Community, Diaspora and Immigration
Hon Maria Kiwanuka, the role of the Diaspora in the Ugandan economy
Transcript from her speech at the 1st Ugandan UK Convention
She said that the Convention was very timely as developments at home had created many opportunities for members of the Diaspora. Uganda and Africa currently present some of the highest returns on capital in the world, with some projects having a ROI of up to 30%. This figure, she said, contrasted very favourably with the recession that the Diaspora had had to face in the UK and other parts of the world.
She said that the Ugandan Diaspora had special skills and networks, that they were very resilient people who migrated just with skills but still made it, for which she congratulated them, amid loud applause! She explained it was these very skills, attributes and the “I can do it. I am not afraid of anything. I can make it” attitude that she wished to be brought back home. This attitude should position well anyone wishing to exploit the opportunities in Uganda, to bring transformation back home and to themselves.
She assured the audience that her Ministry is committed to provide all the necessary help for people to settle back in Uganda or to invest in the country, aiming to provide the necessary infrastructure and policy environment. She said that the reforms had created a vibrant financial sector to provide credits and advice on financial strategies, and also strong telecommunication and transport sectors, which had lowered the costs of doing business in Uganda. She mentioned as an example how MTN and Western Union had joined forces to lower the costs of sending money back home by mobile phone.
Next, she highlighted the opportunities available in Uganda:
Oil sector – construction of oil refinery, storage facilities and pipelines, distribution of natural gas products, logistics and transportation, marketing of oil products, skills training and capacity building in oil and gas.
Tourism – Provision of accommodation facilities in major tourist parks, beach resorts around the water bodies, especially around Victoria Lake, Hospitality training facilities, marketing efforts worldwide to help promote Uganda globally.
Manufacture – Agriculture – Health – Finance – Textile, ceramics, dairy, beef, medical and veterinary drugs, plastics and packaging, fertilisers, seeds implements and paper product; agriculture processing (Uganda’s most promising and key strength); commercial fish farming, establishment of commercial seed multiplication centres, poultry, animal and crop farming, value addition through the processing of fruits and vegetables and other agricultural products.
Construction of silos would address the lack of storage, which is now forcing farmers to sell their products straight after harvest, at whatever price they can get, to avoid it perishing.
Leather processing, planting of trees, mining and ITC, establishment of business processing and outsourcing centres, digital paid television, management and transmission of data storage facilities.
Housing sector, energy, financial sector, mortgage facilities, merchant banking, Islamic banking products, leasing finance for example for farm machinery, education, infrastructure, highways maintenance and construction, water transport ferries (more ferries needed to the one currently available), health infrastructure, quality health care at affordable prices and credible health care insurance.
She mentioned that all these investment areas could be entered into on a PPP principle (Public Private Partnership).
She then shared her views on the role of the Diaspora in the Ugandan economy. In 2010, Diaspora remittances were estimated at $800 million, playing a crucial role in the economy. This role can be further enhanced by continuing working through organizations such as the Ugandan UK convention, UNAA in North America and some other community organisations. She suggested forming investment clubs, set up jobs database to help employers in Uganda to identify qualified and experience staff in the Diaspora. Uganda aims to strengthen and modernize the capital markets to make it easier for non-residents to invest in capital markets back home.
She talked about how Uganda plans to utilize the proceeds generated by the petroleum development. The Ministry of Finance is committed to transparency in the utilization of oil proceeds. The priority will be to invest in physical and human capital so that when the oil runs out, the nation’s children and grandchildren will have something to remember it by. It will not be used for consumption but only for capital development, such as the new hydropower dam in Karuma and major infrastructure rehabilitation works. A comprehensive policy paper is being worked on with technical input from partners such as Norway, the IMF and the World Bank. This paper will be publically discussed, and presented to parliament for approval.
She finished by talking about the youth. 70% of Uganda’s population is under the age of 25. Her ministry, she said is addressing this by putting more emphasis on vocational training, on business and technical skills enhancement rather than going for traditional white collar jobs. The ministry is looking to make agriculture more effective and productive and thereby become more attractive as an occupation for young people, instead of driving boda bodas. Agro-processing is encouraged as a job creation tool. This has been started in a small way with some of the commercial banks in Uganda, coming in to assist, and the Diaspora is very welcome to share ideas and suggestion on this matter.
She appealed to the Diaspora to get in touch through their local MPs at home in Uganda, explaining that the dual citizenship would have been approved much sooner if it had passed through a local MP rather than be presented as a matter from abroad. She urged diasporans to come to Parliament through their local MPs.
Hon. Kiwanuka then talked about the people present being privileged to have been born and brought up in Uganda and now working in the West , saying that their children born in the West do not have the same advantage . This is why the government made sure that the dual citizenship was approved. As the older generation retires and return to Uganda, the children will be left as the workers. What will their views on Uganda be? How is the current Diaspora positioning them to view Uganda? “As the mother country” Hon Minister asked, “or as ‘somewhere over there’ that Mum and Dad keep on talking about”?
She concluded by saying that the right time to go back home is to “listen inside you at the still small voice that will tell you when it is time”.
Hon Minister’s answers to some commonly asked questions:
What are the measures put in place to stabilise Uganda shilling against the dollar?
She enumerated the 3 major causes for the fluctuating rates. The first one is global, where the financial crisis had now reached Uganda; the events in the Middle East and North Africa which affected oil products, and a global demand for the dollar.
The regional aspect of the problem included a drought and climate change in East Africa that had had an effect, as well as the infrastructure bottleneck that is hitting home. And locally, the farmers received very high demand for their food as a result of the crisis in the horn of Africa.
There are 4 main sources of the dollar: export; foreign direct investment from companies and governments abroad, who through their own problems invest less; remittances on the decrease and lastly an increased demand for imports such as electronics (TVs, cameras, mobile phones) so that imports heavily outweighs exports, factors which all cause loss of dollar reserves.
The role of the Bank of Uganda is to smooth the curve, to sort out the volatility, so that the movement is not so erratic; its role is not to pump dollar into the economy. The rate is determined by the market. The government cannot control the exchange rate, but can only promote and diversify export, so that the export earnings close the gap with the import demand. This is the area where Hon Minister appealed to the Diaspora for assistance, “We must transform our nation from a consuming one with a much higher rate of import to a producing one with a higher rate of export”. Value added must be maximized through agricultural productivity, increased agro-processing, and improved skills training and utilization.
Are there any measures put in place by the government to discourage landlords from making tenants pay in dollars rather than our local currency?
There is no such law in the open economy of Uganda. It would cause unnecessary interference in the business environment. Tenants could be asked if they want the government to control the price at which they sell their products in those landlords’ premises. In any case, if landlords were made to charge in shillings, they would be writing contracts for a month or three months rate. In some cases, landlords charge in dollars because they took out loans in dollars and the tenants charge for their product or services in shillings but they change their rates as befits their cash flows.
Another question put forward was why import duties and clearing taxes were so high.
She explained that import duties in Uganda are determined amongst other factors, at the East Africa Community level. For example, Uganda suffered recently a shortage of sugar and the price shot up by more than 100%. The Ministry of Finance suggested to Cabinet, which approved, to temporarily lift the duty on imported sugar, so that it could fill up the gap and make the price comparable to local sugar. “But we had, as a government, to ask the East African Community to clear this suggestion. This is to show that many of the taxes and duties are fixed by the EAC, in much the same way that what is happening in the UK is fixed at Brussels”.