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‘We’re not landlocked, we’re landlinked’

Interview - May 20, 2014
Uganda has been one of the ten fastest growing economies during the last 20 years, but its economy depends too heavily on oil. Minister of Finance, Planning and Economic Development Maria Kiwanuka talks about how they are diversifying for a more economy sustainable economy, putting much emphasis on agriculture, an sector in which she believes Uganda’s strategic location gives it an advantage. She also explains other opportunities available in Uganda’s economy, such as in infrastructure and tourism
MARIA KIWANUKA, MINISTER OF FINANCE, PLANNING AND ECONOMIC DEVELOPMENT
MARIA KIWANUKA | MINISTER OF FINANCE, PLANNING AND ECONOMIC DEVELOPMENT
One month ago you said in Washington that your petroleum revenues would be used to fill the infrastructure gap, not just in Uganda but also for East Africa by making the nation the logistics hub of the region.  Can you please elaborate in this statement? Which are the strategic programs that are going to turn Uganda into the gateway of the East African Community?
 
As you know, oil reserves in the Western part of Uganda have been discovered. We have devoted a couple of years to ascertaining the best way to use the benefits of these oil reserves for our developing economy. We all know that all petroleum resources are finite. We have to make a plan that is sustainable. Our goal is for the black gold underground to come up to support the perennial green gold. Indeed, agriculture continues to be a strong point of our economy, and it will continue long after oil has gone. Our goal as a government is to make sure that more Ugandans enjoy high-value opportunities. For that, we need infrastructure. We are using all of our oil revenues to address our infrastructural gap—from roads to power, irrigation, ICT, and so on. 
 
Of course, infrastructure requires us to have a lot of capital upfront for a fairly long repayment period. This is what the private sector does not like. However, what they have to understand is that benefits accrue for anyone who is using it. That is why it is one of the government’s top priorities. On top of which, we aim to continue to provide the economic stability that has made Uganda one of the top performers in the region. We are also working to ensure that we continue to have a level playing field to attract more investors into the country. Added to this is the enhancement of our workforce’s productivity. The government is actively rolling out programs for training, skills development and healthcare.   
 
Without a proper education and health system Uganda’s growth potential will not be able to meet the expectations generated by a 2014 projected growth rate of 6.8%. As the ministry in charge of the allocation of cabinet’s budget, how are you promoting and encouraging the development of Uganda’s education and health system?
 
All the productive sectors (e.g., agriculture, energy, transport, water, etc.) and social development sectors (e.g., health and education) will all come into the annual budget. These are the things that I am responsible for. I have to balance the budget and make sure that our programs do not go beyond the budget. I have to maximize the mobility of resources such as domestic taxes, overseas development assistance (ODA), remittances, and foreign direct investment (FDI). I have to allocate them optimally between the sectors, and monitor their usage to promote accountability. 
 
Agriculture is the most important sector of the economy, employing over 80% of the work force and coffee accounts for the bulk of export revenues. Which policies are you implementing to make agriculture to reduce rural poverty?
 
We have to contend with the better infrastructure situation and the lower cost of production that you find in Southeast Asia, East Asia and India. Uganda is the heart of East Africa (EA). We have land borders with Kenya, Tanzania, and Rwanda. Burundi is just one country away. We also have connections with Southern Sudan and Eastern Congo. This makes as a natural distribution hub for EA. We are not landlocked. We are land-linked. 
 
There is an increasing focus on answering the regional food requirements. This goes beyond the luxury items that we used to concentrate on before the global financial crisis (e.g., fresh fish, organic coffee, fine spices, processed vanilla, etc.), which, apart from vanilla, necessitated expensive airfreight. At this moment, all our neighboring countries are our net food importers. I think we should seize this moment, and increase our productivity to answer the food requirements of Western Kenya, Northern Tanzania, Rwanda, Burundi, South Sudan, and Eastern Congo. That is where our geographical location becomes an advantage. You can get to these countries by land in 4 hours, even while we are along the shores of Lake Victoria. 
 
Uganda’s good climate positions it nicely as the food basket for EA. We have two growing seasons a year. We have short rains and longer rains. That means twice the productivity. Uganda has vast arable lands. Our landscape is mostly accessible.       
 
As the Minister of Economic Planning, which steps have been taken to ensure an inclusive and sustainable economic growth?
 
Over the past 20 years, Uganda has been one of the ten fastest-growing economies in the world. Things may have slowed down a bit during the global financial crisis, but now we are back in form. The goal now is to make sure that this growth is inclusive and sustainable. Inclusivity means giving Ugandans more opportunities to support themselves and their families. The sustainable part comes in meeting their families’ needs in terms of service. That is why you see me emphasizing agriculture, agro processing, distribution and tourism. Through this, we can get more people working and thriving in these sectors. They can afford more of their health, education, and social needs. That is the best way to become sustainable.   
 
Uganda has played a leadership role in championing further integration of the East African Community and the Ugandan President has been praised for reviving the Community. Can you elaborate in the role that Uganda is playing in order to accelerate the monetary integration process and take full advantage of its strategic position?
 
Yes, the five Heads of State (Uganda, Rwanda, Burundi, Kenya, and Tanzania) signed the EAMUP last November 30, 2013. It was a historical agreement. We will come together with a common currency.  We began with a common Customs Unit (CU), then we developed a Common Market (CM). Now, we have the Monetary Union (MU). 
 
