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Structural transformation, private sector credit, and growth : implications for employment and economic growth in Uganda
Thesis (PhD)--Stellenbosch University, 2025.
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Stellenbosch : Stellenbosch University
2025
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| _version_ | 1867613969373462528 |
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| access_status_str | Open Access |
| author | Ojangole, Patricia Adongo |
| author2 | Aziakpono, Meshach Jesse |
| author_browse | Aziakpono, Meshach Jesse Ojangole, Patricia Adongo |
| author_facet | Aziakpono, Meshach Jesse Ojangole, Patricia Adongo |
| author_sort | Ojangole, Patricia Adongo |
| collection | Thesis |
| dc_rights_str_mv | Stellenbosch University |
| description |
Thesis (PhD)--Stellenbosch University, 2025. |
| format | Thesis |
| id | oai:scholar.sun.ac.za:10019.1/132030 |
| institution | Stellenbosch University (South Africa) |
| last_indexed | 2026-06-10T12:44:35.400Z |
| license_str | Other — see source repository |
| provenance_str_mv | Harvested via OAI-PMH from SUNScholar — Stellenbosch University Repository |
| publishDate | 2025 |
| publishDateRange | 2025 |
| publishDateSort | 2025 |
| publisher | Stellenbosch : Stellenbosch University |
| publisherStr | Stellenbosch : Stellenbosch University |
| record_format | dspace |
| source_str | SUNScholar — Stellenbosch University Repository |
| spelling | oai:scholar.sun.ac.za:10019.1/132030 Structural transformation, private sector credit, and growth : implications for employment and economic growth in Uganda Ojangole, Patricia Adongo Aziakpono, Meshach Jesse Moleko, Nthabiseng Stellenbosch University. Faculty of Economic and Management Sciences. University of Stellenbosch Business School. Structural adjustment (Economic policy) -- Uganda Economic development -- Uganda Labor market -- Uganda Economic policy -- Uganda Financial services industry -- Uganda Credit -- Uganda UCTD Thesis (PhD)--Stellenbosch University, 2025. Ojangole, P. A. 2025. Structural Transformation, Private Sector Credit, and Growth: Implications for Employment and Economic Growth in Uganda. Unpublished doctoral dissertation. Stellenbosch: Stellenbosch Univeristy [online]. Available: https://scholar.sun.ac.za/handle/10019.1/132030 ENGLISH SUMMARY: There is growing concern about the nature of structural transformation experienced in African economies, which is seen as different from that experienced by the East Asian economies. Specifically, although African economies have experienced impressive growth rates from 2000, the growth is not creating jobs, and it is therefore not reducing poverty and income inequality on the continent. In addition, while policy makers need to understand the job-creating potential of different economic sectors to promote those that are job-enhancing, the evidence about employment effect of growth by economic sector still needs to be explored. There is need for more evidence on the constraints to the growth of different sectors of the economy. For instance, while there is a large body of evidence on private sector credit’s effect on aggregate economic growth, the sectoral disaggregated impact of private sector credit on sector-specific growth is scant. This limits priority setting and resource allocation towards growth-responsive and employment-enhancing sectors. Therefore, evidence on growth patterns and their drivers, employment effect of growth and the sector-specific impact of private sector credit is vital in closing this research gap and guiding appropriate policy that could lead to sustained growth of GDP and jobs. Accordingly, this study seeks to close this gap using the case of Uganda. This study aims to answer the following fundamental questions: what is the pattern and nature of structural transformation that has been taking place in Uganda, if any, and which sectors drive the experienced growth? What is the job creation potential of the overall and sector GDP growth? What is the impact of private sector credit on sector specific economic performance? Against this backdrop, this thesis presents three empirical essays: (1) the patterns of structural transformation in Uganda, specifically evaluating the nature and sources of productivity growth, (2) structural transformation, growth, and employment effect in Uganda, and (3) the impact of private sector credit on growth at both economy-wide and sector levels. The first essay (Chapter 2) addresses the first question: what is the pattern and nature of structural transformation that has been taking place in Uganda, if any, and which sectors drive the growth experienced? The study uses data from the Economic Transformation Database (2021), which provides data on 12 economic sectors in Uganda from 1990 to 2018 and applies canonical decomposition methods to decompose labour productivity growth in Uganda into within-sector and structural change components from 1990–2018. Specifically, annual labour productivity growth rates were computed, then the annual growth rates over a period of ten years were averaged. The results show that overall, there is within-sector growth driven by labour productivity improvement in sectors and not structural transformation in Uganda. Initially agriculture was the primary contributing sector, followed by manufacturing and trade, but in recent decade, agriculture has become a negative contributor. The results show that within-sector labour productivity growth has been dropping over time. Indeed, the results suggest that structural transformation, which should be a priority for policymakers, still lags, mainly because the sources of growth are within and not across sectors. The contribution of this essay to the literature in Uganda on patterns of structural transformation is the understanding of the disaggregated sector contribution beyond agriculture, manufacturing, and services that other studies on Uganda have attempted to analyse. In the second essay, the thesis analyses the relationship between employment and gross domestic product (GDP) growth at aggregate and sector disaggregated levels. Again, using the Economic Transformation Database, which provides data on 12 economic sectors in Uganda from 1990 to 2018, the study estimates a Markov switching regression model to establish the employment effect of GDP growth. The method was motivated by the cyclical pattern of Uganda's growth during the study period. The Markov switch regression results show the asymmetric relationship between GDP growth and employment growth in Uganda, which is a key contribution of the study to the literature. The analysis