Monday, March 18, 2013


Last week Ugandan Tutus Mawano emerged on of three winners in a continental computer applications innovation competition.

His innovation “Ffene” is a low cost business management application aimed at helping small business owners to file better books of accounts and monitor the business remotely.

As the demands of society increases productivity, the amount you extract for every unit of input, has to increase too.

So if you were previously man and wife subsisting off a piece of land, when the children come along, you have to find a way to extract more from the piece of land to sustain all of you.

Innovation is critical to any developing and growing society. Innovation is what will allow you to extract more and more value from less and less of the natural resources available.

Innovation is built on knowledge. The more knowledge a society has the more innovative it can be.

An interesting article “Ideas trump resources when it comes to city growth” published in “The Atlantic Cities” Magazine last week extended this same point further in a way that is relevant for Uganda.

The article was a commentary on a previous article that had noted that, currently in the US the parts where the economy is on the rise is the states or cities based on extractive industries like mining and oil drilling.

“The real winners of the global economy have turned out to be not the creative types or the data junkies, nut the material boys: countries, states and companies that have perfected the art of physical production in agriculture, energy and , remarkably, manufacturing, ” one David Brooks argued in the New York Times.

However the rebuttal in Atlantic Cities argued that  its not resources but ideas that powered advanced economic growth noting that “Large endowments of natural resources and of extractive industries can pose a powerful barrier to knowledge accumulation, educational excellence and advance economic development,” an apt description of the ‘resource curse’.

A study which contrasted cities with and without extractive industries showed that the cities with extractive industries tended to have lower levels of entrepreneurship and lower growth in economic activity.

However they always are the exceptions to the rule, countries or cities which have extractive industries but have shown progress in the three key indicators of regional economic development --  GDP per capita, average wages and per capita income.

Countries such as Canada, Norway and Australia have done well to exploit their resources for sustainable growth in sharp contrast to Russia, Venezuela and the Middle East the article says.

They have done this by investing their windfalls on building “institutions and social structures which harness knowledge, accumulate the human capital, and generate the innovative capacity that powers economic growth.”

The articles points to Houston in the US and Calgary in Canada as examples of the cities that have exploited their natural resources well. Houston has developed a cluster of high value added technology oil related industries, to the point that it is the home of a large number of technology workers and software engineers specializing in oil. Calgary has built itself up as a knowledge and as a result is the most affluent city in north America.

We have already earmarked our petrodollars for infrastructure development as a first priority ploughing into social services, research and innovation would guarantee not only sustainable development but that more people will enjoy the benefits of this finite resource.

For starters there is no reason why Uganda cannot become the hub of agricultural research in the region, especially since agriculture will still be an important sector long after the oil has dried up.

They say don’t count your chicken before they hatch, but in the case of money you need to know how you will spend before you get the income. Otherwise the  when our oil dollars turn up we will be like pigs at the trough and when its all done we will look back and wonder where it all went – Nigeria style!

No comments:

Post a Comment