Economic Diversification and Growth

Chapter 6
Implementation of the Strategy:
Key Messages and Conclusions:
The Role of the Private Sector
A modern recreation facility in Jinja Uganda
The private sector is the most powerful instrument
of economic development. Governments, NGOs
and development financing institutions increasingly
emphasize the role of private enterprises in the
implementation of their development objectives. Global
demand for energy and raw materials encourages
multi-national corporations to give a higher priority to
developing countries that now receive more than 50
percent of their foreign direct investments. In addition,
a growing number of MNCs include development and
corporate social responsibility in their agenda.
Uganda’s business environment (129 th out of 148
countries in the Global Competitiveness Index) is
not favorable to a strong performance of the private
sector. The number of registered enterprises almost
tripled during the 2000s, but the business landscape
is dominated by microenterprises. Oil production
will increase average incomes and stimulate private
sector development, but limited backward and forward
linkages, inadequate access to financing, incapacity
of small enterprises to meet the standards of oil
companies may reduce the overall impact of the oil
industry on the other sectors.
The agricultural sector could be a major beneficiary
of oil development. Rising national incomes and
urbanization will increase the demand for food. Uganda
may also have the capacity to develop agro-processing
and light manufacturing.
I. The Private Sector as A Development Agent
6.1. Traditionally, governments, multinational institutions and NGOs are viewed as the main actors in international
development and little attention is given to the development role of the private sector. Today, however, businesses
(notably multinational corporations) begin to be recognized as credible and resourceful partners in the implementation of
the international development agenda. For Koffi Annan in June 2005, “It is the absence of broad-based business activity, not
its presence that condemns much of humanity to suffering.”
Uganda could produce and export products of higher
value, building on those it is already exporting within
the region. Uganda is exporting plastics, iron and steel,
chemicals, paints, cosmetics, construction materials,
pharmaceuticals and processed food and could tap into
other products of similar capabilities.
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