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Uganda’s President Yoweri Museveni has said that a major thrust of his government’s new export-led growth strategy is to stop the massive loss of value to the outside world through exports of primary commodities.

“When you produce and export unprocessed commodities you lose value at a massive scale,” he said recently in a keynote address to a pre-consultative group forum at the International Conference Centre in

  • Kampala.

 

The theme of the forum was, ‘A framework and imperative for Uganda attaining emerging market economy status in 15 years’.

Illustrating the importance of adding value to products, Museveni said that the people of Thailand get more money from cassava, which they turn into final products like starch, than Ugandans get from exports of huge volumes of unprocessed coffee. Uganda is the world’s fourth largest producer of coffee beans.

He said the Ugandan shilling is losing value primarily because Uganda is importing much more than it is exporting to regional and global markets. As a result dollars are needed more than the shilling because exports bring in very little foreign exchange earnings.

Museveni also emphasised three other issues: the importance of the market as the ultimate stimulus for economic growth, the role of the private sector in export-led growth, and the need to mobilise the grassroots traditional sector to produce for the market.

“We need to channel some of the private sector response into the export-oriented businesses. These areas are more difficult to invest in so let’s get investors who are willing to come here,” he said.

In a clear call for a stronger public-private partnership Museveni said, “We produce abundant materials. If we concentrate on products that don’t use imported materials we can be competitive. The whole government system must understand that.”

Underscoring the primacy of markets in private sector-led and export-oriented growth Museveni said it is “the need for markets, the self-interest of the people, the desire to sell what you produce in order to get money” that drives international trade.

A major part of the problem with Africa, he said, is that internal markets in individual countries are small, making it imperative to talk about regional and global markets because “that’s where the future is”.

Museveni urged Ugandan producers to tap vast markets like the US$11tn US market by moving away from products “like jerricans and plastic plates that people in America don’t buy”.

“If you go into the textile industry, you get a product that is demanded by the international market. We consume about 180mn metres of textiles in Uganda worth about US$500mn. That is not bad money. But it is not real business. Aim at the big international markets” he told participants who included members of Uganda Manufacturers Association.

Museveni again voiced his displeasure at the continuing importation of mivumba (second-hand clothes), which he strongly criticised for inhibiting the development of Uganda’s infant textile industry. He justified the tax increase on mivumba, because local textile producers have potential to create jobs and take advantage of the tariff-free and quota-free opportunities the AGOA market in the US had opened up for eligible African countries, including Uganda.

On areas where Uganda could have a comparative advantage, Museveni cited the agro-processing sector whose global market three or four years, he said, was around US$1.2tn, of which Africa earned just US$13bn or 1%.

Omwony Ojok, the state minister for economic monitoring, who chaired the conference, said the rate of Uganda’s economic growth had declined from around 10% 17 years ago to about 7% a few years ago to the current 5.5%.

He said that although 5.5% is still high compared to the rates in other countries “it cannot be a source of jubilation”. Characterising priorities of donors (who are supporting Uganda’s development process) as “shifting”, Ojok underscored the need to build local capacity.

Domestic capital formation, he said, would transform the economy from a state of dilapidation to a point when Uganda can join the group of emerging market economies.

“The export-led strategy will only succeed if we focus on two areas: the private sector must be considered a strategic and lead sector in this new strategy, and Uganda must find its area of competitive advantage,” he said.