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President's speech at G8 summit Sea Island/Georgia
2004-06-09 Mr. Chairman,
Africa is a Continent of 11 million square miles and 800 million people. 700 million of them are Black people – the original stock of the human race. Although Africa is the origin of Man and the human beings did not start populating other Continents until 100,000 years ago,[1] the population of Africa remained small. In 1900 the population of Africa was only 110 million. The African population stagnated mainly because of the enemies of Man that also thrive in the ambient climate of Africa – tse-tse flies, mosquitoes and microbes.
The population of Africa has now recovered and it is moving to optimal levels. This was one of the strategic bottlenecks that faced the Black race. Small population, in a vast and rich Continent, negatively affected the process of State formation, innovativeness of the African peoples and the ability to resist colonization.
Apart from this strategic bottleneck (a small population in a vast Continent with a lot of natural resources), there were seven (7) others by the twilight of colonialism. These were:
(1) Usurpation of people's sovereignty by colonialism and, later on, neo-colonial regimes that were characterized by total absence of democracy;
(2) Absence of infrastructure development (roads, rail, telephones, power-stations, schools, hospitals, etc);
(3)Suppression of the private sector, especially by the post-independence African regimes;
(4) Relying on exporting a narrow spectrum of raw-materials with no value addition whereby Africa would export both money and jobs to the outside world; Africa 'donates" to the outside world US$ 10 on every kilogram of lint cotton and about US$ 20 on every kilogram of unprocessed coffee;
(5) The development strategy of concentrating on import-substitution industries rather than the export oriented ones; since the internal markets of the respective African countries are small and the regional markets are disorganized in addition to being small as well, even countries that have been politically stable for all the 45 years since independence have not faired any better than those that have been unstable; the Western countries, while talking of helping Africa to grow, have, nevertheless, for most of this time, shut African processed goods out of their markets;
(6) The balkanization of Africa into 53, mostly sub-optimal states, has meant that Africa cannot have a large internal market under one Political Authority; have no power to negotiate with the rest of the world; and, does not have the military capability to deter those who permanently encroach on African rights;
(7) The African man and woman had their human potential stunted because they did not go to school to develop literacy and skills; and were in ill health because of no immunization, poor hygiene, poor nutrition and
inadequate medical care.
By the twilight of colonialism, these were the seven (7)
strategic bottlenecks facing the Africans. In the last 18
years, as far as Uganda is concerned, we have four (4) of
these seven (7) strategic bottlenecks addressed only:
(i) Democracy;
(ii) Infrastructural Development and Modernization (physical and social infrastructure);
(iii) Human resource development through Education and health for all; and
(iv) Private sector-led growth.
The other three (3) most crippling bottlenecks remain un-addressed. We are still exporting raw-materials instead of finished products; the need for export-oriented-growth is not understood well by many African political actors or by our Development Partners; and Africa is still politically balkanized, thereby inebriating her when it comes to negotiations with the rest of the World, consolidating the integration of the African market and strategic defence of Africa's security and other interests.
It is because of these seven (7) strategic bottlenecks mentioned above that all Black African economies, except for South Africa, have stagnated in the last 47 years since Ghana's independence in 1957. Here-below, is a sample of GDP per capita (using the Purchasing Power Parity method) of a number of the African countries compared to the developed and developing countries of Europe, America and Asia:
Table showing GDP per Capita of different countries of the World (figs. the Year 2002):[2]
Country:
(Africa) GDP/Capita (PPP) US$ Country(Asia) GDP/Capita ( PPP ) in US$: Country:
(Europe &
US) GDP/Capita (PPP)
in US$:
Botswana 7,000
DRC 600 China 4,700 Belgium 29,200
Ghana 2,000 India 2,600 Denmark 28,900
Kenya 1,100 Japan 28,700 France 26,000
Morocco 3,500 Malaysia
8,800 Germany 26,200
Mozambique 1,100 South
Korea 15,000 Russia 9,700
Nigeria 900 Singapore 25,200 Sweden 26,000
South Africa 10,000 Thailand 7,000 Switzerland 32,000
Sudan 1,400 U.K. 25,500
Tanzania 600 USA 36,300
Uganda 1,200
Zimbabwe 2,100
This stagnation has affected all African countries irrespective of
whether they were pro-West (i.e. capitalists, free market) or pro-East (i.e. socialist, Central Planning, state ownership of the means of production); whether they were multi-party or single-party; or whether they went through internal (civil) wars
or have been peaceful for most of these years. Botswana is an exception mainly because of minerals like diamonds and a very small population of 1,573,267 million. However, the stability and good governance of Botswana should also be acknowledged plus the export drive in the beef sector.
