ACRES OF DIAMONDS IN THE EAC

The story is told of the man who frustrated with eking a living on his farm, sold it and took off into the world to find his fortune.

After trying this and that with little success and his finances dwindling to a drip, he decided to go back, with the hope that his own may treat him better. When he got back he was shocked to find where his farm once was a thriving diamond mining enterprise.

The moral of the story is that we often miss the opportunity staring us in the face for speculative fortune further afield.

Last week the Private Sector Foundation of Uganda hosted a dialogue on “The status of East Africa community process on investments and job creation”

The event, co-sponsored by the Mastercard Foundation, came with equal part jaw dropping surprise and headshaking despair.

"New entrant Democratic Republic of Congo (DRC) comes with a bounty of gifts, which include the fact that a third of all the world’s copper and cobalt reserves are underground there. We more or less knew that. But when we heard that assuming Uganda exploits its oil optimally we could have an economy by 2050 equal to the current size of the South African economy -- $500b, you had to seat up and pay attention....

The reincarnated East African Community (EAC) has been in existence for the last two decades, while the free movement of goods and services came with the common market protocol in 2010. In this time we have seen trade within the region grow to about 20 percent from a six percent at the turn of the century.

As an example it is reported that at least 80 million youth are unemployed in the region. Unemployed as used in this context means a person who has done paid work in the last week. So the reality is definitely much worse. The Economic Policy Research Center (EPRC) estimates we need to create 120 million jobs to plug the hole.

With a new regional population of about 300m and a combined GDP of just under $300b and the freeing up of the movement of goods and people, job creation should come easier to the region.

The free movement of goods and people will boost industry and services with a corresponding increase in jobs.

However, we learnt that Non-tariff barriers are holding back our full potential. While goods move around largely tax free in the region, powerful interest groups have conspired with their respective states to throw up other barriers to trade, to protect their own interests be they their own inefficient industries or importation deals from outside the community.

So suddenly your maize or eggs don’t meet their health standards, never mind the market for our eggs have been growing in the last few years. Or your milk, it is suspected to cheap to be locally produced, you must have sailed it in all the way from Australia and smuggled it in via the DRC or how is it that now a truck can only make two round trips a month to the coast now when in 1977 it could do two round trips in a week on roads that were in worse shape than they are now.

It would be easy to dismiss these as teething pains of the young community, but we need to nip them in the bud before they become entrenched in our way of doing things.

Besides that, some people have made the argument that quality of the population is lacking, be it in terms of purchasing power or capacity to actualize our potential. But its probably a chicken and egg situation, do you open up to trade and raise incomes and therefore the quality of your people or do you wait to improve the people’s quality and then the trade and increased economic activity follows? I think it is the former rather than the latter.

That being said the respective government really need to be more proactive in improving the quality of the people by rejigging the education system, improving health care and other services.

Making entrepreurship part of the curriculum on day one and business support services to existing businesses, may make the difference between Ugandans benefitting maximally from the new opportunities or we may be in danger of providing only office messengers to the region.

On an intellectual level we know our acres of diamonds are under our feet, but the will to do what is necessary to unearth those diamonds seems is slow in materializing.