President Yoweri Museveni has publicly contradicted his economic experts and advisers in the Ministry of Finance, Planning and Economic Development over the growth of Uganda’s economy.
President Museveni, who on Wednesday, June 7, 2023, was delivering State of the Nation address at Kololo Ceremonial Grounds in Kampala, said Uganda’s economic growth for this year is projected at 5.5% in real terms compared to 4.7% last financial year 2021/22.
He added that over the next five years, the economy is projected to grow at an average of 6.5 – 7% per year.
However, the above figures are growth rates from the Ministry of Finance, which President Museveni publicly disagreed with, asserting that the country’s economy grows much faster than that.
“But these are growth rates of the Ministry of Finance but me, I believe we can grow much faster. Above in this speech, I have said that our economy will be GDP size of $55.2 billion by the end of the financial year 2023/2024. This is assuming a rate of growth of 6% per annum. This is all while our economy is still largely raw material-based. This is the problem I have with [Ministry of] Finance. All these plans; 6% rate of growth, they (experts in the Ministry of Finance) are all assuming we will remain a raw materials producing country which I don’t accept,” Museveni said.
The President noted the country must walk away from being a raw material dominated economy to a value addition and processed materials exporting country to accelerate economic growth.
“Coffee is a good example; 99% of our coffee is exported as unprocessed coffee. A raw material for cleverer people. We who don’t see far, we sell our raw material to cleverer people to earn big money out of our sweat. With unprocessed coffee, we get $2.5 per kilogramme. With the same coffee processed, a kilogramme will give us $40 increasing in value by a factor of 15. If this logic of value addition is extended across the entire spectrum of our raw materials, our economy would expand by at least a factor of 10. It would expand from $55 billion to $550 billion in the short term,” he said.
Museveni noted that Uganda has in place all the factors that facilitate addition of value to raw materials, and subsequently, the exportation of processed products. These, he said include; an educated workforce, electricity, a better road network, the railway, piped water, telephone lines, and internet, among others.
“Is this not what countries like South Korea that did not even have the same raw materials like we have did? You check the history of South Korea. What was the GDP of South Korea in 1961? What is it now? The answers are; 1961, the GDP of South Korea was $2.42 billion. You can even check what was the GDP of Uganda 1961. I don’t think it was very far behind this one. Today, the GDP of South Korea is 1.81. trillion dollars, it is almost 2 trillion. From 2 billion dollars in 1961 to 2 trillion now. And South Korea is half the size of Uganda in land area,” he said.
President Museveni also criticized the Vision 2040, Uganda’s 30-year development plan to transform the country from a predominantly peasant and low-income country to a competitive upper middle income status country by 2040.
“That the plan is to remain poor until 2040. I am not part of that.”
He said the major obstacles to Uganda’s growth are exportation of raw materials and frustration of investors by government officials.
Meanwhile, according to the Ministry of Finance, Uganda’s growth will arise from a number of factors that include economic stability as a result of low inflation; establishment of more manufacturing plants; continued implementation of the Parish Development Model (PDM); support to Small and Medium-Scale Enterprises through Emyooga SACCOs, the Youth and Women funds and other initiatives; increased Oil and Gas Sector activities; and growth in regional trade and the positive impact of the continued recovery of economies in the Middle East, Asia, Europe and USA which provide markets for Uganda’s exports.
The Ministry of Finance projects Uganda’s GDP to grow to up to 207.22 trillion shillings (equivalent to USD 55.17 billion), translating to USD 156.76 billion in purchasing power parity terms by the end of 2023/24 financial year.
This in turn is projected to grow Uganda’s GDP per capita to USD 1,186, up from USD 1,096 in 2022/23 financial year.
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INFLATION:
President Museveni informed the nation that the prices of domestic goods and services have come down compared to what they were one year ago.
“To take a few examples, the price of edible oil has reduced from UShs10,079 per litre in March, 2022 to UShs9,556 per litre in March, 2023; Petrol from a peak of UShs6,563 a litre to UShs5,138 a litre now, ordinary cement from a peak of UShs37,315 a bag of 50 kg in May, 2022 to now UShs34,874. Therefore, we have defeated the rapid increase in prices of consumer and production prices,” he said.
However, food prices remain high which, according to President Museveni, is due to climate
change effects that caused prolonged drought in many parts of the Country.
This, he said will be history because of the on-going Government investment in small-scale solar powered irrigation to address water shortages.
Last year, after the breakout of the Russia-Ukraine war, which caused sharp increase in prices of essential commodities such as food and fuel, the Government resisted price controls and subsidies despite public outcry. This, President Museveni said, was because these kinds of measures are not sustainable and they instead introduce distortions in the economy.
“They bring about the old habits of smuggling (magendo) and can result in shortages of goods in the markets. This happens when some rich business people hide consumer goods to cause artificial shortages in order to benefit from higher prices,” he said.
Although many countries around the world gave subsidies or controlled prices of some essential commodities such as fuel, bread, wheat among others, President Museveni asserted, “we do not believe in subsidising consumption such as subsidising petrol for people to drive to night clubs.”
