Uganda’s economy for 2010
and going forward, 2011 has not been rosy. The economy recorded weaker growth
of 5.1% in 2010 because of receding aggregate demand, mainly in private consumption,
and falling production for traditional exports, in particular coffee. Growth in
2010 was primarily driven by the telecommunications, financial services and
construction sectors, while the services and agriculture, forestry, fishing and
hunting sectors, which account for 54.4% and 24.8% of GDP respectively, showed
weaker growth.
For the past 10 years, the declining GDP share of the
agriculture sector has been the result of low productivity, limited value
addition and lack of commercialisation. This is where deliberate investment
should go! External factors (Global price rise of crude oil, blent and gas,
imported inflation etc) aside, the major fault-line that explains economic
perils we are experiencing as a country lies’ squarely in the near nose-dive
fall in agriculture productivity! This got us to unprecedented food inflation of
about 44%! This further drove average inflation to over 16%! Agriculture
commands an ecosystem of feed forward and feedback linkages that drive key
sectors of the economy. It therefore holds, that agriculture productivity and
value addition, constitute the Holy Grail for our long term economic stability
and transformation.
I have suggested before, just like Ministry of health distributes
Mosquito nets across the country to contain malaria, the ministry of
Agriculture working with public sector agencies like NAADS and Private sector
agencies like Uganda National Farmers Federation, Uganda National Chamber of
Commerce and Industry, Private Sector Foundation and existing cooperative
societies, can purchase and directly distribute fertilizer (Urea and NPK) and
highbrid seed to all farmer households at a hugely subsidized rate. Bingu Wa
Mutharika of Malawi did the same, notwithstanding shrill voices and outright
objections from myraid groups that included IMF, World Bank, Adamsmithian
economic bureaucrats and analysts. His quote
on 4th June 2008 “Enough is enough. I am not going to go on
my knees to beg for food. Let us grow the food ourselves” captured the decision
moment very well and a green revolution began in Malawi. Uganda, to even do it
more sustainably, we should invest in production of fertilizers here at home.
Uganda, we can do it.
Where will the money to do the above come from? Cutting public
administration costs (austerity measures), creating a parliamentary oversight on
activities of Bank of Uganda, harnessing
citizens (baraaza’s are an important entry to citizen action) to monitor
service delivery and promote budget discipline (thus curtail hemorrhage of
resources through corruption) and hedging our oil resources to secure a
stimulus package will in a very short -while deliver resources we need to
revolutionalize agriculture productivity, revive competitiveness and
transformation the economy.
We can start with an agriculture stimulus package. Why is it
important? For farm commodity prices to be kept deliberately low to help ensure
a cheap food supply, and curtail food inflation, the cost of production must not outstrip the sales price of the
crops. So if you want farmers to stay in business, you have to subsidize them
to keep that cheap food. Reality is that the cost of producing food has to
be paid or no one can produce it. So it's either paid by the consumers or paid
by the government. Therefore, government stimulus can keep production costs
low, drive bumper harvest and have consumers enjoy affordable and samptuous
meals! Remember, food security is the first line of security for any country. For
countries like Russia, their cereal vaults never run dry!
Looking deeper, strategic
communication and actions that restore confidence in the current economic
performance and future prospects can restore confidence and hope to people
(Human behavior is important in economic
performance of any country). This will in turn mitigate speculation and halt the current mad rush for the United
States dollar or the green buck or Benjamins as it is fondly called in the
United States. Combined with interventions that stimulate the production of
goods and services for local market and exports, investment in productivity and
storage (grain vaults) and use of buffers as a monetary tool: Such actions will
sprout our economy again. External factors like Greece bail out that could
stabalize the Euro zone, may have a hopeful effect on currency market in
Uganda.Mark you! There are no shortcuts to this. Its only what we have that can
save us from a reccession. Solution: Hedge
our national oil resources, secure money to beef up our reserves to over six
months of imports and deliver a stimulus package to save our economy. Period!
Morrison Rwakakamba
Chief
Executive Officer
Agency
for Transformation
Re-imagining agricultural and
environmental policy
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