504435 SEATINI UGANDA The private sector remains a key engine of economic growth  and can play an important role in promoting sustainable economic development in Uganda through enhancing agriculture, industrial and services development, contributing to domestic resource mobilization and generating employment opportunities, among others. In Uganda, the private sector comprises both foreign and domestic enterprises and firms engaged within key sectors of agriculture, services, industry and infrastructure. Majority of the domestic private sector lies within the informal sector i.e. the Micro Small and Medium Enterprises (MSMEs). This sector is an important source of employment # creating 19 out of 20 non-agriculture jobs with young people occupying 94.7%  of these jobs. The sector also contributes to up to 43%  of GDP at market prices majority of which have not been in existence for more than 5 years, and with 90% of them operating for less than 20 years.
Despite this potential, this sector unlike their foreign counterparts (foreign direct investors), face peculiar challenges including limited access to investment capital given the high interest rate of up to 24% per annum which increases the cost of credit, low level of skills and technology, competition from foreign firms which crowd out domestic enterprises and limited government support. Consequently, only a handful of the domestic enterprises have survived to celebrate their first birthday. This is despite the fact that the sector can play an important role in acceleratinggrowth, alleviating poverty and improving the quality of life of the people of Uganda.
This has further been aggravated by the existing trade and investment policy frameworks which do notadequately support strengthening the competitiveness of the domestic private sector. They place more emphasis on attracting ForeignDirector Investment (FDI) rather than strengthening and improving domestic investors' capacity and participation in various sectorsfor the overall improvement of the economy. These policies and laws majorly aim to protect the interests and rights of foreign investments at the cost of the community rights. The Investment Code, 2000 and the Uganda Free Zones Act, 2014 for example provide investment incentives such as tax holidays and land concessions for foreign investors seeking to establish in Uganda.
In addition, the existing investment related policy frameworks assume that the challenges faced by these firms are the same. They thus provide general strategies for the private sector development and remain silent on efforts to address some of the underlying challenges that limit their capacity to be competitive. The policies for example are not explicit on sourcing locally and forming joint ventures which are both critical for promoting local content, creating employment, facilitating backward and forward linkages, boosting production and productivity enhancing the domestic industrial sector development. The existing policies are also silent on foreign investors' engagement in petty trade,of which majority of them import the merchandise and consequently crowd out domestic enterprises engaged in these sectors.
Domestic private sector is imperative as it can contribute to increased production and productivity, employment creationfor thegreater majority of the local population and contribute to increase domestic resource mobilization through taxation. Domestic investments are more likely to benefit the local community and contribute to greater economic development if compared to FDIs whichrepatriate profits and often operate outside the host country's policies and laws on environment protection and human rights among others.
It should be noted that despite the efforts by government to attract greater FDI flows and the subsequent increaseof this flow into the country, this rise has not resulted into rises in employment creation, meaningful technology and skills transfer, value addition and private sector development including growth of the service, industry and agriculture sector production and productivity. This state of play has made it more and more apparent to enhance local private sector capacity to increase domestic investment into the economy and foster structural transformation for economic growth and development.
Currently, there are a number of ongoing policy processes which require civil society and private sector engagement to influence a policy environment to strengthen domestic private sector competitiveness for sustainable development and improved livelihoods. These processes include the development of the Private Sector Development Strategy, the development of the strategy for the Free Zones Authority and the amendment of the Investment Code Act 2000. The project will also advocate for the review of the Public Procurement and Disposal of Assets (PPDA) Act to be reflective and coherent with the Buy Uganda Build Uganda (BUBU) policy which promotes local content. Engaging in these processes is imperative and thus necessitates raising stakeholders' awareness to effectively participate in and influence these processes.
It is therefore imperative to advocate for and influence the review of private sector related policy frameworks to enhance local content and joint venture formation. Adopting such legal frameworks can go a long way in facilitating forward and backward linkages which are critical for employment creation, increased production and productivity as well as increase tax revenue generation.
SEATINI wishes therefore to propose a project on Promoting investment policies that support domestic private sector competitiveness for sustainable development in Uganda.
Overall objective
To strengthen domestic private sector competitiveness through a conducive trade and investment policy framework for sustainable development in Uganda