Tuesday, April 18, 2017

BUY UGANDA, BUILD UGANDA, ABOUT TIME

The recent announcement by the trade minister Amelia Kyambade that government is going to push a bias towards Ugandan goods and services is a timely one.

Currently Uganda is in the midst of an economic slowdown triggered by among other things, recent drought, an emphasis on huge infrastructure projects, delays in the development of the oil sector and plugging of certain leakages to government funds, which facilitated corruption.

One of the challenges for the Ugandan business is one of little internal demand for locally produced goods, which is further exacerbated by the free movement of goods and services through the East African Community (EAC).

"And because we are not producing, we are not creating jobs at a fast enough pace, out terms of trade are worsening as we continue to export raw commodities whose value fluctuates widely from year to year while we import higher value goods, a situation which does not favour our shilling nor our individual standards of living...

The objectives of Buy Uganda, Build Uganda (BUBU) include that in the next five years 20 percent of all government procurement by value should be sourced locally and that the 50percent of all shelf space in the market should be dedicated o Ugandan goods.

If executed well this is a useful initiative.

Government is the biggest client of any single group. A commitment by government to direct it’s sh24trillion budget towards production it can have a ripple effect through the economy.

But first our producers must produce.

Barely 20 years ago Vietnam was just making up the numbers in the world of coffee exports.
But beginning at the end of last century Vietnam’s coffee production jumped. They are now second only to Brazil as coffee producer, sending more than 25 million bags to market last year.

Uganda coffee exports have grown to just under 4 million bags annually over the last 20 years.
Vietnam were able to ramp up production by doing away with collective farms and letting the private sector play a more central role and in strategic government interventions especially in the provision of inputs and extension services.

That aside a sizeable amount of Vietnam’s coffee is consumed in-country and through their own initiatives have seen its coffee take first priority over other coffees in restaurants, schools and government offices.

"We like to talk about industrialisation but 50 years into our independence there is little we produce on an industrial scale. The BUBU initiative may be the kick we need to get off our backsides. The initiative if executed half decently should see government beefing up demand for our local products, which would have to scale up production....

The point is that to talk about industrialisation while not organising production means it will continue to be a pipe dream. And we are not even talking about huge land holdings being put under coffee. There will be a few farmers who can manage huge plantations but by increasing the productivity of our small holder farmers, who currently harvest about half a ton per hectare, well below their farms’ potential then the benefits of increased production will be more widely spread.

In business the effectiveness of one’s execution will depend on the human resource you have at your disposal, efficiency of the operations and the effectiveness of your strategic process. It wold not be stretch to say we are deficient as a country in three areas but we are particularly bad on strategy. 

Human resource is the essential ingredient but once your strategy is lacking or non-existent there is really nothing you can do about marshalling the other two components.

It is heartening to see in the coming budget government has not only earmarked funds to hire more extension workers but has also scrapped VAT on extension services. A lot more has to be done to make possible affordable agriculture finance, robust agro-processing and export promotion incentives.

Sticking with coffee, Brazil the world’s biggest producer of coffee – it produces three times as much coffee as Vietnam is so invested in the crop because of the ripple effect through the economy. It not only exports bean, but also has developed its own coffee brands that compete favourably at home and abroad. But Brazil is also on the cutting edge of coffee research and development which not only means they will always be increasing the productivity of their farms but has spawned alternative uses for the aromatic bean – from cosmetics to pesticides to fertilisers and even military applications.


All these are jobs from maximising the potential of one crop. Now imagine the magic we can conjure from all the crops we can produce in this country?

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