Roundup: Uganda pushes for productive middle class to boost development

The Ugandan government has said it is making a policy shift to focus more on creating a productive middle class as it grapples with fast tracking the country's economic development.

President Yoweri Museveni, in a March 13 statement on how to pull millions of Ugandans out of poverty, said the move would in the short run affect traders who have profiteered on consumerism.

He argued that the country's import-based economy continues to hemorrhage its forex earnings, and in turn, enriches external interests.

Focus has to be turned to building a productive middle class like manufacturers, farmers and exporters who by nature of their business would create jobs and look for markets, thus bring in foreign earnings, said the president.

Museveni argued that this would trigger socio-economic transformation that would see Uganda's mainly peasant society metamorphoses into a middle-class and skilled working class society.

To enable the building of the productive middle class, key factors have to be put in place.

Uganda is already laying a social base to stimulate social economic transformation. Apart from having peace and security, a key determinant in attracting investment, the country has improved its energy and transport infrastructure, liberalized its economy and improved the provision of social services like education and health.

"We are going to use it (social base) to transform the society permanently. We need correct policy stimuli to do so," Museveni said, noting that Uganda is now in position to tackle the residual problems and convert into a middle-income country by 2019, and an upper middle-income country by 2040.

One of the policy shifts needed is the transformation of the country's agricultural sector from peasant farming to commercial farming.

Agriculture is the backbone of the country's economy, with close to 70 percent of the population deriving its livelihood from the sector, according to government figures.

The government has created several funds from which farmers can access low interest loans to boost their agricultural production. It has also revamped its National Agricultural Advisory Services to boost production. Farmers are among others given free farm implements.

Drawing from the Ethiopia example, Uganda is also shifting focus to light manufacturing with hope of transitioning to heavy manufacturing, high technology industries and provision of services.

Ethiopia made a policy shift to encourage industrialization. For instance, it stopped the export of raw materials like hides and skins which boosted its leather industry. This has in turn led to the creation of jobs internally and increased foreign exchange earnings from the leather industry.

Assembly of motor vehicles in Ethiopia has also created more jobs in the country, and reduced the loss of foreign exchanged used to import vehicles.

Museveni argued that a similar policy must be adopted by Uganda.

He said Uganda losses a lot of foreign exchange by importing second-hand clothes and yet textiles can be produced from cotton produced in the country.

Government figures show that the total demand of textiles in Uganda, annually, is 226 million of meters, worth 270 million U.S. dollars.

"If all these textiles are manufactured here, we shall need about 400,000 bales of cotton, each weighing 185 kg. All these dollars will remain here and we shall create direct employment of 80,000 people," Museveni said.

With favorable policies, Uganda also hopes to attract more Foreign Direct Investment.

Museveni argued that the domestic, regional and international market Uganda has will feed the huge domestic production that may arise.

"We cannot go wrong. Africa is the epicenter for the huge socio-economic transformation that is coming next. Let us not miss the bus again," said the president.

Critical to all this, is the fight against corruption, a cancer which experts argue is slowing down the development of the country.

"This corruption will be eliminated. There will be no equivocation on this issue. The way we defeated the indiscipline of the army, is the way we are going to defeat corruption," Museveni said. Enditem