Trade can be a very powerful tool for poverty eradication, creation of employment and to promote sustainable development. However, we have noted the meagre budget allocation to the Tourism, Trade and Industry of Ushs 52.56 billion in FY 2014/15. Therefore, Government should increase the budget allocation to the sector in order to address issues of value addition, manufacturing, improvements of standards of goods, and to promote the critical backward and forward linkages between agriculture, value addition and trade.
This is an extract from the Civil Society Organisations (CSOs) statement on the 2014/2015 budget which they presented to the budget conference. In the document this is all that the CSOs included under their sub-section “Trade”? I find it curious that the CSOs in this particular section of their document did not specifically adduce the problem as being Uganda’s fiscal policies which favour imports into Uganda over Ugandan made products. Uganda spends on imports nearly twice as much as the value of its exports – leaving us with a huge trade deficit. This is one of the reasons why our money enjoys a weak position compared to other currencies.
Uganda has prematurely opened its borders and markets, so wide, to unregulated market capitalism to the detriment of Ugandan entrepreneurs. For example, can you imagine a scenario in which a university of the so-called ‘developed’ countries derives the bulk of its equipment and materials from Uganda? Not a chance, and yet this is the norm in Uganda. Recently, at a workshop organized by one of our leading universities, other than amongst the participants, I was hard pressed to find anything else at the workshop that was made in Uganda. The public address system, furniture, file folders, pens, note books, clothes that we wore, synthetic hair, name tags, you name it, were all imported. Wait a minute, may be the mineral water that we drank, but then again, aren’t the minerals used to purify the water imported? Even at lunch time, the tomato sauce on the menu was imported.
Ugandans innovate but our innovations do not receive the requisite support in-country? There are many innovators in Uganda whose products are of high quality, but the Government of Uganda (GOU) has not done enough to protect and to nurture our economy to maturity. Such as provide the relevant infrastructure that would ensure the reduction of our production and transportation costs. It is not uncommon for us to experience day-long electricity power cuts – load shedding, which sometimes occurs without warning. This forces, our manufactures, for example, to use generators, a more expensive source of energy. That is why, for example, imported tomato ketchup is priced cheaper than the Ugandan made one, and yet the tomato ketchup made by Reco Industries, for example, is far superior in nutrition and taste than all the imported ones.
The GOU favours foreigners in form of open access to the Ugandan market, while it has not done enough to protect the internal market share for its domestically made products. In a bid to attract the so-called foreign ‘investors’ they are given very lucrative tax incentives, perhaps this is a reason why Uganda Revenue Authority (URA) has pegged tax charges to the dollar, to simplify for the foreigners, irrespective of hurting indigenous companies.
Similarly, in defence of Uganda’s contract biding that is skewed in favour of foreigners, a government official was reported as having said that local firms are ‘ignorant’ about making competitive bids and that they cannot raise the minimum two percent of the tender deposit required in advance as surety. Why are we, the citizens, who live so close by to the origin of the bid, ‘ignorant’ of it and how best to win it? Is it not the case that the bidding process is stacked against us? So, for example, with all of our trained engineers, some of whose training was funded by our taxes, we take huge loans to bring in foreigners to build roads for us.
Is it not the role of GOU to ensure that we are not ‘ignorant’? And why is our government not giving us preferential treatment in the bidding process? Ironically, none of the so-called ‘developed’ economies attained mature economies whilst their borders and markets were wide open. In fact, even when their economies have attained maturity, they continue to maintain protection walls around them, in form of tariffs, quotas, subsidies, immigration work permit restrictions, and more.
Ugandan businesses and products should be competitive within Uganda first. It does not make sense for Uganda, a country that has two or sometimes three seasons in which we can grow food to import fresh fruits and vegetables. Even worse, that we import tinned vegetables, tinned fruits and processed food items such as coffee, tea, tomato ketchup which we grow and can be processed in country.
It also does not make sense to me that we are importing and reducing taxes on food supplements, while home grown products such as those that we grow at Alinga Farms are taxed heavily – apparently because we sun-dried our products and packaged them at ‘international standards’ fit to be sold at major supermarkets, URA is applying a value addition tax on our products?
The problem is not in the budget allocation to tourism, trade and industry, it is in Uganda’s entire fiscal policy. Our trade policies simply need to be revised in favour of Ugandans, like other nations do for their citizens.