Page last updated at 21:14 GMT, Monday, 11 July 2005 22:14 UK

Africa's entrepreneurial vision

By Claire Bolderson
BBC News

The clothes in Herbet Massissi's shop in Kampala are made of brightly coloured fabrics turned into original designs by his wife Anne.

Map of Uganda
Many who escaped wars in Uganda are now returning

The material is all created on silk screens in the workshop at their home in the Ugandan capital where they employ 14 people.

Mr Massissi is one of a growing number of Ugandans who have returned after spending years abroad avoiding the endless wars.

Now they are forming a small core of struggling entrepreneurs.

New business

International assistance may contribute nearly half of Uganda's budget, but that does not mean everyone in the impoverished country is sitting around waiting for aid.

Next door to Massissi's shop is a European style supermarket run by another Ugandan businessman, Fitz Ssebunya.

Mr Ssebunya also owns a bakery, providing jobs for nearly 30 people from the community nearby.

The investment they have brought in has fuelled a mini-renaissance in the village.

There are new shops and even talk of a new school.

Successful sector

Many of the anti-G8 protestors in Scotland last week argued that privatisation and capitalism are being foisted on poor African nations against their will.

But in places like Uganda, governments are beginning to think that expanding the private sector is the only way to reduce aid dependence and stimulate growth.

It is the same story in previously Marxist Ethiopia, a country more associated with famine than business opportunities.

In the past three years, the Ethiopian government has been liberalising its economy at a rapid pace.

It wants foreign investors to come and take a look and its welcome is already paying off.

Horticulture is the most successful sector to date.

There are more than 30 flower farms growing roses for export to Europe.

Nearly half of them are foreign or part-foreign owned.

Earning cash

At Linssen roses, about an hour's bumpy drive from the Ethiopian capital Addis Ababa, the Dutch manager Peter Linssen has seen the impact his farm has had.

Ethiopian Prime Minister Meles Zenawi
Ethiopian Prime Minister Meles Zenawi is popular in the West

Women who previously worked their small fields for nothing now earn a dollar a day cutting and packing roses.

It may not sound like much, but it has given them a status they never had before.

"Now the women really run the families because of the money they're bringing in," says Mr Linssen.

Slow liberalisation

Foreigners investing in Ethiopia are given tax breaks by the government.

They are also allowed to avoid punitive import tariffs when they bring in capital goods.

But it is not all plain sailing.

The Prime Minister Meles Zenawi may be the west's favourite African leader because he is so pro-development, but he is finding it hard to shake off his Marxist roots.

Telecommunications and freight remain in the hands of the government. Nobody but the state is allowed to own land and the banking sector is closed to foreigners.

According to the World Bank, Ethiopia still has quite some way to go when it comes to liberalising the economy.

Aid dependence

In Uganda there are other obstacles to private business.

Entrepreneurs may be ready and willing, but there are few incentives to invest and with banks charging astronomical rates up to 26 %, for loans that have to be paid back within five years - it is very hard to get off the ground.

Nobody is under any illusion that in countries where millions live below the poverty line, the answer to all the problems is going to be private business.

Big investment by governments in health, teaching and infrastructure is going to be vital, and this is where debt relief and foreign assistance come in.

But Ethiopia and Uganda both have rapidly growing populations.

What they need are jobs that put money in people's pockets, creating tax revenue and domestic consumption.

Then, and only then, will they be able to think about being weaned off aid.

SEE ALSO
Country profile: Uganda
09 Apr 05 |  Country profiles
Country profile: Ethiopia
09 Jul 05 |  Country profiles

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