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Uganda: Museveni Does Not Think Like a Drunkard
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The Monitor (Kampala)
OPINION
13 May 2008
Posted to the web 12 May 2008
Nyombi Thembo
This is in response to Capt. Charles Byaruhanga, in the article: "Museveni confused inflation with wealth" (Daily Monitor, May 9). Byaruhanga seems to over-inflate his opinion about himself by preaching economic management to the President with regard to what the latter was supposed to say on Labour Day at Kololo.
Byaruhanga seems to think that President Museveni is a kind of leader who just speaks to appease his listeners. This is where Byaruhanga totally misses the point. Museveni is a strategic thinker and a nationalist whose economics appreciation credentials are well known to all who are in the know about economic management.
Museveni does not look at the economy as a bunch of disjointed units but as a whole system where different sectors reinforce each other for economic well being of a country.
By President Museveni saying the increase in food prices was good for the economy he actually made the most well educated economics commentary of the year. As all of us know, more than 70% of our people in Uganda are engaged in agriculture, but because of low prices and in most cases experiencing decreasing trends, the farmers have been experiencing worsening terms of trade. Since the bulk of our people are engaged in agriculture, improvement in food prices will have a positive effect on aggregate demand.
With increased aggregate demand, government revenue will increase which obviously will improve government's capacity to pay increased salaries to workers. Increased demand by the bulk of our people will impact positively on the sales revenues and profit levels of most of the producers in the economy, stimulating investment and of course leading to payment of improved salaries to our people who work in factories and the service sector.
I wonder whether Byaruhanga has contemplated what would have happened to the farmers if the current increase in prices of basic necessities like salt and soap was not accompanied by even greater increases in prices of foodstuffs.
I have heard people say the increase in prices of agricultural products will not benefit the farmers because the prices of manufactured goods are also increasing. This is not true. A casual look at the movement of prices strongly suggests that prices of agricultural products are increasing at a higher rate than the prices of manufactured goods and services the net effect of which shall be improved terms of trade for farmers.
When you compare the basket of manufactured goods ordinarily consumed and produced by the poor it is evident that terms of trade have improved in favour of the poor farmers by more than 40% in the last one year.
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What is happening in Uganda today and indeed in the whole world is therefore not bad for the struggling farmers especially those in developing countries who have always suffered due to lopsided price increases. If Byaruhanga cared to browse our recent economic history, he would have known that every time agricultural prices increase, our economy performs well- he could refer to the coffee boom of the mid 1990s.
He should therefore know that by Museveni making that kind of remark, he was looking at the economy as a whole. Museveni is not a type who interprets economic indicators the way drunkards interpret the bible by quoting only those verses that seemingly promote alcoholic consumption. If Byaruhanga insists the increase in food prices is not a blessing to farmers, let him tell us whether farmers would benefit more by falling prices!
The writer is Minister of State for Luwero Triangle
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