive industrial sector.
In our view, the policy offers great opportunities for employment creation while at the same time challenges for labour and the world of work.
The following are critical imperatives for labour:
The critical target in the policy is industrialization that has always been the cornerstone for growth in many countries in the world. As economies transition from subsistence agricultural production towards higher value manufacturing and service and agro-processing activities, these industries offer higher value addition and more productive jobs that drive long-term improvements in living standards. Job creation and improvements in living standards is in the best interests of workers and labour unions whose mandates is promotion of the socioeconomic interests of workers.
However, Uganda still struggles with a transition from agricultural production to a globally competitive industry. Economic activity continues to be concentrated in low value-added agricultural production, non-tradeable services and manufacturing activities such as construction that offer only a limited scope for long-term productivity growth and high wage employment. This is the biggest challenge and workers are still being exploited and have not seen improvements in employment and livelihood. This is where we as labour unions have been proposing several measures to government.
There are many policy reforms necessary to address key constraints to value addition and to unlock globally competitive production. Some of these have been addressed in the new industrial policy though they still remain on paper.
The new industrial policy has the following tenets, Exports are critical to successful industrialization, Pro-competitive programmes like market-friendly policies that encourage entry and competition plus enhanced monitoring and certification of standards to ensure effective quality control of Uganda products.
Exports will play a critical role in Uganda’s industrialisation story for two reasons but economic growth requires increases in productivity, and productivity growth requires producing at scale.
Uganda has relatively a small domestic market and so attaining scale means exporting. At the same time, there is no better yardstick to measure productivity than the ability of firms to compete on the global market, with global competitive pressures forcing firms to upgrade over time. Rapid growth in exports with a rising share of exports in GDP leads to longer sustained growth in national incomes. Global trade this year is forecast to grow by 8.4%, creating new opportunities for East Africa and Uganda.
Pro-competitive programmes, emphasizing skill development, cheaper electricity, and increased domestic linkages are important factors.. Programmes like supplier development make the most of foreign direct investment with transfers of knowledge and technology involved in supplying to large multi-national firms leading to significant and persistent gains in domestic firms’ productivity, sales, employment, and eventual capacity to export.
