Background

GDP Share of Agriculture

Agriculture constitutes the main activity contributing to the economy, with food crops making up in excess of 50% of that sub-sector share.

Source: Uganda Bureau of Statistics

It is another reflection of the importance the rural community plays in the economic activity of the country, and, an indication that we are still a growing country, amongst which, predominant income is derived from export of semi or unprocessed agricultural produce.

GDP Share of Manufacturing

Manufacturing on the other hand, tails behind agriculture, hovering at close to 10% as of 2001/02, reflection that Uganda is still a long way from the dream of being an industrial state, see table below.

Source: Uganda Bureau of Statistics

Composition of Imports

One way to gauge the level of 'industrialisation' of a country, is to examine the scope, and more importantly, the share of various categories that lend themselves to manufacturing in varying ways, looked at in the contexts of local manufacturing scope and consumption patterns.

One can clearly discern that basic consumables constitute a sizeable share, gauged against 'engines of manufacturing' in the name of petroleum products, and, knowing that much of the electricity consumption is domestically consumed.

Given relatively low manufacturing, category 12 in the table and chart following suggests that machineries are not directed largely to manufacturing, and raise the question of how much of that category is 'vehicles'?

It is worth saying that a low technological base that can be explained by the very limited scope of local products versus imports in machineries and equipments in daily use locally, mean that R&D in industry needs urgent promotion to increase home-grown technologies, reinforced initially with importation of appropriate fabrication tools, machineries and instrumentation, with local development encouraged and supported.

Source: Bank of Uganda

Direction of Exports (Quarters 1 and 2, 2002)

(Exceeding US$ 5million in one of quarters)

Looking at destination countries for our exports, presents another interesting scenario. Save for Netherlands, most likely for the flower industry, our individual country 'largest export destination' is Kenya.

Many, many things can be said about this, and, lessons need to be taken over importance of that relationship. First observation, Kenya, although a developing country as well, which at the time the statistics are quoted (2002), was suffering a negative international image while Uganda was under a different perception. Secondly, as we will see, largely 'flower' exports to European Union (EU) gave it relatively good positive trade with EU while its combined global picture is one of higher net negative trade for the years 1980, 1990 and 2002, according to EU statistics from Brussels, August 2003.

Later on, we will look at the East African Community (EAC) regional trade, a picture that will further demonstrate our yet to be realised industrial potential, as net trade is in favour of the other two member states.

COMESA is an important region to Uganda, ranking second to EU, with reasons to be partly found in types of exports and their worth, in spite of being 'nearer' than EU.

Looking at America versus Asia, they may both be deemed 'distant', but the slant in much more trade with the Asian region revolves around such parameters as trade policy and requirements, 'accessibility', competitiveness and probably products themselves.

Republic of South Africa (RSA) is a late-comer after past sanctions, but, it is taking much of the 'world' by storm, comparing in trade with the rest of Africa. We actually have a dramatic rise in imports from RSA.

Composition of Exports

Coffee, may in many ways be considered as both a 'blessing and a curse'. Blessing, having been the main component of exports for decades. However, unlike the sixties, its contribution has been on the decline, in recent years, given the world trends in price controls, and, the 'supply / demand' situation. Of late, this problem has become quite significant, with prices tumbling as can be seen between 1999 and 2002.

Of late, fish and gold have assumed significant positions, with prices for the former moving in the 'right' direction, both internationally and regionally.

Tea and tobacco show a 'lukewarm' trend, given that they have been around for ages, with auctions in Mombasa having a 'foreign' controlling hand. The case of tobacco is one of an uncertain future, with world group of big players battling it out with health concerns. In spite of all that, it is an important crop, employing many, contributing to the treasury, and, one of the few companies floated on Kampala Stock Exchange (KSE), allowing local participation in ownership.

Hides and skins have gained prominence, while maize has had a dramatic increase in exports, reflected by growing earnings in spite of rapidly declining prices. It is my observation that, there has been a puzzle of goings on in the region, with grain demands rising, resulting in more imports, yet Uganda seems to be playing a 'small' role, and, prices are dwindling!

Wrapping-up, it does seem that agricultural mechanisation must be the way to start an 'industrial turnaround' for Uganda. This trend seems to be gaining ground from the analytical perspective.

Two tables for composition and unit values for exports from Bank of Uganda publications follow:

Index (for 2 tables, above and below):

Trade in East African Community Region

In our first / inaugural issue, Volume 1, Issue No. 1, we discussed EAC intra-trade under the article titled 'Do I Have The Competitive Edge?', and I quote:

'Intra-trade in semi-processed and finished goods within the East African Community (EAC) region is a good indicator of relative industrial development. With both Kenya and Tanzania, Uganda's net trade position is negative. Between 1995 and 1997, Uganda's exports were UShs.81,519,359,000 and UShs.16,478,428,000 against imports worth UShs.556,064,847,000 and UShs.41,420,429,000 with Kenya and Tanzania respectively. Clearly, while Uganda's exports are predominantly unprocessed and semi-processed agricultural products, Tanzania's exports to Uganda seem to have less similar agricultural content, with Kenya's having even less. This all adds up to Uganda lagging behind, especially relative to Kenya in regard to manufacturing'.

In spite of the above, the East African region remains in the category of relatively less industrialised countries, a case further demonstrated in the same article cited above. The merging of the three EAC states in a more 'critical mass' for trade purposes should serve as an engine for industrial growth. That Uganda has been able to get a more 'favourable' five-year status, is not reason for complacency, instead, everything must be done to transform our efforts and focus to move from the very weak position to one where we should initially be seen to move as close to other members in as short a time as possible. With the intricacies of setting in motion the process of transforming industrial activity, five years is like a 'wink', given the mammoth task ahead of us.

The Case of Kenya

World Trade (Net Importer)

On the global scene, Kenya's imports stood at 1.8, 1.6 and 3.9 against exports of 0.9, 0.9 and 2.4 billion Euros for 1980, 1990 and 2002 respectively. This represented net negative balances of 0.9, 0.7 and 1.4 billion Euros for the respective periods. This is from EUROSTAT (COMEXT, CRONOS), IMF (DOTS) and WEFA (WMM), published in Brussels, August 2003.

Trade With EU (Net Importer)

Again from the same EU source, trade with EU had Kenya imports in excess of exports for the same years at 0.5, 0.6 and 0.8 exports against imports of 0.8, 0.9 and 0.9 billion Euros. The net trade balance declined in 2002 compared to previous periods. Kenya's relative success story is to be largely found in the flower industry that has of late come to be shaken by quality issues.

Exports to EU (2002)

From the same source, Kenya's main export to EU is in agricultural products, standing at 0.8 billion Euros.

Imports from EU (2002)

Import are largely in machinery, followed by chemical products and transportation materials at 0.28, 0.19 and 0.16 billion Euros respectively.

Significant Issues for Uganda

Uganda has to strengthen the following:

The work of the Agricultural Engineering and Appropriate Technology Research Institute (AEATRI) at Namalere deserves urgent attention to strengthen its role as a nucleus for development of agro-processing equipments through: Urgent and handsome funding to meet its projected programmes; Extending its activities to meet its role as a demonstration centre for small entrepreneurs manufacturing agricultural tools, machineries and equipments; Review its proposals for tractorization in order to identify a suitable and robust way forward