The Independent Uganda: You get the Truth we Pay the Price
Therefore, Kim’s advice that poor countries should now focus on services as the engine of growth is misleading. Services have limited scope for productivity growth. Often one can only increase productivity in the service sector at the price of lowering the quality of the service. A teacher cannot teach a particular lesson at a faster rate or teach a larger number of students in one class without compromising the quality of learning.
The main issue I challenged Kim on, however, is the effect of services on poverty reduction. If you look at the world’s fastest growing economies over the last 20 years (1995 to 2015), they include Ethiopia (6th at 7.2%), Uganda (12th at 6.92%) and Vietnam (13th at 6.92%). In spite of same rate of GDP growth, Vietnam has been much more successful in reducing poverty (from 50% in 1990 to 3% in 2014) than Uganda (from 56% 1992 to 19.7% in 2014).
Vietnam began her reforms in 1986, Uganda in 1987. Vietnam’s growth has largely been driven by manufacturing, Uganda by services. Since 1986, Uganda’s manufacturing growth has averaged 9.78 and services 7.07%. Vietnam has averaged 14% on manufacturing and 6.0% on services. Thus, while manufacturing contributes only 7% of Uganda’s GDP and services 51%; in Vietnam manufacturing is 40% of GDP, service 38%.
In fact for Uganda, between 1986 and 2000, manufacturing growth averaged 14.34%. However, from 2000 to 2015, average manufacturing growth fell to 5.68% and then to 4.97% between 2005 and 2015 while Vietnam has averaged 11% over the same period. The share of manufacturing to GDP in Uganda has not grown in 15 years while that of services has literally exploded. Yet services don’t create as many jobs as manufacturing. This could be the reason our rapidly growing economy driven by services has youth unemployment is 83% while Vietnam that is driven by manufacturing is 7.8%.
This brings me to agriculture which the World Bank president ignored and which many of my debating friends say we need to take more seriously than manufacturing. Since 1986 Agriculture in Uganda grew at an average of 3.33%, not fundamentally different from Vietnam where it has grown at 4.1%. However, agriculture in Uganda still employs 80% of the labour force, in Vietnam 47%.
Why is Vietnam more successful at creating jobs and reducing poverty? It is not because it has grown its agriculture faster than Uganda. They are very close. The trick has been her manufacturing growth. Indeed, in 2014 Vietnam became the largest exporter to the US market among the 10 members of the Association of East Asian Nations. Its biggest advantage is low wage costs ($197 in 2013) compared to neighbours such as Thailand ($391) and China ($613). Vietnam is an exemplar of poverty reduction in the world because it relies largely on manufacturing.
Indeed, in 2009 high tech electrical manufactures overtook crude oil (which Uganda is eyeing hungrily) as the main source of export earnings for Vietnam. Crude oil’s share of export revenue has fallen from 22% in 1996 to less than 5% today. Yet primary agricultural exports remain the largest source of Uganda’s foreign exchange earnings. Thus contrary to what the World Bank president’s advice on services, Africa needs manufacturing if it is to create jobs for its youths and eliminate poverty.
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Finally a word on agriculture: President Yoweri Museveni and his main opponent, Kizza Besigye, are arguing that peasant farmers must be protected from land grabbing by commercial interests. Their stand is certainly humane and hence politically attractive. Yet it is economically retrogressive. Allowing money barons to grab peasant land is socially harsh but it may be the solution to transforming rural relations. Dispossessed peasants can be re-united to the same land through the agency/initiative of capital – as agricultural laborers.
Without owning and tilling their own land to produce their own food, peasants would become agricultural labourers. As such they would form a market for food and other products. Secondly it is hard to move excess labour out of agriculture to industry without dispossessing peasants of their land. And without this, it is difficult to facilitate the penetration of commerce into agrarian structures.
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amwenda@independent.co.ug
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editor@independent.co.ug
There are a number of manufacturing companies in Uganda e.g Beverage and Breweries industries like Coca cola,Pepsi ,Nile breweries,Uganda breweries, Mukwano industriesMovit etc some of these industries use local raw material from Ug has govt carried out an audit on whether Ugandans who supply raw materials to these companies have benefited?
There is alot of concoction in the herbal industry which for some strange reason is dominated the Muslims.
If i were Stella Nyanzi’s lawyer i would have advised her to apologize 1st of all she is a single mother the man who did her a favor and impregnated her has fled(she looks like Kazinda even their features are similar) She will definitely be declared mad by Doctors in Butabika there are some many things that suggest that she is indeed mad e.g how could she carry her belongings in a basin as if she could not afford a suitcase(do people still use basins for bathing?) what happened to showers?
Women activists have lost the war on pads( even 5 year olds want pads now) they should 1st advise teenagers to open their legs sparingly for men; just go to villages you find a 16 yr old girl with HIV you wonder what she wants top do in the grave at an early age. I dont think pads have been an issue to Ug girls they just love sex they would rather balance men in bed than solve a maths equation like XY2+ ZYXX3 =——–besides that i dont get the corrolation between studies and pads after all most girls are ever pregraenag so when will thye use the pads?
Mbu NTV’s reporter was kidnapped(Ugandans really love the the social media) i just laughed that was the work of one of her jilted lovers.
One of the major strengths of manufacturing is the large multiplying factor. For every job in manufacturing there are almost three created in other sectors such as transportation, banking, raw material producers, etc.
But still, the other end of the argument is not incorrect. Manufacturing automation has been eating jobs not necessarily that manufacturing output has been declining.
Guys, first you need to understand what industrial automation is? And what it actually reffers to. Today in Europe or USA , most industries are either fully or semi-automated and yet they are by far the largest employers in euro and USA. So automation is does not take a way jobs as that un man allege. Automation create new jobs and skills and increases productivity, yes services can be an option but we need to remember that the best service providers such as bankers, airlines, insurance providers, will want to provide their services to an automated country .
#BuyUgandaBuildUganda