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President Yoweri Museveni has outlined three key strategies aimed at fostering profitable trade relations between Uganda and the European Union (EU).

Museveni on Wednesday, March 6, 2204, made a pointed appeal for collaboration at the ongoing third Uganda-EU Business Forum that is being held at Speke Resort Munyonyo, Kampala.

Held amidst the cool breezes of Speke Resort Munyonyo on the shores of Lake Victoria, the high-powered event is witnessing Ugandan and European businesses sealing lucrative deals.

Museveni on Wednesday, March 6, 2204, made a pointed appeal for collaboration at the ongoing third Uganda-EU Business Forum that is being held at Speke Resort Munyonyo. (Photo by Mpalanyi Ssentongo)

EU ambassador Jan Sadek, who is the main convener of the forum set the ball rolling before President Museveni gave his speech.

Amb. Sadek confessed that it was a spectacular moment for the forum, as one would think that the forum was being held at one of the seven wonders of the world. The summit attracted over 3,700 participants taking part both physically and online according to Evelyn Anite, the State Minister of Finance for Investment and Privatization.

According to Sadek, the high-level forum themed: Boosting Trade and Investments: What can Uganda gain from the Global Gateway?, serves as a platform for collaboration between Ugandan and European businesses and government representatives.

President Museveni, addressing a gathering that included EU ambassadors, and groups of investors from across the EU which include France, Germany, Netherlands, Ireland, Sweden, and Poland among others, emphasized the need for "dialogue, not political chauvinism".

According to Museveni, the idyllic lakeside setting and focus on business deals suggest a shift towards economic partnership.

Museveni started his address by alluding to three strategies that make an enterprise make profits. And he noted that the higher the profits the better.

“Therefore, when we are talking about businesses, we should look at the level of profitability of businesses in this part of the world, compared to Europe, compared to Asia, and other investment destinations. I think Uganda Investment Authority should be able to give you those figures,” he said.

What are the profitability rates here, compared to other places, Museveni asked, adding that to make a profit, three elements are needed. Number one, he noted, “A producer of a good or a service. After you get a good or a service, the next challenge is to get a consumer-somebody who buys what you produce,” Museveni said.

Unfortunately, many actors, he said, still don’t remember the history of the evolution of the social systems currently available.

For instance, he underlined that “if you take the last 600 years of the human race to know what was happening and how we got all sorts of figures who had different ideas. If you take for instance Europe, from the time of the renaissance we had all sorts of thinkers who believed in Bullionism”.

Bullionism is an economic theory that defines wealth by the number of precious metals owned. According to Museveni, bullionism is an early or primitive form of mercantilism and a practice dominant from the 16th to the 18th centuries that emphasized the importance of accumulating precious metals, such as gold and silver, as a measure of a nation's wealth and power.

Ambassadors and Heads of Missions representing different countries in the European Union (EU). (Mpalanyi Ssentongo)

President Museveni noted that some of the countries that took the bullionism line did not end up well. Then, he mentioned of the other group of thinkers in France called physiocrats.

These people, Museveni said, believed that agriculture was the most important thing. This economic theory was developed by a group of 18th-century Age of Enlightenment French economists who believed that the wealth of nations derived solely from the value of "land agriculture" or "land development" and that agricultural products should be highly-priced.

In 1776, President Museveni said a man called Adam Smith wrote a book that helped people to think clearly.

In the book, the author gives an example, “look at me! I am having my breakfast, however with this breakfast I have bread made by a baker, then I have meat that was sold to me by a butcher, and I have beer from the brewer, then he said all these people enabled me to have breakfast.”

The lesson, Museveni narrated is that the suppliers of Adam Smith’s breakfast did not love him, but loved themselves, and because of that each one of them pursued the area they knew best but, in the end, provided what Adam Smith needed.

In the end, Museveni said this is how Adam Smith helped the world to understand the importance of the private sector, free enterprises, the importance of specialisation, and the importance of exchange or trade.

This, Museveni said, helped Europe and the rest of the world to know where wealth comes from. He said Adam Smith’s book was about understanding the source of wealth.

When the question of who can reliably create wealth was answered, Museveni said another question arrived and was unfortunately not answered.

Along the way, Museveni said Karl Marx also came in in 1848 with a theory that had some good points but also confusion.

He said that Karl Marx fronted the idea of labour as the most important factor of production, which Museveni said was only partially right and not wholly.

“Because if you only think of labour and forget entrepreneurship, capital, natural resources, then you are only partially tackling the issue of wealth creation,” he noted.

President Yoweri Museveni visiting the exhibitors stalls during the ongoing third Uganda-EU Business Forum that is being held at Speke Resort Munyonyo, Kampala. (Photo by Mpalanyi Ssentongo)

He said that even then, Adam Smith and the others had not envisioned another question, the reason why in 1929 the capitalist system collapsed.

“What was the problem? It was the issue of aggregate demand. If you produce products and no one buys then you get into a crisis and this is what awoke thinkers to know that it’s not only the production of goods and services, but also the question of demand-the buyers,” he said.

Therefore, Museveni said that the first element of a business is to produce a good or service, secondly, to have a consumer who has money in his pocket, and thirdly, to have the infrastructure to link buyers and consumers.

Lack of dialogue

The lack of dialogue, the president said is the problem affecting business. “Through the Ambassadors here, I would really like to encourage them to tell their governments to engage in serious dialogue with us. We are here, we know what we are doing, but we need dialogue, not just running around and misusing opportunities,” he said.

The President alluded to the 129 countries of the Non-Aligned Movement (NAM) and the Group of 77 and China with a combined population of 6.6 billion, noting that he sold them the idea of working for global affluence.

