Liechtenstein is a small country in the middle of Europe. It covers an area of 160 square km or smaller than the size of greater Kampala; has population of about 40,000 a tenth of Kampala’s population.
Nothing to write home about, that is until you discover it
has the highest per capita GDP in the world of $180,000 by some accounts. The
World Bank places it behind only Monaco at $234,317.
For the purposes of this article, we will use Liechtenstein.
The net sum of the Liechtenstein economy is to service the bigger EU $17trillion
market. They are a tax haven, offering low tax rates for individuals and
companies and are a tourism destination. Their central location means people
can live in Liechtenstein and commute to work all over the EU. Or better still
register their companies in Liechtenstein and operate all over the EU.
The moral issues of providing tax haven services aside, Liechtenstein’s people would not be as affluent as they were if they were situated where the Central African Republic (CAR) is.
The point is you need to attach yourself to big markets like Liechtenstein or Mexico or Hong Kong if you want progress.
A few weeks ago the US announced it was suspending Uganda
from the Africa Growth Opportunities Act (AGOA), which allowed free access of
our goods to the largest economy in the world duty free. They said they were
kicking us out along with Central Africa republic, Gabon and Niger over human
rights issues. In our case the passing of the Anti-Homosexuality bill earlier
in the year.
The irony of it is that the law was passed through a
democratic process, which they are always encouraging us to do, and therefore
by their action they want us to subvert the will of the people.
We are damned if we do, and we are damned if we don’t.
The bigger story though is that while we do not neighbour
the US, this access to the biggest economy in the world, has been open to us since
2000 and in that time period we have grossed exports of about $200m or about
$9m, with the biggest export receipts coming in last year.
Kenya on the other hand grew exports under AGOA to $525m in
2020 from $29m in 2001. If they suspended Kenya there would be a greater impact
on their economy than us.
"The bigger story is then is how we failed to take advantage of this giant market when we could and probably explains why we struggle to take advantage of other markets in the region and beyond...
A friend of mine thought he could supply coffee to South Africa.
When he got in touch with a major supermarket chain after looking over his business,
they offered him space on the shelves of the 14 stores in Cape Town. They
wanted him to supply 45 tons of his coffee every two weeks, but in addition
have 45 tons constantly on hand in their stores, to maintain continuity of
supply.
The logistical and financial demands were such that he had to
go tail between legs back to them and give up the offer. To just meet those
basic requirements would require he scale up his operations at least fourfold,
something he did not have the capacity to do on his own. You can argue that
with a bit more sophistication he would have got partners to come in with him
on the deal and who knows.
To exploit AGOA we needed to do much more than we saw
happening around us. But maybe we are not to blame for criminally squandering
the AGOA opportunity when we had it?
Let us not deceive ourselves that we will develop, that is
manage a reasonable standard of living for all Ugandans on our own steam. We
will have to trade. The formula has worked for the east Asians, Europeans and
even the US, so who are we to think we can be any different.
Our technocrats and politicians need to be burning the
midnight oil, plotting and scheming on how to break into rich markets. We have to
look up and down the value chain to see how we can produce multiples of
whatever we are producing now; investments in research will be critical, how we
can improve our communications and transport infrastructure –the development of
rail and water transport must be treated with greater urgency and all the supporting
services in trade negotiations, finance, marketing we will need.
We have worked very hard to get our East African Community
up and running. There is still a lot to do, but it can give us a taste of the
work we have to do.
The Kenyans, Tanzanians and Rwandans refusing us to prosper
by putting non-tariff barriers in our way is standard for any markets and
require a certain kind of skill in government we seem to be missing.
So beyond just producing stuff we need to be able to process, distribute, grow and protect those markets...
If we can only take a break from trying to steal public
resources we might be able to get this done.
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