Mr. Patrick Mweheire, the CEO of Stanbic Bank gave a talk to an assorted audience of Media Executives and Business Reporters at Africa Centre for Media Excellence (ACME) on Wed. 21stSept. It was an eye opener for all those concerned with reporting on Uganda. Giving an Industry perspective, he said that compared to other EA countries, Uganda’s business and investment prospects, which abound, go un-highlighted. Instead, he said, Ugandan Reporters tend to focus on sensational tabloid stories, some of them damaging to the country’s prospects as far as Direct Foreign Investment is concerned. “If you open Business pages of Kenyan or Rwandan newspapers, you get the feel of their economy; not so in Uganda”.
Highlighting Uganda’s prospects vis a vis the continental picture, he put the country among the 17 which will definitely post growth north of 5% (2016-2020). Mr Mweheire said that half of the top 25 fastest growing nations in the world are in Africa and that Uganda has sound macro – economic fundamentals. He placed Uganda within the top 10 fastest growing economies in the next 5 years.
The Harvard Scholar with a sterling career in Investment Banking on Wall Street & London said that despite challenges, Uganda’s non-commodity reliance is a source of strength. He highlighted Uganda as systemically important giving political stability as a harbinger for the country’s steady progress. Uganda, Kenya, Mali and a few other countries are sandwiched between the most stable countries and the volatile ones such as S.Sudan, CAR, Nigeria and DRC among others.
He credited Uganda for sound economic planning and macro reform post 1990’s emphatically saying the country had been pulled out of doldrums. He projected the picture of before and after the mid – 1990’s which indicated the stark reality of where the country has come from. Clearly, it was from a state of hopelessness to one of consistent improvement in all the economic differentials of taming inflation, improving the banking sector and attracting direct foreign investment. He commended the regulatory frame work reflecting perceptions of the ability of government to formulate and implement sound policies and regulations that permit and promote private sector development.
He said that the rapid population growth for EA, currently projected to be 500 million people by 2050 may not play-out well for Uganda as a demographic dividend. Uganda remains on top of all of E.African countries in population growth. He pointed to recent statistics indicating a baby is born every three minutes in Uganda. Skilling the population is the only key to reaping the demographic dividend and that the picture is not currently rosy in Uganda. The unplanned for rapid populations swell could well be a negative factor for Uganda’s economy medium to long term.
Another dim picture he painted was on Africa’s investment thesis. Uganda is no different from others on the continent. GDP for the continent is expected to increase by US$700 billion (Size of Netherlands) but this is overshadowed by consumption expected to grow by US$1.0 trillion (Size of Mexico) by 2020.
Africa’s long term growth drivers remain the same; substantial natural resource wealth, rapid urbanization, raising labour productivity and leapfrogging coupled with a fast growing population. The population of 1.0 billion today, is expected to increase to 1.5bn by 2030 a 50% increment. This is mind boggling.
Mr Mweheire then dwelt on emerging trends in Uganda which appear similar across the continent. Consumerism, Agriculture and real estate, infrastructure services and natural resources value chain.
He highlighted a clear improvement in Governance (nine elections were held in 2014 & five in 2016)- greater inter-regional trade(economic zones beginning to harmonise key trade policies and provide real scale) liberalized economies and low leveraging (both Sovereign and Corporate leverage is low at 40% debt to GDP & debt servicing costs as a percentage of government revenue is less than 15% for most sub-Saharan countries).
Factors projected for economic transformation – Mweheire pointed out Oil and Gas development, Power and infrastructure development, Agricultural and Tourism.However,the Oil & Gas sector recently did a survey to locate skilled artisans e.g. welders. Of the 10,000 required soon, only 200 were available! He said Uganda is not doing well on skilling targeted workers in key sectors e.g Oil and Gas. He posed a question: ‘Is anyone in government or the private sector doing something about this?’
I asked him about the reported ‘Bail Outs’ of struggling local businesses. While as the President and technocrats in Government have consistently said there won’t be ‘bail-outs’, the Press has persisted with such reports; to the extent of alleging behind the scenes bail-outs as reported by The Independent recently.
The CEO rubbished this as mischief by the press. As a banker, his analysis is that Government is not bailing out the struggling businesses. However, it is committing to pay off local debt obligations which will go a long way in alleviating the situation. It was an evening well spent.
Dennis Katungi – Media & Communications Manager, Uganda Media Centre