Kampala — As the Ugandan economy begun to pick up in the 1990s, sustaining the long road of economic reforms was the key driving force of growth and stability. Events of the last 2-3 years where the growth of the economy slowed to an average growth rate of 5.7%, has raised questions from certain sections of the society in Uganda.

Among the many questions being asked are: Have the reforms failed to bring a lasting impact on the economy? Has the reform process been mismanaged or ignored along the way? Should we embark on another package of reforms again by the IMF and World Bank or we need a Ugandan home grown/designed package of reforms?

Answers may be divergent and numerous as can be seen from the proposals made by the new Finance Minister Suruma in the new economic shift. Taking a look at the trends in the global economy and as globalization takes root, there have been changing characteristics that the Ugandan economy has not quickly reflected on and yet these features are key in post reform economic growth and development of the country.

Globally, there has been increasing trade in services such as education, healthcare, insurance, business to business services and ICT averaging over 40% of total exports of developing countries(ITC, 2005).The International Trade Centre (ITC) acknowledges that in 5 years to come, trade in services will jump to 70% and greater majority of the opportunity is in trade between countries in the south. Outsourcing presents a major type to this opportunity.

Countries of the West have already reached an apex with multinational companies trading in services. Other countries such as India, China and the South Asian tigers such as Singapore and South Korea are moving very fast in this trade. There is no doubt that this trade is destined to make a significant change in the composition of international trade in the nearest future.

Offshore outsourcing of services has also become a model trade event in scenario. The term referred to is BPO - Business Process Outsourcing and countries like China and India are already doing outsourcing work for large multinationals in insurance and ICT for software companies in the USA, and other developed service economies and this is partly why these economies have phenomenonal growth rates. The Chinese economy is growing steadily at 10% annually and the Indian economy is growing at a rate of 7-8%.

Outsourcing is key in the services industry and is equally important for any economy that is attempting to fast integrate itself in the global economy. This business practice has grown globally over the last decade with traditional centres of outsourcing being USA, European Union and Japan. And the evolution of this process is fast going to Singapore, India and China mainly due to their great focus on the cheap labour, relatively good ICT infrastructure and a conducive business climate.

The general emphasis a country puts on growth and development of the services industry determines the speed at which it can tap opportunities in outsourcing business. This is an approach that the Uganda economy should strive to take advantage of.

In 2005, there are high expectations for a shift in target countries for BPO. The question now is why Uganda is not on the list of countries that are vying for this back office work which can increase opportunities for employment creation, build synergies for other sectors in the economy and increase Uganda's presence in the global market place? Some African countries vying for BPO are Morocco, Tunisia and Ghana. These countries have put emphasis on the development, profiling and competitiveness of their services industry and are also favoured by their relatively conducive political and business atmosphere.

In Uganda positive steps are being taken with Uganda Export Promotion Board coordinating the design and formulation of the Services Industry Export Strategy. This strategy ought to focus on sector competitiveness issues such as infrastructure, human resources, quality and standards, indicators of capacity for international business and systematic and effective marketing programmes for the Sector.

Initiatives of this nature are key in the sector to make Uganda a hub and spoke model in globalization of services. Supporting these initiatives under the Uganda Export Promotion Board can enable Uganda to brand and position herself in the in the region as a Centre for health expert management for communicable diseases and Higher Education and also business to business services, ICT, insurance and consultancies among others.

This can give Uganda an edge in vying for BPO especially that Uganda has well qualified graduates, an English language heritage from the British, relatively stable political atmosphere and an improved business environment.

Countries that have succeeded in taking high advantage in BPO are heavily involved in industry capacity building e.g. promoting ICT services and investing in ICT infrastructure like High Technology Parks. A good example is in India where there is an increasing shift in fortunes in BPO from major metro cities like Bangalore, Delhi, Chennai and Mumbai to small and hitherto unknown towns like Pune, Jaipur and Kalkaska. The Indian example is further strengthened at a macro economic level by the Indian Government favourable incentive regime with a long-term focus.

Increasing focus on IT application, development, consultancies and maintenance type of work for export is a sure way of giving mileage to all developing economies in BPO. In Uganda, the recent shift in focus by the government to have 75% scholarships for science education should not be for its sake. It should be reflecting these changing trends in the global economy and the growing importance of specific skills and knowledge for the economy to attain and sustain a good growth pace.

The services industry in Uganda is key to economic growth, creation of employment, enhancing Uganda's image in the global market place and facilitating development of other sectors. The services industry can enable the country to offset the Balance of Payment (BOP) deficit, evident in export of tangible goods that are mainly raw materials with less value addition and above all, lessen the burden in paying shipping costs of tangible goods.

Besides that, Uganda has a niche market for services like education, healthcare and ICT in the COMESA region and can enhance niche tourism targeting the global market e.g. Gorilla Tracking, bird watching, river rafting etc.

The opportunity for Uganda is now and we cant just let it slip.

The writer is an Economist and a Senior Trade Promotion Officer at Uganda Export Promotion Board (UEPB)