17 June 2017

Uganda: Buy Uganda Build Uganda Campaign Stirs Controversy

A campaign recently launched by Trade, Industry and Cooperatives minister Amelia Kyambadde to lure more Ugandans to consume locally produced goods continues to generate debate. Critics of the campaign argue that it was based on false assumptions.

Dubbed "Buy Uganda-Build Uganda (BUBU)", the campaign is part of the ministry's efforts to implement the 2014 Buy Uganda policy and correcting trade imbalances. The policy was premised on similar campaigns in Tanzania, Kenya, South Africa and Malawi among others.

South Africa in 2001 launched "Proudly South African" campaign with the goal of encouraging South Africans to buy local products. It was based on the idea that boosting consumption of local products by South Africans and those visiting the country would lead to economic transformation and job growth in the country.

Kyambadde and her team adopted a similar approach expecting that the country could earn over one trillion shillings annually if Ugandans and visitors were encouraged to consume locally produced goods.

The ministry estimated that the county could earn Shs 6.7 billion if parents purchased locally produced school uniforms for pre-primary pupils. It also expected earnings of up to Shs 199 billion from locally produced school uniforms for primary and secondary schools uniforms annually.

The army, police, prisons and Uganda Wildlife Authority uniforms would fetch over Shs 33 billion if sourced locally. However, critics say the campaign is bound to fail.

One line of thought says the private sector which the minister expects to play a crucial role has not been supported to deliver to the expectation. Others have accused the minister and technocrats of attempts to sabotage the East African customs union's free trade.

Bank of Uganda's executive director for research Dr Adam Mugume is one those that have expressed reservations about the Buy Uganda Build Uganda campaign.

"Well, there are those who believe that to stimulate exports is to do the 'BUBU' - Buy Uganda Build Uganda. But we all know that, for you to export, you must import. Think about it. There is no way you are going to produce a shoe 100% made in Uganda.

If you are to export a well made shoe... you must import some of the raw materials. So that is why in some cases you ask yourself; what does BUBU mean? Because for me to produce, I have to import. So, if am to buy Uganda and I want to produce a shirt and I don't have the materials, what do I do even if I love Uganda. Therefore exports is the way to go", he said.

Mugume says it is unlikely for Ugandans to buy the locally manufactured goods at a time when demand is low and when people virtually don't have money to spend.

Mugume thinks Uganda's biggest opportunity remains in trading with other countries in the region and outside the region. He says the ministry of Trade should study and select goods at which Uganda has an edge over its neighbours and vigorously market them as a means of closing the trade imbalances.

He agrees that the private sector is one of the ways of stimulating demand of locally manufactured goods and services but it also needs support from the public investments. Others have said the BUBU campaign seems like an easy solution. They insist Uganda needs part the global trade if is to attract foreign direct investments and local production.

EU head of delegation in Uganda, Ambassador Kristian Schmidt in a recent interview said that it is vital for Uganda to continue competition within East Africa and other regional blocs including the European Union.

"We must not believe in those easy solutions and I would certainly wouldn't recommend to East Africa and the countries here to give up on the regional integration because I believe a country like Uganda has everything to gain from integrating to its neighbouring markets. Uganda is landlocked and it has something to sell and share with its neighbours in the region. That is how Europe became prosperous. It was by creating that single market", Schmidt said.

He believes that if the economy in Uganda recovers in terms of consumption and importation among others, then the country is likely to see its current account widening and the interest rates waggling. One of the solutions to those would be more trade.

But Makerere University's School of Economics lecturer, Dr Ibrahim Okumu allays fears that BUBU will negatively impact on the East African customs union.

He says the essence of a custom's union is economic relevance among member states, which among other things, involves movement of goods and services across borders with the most competitive firms taking the day irrespective of the country of production.

Dr Okumu says member states have a duty to ensure that even within the EAC custom's union, their electorate has jobs and this can only be achieved by specializing in producing goods and services that would be consumed domestically and in the member states.

He insists that it makes absolute sense for Uganda to create economic incentives that would make its home-grown companies competitive locally.



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