Reviving Cooperatives & Investing in rural infrastructure for equitable growth and poverty alleviation-PART II

By Drake F. Kyalimpa

By the time this article gets published, Ugandans will have had listened to the state of the economy and the budget speeches but not without agriculture being mentioned. It is almost a year since I wrote an article discussing the policy direction that could be adopted by government planning authorities with regard to agriculture and I did suggest avenues for sensible and attainable poverty alleviation. To those who read part 1 that appeared in the New Vision of xxxxx , this is a continuation of this discussion.

II Agriculture vs. Manufacturing: Where are we sufficient?
Uganda is an economy that is self-sufficient in agriculture as reflected in the sectors export intensity (i.e., a significant share of agriculture exports in gross total output). On the other hand, we are less sufficient and very dependent with regard to the manufacturing sector based on the sectors import penetration ratios (IPR) (the share of imports in total demand is very high for manufacturing).

It should not be surprising that as much as 50% of the total demand for the manufacturing sector is supplied by foreigners. This has consequences for the economy because of the differences in value between our exports and imports, let alone the stiff completion our manufactured products face in regional/international markets. The private sector should come in and invest in local content and affordable technologies. 

III Where have we gone wrong as a Government?
I will briefly summarise the critical issues that seem to slow down the efforts of eradicating poverty and sustaining economic growth in Uganda. 

1. Consistent failure by the Government authorities to implement recommendations from a wide range of policy studies on agriculture and poverty alleviation in Uganda. A good example is the continued failure to increase the share of agriculture in the national budget. This share has remained stuck at an average of 4% for long even below going by the current budget proposals. The Government need to revisit the policy recommendations of the Comprehensive African Agricultural Development Programme (CAADP) country study (Benin et al, 2008) and the Maputo Declaration, which advocates for increasing the sector’s share to 10%. However, it is not a matter of increasing funds to the agriculture sector, but how these funds are prudently managed, and in which agro-based activities are they channelled to yield positive results. One wonders why the contribution of agriculture to GDP has been free falling (from 60% in 1990 to 23% today) despite massive government interventions (NAADS, PMA, PFA, PAPSCA, and RDS). I challenge the ministry that designs the budget for agriculture to tell Ugandans how many jobs will be created, which crops will be affected, how much will household incomes change in rural and urban areas if investment in agriculture increased by 3-4%? Can we measure the welfare gains of the current interventions and be able to say a certain region or household group has gained from an intervention? How can we achieve the needed productivity growth when we are not investing optimally in agriculture? But we have been told how to invest except we have not listened.

1. Failure to strengthen the linkages between agriculture and education. Whereas education for all is good for economic development, it has not served Uganda’s agriculture sector well. It is hard for the educated graduates/youth to participate in rural based agriculture when their expectations are on better paying jobs based in urban areas. We all know the state of graduate/youth unemployment especially in urban areas in Uganda. Our education system is good as an indicator of literacy but not sufficient for participation in rural based agriculture. Intensifying agriculture based vocation training could perhaps be a better option. 

2. Failure to prioritise specific agriculture interventions for specific areas. Not all policies meant for agriculture sector development have met their intended objectives. We cannot have a uniform agriculture policy for all regions in the country when indeed farmers participate in different activities and are not willing to diversify due to constraints beyond their control. Zoning is needed for specific regions and specific farming activities.

3. Lack of or limited participation of the private sector in Agriculture. It is on record that FDI into agriculture account for less than 10% of the total whereas the shares for services and manufacturing have been above 50% at different times. If the Government rejuvenated cooperatives, the private sector and the Government could partner in buying the produce thereby promoting a win-win situation.

III Rejuvenating Cooperatives: Why we need them now
There is general consensus that cooperatives play a significant role in promoting equitable and sustainable socioeconomic growth in both developing and developing economies by promoting organised communities for a common goal (better living standards). In summary, cooperatives help farmers to get quality agriculture inputs, and indeed, supplement the Government efforts of service delivery by providing education and health (Read about Cooperatives in Ivory Coast and Columbia). The Government should play the supportive role where cooperatives are formed under a regulatory authority. 

IV Oil revenues, infrastructure development and the agriculture sector
Investing in agricultural projects for poverty reduction could surely be one effective way of managing oil revenues for economic growth. Hopefully, this will be the only way we can increase the share of agriculture funding to 10% or more without any excuses or time wasting debates. 

VI The youth fund scheme
The best way to monitor these funds is for the Government to acquire land in rural areas and encourage the youth to invest in agriculture. Note all will invest these funds successfully in the service sector (salons, shoe shining, video kiosks, and food marketing). 

VII Conclusion
One thing for sure that will remain: We cannot grow ourselves out of poverty without significant interventions in the agriculture sector. No sector is so critical to Uganda’s economy even with current constraints than agriculture (i.e. no one on a single day sits in an office without eating or drinking but what is always on that table everyday goes through a process most of us do not want to know).

The numbers are available, and cannot be challenged. The economy can grow at 7%, 8% or even 10%  when most households cannot afford a kilogramme of sugar or even afford three meals. Let us mind much about the microeconomic effects of government policies.

The writer is an Economist and focuses on Quantitative Economic Policy Analysis