Monday, October 31, 2011


Local businessman Andrew Rugasira is in the US hawking his coffee, trying to infiltrate the distribution chains of the largest consumers of the beverage in the world.

The US has 150 million coffee consumers who between themselves put down 400 million cups daily as their contribution to the $20b market. To put this in perspective all the economic activity in Uganda amounts to just over $17b annually.

Last year Good African Coffee (GAC) -- Rugasira’s company, made its first tentative steps into the American market by signing some distribution agreements before earlier this year beginning to distribute via the internet.

His coffee is now sold in Jewel and Meijer supermarket chains around the US, which between them have nearly 400 stores.

Leveraging the African Growth Opportunities Act (AGOA) as well the growing Fair Trade movement, GAC may have hit on a way to get a foot in on the gargantuan American market.

Fair Trade is a social movement, which seeks to promote better prices for producers as well as promote socially and environmentally sustainable enterprise.

Our export commodities are a hangover from our colonial times. In Uganda’s case Britain got us growing coffee, cotton and tea to supply their industries. Since the larger market and better infrastructure was at home it made economic sense to ship the raw materials back home for processing. After independence British industry saw no need to change the status quo.

The net result of this is that British industry carved out for itself the more lucrative part of the value chain – processing, marketing and distribution leaving the labour intensive, low paying, growing and harvesting of the crop to Ugandans. This of course applies to all past colonising nations.

After independence the ideal situation would have been for the former colonies to start processing their own raw materials and sell these to the west, but it never happened. The west threw up barriers to trade that made it near impossible to export processed goods to them. So we find ourselves 50 years down the road still exporting raw materials.

In recent years things are changing with a realization by western populations that the situation is not sustainable and also due in no small measure,to the threat of China’s insatiable demand for the same raw materials. Such initiatives as AGOA and the European Union’s Everything But Arms are being implemented.

However despite the more than a decade of AGOA the benefits to Uganda have been minuscule.

To take effectively take advantage of the opportunities that the American market present will take more than restless spirits like Rugasira banging on doors.

To penetrate the western markets we are going to have to compete as a nation, gear our economy towards penetrating foreign markets.

We will not be reinventing the wheel.

Columbia’s world famous Juan Valdez Café started out of the desire of the country’s farmers’ cooperatives to win more value for themselves. Through increased production, improved quality and government support in tax concessions and marketing support their coffee is now a world brand touted as “the richest coffee in the world”.

Taking from Columbia, a national strategy would also provide for efforts to nurture and develop supporting industries in processing, distribution, marketing, finance and research. And to make it all sustainable this process should be implemented largely by the private sector.

Of course this can be overlayed over any industry in which it has been established we have or can create a competitive advantage -- all other agro-processing, tourism, education, health, ICT and financial services and hydro-electric power generation.

We have gone as far as we can on the laissez faire approach, where government only bothers itself with providing a sound macro-economic environment and allowing business to sink or swim as it pleases.

A lack of strategy – or execution of strategy, sees us now without power to drive industry, with a fledgling railway and water transport sector and serious deficiencies in our research and development capabilities.

If we had better planning Rugasira would not be our lone ranger taking on America and the world alone, but would be part of a battalion – ok maybe a platoon, of similar minded entrepreneurs from agriculture to education and ICT, modern day barbarians at the gate of the western and regional economies demanding to be let in.

It is not a farfetched vision, we just need to put in a little thought and application to set the ball rolling before it takes on a life of its own and runs on its own impetus.

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