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A SHIFT AWAY FROM AGRICULTURE IS CRITICAL FOR UGANDA


Anyone who has half a stake in this country would be a keen observer of the economy and the direction it is taking.

In the last three decades the economy has shown strong growth, only slowing to overcome bad weather, a global financial crisis or unrest in the region.

Compared to when I started out in business, it has become a more liberal economy, with individual initiative being rewarded more and more. While the economy is still dominated by the informal sector, the formal sector is growing annually.

But the biggest shift in the economy has to be the reduction in agriculture’s share of the economy from more than 80 percent to about 25 percent today.

This has happened despite the leap in the production of everything from bananas to coffee or from milk to maize. What has happened is that more of the economy – though not nearly enough, has been taken up by industry, construction and services.

This is how it should be and in fact, more work is needed in shifting this balance even further away from agriculture.

We should do away with agriculture all together. No. In fact we need to produce more, but more efficiently.

At the end of the Second World War 30 million families relied on agriculture for a livelihood a number that has plummeted to about three million today. But the US is still the largest exporter of agricultural produce in the world. And yet agriculture only comprises one percent of that country’s GDP.

In fact agriculture can serve as the stepping stone as it has done everywhere else.

Countries which have industrialised have first taken care of agriculture and more specifically they have ensured food security. They have done this by improving the productivity of their farms through improved farming practices – the use fertiliser, irrigation and improved genetics.

The surpluses they have produced have been processed and stored for their own use or exported to other countries with deficits.

To improve efficiency these countries have mechanised their agriculture, which has meant less labour needed in the fields, which has led to consolidation of small holdings. The former farm hands migrated to the cities to man industry.

This is the development trajectory we must follow, in fact accelerate, if we are to see improved living standards for all Ugandans across the board in our life time.

Unfortunately we do not have the luxury of time. Sequencing is not an option. We are going to have to do many things at once.

A lot of work is being done on infrastructure development. Our transport, energy and ICT infrastructure are considerably far behind where they have to be to meet our development ambitions.

Good infrastructure is critical for ease of doing business in any economy. It means goods and services can get around quicker and people can be more productive.

In addition we need to work on our soft infrastructure, the laws and institutions that we operate under. We not only have to bring them up to date but we need to commit to executing them transparently and quickly.

In anticipation for the shift towards industry and services we need to reskill the labour force with more relevant skills than the rote learning they got in school a higher investment in skill training centers will be crucial.

Traditional economics emphasises the play of land, capital and labour as the factors of production to which can be added entrepreneurship, the ability to manipulate the above mentioned factors to deliver goods and services.

Entrepreneurship is a skill that can be taught and nurtured by mentoring. A critical skill for our economy.

Recently when renowned economist Professor Sir Paul Collier was in town at the invitation of the Bank of Uganda. He said one of the key things that would help transform this economy is the development of modern companies.

By modern companies I took him to mean, companies that are well set up, have strategic visions and 
have the potential to compete on the world stage.

My point is this, that while we need to shift more resources towards agriculture, it is advancements in the other productive sectors – industry and services, that will generate the jobs and raise incomes all around.

(JULY 2018)

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