Ugandan businesses in the service sector have been advised to formalize as well as form strategic partnerships if they are to position themselves for the international market. This is as government seeks to grow its exports for both the commodities and services.
Elly Kamugisha Twineyo, the Executive Director of Uganda Export Promotion Board (UEPB) says that Uganda is currently exporting a number of services, tourism being the highest foreign exchange earner, but that informality remains an impediment.
Uganda’s annual revenue from service exports oscillated between USD 1.6bn in the 2012/13 financial year and USD 2bn in 2016/17. Tourism alone has earned USD 1bn averagely for the last four years contributing 10% to the GDP (and 23% of the country’s exports) while remittances also bring in USD 1bn annually on average.
“Services are very important. There is no way a country can ignore services. If we double them and double commodity exports, we will attain middle income status. If we market well, we don’t need 10 years to become an upper middle income economy,” Twineyo said.
He was speaking Tuesday during a business clinic whose focus was on growing the services segment of Uganda’s exports.
“Informality is a challenge both in commodity and services. We could be exporting more but without knowing. It is due to this informality that we are importing more services”.
He as well highlighted the lack of adequate skills, standards, financing, gaps in policies regulating services exports, and stiff competition from local firms export markets, as some of the challenges still hampering growth in service exporters.
Patrick Kagenda, from Data Care, a Ugandan IT development firm says the country has a lot of potential to export Information and Communications Technology (ICT) services but that more needs to be done in marketing Uganda as an ICT destination. He also emphasized the need for the private sector service providers to work collectively so as to bid competitively.
“At times, when we are delivering an IT solution, you find that some businesses are good at project management, others good at training and others are good developers. But sometimes, one company may not have all this,” Kagenda told SoftPower News on the sidelines of the workshop.
“But if you know, by working with another company, you can become the lead consultant and the other firm becomes a sub, then together you can deliver the service as a consortium. That’s what most of these internationals do when they come here,” he said.
He also argues that like it is in the hospitality sector where different hotels are categorized based on the services they offer, the same case should be in IT by ensuring these firms are ISO certified.
Twineyo said that there is potential in Uganda’s tech startups especially if they develop Apps that can link and preorder services like tourism. He says opportunities lie in the EAC market as well as EU and Asia.
Beyond tourism and IT, Uganda also exports logistics services as well as transport, storage, labor, clearing and forwarding, construction, insurance, postal and courier, and financial services.
Global trade in services accounts for almost two thirds of the world’s economic activity. In 2017, global services trade grew by 7.8% reaching USD 5.4 trillion. Statistics indicate that 30% of the world workforce is employed by service firms which create most of the new jobs.