Monday, July 25, 2011

TAKE ADVANTAGE OF THE "CRISIS"

Many years ago at Singo military training barracks deep in Luwero (at the time) the question was put to a group of 1000 fresh A-level graduates, “Which are Uganda’s cash crops?”.

Drilled in an education system, even then well past its sell-by date, the eager faced young men and women belted out the usual – Coffee, tea and cotton. There wasn’t very much else we were exporting in the early 1990s.

“What about maize, cassava, mangos, beans?”

The point was made. Anything can go for cash. But frozen in our colonial mold as producers of raw materials for western industry we could not see past the usual suspects 30 years after independence.

Last week in an exclusive interview with the Business Vision, central bank Governor Emmanuel Tumusime Mutebile pointed out that Ugandan export receipts had risen more than 13 times in the last 25 years.

As recently as 1997 analysts were projecting that as a result of increasing export diversification, coffee would fall below 50% of our total exports. In 2009 total exports of goods and stood at $1.5b of which coffee accounted for $280m.

Also last week it was announced that Makerere University Technology Faculty’s designed and developed battery powered car was due to be launched soon.

Our car is not the first battery powered car in the world – there are a few thousand in production already, but as a signal of what our scientists can do, it was a potent symbol.

Still wed to the notion that labour is muscle driven we forget or overlook our huge potential as exporters of services and knowledge based products. We think our exports have to be trucked out in containers.

We cannot be blamed because in addition to our pre-independence mindset, we are still firmly stuck in the pre-industrial age.

The selling of our basic education services to the children of the East African Community counts as an export, if we define exports as a foreign exchange earners. More than a decade ago health, financial and IT services were identified as fields in which Uganda could develop a competitive advantage.

The beauty of such services is that they are little affected by the weather, seasonality or disease, like our favourite export crops are. But we have seen little effort in boost the marketability of these services.

Increasingly we are talking about a knowledge economy, where knowledge is a product created by a knowledge worker as opposed to a manual worker. An economy graduates up the scale if more of its knowledge is embedded in its systems and does not walk out the door – or country in this case, with the knowledge in its head, hence the term brain drain.

Last week again there was news of a looming famine in Somalia, Northern Kenya, Ethiopia and Southern Sudan. A lot of it to do with conflict in the area but also massive crop failure as has not been seen in the last 30 years.

Uganda long touted as the breadbasket of the region, is going to feel the pain too, some because of crop failure due to erratic rains but mostly because our own food is going to be in such great demand that we can expect a continued increase in food prices for at least the next 12 months.

This should not be. Our agricultural institutes do some very useful research – ask the breweries, we just seem to have failed to bridge the gap between research and its widespread applicability.

Our difficulty in appreciating the knowledge economy is that it turns traditional economics – the management of scarce resources, on its head. How do you manage a resource – knowledge that is infinite using traditional economics?

The point is that for a country like Uganda – landlocked, underpopulated and poor, we need to make a break with a lot of what we learnt in the past.

Right now we are in the throes of a “crisis”, but there is no better opportunity than a crisis to rejig our way of doing things.

We did it 20-odd years ago with the remodeling of the economy – who would have thought we would buy dollars off the street? This crisis is an opportunity we should not allow to go unexploited.

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