Let us look at each of the three points a bit more closely. Let us look at cotton. There are six (6) activity levels involving cotton: growing, ginning (removing the seeds), spinning (making yarn), weaving (making fabric), finishing (printing colours) and tailoring (making garments). According to present-day prices, we get US $1.20 per kg. of lint cotton (after ginning). If we spin the cotton into yarn, our earnings will go up by three (3) times ($3.60); if we weave the yarn into fabric, our earnings will go up six (6) times ($7.20) compared to the price of lint cotton. If we make garments, our earnings will go up ten (10) times ($12.00) compared to the price of lint cotton. Besides, when we export lint cotton, all these job levels are exported: spinning, weaving, finishing and tailoring. This export of raw materials is, therefore, the curse of Africa. By exporting all these jobs, it means that the African's purchasing power remains very low. If you have no job, you do not earn income. If you have no income, you cannot buy. Therefore, a country of jobless people is a country of a miniscule market.
If people are not employed because the jobs have been exported by this colonial and neo-colonial arrangement, it also means that their Government has no tax revenue with which to develop the Country.
Sometime ago I gave the following example of consumption levels for milk and beef (to a different audience). In Uganda, milk per capita consumption is 40 litres and beef per capita
consumption is 3.6 kilograms. Yet the World Health Organization (WHO) recommended levels are: 210 litres of milk per annum; 50 kilograms of white meat and 30 kilograms of red meat per annum. On account of this under consumption, Uganda, currently, has got a big overproduction problem of milk.
Since the Africans have been busy exporting jobs and money on every kilogram of raw-material they export, they are, in-effect, 'donors" in ignorance. They donate to others unknowingly and unacknowledged. They do not demand a Donors' Conference. They just donate. This, then, means that the entire Ugandan market is only US $30 billion, if you use the PPP method; but only US $7 billion if you use the simple method that does not factor in price levels. The purchasing power of the whole of the African market, if it was united, is US $550 billion. Yet the market of the USA is US $11 trillion, the EU market is US $8 trillion and that of Japan is US $4 trillion. It should be remembered that the population of Africa (800 million) is almost three times the population of USA (290 million); yet the consumption of the USA is twenty-two (22) times greater than that of Africa. Therefore, accessibility of these developed markets by our processed goods should be the single most important demand by Africa.
Aid strategy per se is a non-starter. It has failed in the last 40 years. Aid in order to trade should be the slogan. Instead of the West dispensing opinions about simple things like democracy and policing elections (things that are within our competence), they should deal with the one issue that is,
currently, outside our competence – accessibility to large and, therefore, lucrative markets. Accessing these markets will create jobs by attracting investment; jobs will uplift our peoples' incomes; and incomes will mean more purchasing power for Africans. Thus our internal market will grow for us and for our partners – from the West and from the East.
The process that has already been launched of rationalizing the 53 states into more viable regional units – SADDC, COMESA, ECOWAS, EAC, etc., should be accelerated, deepened and be made into the major units of negotiating with the outside world. Belgium is a small country of only 10 million people with a land area (31,000 sq. km.) equivalent to one region of Uganda. Yet it has a GDP of US$229.6 billion (using the simple method), larger than the GDP of East Africa (about US $28 billion), South Africa (US$ 113 billion) and Nigeria (US$ 42 billion) combined. Nevertheless, they (Belgians) dare not negotiate on their own with outside partners. They negotiate behind the umbrella of the EU, their greater wealth compared to Africa's notwithstanding.
