Uganda has much to offer the US

By Ofwono OpondoOF recent there has been orchestrated scepticism about the American Growth and Opportunity Act (AGOA) initiative by some people. The opponents are led by the anti-Movement political coalition. They have either failed to grasp or deliberately disparage AGOA as a possible breakthrough to transforming the lives of Ugandans.One Professor was recently quoted by the media to have described AGOA as “bogus,” but nothing much can be said because he apparently gave no reasons for the anti-AGOA attitude.Last Saturday The Monitor quoted Winnie Byanyima (Mbarara Municipality) to have among other things, asked, “What would America want from Uganda?” She then added that what her constituency needed was “poverty alleviation” and “second-hand clothes,” so as to “produce more and export some.”If the media reports are accurate, then Byanyima’s assertions cannot go un-challenged. The Movement position has always been (even in the bush) that Africa in general but Uganda in particular must develop an “independent, integrated and self-sustaining economy,” so as to break out of backwardness.This is point number five in the Ten-Point Programme which was revised to the Fifteen Point Programme of the Movement not so long ago (1998).Therefore the Movement had long identified that the source of the poverty that still bedevils much of Africa 40 years after independence, was continued reliance on exporting raw materials. In President Yoweri Museveni’s election manifesto 2001, he pointed out the example of coffee, whereas the over-valuation of the exchange rate and the inefficiency of the former Coffee Marketing Board (CMB) and other state control mechanisms had eroded the real value of farm-gate prices offered to farmers.The combined effects of the economic reforms since 1986, such as the liberalisation of the CMB, licensing of private coffee traders, and abolition of coffee export taxes, led to an increase in the real value of the farm-gate prices to farmers.It should be recalled that before these reforms were instituted only 31% of the value of coffee earned by Uganda was passed on to the farmers compared to 62% in the 1999/2000.As a result, household earnings from coffee increased and the poverty head-count for those engaged in cash crop farming, especially coffee farmers fell by 32% between 1992 and 1996!This led to a big fall in the incidence of poverty among coffee farmers. The reforms also allowed farmers to receive a larger share of the coffee price and enabled them to be paid cash instead of the chits of paper, as was the practice before with CMB.Therefore, if Byanyima has been in the Movement and wants to reform the Movement now, she should clarify her position: whether she supported this analysis in the past or did not. We also challenge her to propose alternatives for the way forward.Byanyima refers to our drive for the AGOA initiative as “political opportunism.” If this is “opportunism,” as she claims, then it is an old one because that has been NRM line all along.And as Museveni said at the recent cabinet retreat at Kyankwanzi, while many tactical successes have been scored in many areas of the economy (construction, lower inflation, consumer goods, transport, infrastructure, water, HIV/AIDS and health etc.), the strategic goal of transforming Ugandan is yet to be achieved. Nevertheless, the tactical successes achieved form a good basis for a great leap into modernisation.The third issue raised by Byanyima was: “What would America want from Uganda?” First, the US and EU have for a long time been buying beans coffee (kasse), vanilla, flowers and horticultural commodities, in raw form from Uganda.The entire world is now buying fish fillet from us. In the 1960s they bought sugar and beef as processed items from Uganda, but using the quota system. All these were ruined by the mistakes of Byanyima’s new found allies, UPC, by the nationalisation of the economy in 1969/70.A few years back, Ugandan fish had some problems of quality in the EU market, but this has now been resolved to the satisfaction of the regulatory authorities of the EU and fish exports are picking up.Uganda is exporting huge amounts of hides and skins to the outside world. These are the best hides in the world on account of the humpless long horned Ankole cattle, which were saved in spite of the misguided policy of ranches, which Byanyima and some of the AGOA critics have been supporting.The hides and skins in their unprocessed form brought in $60m in 2001, more than half of the coffee earnings in the same period. This is the reason we need to diversify, while simultaneously increasing production and improving quality of our exports to benefit from AGOA, which Byanyima appears not to fully understand. This is what we can sell to America!The NRM does not support the continued massive loss of value through exporting unprocessed cotton, coffee, tea, hides and skins, and unskilled manpower (kyeyo).To do so, we only get 10% of the actual value when lint is exported instead of garments. Raw coffee only fetches a twentieth of what roasted and ground coffee gives, and we get a third from hides and skins as compared to exporting shoes, belts or processed leather.Government cannot accept this situation to continue and will strive to minimise or in some cases eliminate altogether these massive losses of value.Byanyima also talks of “producing more and export some,” as a good condition for her constituency, which is untenable as already pointed out because Uganda has been doing this for the last 100 in the global economy.In 1986 Uganda produced two million bags of bean coffee (kasse). But on account of the stability since then, production increased to four million (doubled) by 1996 and we became the fourth largest coffee exporter in the world.From the two million bags in 1986 we earned $50m and when we “produced more” (300 million bags) in 2001 we received $104m.So could Byanyima explain this widespread poverty among Uganda’s coffee and cotton farmers, if “producing more,” was the only issue!“Producing more,” as Byanyima argues, in itself does not constitute breaking new ground. Countries, some of them less-endowed than Uganda like South Korea, Malaysia, Thailand and others, have gone through this transition.Reliance on the importation of second-hand clothes (mivumba) should not be recommended if we want to progress. Importation of mivumba suppresses the re-emergence of our textile sector by denying employment to our people while denying our energy, communication, transport and water sectors revenue.By continuing to import mivumba even the cotton farmers Byanyima claims to protect will not be helped, as their produce will not fetch real value. How will the cotton farmer in Soroti or Lira pay school fees when his/her cotton cannot be bought because we wear mivumba imported from the US or Europe made from cotton from India or Pakistan!But in any case, what does the five percent tax increase on mivumba translate into in real terms either for a mivumba dealer or consumer? Suppose a shirt costs sh2,000 and a five percent tax is levied and transferred wholly to the consumer. This translates to only sh100!Mark you, clothes are not bought by an individual on a daily basis like salt, soap, kerosene and sugar, which are all taxed. Byanyima only raises the issue of mivumba because she thinks it attracts media attention. It is actually salt, soap, kerosene and sugar that unites the poor consumers because they are the basic necessities of life.