Selling off key govt parastatals to private individuals remains Museveni’s biggest mistake ever!

Professor Edward Bbaale has for the last decade centered his research on firms and African economies, with one part of it looking at the dynamics and economic roles of firms in bridging productivity, export and employment gaps in Africa.

Makerere University held a prestigious event at which Professor Edward Bbaale delivered his Professorial Inaugural Lecture under the theme Rethinking Growth in Africa, Firms and the Business Environment Quality.

The Lecture held during the year-long celebrations to mark 100 Years of Makerere University‘s existence came five months after Prof. Bbaale’s promotion from the rank of Associate to full Professorship.

Professor Edward Bbaale has for the last decade centered his research on firms and African economies, with one part of it looking at the dynamics and economic roles of firms in bridging productivity, export and employment gaps in Africa. His other research puts into perspective the quality of business environment necessary for firms in Africa to flourish.

Prof. Bbaale said the country has great potential of technological change, innovation, employment and skilling which can only be attained when the industrial sector is prioritized.

“The contribution of industrialization to GDP was rather higher in the 60s. Due to the volatile economic environment and following what happened in the 1980s and 1990s, we have had a decline in industrialization.

Uganda in the 1990s privatized most of the public enterprises at the urging of the World Bank and the International Monetary Fund. But experts say that selling key government parastatals to private individuals during the early days after Uganda had emerged from decades of political turmoil was a huge mistake of President Museveni ‘s rule.

“We have seen a situation which I risk to call de-industrialization where the service sector has taken over industrial and agricultural sectors,” Prof. Bbaale said.

“Despite this, majority of our population is employed in the agricultural sector yet it contributes the least. This means poverty can not be escaped unless something is done about agriculture because that is where most of our people are.”

Overall, industrial sector growth in Africa continues to lag behind GDP growth from approximately 17% in 1981 to 12% in 2020.

In Uganda for example, the share of the manufacturing sector to GDP continuously experienced weaker growth with a marginal contribution of 4% in 1980 increasing to only 5% in 1990, and to 16% in 2020.

This figure is still far below the 20% target specified in NDP III, Prof. Bbaale said.

The implication of this is that although the prudent macroeconomic policies managed to increase GDP growth in Africa, they have not been sufficient enough to spur growth in the industrial sector, which affects its potential for job creation,” Prof. Bbaale added.

“What is required of African economies to revive and sustain their growth, particularly in the industry sector is to refocus on the micro-economic policy environment where business firms operate.”

Prof. Bbaale added that firms in Africa are predominantly small (close to 58%) with few medium and large firms and only 23% of the firms engage in exporting.

In Africa, Firm-level Gross Job Creation Rate (GJCR) stands at 13% while Gross Job Destruction Rate (GJDR) stands at 6%.

Small firms have a low chance of surviving and growing into large scale firms that are more productive. Therefore; low aggregate industrial productivity in Africa is to a greater extent attributed to a large fraction of small firms. Even with more domestic firms, domestic capital accumulation remains too low to boost adequate growth, he said.

Prof. Bbaale, pointed out some of the constraints to the potential of firms to achieve fast growth as the unreliable power supply, huge transportation costs, corruption, poor tax structures and weak laws among others.

One of longest serving professors of Makerere University Prof. Elly Sabiiti commended the great work done by Prof. Edward Bbaale and attributed this kind of achievement to formation of the Professorial Inaugural Lecture Committee in 2007. The Committee was established to guide newly-promoted professors on how disseminate the knowledge accumulated over the duration of their academic journeys for the benefit of the society.

He added that the theme of the Professorial Inaugural Lecture was relevant especially since it comes a at a time when Makerere is celebrating 100 years of excellent service with a milestone of over 90 professors.

Prof. Barnabas Nawangwe, the Makerere Vice Chancellor noted that the University contributes 70% of the research output in Uganda and 3% to the continent. He added that professors like Bbaale are expected to take the lead in the economic development of the country through their comprehensive research.

“I am glad to note that the inaugural lecture topic on “Rethinking Growth in Africa: Firms and the Business Environment Quality” is in line with the current global economic challenges arising due to the Covid-19 pandemic. Several business firms both local and international went into unprecedented decline. In Uganda, the informal sector has been greatly affected and livelihoods compromised,” the Vice Chancellor said.

The Deputy Vice Chancellor in charge of Academic Affairs, Assoc. Prof. Umar Kakumba, congratulated Prof. Bbaale upon delivering his Professorial Inaugural Lecture, saying it is a prestigious and highly regarded public talk by an appointed Professor in an academic institution.

Assoc. Prof. Kakumba said Professor Bbaale’s inaugural lecture theme was very relevant in today’s setting and has provided very important knowledge.

“Professor Bbaale has ably demonstrated the contribution of his academic exploits in economic development. Notably, his lecture is in line with the theme of the Third National Development Plan (NDP III), on “sustainable industrialisation for inclusive growth, employment and sustainable wealth creation”.”

Prof. Bbaale highlighted that overall industrial sector growth in Africa continues to fall behind GDP growth and that the manufacturing sector in Uganda has a marginal contribution to GDP at 16% as of 2020.

“He has argued for more focus on the microeconomic policy environment where business firms operate. This is expected to improve the success of the NDP III,” Assoc. Prof. Kakumba said.

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