Weakness of the private sector in Uganda

  • The country's private sector has a tendency of fear of risks involved in business undertakings.
  • The sector leads to under-utilization of the domestic resource potential. This is because not all resources in the country are employed.
  • Private sector activities located in urban areas often lead to rural - migration.
  • The sector is also faced with a problem of inadequate financial resources expand its activities countrywide.
  • There is the tendency to use of capital intensive techniques of production so as to increase output within the sector. This leads to limited employment prospects for the available potential labour force i.e. unemployment may result.
  • The sector tends to be monopolistic in nature, specializing in one or production activities.
  • It may not promote the country's interests as individual desires/aspirations to dominate at the cost of national interests.
  • The private sector in Uganda, often concentrates on small-scale production activities. This may not enable it to generate adequate economies of scale.
  • The high degree of ignorance among the people also greatly hinders the desired activities/targets of private sector in the country.
  • The sector is further faced with unpredictable political policies by government. There is usually the threat of fear of nationalization programmes the state.
  • The prevalent use of rudimentary/outdated technology also limits the scale of output production by Uganda's private sector.
  • The private sector of Uganda is usually profit motivated. This again may act against the aspirations of the individual consumers.
  • Capital outflow/profit repatriation can occur where and when private sector activities are under foreign ownership.
  • There is limited levels of diversification due to the production of similar commodities.
  • The sector is further faced with the production of poor quality products.
  • It could lead to income inequalities where a few people get engaged in such activities, whereas the majority are not.
  • Policies adopted by the government to encourage and promote the private sector.
  • Uganda, and indeed in most developing nations, governments think that private sector activities can distort national development targets, and the private sector sees government as an obstacle to market forces and the stimulation of entrepreneurship. Therefore, to make the private sector more effective in Uganda, some policies have been suggested.
  • The government has endeavoured to provide both economic and social infrastructure e.g power generation, water supply, maintenance of roads, telecommunication network, etc.
  • Trade liberalization has been implemented, where entry into a particular field of economic activity is not restricted.
  • The current privatisation programme in Uganda is also aimed at enhancing the government policy of encouraging the private sector; by transferring state-owned enterprises to the private sector investment.
  • The government has tried to maintain security and political stability. This move, too, has helped to promote the private sector.
  • Economic incentives e.g subsidization policies, tax holidays, etc, have been encouraged by the government, so as to stimulate private sector investment.
  • Price stabilization - The stabilization of market prices of goods and services by the government has cultivated confidence in the private sector to invest.
  • The private sector (especially farmers) have been provided with inputs so as to encourage their production activities.
  • The government of Uganda today, has embarked on the repossession of property to Asians to encourage the private sector.
  • The provision of good administrative and social atmosphere, and yet this can not be provided by the private sector.
  • Poverty alleviation programmes, where the government has devised regulatory measures and structures to motivate and encourage private investor to channel their savings and investments to benefit the majority.
  • The government has enabled the extension of a considerable degree of autonomy of the private entrepreneurs in their investment and management decisions.
  • Respect of contractual obligations and the protection of property rights including intellectual property rights.
  • Consistent and uniform application of government policies aimed at ensuring fair and equal treatment among private firms, foreign and enterprises.
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