More Investor Confidence Needed [editorial]

A survey released by the Bank of Uganda last week showed confidence by the business community in the future of the economy. The survey showed that the confidence index had risen to 67.2% in the first three months of this year compared to the feeling in the last three months of last year, where the confidence index was 50%.

The survey pointed out that the increase in business confidence comes from confidence in the recovery of the Kenyan political impasse, aggressive marketing and improvements in service delivery.

Businesses are, however, looking forward to a period of higher inflation as input costs rise due to higher fuel and food prices. There was great confidence that financing costs will drop due to new entrants in the banking industry.

However, the major omission in the survey was the cost of corruption on doing business in Uganda.

Recent surveys have showed that corruption, paying bribes to win contracts, licences and concessions, was a major input in the cost of doing of business.

And more than the frustration with our rotting infrastructure is the endemic corruption. A World Bank survey in the 1990s showed that businesses paid as much in bribes as they did in taxes to stay afloat. There is no reason to believe that that situation has improved.

We should not hide our heads in the sand about the deficiencies in our economy that are frustrating private sector growth and by extension investor confidence.

The high numbers in investor confidence probably suggest they are measuring us against very low expectations; maybe they are comparing us with the DR Congo, Sierra Leone or Liberia.

That Ugandan businesses still have confidence in the economy is a good thing, but that should not stop us from asking ourselves the hard questions that will improve conditions for the private sector in a way that can be benchmarked against the highest international standards.