“I put it to them and said to you people why don’t we tilt our theme to global affluence. Up to 1980, affluence was only in Western Europe, North America, Canada, the USA, and Japan. These are the only countries that have affluence in the modern sense. The rest of the world was in poverty. But now, things have changed a bit. China has gained some affluence, India, a bit, and some African countries,” he said.

President Yoweri Museveni visiting the exhibitors stalls during the ongoing third Uganda-EU Business Forum that is being held at Speke Resort Munyonyo, Kampala. (Photo by Mpalanyi Ssentongo)

However, Museveni decried that affluence is not really made a priority by global actors. And yet everybody would benefit. He asked why global players would want to live in a world where some people are poor. He noted that this would limit their abilities.

Just before China started moving forward, Museveni said Uganda was trying to develop the steel industry with the available iron ore resources, one of the best in the world, when they were told not to waste time with steel as they were told that there was a glut with steel.

However, he said that they discovered that the glut was being created by people who wanted to be in affluence alone.

“But when the Chinese started building and getting out of poverty, a ton of steel jumped from $200 to $900. It has now come down to about $700. Now we are developing our steel industry because the movement of the Chinese from straw-thatched shelters to permanent buildings caused the price of steel, copper, and cement to go up due to the movement from poverty to affluence,” he narrated.

Museveni maintained that global affluence would mean good business for everybody. He said that assuming all the people of the world had a per capita income of $20,000, the size of the global economy would be huge.

Stop wasting our opportunities

President Museveni told the business community to push political actors to wake up and stop wasting the opportunities for the countries.

He said the inhibitors of business have been the unfair division of labour in the world, where some places like Latin America produce the raw materials and they are taken to the USA to be processed into finished products. He said this is very dangerous.

President Yoweri Museveni visiting the exhibitors stalls during the ongoing third Uganda-EU Business Forum that is being held at Speke Resort Munyonyo, Kampala. (Photo by Mpalanyi Ssentongo)

“When you hear of the chaos in Africa now in the Sahel countries like Burkina Faso, Cameroon, Chad, Gambia, Guinea, Mali, Mauritania, Niger, Nigeria, etc, the original problem is exporting raw material and this is very dangerous,” he said.

According to Museveni, the global market value for coffee is now at $460b, but all the coffee-producing countries- in the world share $25b only.

From the $25b, he said Africa shares $2.5b and that Uganda shares only about $900m of it because the country produces a huge amount but exports it in raw form.

“Very good quality coffee but a kilo is about $2.5. Someone else in the world is adding value and earning $40. All the other levels of job creation are lost,” he said.

Museveni alluded to Western countries that grow cotton and said that there are about 6 to 7 levels of job creation along the cotton value chain.

Level one, he said, “You grow the coffee and there are some jobs there. Level two is cotton ginning, which is where most of the African countries end. But abroad where cotton is exported, the jobs are exported in other levels.”

Accordingly, Museveni said that the unfair division of labour is inhibiting business. He said if people don’t have money in their pockets, they can’t buy products from the rest of the world.

He said the European Businesses coming to invest in Uganda is common sense and a good strategy. However, he noted that the non-tariff barriers created by bad politics are also inhibiting business.

“We need to advise the government from the EU to stop that mistake because there is no way you can control the world politically. You can’t do it, and you should not even attempt to control the world politically,” he said.

Lastly, Museveni downplayed ideological chauvinism. He said, “Down with ideological chauvinism. Don’t bring your ideas and impose them on other people. Please stop that and don’t waste our time.”

Museveni added, “We have spent almost 500 years dealing with past mistakes; therefore, we need to end this arrogance in trade. If I bought your product, it is because I need it. Don’t try to impose your thinking on me, I know how to think, if something is right, I know how to see it. Influence people by example, this is a non-trade barrier, bringing politics into business, it must stop.”

Eight financial initiatives worth sh218m euros were signed to boost trade

The president also signed eight financial initiatives worth sh218m euros signed to boost trade and investment in Uganda.

These include, among others the green and decent jobs WeWork (eur 50m), women entrepreneurship programme (eur 50m), advancing respect for business and human rights (eur 5m), the support to Agriculture revitalization and transformation (eur 11.5m), green and inclusive growth in agri0food systems.

Positive balance of trade

According to Morrison Rwakakamba, the Chairman of the Uganda Investment Authority (UIA), the European Union (EU) is a key trade and investment partner for Uganda.

He revealed that in 2022, Uganda had a positive trade balance with the EU – with the total trade volume reaching EUR 1.5 billion (sh6.2 trillion), with Uganda exporting 800m euros and importing 700m euros.

In this period, Uganda’s main exports to the EU were food, notably coffee, live animals (82.1%), and flowers (14.7%). Inversely, he noted that Uganda’s main imports from the EU were machinery (38.2%), and manufactured goods (22.8%).

According to UIA, Uganda is an appealing destination for Foreign Direct Investment (FDI). In 2021, Uganda was the top recipient of FDI in the East African Community (EAC), amounting to $3.2 billion (sh12.1 trillion).

According to Rwakakamba, Uganda’s investment climate is very favourable, with the rate of returns enjoyed by investors, averaging 13.8% in 2022, the highest in the EAC and the 4th in Africa. He appealed to EU investors to invest in Uganda but also underscored the contribution of the EU investors to Uganda’s FDI.

Total FDI inflows in 2019 amounted to 46.2%, with the EU private sector as a leading investor in the sectors of energy, agribusiness, ICT, construction, transport, tourism, finance/legal services, and education.