We have learned from the experiences of others (the Eurozone or the East Asian Miracle of 2006/07). We have established a 10-year roadmap with beacons or indicators along the way in terms of revenues collected and the ratio of GDP to make sure we harmonize our statistical base (bringing our central banks together to one clearing house, getting the capital markets to a common platform and what to do with the payment-and-settlement system).  
 
We have indicators. We are aware that each one has different levels of financial sophistication and paths along the development route. As we reach each milestone, we go on to the next task. Hopefully, by the end of the decade, we will all be together to converge. Should this not be the case, those who are ready will go ahead, and those who are not will carry on till they are ready so we can all converge.     
 
The advent of smart phones and applications has paved the way for mobile money. How does this benefit the rural sector?
 
In the span of 2 years, banking penetration has gone from 29% to 58% of the population. The next step is to make sure that we have the mobile money services—not just depositing and withdrawal, but other financial functions, as well (things that you would expect from traditional bricks-and-mortar banking institutions). We are working closely with the private sectors. Apart from the banks, we are also collaborating with companies such as Western Union, Visa or MasterCard.
 
The goal now is to find ways to use technology for decreasing the cost of operating in the rural areas. Once we get the financial sector connected, we can find a way to leverage on it for business (micro insurance, business credit application, etc). We are conducting surveys and looking at what is being done across Africa. We have national surveys and accessed international documentation. We look into the 4 main things that investors ask for (all-weather roads, reliable power supply, piped water to the offices or factory premises, and skilled labor).  
 
Now is the moment to assure that those nations that are going out of the global economic slowdown know about Uganda’s economic renaissance and it’s most appealing sectors for foreign investment; roads, reliable power supply or piped water infrastructures require long-term capital investment. How is the government positioning Uganda as a top foreign investment destination and showcasing globally the most profitable sectors of its economy?
 
These initiatives are capital intensive, but we make sure that we maintain a good credit rating. We are leveraging on all our assets. As I have mentioned before, the oil revenues will all go to infrastructure. We are also looking into least-cost financing (LCF) based on the revenue from our resources. We have some private-public partnerships (PPPs) going on. There is Total (from France), and the China National Offshore Oil Corporation (CNOOC). UK’s Tullow Oil Plc. has signed up for production, even during this stage of exploration. After all, there are opportunities in supporting production in the oil fields, as well as prospecting for new petroleum finds. A lot of people are coming for that. 
 
We have prospects in the non-petroleum sector. Uganda is one big mineral nugget; probably because it sits between 2 rift valleys. We have gold, phosphate, copper, cobalt, uranium, nickel, and many more. We have just finished a mining survey for non-petroleum minerals, which is now available for investors to look at.
 
We have gas associated with the petroleum finds. This is good for companies looking to come in and develop gas-fired power (what we call independent power providers or IPPs). We have a tariff that investors can refer to for geothermal, diesel, and solar energies. We are very keen on doing that. That is why we are expediting our network of electrification for all the IPPs to participate. We have about 7 so far, and they are all in hydro. 
 
Apart from those sectors, we also have agriculture and agro processing. 10 crops have been prioritized; namely, cassava, maize, beans, rice, and so on. We have dairy farming, fish farming, cattle, and organic cotton. Without any effort or investment, Uganda is the 2nd largest producer of coffee, and the 4th largest producer of tea.  
 
As for tourism, Uganda is the best destination for boutique tourism. Eco tourism is one of them. You probably heard about our mountain gorillas. That is not even 10% of what we have. Here in Uganda, you can see the rare climbing lions, straddle the equator, sail in the world’s 2nd largest lake, experience the hot springs of the Kidepo Valley National Park, watch the gazelles and impalas of Karamoja graze (one of the most beautiful and almost untouched places), and enjoy snow along the equator at the Rwenzori Mountain National Park (RMNP).
 
Uganda has Jinja, which is the source of the Nile (one known to ancient civilizations, and it starts 50 miles from here). I could go on. 
 
Uganda is a very good place for community tourism. We have all the 4 major tribal groupings in Africa. We have the Bantus from the South, the Nilotics from the North, the Arabic and Hamites from the East, and the cluster from West Africa. They all meet in Uganda and they all live in peace and harmony with more than 40 tribes. Despite this diversity, we are still known as the “Land of Smiles”.         
 
From your experience working in United States. What do they know about Uganda? How is your government increasing people’s awareness of Uganda?
 
Many years ago, I have come across people who confuse African countries. Now, there is an increased level of awareness. This has a lot to do with global media and telecommunications. Just as people here now know what is happening in Chicago, people in Chicago know what is happening in Uganda. They have seen it on CNN or one of the other satellite TVs. 
 
The platform is there but we need to present Uganda in all its glory. We need to highlight the opportunities that we have for business, tourism, and residence. I think we need to do a lot of marketing and promotions. Who better to do that than the Americans? 
 
How would you describe Uganda in one word, in one sentence? 
 
Sir Winston Churchill was a great wartime leader, and he visited Uganda during the beginning of the 20th century. When he returned, he gave a talk—much similar to what I am doing now. He said, “When you think of investing, ladies and gentlemen, think of Uganda”. Why reinvent the wheel? There it is. It is still as true as it was a hundred years ago. Uganda is the “Pearl of Africa”, as well as the “Heartbeat of Africa”. 

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