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Museveni misread the meter on the Ugandan economy

By Charles Byaruhanga

On October 9, 2009, Uganda celebrated her 47th Independence Anniversary. Most opposition politicians did not attend because national celebrations have turned into NRM functions, where the party functionaries dress in yellow colours and dry banana leaves to signify support for the nth term for President Museveni. In addition, the content of President Museveni’s message has not changed for several years and includes blaming the opposition for the shortfalls and failures of his government, the “commitment” to fight corruption and statistics intended to portray that the NRM government has registered an impressive economic growth.

What intrigued me most on the Independence Anniversary occasion at Kololo Airstrip was that the President of an agrarian economy whose comparative advantage is in agriculture applauded as healthy the decline in contribution of agriculture to the country’s Gross Domestic Product. While he acknowledged that agriculture remains the primary employer of about 70% of the population in rural areas, he said the economy has been transformed into a modern one driven by the service and industry sectors with a momentum of growth compared to economies of India and China.

President Museveni, like other proponents of the “abandon agriculture” school of thought, thinks that reliance on growth in the industry and service sectors to drive development is more likely to be successful in promoting economic growth. However such growth will only be in a limited number of locations and among few people, leaving out majority of areas and people undeveloped as is the case with Uganda. This cannot achieve “Prosperity for All” because available literature shows that growth in agriculture is an important ingredient that connects economic growth to the poor.

In an agrarian economy such as Uganda, agriculture plays a strong role in reducing poverty. No country has been able to sustain rapid transition out of poverty without raising agricultural productivity. By leaving the sector to lag behind other sectors largely due to poor farming practices, dependence on rain-fed-agriculture and poor transport and distribution channels, majority of the population remain poor. This explains why the gap between the haves and have-nots has grown wider and poverty has become rampant despite the much “hyped” economic growth because agriculture has been mismanaged by the planning authorities, inefficiencies and high corruption in the government.

The industry and service sectors alone cannot bring prosperity without simultaneously transforming the agricultural sector. Available literature strongly support improved agricultural productivity as a critical strategy to reduce poverty and food insecurity in Uganda.

In an economy where agriculture is the main productive sector, rapid growth will not occur unless agricultural productivity improves. Agricultural growth is fundamental for successful growth for it increases food production to prevent rising prices and wages from undermining industrial development.

The most compelling evidence comes from comparing Africa and China. China’s poverty rate fell from more than 50% in 1981 to about 20% in 1991 and 5% in 2005. In 1981, China’s poor outnumbered Africa’s by almost 4:1 yet by 1996, Sub- Saharan Africa had more poor people than China. Between 1991 and 2004, 500 million Chinese moved above the poverty line while 130 million more Africans plunged below the poverty line. Agriculture can therefore be a lead sector in overall growth and an effective route out of poverty as it was in China in the last 20 years.

In 1960s, Uganda was one of the most promising economies of Sub-Saharan Africa. It is now among the 20 poorest countries in the world with per capita GNP of US$ 279 compared to that of India and China of US$ 724 and US$ 1736 respectively. Increase in economic growth in China began with a sharp rise in GDP in the agricultural sector and has enabled them to reduce poverty to less than 3%. It is intellectual dishonesty on our part to continue presenting statistics, which cannot be translated into real welfare of the population, as a great achievement.

As a progressive rancher, President Museveni has become one of the richest in Africa (as reported in the Orumuri newspaper of the week ending October 26, 2009). He should champion agriculture because of its multiple effects on the wider economy instead of emphasising industrialisation at the expense of agriculture and national wealth at the expense of equitable welfare of majority of the population who cannot participate in economic growth without increased agricultural productivity.

The agriculture sector creates jobs and incomes and helps the rest of the economy to grow by boosting demand for local goods and services. Although no poor country has successfully reduced poverty through agriculture alone, none has achieved it without first increasing agricultural productivity. Stagnating agricultural productivity slows wider economic growth and exacerbates poverty.

My appeal to NRM leaders is that unless priority is given to spending on agriculture and infrastructure and services which support private investment in agriculture, poverty will increase and we will achieve prosperity for a privileged few. Government should extend short term seasonal credit to the poor farmers to help them buy land to increase their agricultural productivity.

The writer is a management consultant and policy analyst

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