Posted on March, 12, 2019 at 09:44 am
By ISMAIL MUSA LADU
The country’s business climate has over the past few months taken a dive, with agriculture and manufacturing being some of the biggest victims.
According to the Uganda Business Climate Index published by Economic Policy Research Centre (EPRC), the country’s business climate has, for months, been operating below potential.
This, according to analysts, has had a negative impact on job creation, revenue collection and the general outlook of the economy.
The Business Climate Index, according to the report, declined by 1.68 points from 90.40 to 88.72, remaining below potential, especially in the manufacturing and agriculture sectors.
The index for the agriculture sector dropped by 65.16 points, mainly driven by changes in tax policies that were implemented in July 2018.
The report particularly takes mention of the introduction of withholding tax for agricultural supplies and Excise Duty for mobile money as the main drivers for the negative environment.
In the manufacturing sector, perceptions of business conditions declined by 2.52 points to 92.13 from 94.65 due rising input costs.
The report also takes particular mention of electricity costs, macroeconomic factors (such as inflation and foreign exchange volatility) and access to finance as key challenges that have affected the business environment.
Electricity tariffs, which have increased by 7.3 per cent for domestic users, 6.1 per cent, 4 per cent, and 2.5 per cent for commercial, medium industrial, and large industrial users, respectively continues to be an impediment to growth.
However, in a recent report the Central Bank indicated an improvement in growth, projecting a 6.5 per cent expansion in the 2018/19 financial year, mainly driven by massive investments in infrastructure and oil and gas sectors.
Source: Daily Monitor