This is the least that Africa must do! This balkanization must, gradually, be wound up. The present structure of African states is also a danger to our ecology. For example, you find a country like Niger, neighbouring a better-endowed country, such as Nigeria. The ecology of these two countries should be complimentary. However, the artificial border that exists between these two peoples means that the citizens of Niger are
not only landlocked; but they are also compelled to worsen the conditions of the desert by grazing their goats, cattle, camels,
etc.,in that delicate ecology. Yet if the desert was left alone without being worsened by livestock, it could regenerate.
I have been to the Kalahari Desert, at Ntswalu, in South Africa, where the Oppen-Heimers have regenerated the desert by winding up cattle ranches and turning them into nature reserves. Unless the citizens of Niger can be allowed to go to a more affable climate, they have no alternative but to worsen the desert.
Another danger, which is threatening Africa, is Global warming. Some powerful, rich countries have refused to ratify the Kyoto Protocol to control Global warming. In fact, some, who come from frozen parts of the World, have even said that Global warming is good because their frozen lands will become agricultural. Where does this leave Africa? What will happen to the Sahel and other, climate-wise, marginal areas of Africa? Can Africa, as presently constituted, negotiate in such matters? How can the African Continent, meaninglessly fragmented, remain silent when its destiny is being discussed by others who may not care whether it survives or perishes?
In the case of Uganda, we have tackled the other strategic bottlenecks. We have long adopted the strategy of private sector-led growth. This has meant reasonable growth in the last 18 years. The GDP has doubled in that time. The population has also almost doubled from 14 million to 26 million people.
Private sector-led growth has meant phenomenal growth in some sectors such as communication through telephone lines from 28,000 to 937,000; auto-mobiles from 40,000 to 500,000; permanent housing units in the Kampala-Entebbe-Mpigi area
from 55,000 to 135,000 units; milk production from 200 million litres to 1 billion litres; beer from 1.2 million cases (150,000
hecto-litres) to 12 million (1.5 million hecto-litres)[3]; steel
production increased from 16,595 tonnes (1996); to 35,000 tonnes (2003); etc.
We have also tackled infrastructure development and modernization. Tarmac roads have grown from 300 kms which were motorable to 6,000 kms; safe water coverage in the rural
areas has grown from 10% to 56%; safe water coverage in the urban areas has grown from 10% to 60%; electricity from 60 megawatts to 380 megawatts; access to health units of all type within the radius of 5 kilometres has increased from 30% to 70%; school classrooms at the Primary school level from 38,000 to 73,000 (Government schools). This does not include a large number of private schools. On the side of Human resource development, we have increased the enrolment of pupils in the Primary Schools from 2.5 million to 7.7 million; students in Secondary schools from 200,000 to 840,000; students in the Universities within Uganda from 5,000 to 64,000. Immunization coverage has risen from 40% to 86%; infant mortality rate has declined from 122/ 1000 to 88/ 1000 born alive (under one year); AIDS prevalence rate has declined from 18% to 6%; in some groups AIDS prevalence rate was 30%.
These are, however, but modest gains. In any case, we cannot achieve transformation alone. We need a Continental, or, at least, a regional effort for the reasons already mentioned.
I appeal to the friends of Africa to take a holistic view of Africa's problems rather than the piecemeal approach that has tended to characterize our interaction in the last 40 years.
We have made these achievements in partnership with the World Bank, IMF and other Development Partners. We would be able to achieve more together if we could address the three(3) remaining strategic bottlenecks more especially value addition and market access to developed markets. The level of Development Partners' support has been adequate;
Uganda, for instance, has got a total of US$ 764 million (2002/03), US$ 823 million (2003/04) in aid. All these could have a dramatic effect if the bottlenecks were dealt with in tandem with Aid in-flows. The issue facing us, however, is not merely the magnitude of Aid. What we need to resolve is whether we are talking of Vision-led Aid or Aid-led 'vision". That vision must, of course, be a Ugandan vision. Aid-led 'vision" is, in effect, not only useless in the end, but a serious constraint to innovative thinking. Only yesterday, the newly elected President of Malawi, Dr. Mutharika, told me that he will not accept an IMF programme for Malawi; instead he will work for a Malawi programme that is supported by the IMF. I salute Dr. Mutharika.
