Skip to main content

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)

Labels:

Comments

Post a Comment

Popular posts from this blog

WE NEED A BETTER SOLUTION FOR KAMPALA TRAFFIC

I am sure I am not the only one feeling it. Kampala’s traffic is becoming increasingly unbearable. Even the removal of roundabouts around the city seem to have an opposite effect to the intended purpose of easing traffic flow in the city. Kampala Capital City Authority (KCCA) has an ambitious plan of flyovers, underground tunnels and railway transport, which should help the cause, I hope. The snarl ups that we are coming fast accustomed to, are not only an issue of teeth grinding inconvenience but have a real cost on our economy by hampering and increasing the cost of doing business. A recent World Bank report suggests that as an economy, we are losing about sh3trillion annually due to traffic jams. The losses come in form of delayed deliveries, higher fuel consumption and the health consequences of seating in a smoke filled environment. To put this in perspective this is the combined budget of the health, agriculture and ICT ministries in this year’s budget. Or ...
Post a Comment
Read more

COME HELP BEAT BACK HIV/AIDS

Uganda has made tremendous strides in containing the AIDS pandemic. For some of us who were around in the 1980s and saw the worst effects of the AIDS pandemic, the way the country has contained the disease is not what we had envisaged back then. Ignorance, stigma and lack of drugs surrounding the disease saw thousands die horrible deaths – wasting away, tortured by opportunistic diseases and being shirked by family and a society out fear.  The doomsayers were projecting a major fall in our population, a collapse of the economy and a total breakdown of social cohesion. That the country is still around and fighting back the disease successfully, could not have been envisaged in those scary days of the 1980s when the disease came into the public conscious. Thankfully rather than sweep the problem under the carpet like many of the neighbouring countries, President Yoweri Museveni led a fight back against AIDS that had at its core widespread dissemination of infor...
Post a Comment
Read more

GIVE OUR TRAFFIC POLICE A CHANCE

Last week during an investor interaction   Kampala Capital City Authority (KCCA) officials called on police to stop overriding traffic lights while directing traffic. KCCA argues that the traffic lights are large investment and it makes no sense for police to countermand them. In a classic case of “The importance of the river was not known till it dried up” on Friday the traffic police desisted from directing cars at the traffic lights leading to the worst traffic snarl-up in the city’s history. People were stuck in traffic jams around the city for hours and long into the night. Maybe it was the unhappy coincidence of the traditional Friday traffic and pre-Christmas excitement but without the traffic police directing traffic it was a mess. They made their point. It of course points to the bigger issue of a revamping of Kampala’s road network, which has remained   largely the same since independence but with an exponential increase in cars in the last three...
Post a Comment
Read more

FINANCING OUR ENTREPRENEURS, A CHALLENGE WE CANNOT IGNORE

In recent weeks the issues of financing for business has been in the news, in one form or the other. We have seen the challenge a past minister is facing with having to hang onto his home. The case is in court, so we can’t discuss its merits and demerits, just to say he may have fallen prey to some predatory practices, with the lender skirting dangerously on the edge of the law. Across the border in Kenya a cap on bank lending rates has been repealed. Three years ago Kenya’s parliament passed a law restricting lending rates to two percentage points above the rate at which the central bank lent money. In reaction banks pulled back their lending to businesses, depressing the economy and prompting the reversal. So now banks can “properly” price their loans, often to the discomfort of small and medium sized businesses. The two incidents are related and speak to the availability and cost of credit. In my business career I have benefitted immensely from credit. It is next...
Post a Comment
Read more

WELL DONE UGANDA REVENUE AUTHORITY BUT …

Over the weekend President Yoweri Museveni commissioned the new head office of the Uganda Revenue Authority, an imposing structure that is set to dominate the Nakawa skyline for some time to come. Congratulations are in order to URA for the construction of such an aesthetically appealing building, which I hope wills set the pace for other developments not only in the area but in Kampala and even Uganda as a whole. I know the pride that comes with having completed such a massive build for the initiators and implementors. The new 22-story structure has allowed the tax man to fold back all his offices from around the city back to the head office, a move they estimate will save them sh7b annually. Using simple math the sh140b will pay for itself in 20 years. The move is seen as precursor to a government move to build a ministerial compound in Bwebajja, where all ministries will be relocated sometime in the future. I have seen comments that such actions are evidence that...
Post a Comment
Read more

SOROTI FRUIT FACTORY, A POTENTIAL GAME CHANGER FOR EASTERN UGANDA

On the weekend President Yoweri Museveni commissioned the Soroti Fruit Factory, which promises to change the fortunes of fruit farmers in the Teso region. "According to reports, the factory can process 129,000 tons of fruit annually or the equivalent of 3,225 trailer loads of fruit. There are 8.2 million fruit trees in the region, if each tree produces 80kg, the 656,000 tonnes resultant production will be more than sufficient to keep the factory running well into the future. Upgrades of the plant’s capacity is foreseeable very soon.... The factory’s products – packed juices, are to be sold locally and to the region. The Teso Tropical Fruit Farmers’ Co-operative has complained that they have been receiving sh200 a kg for their produce but have seen a doubling of the price to sh500 a kg by the factory. The cooperative is a 20 percent partner in the enterprise. Government through Uganda Development Corporation (UDC) owns the remainder. The factory is a $10.2mln...
Post a Comment
Read more