Problems facing the private sector in Uganda
- Inadequate capital. This is mainly due to low levels of incomes and limited access to credit facilities from financial institutions due to lack of collateral securities. This limits the expansion of business opportunities in the economy.
- Low levels of technology. There is use of simple technology especially by the local private investors. This leads to the production of low output and of poor quality hence low levels of economic growth and development. ‘
- Unfavorable government policies in form of high taxes, low taxes on imports, high interest rates on loans etc. This reduces the profits and kills the initiative by private investors.
- Economic instabilities. For example inflation, exchange rate fluctuations etc. Inflation increases the costs of production hence discouraging the growth of the private sector.
- Stiff competition from the imported manufactured products. The imported goods are cheap and of high quality while the locally produced goods are expensive-and are of poor quality. Therefore, they out compete the locally produced goods by the private sector.
- Poor and inadequate infrastructural facilities. This is reflected in form of poor transport network, poor storage facilities and limited financial institutions. This makes it difficult to produce and market the produced goods and services by the private sector.
- Limited entrepreneurship skills. This is due to limited skilled manpower needed for business management and expansion which leads to low profit margins and in many cases closure of business enterprises.
- Limited markets for the products. This is due to low aggregate demand resulting from high levels of poverty in the country.
- Political instability in some parts of the country. This discourages private individuals from setting up meaningful businesses due to fear of losing life and property.
- Inadequate supply of raw materials required in the production of goods and services. Most of the raw materials and capital goods are imported from other countries. This increases the costs of production hence limiting production in the private sector.
CATEGORIES Economics
TAGS Dr. Bbosa Science
