By Our Reporter
Strong GDP growth in Africa has masked disappointing productivity according to The Institute of Chartered Accountants in England and Wales (ICAEW) latest Economic Insight: Africa Quarter 2 report. Uganda in particular has seen lower economic activity than anticipated during the past one year primarily as a result of the sharp decline in commodity prices which negatively affected export earnings.
Over the last 15 years, trade and investment have buffered the continent against the global financial crisis. However, ICAEW says this has hidden low productivity figures despite much greater potential for economic ‘catch up’.
Uganda’s 2016/2017 national budget attributes the slow growth of the economy to the drastic fall in international commodity prices of exports such as coffee, tea and minerals. In addition there was a decline in private sector credit growth as a result of high interest rates, which constrained domestic activity and the strengthening of the dollar as a result of the recovery in the US economy which led to depreciation of Uganda’s shilling causing domestic inflation.
The ICAEW report notes that from the year 2000 to 2015, the average GDP growth across Africa was 4.8% per annum, a full 2.3 percentage points faster than the global average during the 1990s.
Michael Armstrong, Regional Director at ICAEW Middle East, Africa and South Asia said, “Matching the performance of some other emerging market regions might, at face value, seem respectable enough. But the truth is that Africa is starting from a much lower level of economic development than these economies.
