While we were fixated on our slumping shilling, around the world another trend with far reaching implications for our country and continent was taking hold.
The US economy is finding its legs again, after the global financial crisis.
The same cannot be said for the EU, which looked into the abyss a few days ago with the near exit of Greece from the Euro zone. China is finding its economy succumbing to gravity – the scramble last week to avert a stock exchange crash cost more than $120b (sh420trillion), was ominous. And just when we thought we had heard it all the International Monetary Fund (IMF) has warned Japan that its debt burden about $11 trillion or about thrice the size of its economy, is unsustainable.
Apart from making for good television, these coincidences have conspired to send commodity prices – oil, gold, coffee and others falling through the floor.
"The strengthening dollar is causing a drop in world prices, as is the failing demand in the EU, China and Japan...
Already casualties are all around us.
Nigeria is struggling to balance its budget with the price of crude oil falling to $48.62 a barrel by the time of writing this story. To balance its budget a barrel of crude oil needs to be at $122. The other giant oil producer Angola have s lashed the budget by a third and has had to go, cup in hand to Beijing to contract another $25b in oil backed loans while rescheduling other debt due to the second largest economy in the world.
At home, coffee exports in May fell to $35.91m from $30.58m from the same time last year, part of the reason the shilling has fallen 27% since the beginning of this year.
A combination of political expediency and post-colonial interference means Africa has suffered a lot of civil strife, this and the limited access for manufactured goods has failed any projects to capture more value for our commodity exports.
Clearly the chicken are coming home to roost.
We will rue missed opportunities to build the capacity to diversify our economies when the going was good, when we chose instead to splurge on vanity projects and high living.
Despite our falling shilling Uganda is actually more diversified in its exports than Nigeria or even Angola, which both rely on more than two-thirds of their revenues from a single commodity.
This latest global crisis has exploded a few myths. That the EU is past its teething pains and is a cohesive whole. That China’s economy will continuing growing at prodigious rates well into the future, carrying us all along. And that there will always be demand for our raw materials.
This is the umpteenth wake up call for Uganda and countries like ourselves.
"We need to reconfigure, our infrastructure, which is all targeted at exporting out of the region; we need to reconfigure our production, which again is targeted at western industry and we need to reconfigure our thinking, which looks outwards rather than inwards, for ideas and inspiration...
Luckily we have the East African Community (EAC). During the global financial crisis of a few years ago a slump in demand for our exports to the EU, was cushioned by an increase in trade within the region. It helped too that the South Sudanese couldn’t get rid of their dollars fast enough.
Improving trade through better infrastructure, less red tape and a focus on our competitive advantages, could insulate us much better in coming years from the vagaries of the world markets.
But beyond that internally we need to run mean and lean operations. We cannot go along subsidising the corrupt at the expense of the majority and expect to be nimble enough to adjust to a rapidly changing global economy.
If we are not utilising the full potential of our human resource, it’s because the money for building infrastructure, financing social services is being gobbled up by a handful of people. The net effect of this is that the majority are not being provided the tools to climb the social ladder – quality education and health care and good infrastructure, as a result in a time of crisis our response is not as good as it can be because all hands cannot be on deck.
When the US faced down the global crisis they looked to themselves to revitalise their economy, essentially reorganising their economy, giving relief to the worst hit and everyone pitching in the best way they could. Of course there were casualties. And of course there are people who were hard done.
But oftentimes these people were going along for the ride when the things were good and not adding value to themselves or taking advantage of opportunities to do so and when the tide went out they were found to be swimming naked.
They say you should not fail to take advantage of a crisis. This is our crisis let us not let it go unexploited.