of the slump in oil and commodity prices and the near-term outlook especially for investment in energy projects (e.g. in Uganda), is less encouraging.<sup>119</sup> Nevertheless, attracting foreign investors should be a priority to accelerate the development of local capabilities, to move up value chains and to build energy and transport infrastructures.<sup>120</sup> The Logistics Performance Index for 2016 ranks Uganda and Rwanda 58<sup>th</sup> and 62<sup>nd</sup> respectively ahead of Indonesia, Vietnam and the Philippines, which is a plus.<sup>121</sup> Further progress up the Index would lessen the handicap imposed by the inland location as would improved scores on the Doing Business Index especially by Uganda and Malawi.<sup>122</sup>

# **8. Cross-Cutting Development Initiatives**

Development capability in the three countries will be a function of several factors noted above e.g. investment (in infrastructure, natural capital etc.), the business environment, logistics and macroeconomic policies and governance. However, maximizing growth derived from these through increments in productivity will be closely tied to the quality of the workforce, the capacity to assimilate technology, and to grass roots, incremental innovativeness across the leading subsectors.

The scarcity of managerial and technical (STEM) skills<sup>123</sup> and the overall mediocre performance of the workforce have been frequently noted.<sup>124</sup> The slow diffusion of technology<sup>125</sup> and the weakness – or absence – of innovation systems has also received considerable attention. That those have implications for SSA’s growth has not gone unnoticed.<sup>126</sup> For example, the characteristics and the weaknesses of 119 UNCTAD (2016) http://unctad.org/en/PublicationsLibrary/webdiaeia2016d1_en.pdf 120 Kenya has successfully attracted FDI in geothermal and renewable energy and in transport projects. The three landlocked countries would also benefit greatly from such investment. Off-grid electrification using solar PV panels will be the most cost efficient way of supplying power to the vast and dispersed rural population. http://www.nation.co.ke/business/Kenya-posts-fastest-rise-in- <u>foreign-direct-investments/-/996/3194256/-/5po944/-/index.html</u> 121 World Bank (2016) http://lpi.worldbank.org/international/global 122 World Bank (2018) ~ - <u>http://www.doingbusiness.org/ /media/WBG/DoingBusiness/Documents/Annual Reports/English/DB2018-Full-Report.pdf</u> 123 A World Bank report (2014) assessed the development of STEM skills. <u>http://documents.worldbank.org/curated/en/237371468204551128/A-decade-of-development-insub-Saharan-African-science-technology-engineering-and-mathematicsresearch;jsessionid=l1E2N0wqqYXHAvTa0vLtC2T7</u> 124 See the Deloitte survey of workforce capability (2014). <u>http://www2.deloitte.com/content/dam/Deloitte/global/Documents/HumanCapital/dttl-humancapital-trends-africa.pdf. In addition to workforce capability, other challenges identified for selected</u> African countries – including Uganda – were leadership, retention and engagement, and learning and development.

125 Mobile telephony being the exception.

> 126 See for example World Bank (2008) _Accelerating Catch-up_ <u>http://siteresources.worldbank.org/INTAFRICA/Resources/e-book_ACU.pdf; AfDB (2011)</u> - <u>http://www.afdb.org/fileadmin/uploads/afdb/Documents/Policy Documents/FINAL%20human%20capital%20development%20strategy%20(2012-2016).pdf; Eric</u> Hanushek (2013) has shown how the quality of education influences growth in developing countries.

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