Limitations of primary export-oriented economic growth

At its 63rd session the United Nations General Assembly held on September 22, 2008 a special high-level meeting devoted exclusively to Africa’s development needs. It featured the participation of 29 heads of state and government, along with representatives of African, developing and donor countries, bilateral and multilateral agencies and business and civil society organizations. The following is an excerpt from President Museveni’s address.

“In the 1960s Africa missed the boat because of two mistakes, in my opinion. Mistake number one was some anti-private-sector attitudes by some governments – that was one problem. Second problem was the failure to go for export-oriented growth. Some of the countries were engaged in what they used to call import substitution, and yet African economies are small, so if you only aim at positioning for the internal market, you are not going to go very far.
By the time we woke up and changed to private-sector-led growth, the economies of Eastern Europe had been opened up. The big economies of China, the big economies of India had been opened up and they have attracted more investments than our own small markets. We are now doing the right thing by encouraging regional integration. This is good. This is a real answer”.
Because of space limitation, I will focus on the limitations and adverse impact of Uganda’s primary export-oriented growth.
Before Yoweri Museveni came to power in 1986, he had aptly reflected on the need to balance agricultural production including foodstuffs to meet domestic and external market needs. He wrote that people in Uganda had been diverted to producing foreign-demanded crops that happened to be less essential for human survival. “There is need, therefore”, he noted, “to re-orient the economy in such a way that food production [for domestic consumption], while not abandoning the production of cash-crops needed in foreign markets, is given due emphasis” (Yoweri Museveni 1986).
In 1987 the government and the IMF signed an agreement for assistance under the Washington Consensus (stabilization and structural adjustment) terms. One of the terms is the increase and diversification of exports to earn foreign currency to repay external debt. The issue of export diversification was underscored at the national seminar on Uganda’s economy since 1986 which was held in 1989. On January 26, 1990 President Museveni addressed the nation and indeed the whole world, noting, inter alia, that time had come to introduce long-term measures to restructure the economy in order to create an integrated, self-sustaining, independent national economy. The major strategy was an export-led growth through promoting and diversifying exports. The balance between production for domestic consumption and external markets fell by the wayside. Farmers were urged to produce for cash and not for the stomach. Let us briefly review what has happened between 1990 and 2009.
The production and diversification into primary production for export has continued to suffer from the disadvantages of raw materials namely low unit prices and price fluctuations, no matter whether diversification in commodities and markets has taken place.  Consequently Uganda has continued to suffer from foreign currency shortages and to depend on foreign donations and remittances. The principal goal of integrated, self-sustaining and independent national economy will not be realized in the foreseeable future.
While export-led growth is commendable, it can produce desired results only if Uganda diversified into manufactured products with a high unit value. Countries that have succeeded such as the Asian tigers and dragon have increased the share of manufactured products in their exports.
The massive exploitation of natural resources such as fisheries, forestry and extensive land clearance to increase and diversify Uganda’s exports has led to extensive overfishing, deforestation and de-vegetation threatening sustainable development.
The export of foodstuffs previously produced or harvested for domestic consumers like beans and fish respectively has led to serious under-nutrition of infants, children and adults and related physical and mental underdevelopment, susceptibility to disease, lower productivity and mass poverty.
It is recommended that export-oriented growth be recast to bring in manufactured exports, meet domestic food demand and export surplus. In the end the success or failure of export-oriented growth should be based on the extent to which it has improved or undermined Uganda’s human and environmental security.