Uganda urged to look to private sector to fill finance gap

27 Jul 17

Uganda has a shortfall of nearly $1.4bn in financing per year, equivalent to 6.5% of its gross domestic product, the World Bank has said.

The bank said the country should explore the option of raising capital from the private sector to finance the infrastructure investments that were key to driving its growth.

In its report, Infrastructure finance deficit: Can public–private partnerships fill the gap?, the bank urged the establishment of “robust institutions and procedures” to manage public-private partnerships, which had been slow to take off despite initial approval for this approach having been given in 2010.

World Bank senior economist Rachel Kaggwa Sebudde said: “Public-private partnerships have the potential to offer many benefits for the government and the people, but their management requires strong structures and policy frameworks.”

The bank’s report said Uganda’s economy grew by 2.5% in the year to March 2017.

While this was significantly short of earlier projected 4.5% growth rate, the country was expected to post growth of 5.2% in 2017-18, and 6.0% the following year, driven by the development of oil infrastructure following its issuing of exploration agreements.

This included a pipeline jointly developed with Tanzania, a refinery in western Uganda, and a standard gauge railway to the Indian Ocean.

But the bank warned that Uganda was at risk from a renewed tendency to grant tax exemptions and its low tax collection rate, which stood at only 13.5% of GDP.

“Combined with poor return on public investments, this could make it difficult to service the country’s growing debt,” the bank said.

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