Uganda fortunately does much better when it comes to obtaining credit, where it ranks 46th out of 183—making the country one of the better in the world in this area. Here, as depicted in Figure 2, the Bank examines the legal rights of creditors and borrowers in secured transactions and bankruptcy law as well as the strength of credit information bureaus and exchanges.
When lenders have both strong legal rights and easy access to a wide variety of information about the client’s creditworthiness, reasons the Bank, the more available credit will be. When information on borrowers is significantly lacking – as is the case in most of Africa – legal protections for creditors must in turn be very strong. Uganda does well because creditor rights are relatively strong and there is a fair amount of information available on potential borrowers.
Figure 2:
How the World Banks Conceptualizes Credit Acquisition
When it comes to protecting investors and minority shareholders, Uganda unfortunately returns to form. Here, the country ranks 132nd out of 183 countries, largely due to the lack of requirements to disclose conflicts of interest by corporate officials. Uganda is also a moderately difficult place to bring shareholder lawsuits while director liability is weak compared to western countries.
Uganda unfortunately does better in the area of taxation. The World Bank estimates that pleasing the tax man in Uganda requires a total of 32 payments over the course of a year which, in turn, takes up to 161 hours to complete and can consume up to 35.7-percent of a company’s profits. Accordingly, Uganda’s tax burden is ranked 62nd out of 183 nations, making it one of the better in the world in this area.
When it comes to engaging in cross-border trade, Uganda once again reverts to form. In Uganda, to import goods into the country one is required to have eight documents for customs officials to inspect. On average, it takes a total of 34 days to import goods into Uganda with the cost amounting to $2,940 (excluding tariffs) per container shipped into the country.
The cost to export goods is roughly similar as Uganda requires six documents to be inspected by customs’ officials, while the total cost (excluding taxes) is $2,780 per container, with delivery taking up to 34 days from point of origin. Compared to global averages this nets Uganda a ranking of 148th out of 183 on ease of engaging in cross-border trade.
Uganda’s ranking improves however when it comes to contract enforcement, where it ranks 113th out of 183 countries ranked on this issue by the Bank. On average, reports World Bank analysts, it takes a total of 38 legal procedures to take a contract from dispute to resolution, at the cost of 490 days spent in court or otherwise attending to legal issues. The financial cost of pursing a contract claim, says the Bank, typically accounts for 44.9-percent of the value of the claim.
Finally, in terms of closing or liquidating a business Uganda ranks 56th out of 183 countries. Here it takes 2.2 years to close an estate or enterprise at a total cost of 30-percent of its value with an average recovery rate of 39.7 cents on the dollar.
Table 1 presents a summary of these rankings as well as Uganda’s overall ease-of-doing business rating. On all but obtaining credit, paying taxes, and closing a business Uganda ranks well below the median on global measures of business conditions.
Table 1:
World Bank Ease of Doing Business
Assessment and Rankings: Uganda
Prospects
Uganda at present remains what one might call a stereotypical developing African country. It is heavily reliant on agricultural production for its income and produces mainly coffee for export—it is in fact Africa’s largest exporter of the crop—along with tobacco, tea and other low-value agricultural commodities. Still, as in the rest of Africa, additional growth has come in the service sector—which now accounts for 52% of GDP—as well as in some light manufacturing. These other sectors, however, have not grown into major export earners.
