Post-COVID-19 recovery: Let's focus on growing real economy

OPINION

President Yoweri Museveni recently shared a paper with Cabinet on ‘Real Economy versus Vulnerable Economy'.
Real economy refers to the part of the economy that produces goods and services.  In other words, the real economy is the physical side of the economy dealing with goods, services and resources. This side of the economy is concerned with using resources to produce the goods and services that make the satisfaction of wants and needs possible. This can be contrasted with the paper economy, which is the vulnerable ‘part' of the economy.

President Museveni in his paper alludes to the fact that in Economics, we must differentiate the firm ground from the sandy ground. The firm ground for economics is in answering the fundamental human needs, which are food, clothes, shelter, defence, human resource development (education and health), infrastructure and medicine whose demand never stops.

Uganda is endowed with a vast percentage of arable land suitable for agriculture (crop farming and animal rearing), besides other natural resources like minerals. But unfortunately, food in Uganda is produced by only five million families. These grow 1.5 million tonnes of maize, 10 million tonnes of bananas, 1.76 million metric tonnes of beans and other plant protein bearing crops (peas, cow-peas, etc.

In President Museveni's words: "We are only earning $75.463m (2016) and $65.126m (2018) from our cocoa crop of 30,752 tonnes, exported unprocessed as mere cocoa beans. We are earning $175.97m from processed fish, from our 12 factories currently operating." 

He adds that: "If we were to stop bad fishing, we could catch 700,000 metric tonnes of fish per annum, instead of our present 470,000 metric tonnes, but, the exportable Nile Perch would be about 45,000 metric tonnes. This would enable us to earn $301.59m per annum. And note that out of cattle, we get milk, beef, skins and even horns. All these are very valuable raw materials. Out of milk, we get liquid milk, powdered milk for long-distance transport, butter, ghee, yoghurt, cheese, etc." 

Right now Uganda is grappling with a lot of unsold milk. However, milk products to the tune of $4.565m are still being imported. Which are these? They are cheese, butter, ice cream, yoghurt, sour milk, cream, etc. 

The President highlights that "The global market for dairy products is worth $718.9b, therefore, we could share on that market. Fortunately, Uganda has a lot of beef and it is so cheap, at only $2 per kilogramme while in London, a kilogramme of beef is $17." 

I could go on and on to re-echo the President's thoughts towards having a sustainable economy by just focusing on the real economy. For instance, we can look at the cotton plant that produces fibre for cloth, cotton seeds for vegetable oil as well as making animal food and linters that are used to make gunpowder (nitro-cellulose). 

In future, our petroleum industry will give us synthetic fibres such as polyester that we should mix with our cotton to produce very strong cloth. Thus with value addition in every product, the President is saying if we were to concentrate on just one or two, we would have a very strong durable economy by world standards.

While reading the budget on June 11, finance minister Matia Kasaija said sh2.837 trillion is being allocated to health, sh3.592 trillion to education and agriculture sh1.325 trillion among key sectors of the economy. 

The budget did speak to some key measures, such as expanding public works to create jobs, seed capital to youth, women and talent support schemes It is assumed that the costs of the COVID-19 pandemic relief/ stimulus measures outlined in budget speech are reflected in the budget numbers. 

‘Real Economy versus Vulnerable Economy' should be food for thought to all of us as we look forward to the real new normal. 

We also need to lay strategies to innovate, create and add value to our products through the main sectors that will drive the economy.

 The writer is the PS/Admin/HE The President