How to become a money economy

By Moses Byaruhanga

While addressing the NRM Central Executive Committee (CEC) at Chobe Lodge recently, the President who is also the chairperson of CEC asked CEC members to propose a policy that would see the 68% Ugandans in subsistence production transformed into the money economy. Sometime last year, I was party to a workshop where Dr. Ramathan Ggoobi, of Makerere University Business School, made a presentation on the state of Uganda's Economy. In his presentation, he pointed out that UBOS had identified the 68% by location in their parishes, sub-counties and districts. That is one step, knowing where they are and then how to deal with them.

Uganda has so many programmes of dealing with poverty i.e. OWC, Youth Fund, Women Fund, NUSAF, funds for irrigation, etc. During one of the meetings at State House, the President added all these monies and they were totaling close to a trillion. It is high time we evaluated the performance of these programmes. Now that the people in the subsistence sector have been identified by location, should the above programmes target them first? In Dr. Ggoobi's presentation, he mentioned that 4.8 million households were in subsistence out of 7.3 million households in Uganda. The question is what amount of resources do we need to transform these households? Will the above intervention programmes i.e OWC/NAADS, Youth and Women Fund, NUSAF, etc manage to transform these households? We should also bear in mind that much as a household might be given inputs to start producing for the market that might not solve the problem of unemployment.

Therefore, apart from agriculture, we need to grow both the industry and service sectors. People should be able to leave agriculture and join the industry and service sectors.

How should the intervention programmes target the households in the subsistence sector. The President has been promoting the four-acre model for rural households. In this approach, he has been emphasising high value crops or enterprises. One acre for fruits, one acre for food security, one acre for coffee and the fourth acre for pasture for zero grazing dairy cows. One acre of pasture can look after up to five dairy cows. If each cow can give between 15-20 litres, that is 75-100 litres a day. At an average price of 800 per litre that is sh1.8m to sh2.4m per month. You can also add to that poultry.

OWC/NAADS has been giving inputs to farmers after procuring them from the private sector. My view is that this approach should change. The Government should instead of procuring inputs from the private sector, set up its own nurseries at sub-county level and distribute them to the farmers that are ready and willing to plant them. The cost involved will be the cost of producing a seedling taking away the cost of transporting the seedlings like we do now and also removing the profit of the private player. For every seedling the Government buys, if we have Government nurseries at sub-county level, the cost of production will be cut by half.

This way we can even give ourselves a timeframe within which all the households in the subsistence sector will have been reached by the Government. Using this approach of government nurseries at sub-county, we can aim at reaching about one million households annually and in five years, the 4.8 million households in the subsistence sector would be reached. My calculation is based on the fact that we need inputs worth about sh700,000 per household annually. This includes fruit seedlings for one acre and coffee seedlings for one acre plus two bags of fertiliser.

In a year you would spend sh700b to reach one million households. In some of the enterprises like tea growing, it is easier to deal with factory owners to promote tea growing in their localities because they have a vested interest in seeing themselves accessing more green tea. The Mukwano Group has been doing this in Lango area with sunflower growing. This agricultural production should go along way with the application of fertilisers, irrigation, post-harvest handling and above all a stable market.

Part of the market could be processors in the factories. Ugandans like investing in buildings either arcades or residential houses for rent. Recently, I read in the papers that someone had closed 17 arcades in Kampala. If these were 17 different factories and in some cases the money to put up an arcade can put up a processing factory, that gentleman would be among the richest Ugandans. So we need a campaign to convince our middle class to invest in processing as opposed to plazas.

I know there is a problem of the cost of money to invest, but that notwithstanding, those who have it invest in arcades. That same money could have been invested in factories. The factories expand the employment sector; hence, more jobs are created, the sons and daughters of the people in agriculture will find their way into the factories. Also, more taxes are collected from the factories than from the arcades.

Back to farming, there is a group that is mostly not talked about. The middle class farmers. These struggle on their own and are engaged in various enterprises. This group offers jobs at their farms in the villages and by doing so, absorb those who cannot work on family farms of their own. What they need is cheap credit, agricultural insurance, availability of equipment for hire like tractors, bush clearing, construction of dams, etc. On irrigation, we need to remove taxes on the pipes used in the irrigation as these take a big chunk of money spent on irrigation. Lastly, the Government should carry out its regulatory functions in agricultural production very well.

Writer is a senior presidential adviser on political affairs