Shift from agriculture is critical for transformation

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In the last three decades the economy has shown strong growth, only slowing to overcome bad weather, a global financial crisis or unrest in the region.

By Patrick Bitature

KAMPALA – Anyone who has half a stake in this country would be a keen observer of the economy and the direction it is taking.

In the last three decades the economy has shown strong growth, only slowing to overcome bad weather, a global financial crisis or unrest in the region.

Compared to when I started out in business, it has become a more liberal economy, with individual initiative being rewarded more and more. While the economy is still dominated by the informal sector, the formal sector is growing annually.

But the biggest shift in the economy must be the deliberate reduction in agriculture’s share of the economy from more than 80 percent to about 25 percent.

This has to happen despite the leap in the production of everything from bananas to coffee or from milk to maize. What has happened is that more of the economy – though not nearly enough, has been taken up by industry, construction and services.

This is how it should be and in fact, more work is needed in shifting this dependency or balance even further away from agriculture.

Should we do away with agriculture all together. No. In fact, we need to produce more, but much more efficiently.

At the end of the Second World War 30 million families relied on agriculture for a livelihood a number that has since plummeted to about three million today. But the US is still the largest exporter of agricultural produce in the world. And yet agriculture only comprises one percent of that country’s GDP.

In fact agriculture can best serve as the -Stepping Stone – as it has done everywhere else.

Countries which have industrialised have first taken care of agriculture and more specifically they have ensured food security. They have done this by improving the productivity of their farms through improved farming practices – the use fertiliser, irrigation and improved genetics.

The surpluses they have produced have been processed and stored for their own use or exported to other countries with deficits. The maize price in Uganda today is at an all-time bottom for the lack of adequate storage capacity.

To improve efficiency these countries have mechanised their agriculture, which has meant less labour needed in the fields, which has led to consolidation of small holdings. The former farm hands migrated to the cities to man industry and get into construction of housing and roads.

This is the development trajectory we must follow, in fact accelerate, if we are to see improved living standards for all Ugandans across the board in our life time. Our brothers across the borders have set their target on building 500,000 low cost houses in the next 5 years. Each house will create at least 10 new jobs. Housing creates wealth across the spectrum for all involved directly or indirectly.

Unfortunately, we do not have the luxury of time. Sequencing is not an option. We are going to have to do many things at once.

A lot of work is being done on infrastructure development. Nevertheless, our transport, energy and ICT infrastructure are considerably far behind where they have to be to meet our development aspirations.

Good infrastructure is critical for ease of doing business in any economy. It means goods and services can get around quicker and people can be more productive.

In addition we need to work on our soft infrastructure, the laws and institutions that we operate under. We not only have to bring them up to date but we need to commit to executing them transparently and quickly.

In anticipation for the shift towards industry and services we need to reskill the labour force with more relevant skills than the rote learning they got in school. A much higher investment in skill training centres will be crucial.

Traditional economics emphasises the play of land, capital and labour as the factors of production to which can be added entrepreneurship – the ability to manipulate the above-mentioned factors to deliver goods and services.

Entrepreneurship is a skill that can be taught and nurtured by mentoring. A critical skill for our economy. I cannot emphasis enough how crucial this is to our fast-growing youth population

Recently when renowned economist Professor Sir Paul Collier was in Kampala at the invitation of the Bank of Uganda he said one of the key things that would help transform this economy is the development of modern companies.

By modern companies I took him to mean, companies that are well set up, have strategic visions and have the potential to compete on the world stage.

My point is this, that while we still need to shift more resources towards agriculture in the short term, it is advancements in the other productive sectors like industry and services, that will generate the sustainable jobs and raise incomes all around.

The writer is the chairman of the Private Sector Foundation of Uganda.

 

 

 

 

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