MARKETS QUIETLY CHANGING THE ECONOMY

This week it was reported that Uganda is in danger of becoming the continent’s biggest exporter of dairy products.

According to the report Uganda’s dairy producers are in line to export $150m worth of dairy products which will put them at par or ahead of South Africa whose export receipts have oscillated between $130m and $150m.

This good news on many fronts. To begin with it means that the investments in the dairy industry over the last three or so decades are beginning to pay off. In the 1990s there was a determined effort to dot the milk producing countryside with milk coolers. These would take delivery of farmers’ milk and serve as a collection center for transporters to the processing plants. Milk which was previously fed to the calves or poured down the village paths now had new market.

Secondly, the millions of dollars in processing capacity has more than compensated for the start-stop nature of operations of the previously government owned Dairy Corporation. This has created more demand for milk products.

But what was even more heartening for me to read was that as a result of our own low milk consumption of about 65 liters per person annually as compared to the World Health Organisation (WHO) recommended 200 liters, some producers have chosen to specialise in producing powdered milk or extracting casein, a protein contained in milk and used widely in the health and fitness industries.

"However this burst of activity and in several other agricultural sectors have been spurred by the increasing connectivity in the region, which has pushed Uganda’s trade with East African Community (EAC) to $5.5b last year from $1.5b in 2005...

While greater regionalisation has increased our commercial interactions, as a proportion of total trade it only constitutes 9.4 percent. That is both bad news and good news. The bad news is that we are still locked in the colonial trade networks which mean we trade more with Europe than with ourselves.

The colonial trade networks were designed to extract raw materials from Africa for their industries and us serving as token markets. This network meant for example that we do all our trade through Anglophone Kenya and very little through former Belgian colony Democratic Republic of Congo.

The bias is seen in the transport, energy and ICT networks between Uganda and its eastern and western neighbour.

As a measure of how deficient we are in this aspect, trade with Asia accounts for almost 60 percent of the region’s trade. The same figure for the European Union is about 70 percent.

In both these instances their transport infrastructure is well developed whether road, rail, air or water compared to our in the EAC or in the continent as a whole.

The African Development Bank (AfDB), which has identified this shortfall as an impediment to the continent’s development has committed some resources to bridging the deficit. It said in a recent report it had financed the development of 400 km of cross border roads and a single one-stop border post.

They believe regional trade will be more competitive with continued improvements in transport, energy and ICT infrastructure, lowering and/or elimination of tariff and non-tariff barriers and the harmonisation of monetary policies.

The challenge of course is that our bureaucracies, slow as molasses, out of incompetence, corruption or because they are aligned with powerful lobbies that want to maintain the status quo are clearly not doing enough, fast enough.

That means on one hand there are farmers in the region either stuck with their produce, being forced to dispose of it at a bargain for lack of access to markets. While on the other hand there maybe areas of food shortage that cat be helped once again for lack of access to the producing areas. Needless stress on either side.

"In fact with improved connectivity greater efficiencies can be created around the region. Why should anyone else bother growing matooke in the region when we have the best soils and weather for it in Uganda? With improved infrastructure our banana industry would be able to deliver matooke anywhere in the region. This would allow those areas to focus on what they are best at....

As a region to take this even further we should seriously consider setting up commodity exchanges, where produce can be traded. This will ensure farmers get them most favourable prices available on the market by bulking, guaranteeing quality and as a result lowering the transaction costs of their clients.

For that to work  we need greater volumes of what we are producing.

But for a start the promise is there. All we need is greater urgency in lowering barriers to trade, accelerating the development of intra-regional infrastructure and maintenance of peace and security.