on the employment effect of growth reveals that overall, there is no significant employment effect of growth, suggesting a jobless growth in Uganda, which is consistent with the general finding on growth with limited job creation in Africa. The disaggregated analysis shows that three key sectors of manufacturing, mining and trade have a positive and significant sectoral employment effect of GDP growth in a high and low growth states, and the other sectors had only positive effect in a high growth state but not in a low growth state. Moreover, some sectors such as agriculture had a negative and significant effect of GDP on employment during a low growth state. These results suggest that GDP growth effect on employment growth varies by sectors and that it is consistently positive and significant for manufacturing sector, mining sector, and trade services. This therefore calls for interventions to enhance structural transformation through industrialisation to not only boost manufacturing but also trade related businesses both in the internal and global value chains (domestic and international trade). In the third and last essay, the study examines the sector-disaggregated effect of private sector credit on GDP, and at the aggregate or economy wide level. The key question addressed in this essay is: has private sector credit played any role in the growth of those sectors? The sector-level analysis links the impact of private sector credit to growth, sector performance, and ultimately, its effect on employment. This essay uses sectoral quarterly GDP and private sector credit from the Uganda Bureau of Statistics (UBOS) for ten sectors from Q3-2009 to Q3-2022 and employs ARDL technique. The analysis is motivated by the desire to examine the nature of private sector credit effect on GDP across different sectors and to determine whether the affected sectors positively correspond to the employment-enhancing sectors or those that do not. Regarding Private sector credit, the study finds generally show a weak long run relationship between sector GDP growth and credit and varied sector growth effect of private sector credit both in the short and long run. The estimated short run effect of first lagged difference of private sector credit has a positive and significant effect on overall GDP growth, agricultural sector GDP growth and education sector GDP growth, but no impact is found for the rest of the sectors. These results have critical policy implications. First, the finding that growth is driven by within-sector rather than structural transformation suggests the need for policies, programs, and interventions that could drive structural transformation and hence sustainable growth. For instance, government needs to implement policies to promote labour productivity within sectors and the overall structural change towards sectors that promote growth and employment. The majority of the population (at 66.3%) is employed in agriculture – the least productive sector – which contributes only about 23% of GDP (WDI, 2023). The results show that the agricultural sector experienced a within-sector labour productivity growth during 1990–1999, after which the within-sector growth declined to negative during 2010–2018. However, the sector remained the key employer, suggesting a decline in the yield and value of what was produced. This results in increased poverty and low welfare for those employed in the agriculture sector. In addition, the results that the private sector credit effect varies across sectors and that the employment-growth relationship is different across sectors suggest the need to prioritise employment-responsive sectors to address the high unemployment rates in developing countries such as Uganda. For instance, the study shows that private sector credit to the agriculture sector has a positive effect on agriculture GDP, and that agriculture has a positive and significant employment effect of sector GDP growth in a high growth state. This suggests the need to re-orient credit to the agriculture sector to address the key binding constraints such as limited application of other complementary investments in agriculture, which results in low productivity even when private sector credit is obtained. Therefore, addressing these critical constraints to the agriculture sector is essential for spurring structural transformation, growth, and employment creation in Uganda. Increasing agriculture productivity is essential for increasing farmers' incomes and welfare, as well as for providing the needed raw materials for industry and releasing people from the agriculture sector to other highly productive sectors. Boosting agriculture productivity and growth was at the heart of the green revolution in Asia, which drove structural transformation and rapid growth. AFRIKAANSE OPSOMMING: Geen opsomming beskikbaar. Doctoral 2025-05-20T09:39:07Z 2025-05-20T09:39:07Z 2025-03 Thesis https://scholar.sun.ac.za/handle/10019.1/132030 Stellenbosch University xvi, 148 pages : illustrations, includes annexures application/pdf Stellenbosch : Stellenbosch University |
| spellingShingle | Structural adjustment (Economic policy) -- Uganda Economic development -- Uganda Labor market -- Uganda Economic policy -- Uganda Financial services industry -- Uganda Credit -- Uganda UCTD Ojangole, Patricia Adongo Structural transformation, private sector credit, and growth : implications for employment and economic growth in Uganda |
| title | Structural transformation, private sector credit, and growth : implications for employment and economic growth in Uganda |
| title_full | Structural transformation, private sector credit, and growth : implications for employment and economic growth in Uganda |
| title_fullStr | Structural transformation, private sector credit, and growth : implications for employment and economic growth in Uganda |
| title_full_unstemmed | Structural transformation, private sector credit, and growth : implications for employment and economic growth in Uganda |
| title_short | Structural transformation, private sector credit, and growth : implications for employment and economic growth in Uganda |
| title_sort | structural transformation private sector credit and growth implications for employment and economic growth in uganda |
| topic | Structural adjustment (Economic policy) -- Uganda Economic development -- Uganda Labor market -- Uganda Economic policy -- Uganda Financial services industry -- Uganda Credit -- Uganda UCTD |
| url | https://scholar.sun.ac.za/handle/10019.1/132030 |
| work_keys_str_mv | AT ojangolepatriciaadongo structuraltransformationprivatesectorcreditandgrowthimplicationsforemploymentandeconomicgrowthinuganda |