The HIPC terms are not working for a number of African Countries mainly because of lack of qualitative growth in the export sector. This is because of the problem I have already pointed out above of exporting raw-materials whereby we only get 10% of the super-market value of any product. The absence of value addition means that the Debt Sustainability Analysis (DSA) for Uganda shows that the Net Present Value (NPV) of external debt to exports ratio is 350%, well above the 150% envisaged. In the case of our sister country -Tanzania, the NPV of debt-to-export ratio for end of June 2001 would have been 137% (below the 150% target level) if only all the creditors had provided debt relief under HIPC terms.
Nevertheless, this NPV of debt to export ratio of 137% does not leave enough margin, in terms of resources, to undertake investment in infrastructure and social services. As matters stand, however, the present NPV debt to exports ratio for Tanzania is about 220% - above the 150% because the non-Paris Club bilateral and commercial creditors have not yet provided debt relief on HIPC terms. Even in the best scenario, the NPV of debt to exports ratio for Tanzania would be 110%. That would still leave a great burden for the Country. It is being recommended, therefore, that the Multi-laterals cancel the pre-cut off debts (1999). Moreover, the real answer is to enhance exports, not by gravitating towards exporting more raw-materials, but, by adding value to most of our present primary products.
Eastern Africa is also affected by the exclusion from the first list of the Millennium Challenge Account eligible Countries on account of erroneous and subjective analysis in many cases influenced by misinformation and negative travel advisories by certain G-8 Countries. The latter affects our tourism. Yet we have got good experience in fighting terrorism if only there was more serious co-ordination with the G-8. Uganda, almost alone for most of the years, stood against Sudanese-inspired terrorism. Lately, the Sudanese Government has largely distanced itself from the terrorist group that has been targeting civilians in Northern Uganda. The East African Countries, therefore, with more co-ordination with the G-8 can contain terrorism. Negative travel advisories, by depriving our people in the tourism sector of employment, may actually create fertile conditions for terrorism.
As already pointed out, Aid has failed to transform Africa. Whatever Aid Africa has received since Independence has been wiped out several times over by the losses we have suffered in trade. The unfair trade arrangements confine us to producing raw materials whose prices inexorably go down for very good scientific reasons. These raw materials are easy to produce.
Hence, all countries with similar climatic conditions produce
them. Thereby leading to overproduction and, therefore, declining prices.
Besides, as science and technology advance, new raw materials are identified, new techniques evolve or fewer quantities of the same raw materials are used. Thereby, either diminishing the use of the raw materials or rendering them irrelevant altogether. The fate of copper is one good example. Copper
was a raw material for telephone wires in the old telecommunications technology. With new techniques of wireless telecommunications technology, less copper is demanded. Hence, the collapse of the copper prices. African countries such as Congo-Kinshasa and Zambia that had considerable prosperity based on copper in the 1960s have fallen on hard times.
However, the greatest subversion to Africa's development has been accounted for by the protectionism in EU, USA, Canada and Japan. Why are the coffee prices for the bean coffee always going down? One of the causes is the crowding by many Third World countries into the production of coffee because they have no other free window for exporting raw materials or food products. There is protectionism on wheat,
sugar, beef, dairy products, corn, cotton, etc., not to forget intermediate products such as steel. The only remaining windows are, therefore, those provided by coffee, tea and rice – products that the temperate developed countries cannot produce. The Third world countries, therefore, crowd on those few windows and drive the prices down.
On account of these inequitable arrangements, Sub-Saharan Africa has, lost US$ 900 billion in lost trade opportunities, in the last 14 years; while it has only received US$ 445 billion in Aid over 42 years.
As regards to the AGOA legislation, it is the greatest solidarity act by the USA towards Africa in the last 500 years. It is beginning to yield results-300,000 jobs in Sub-Saharan Africa, have been created. The eligible Sub-Saharan African Countries, in 2003, exported US$ 18 billion of goods. All these are in danger if AGOA III is not promulgated in the next 20 legislative days in the USA Congress. We need to extend the third party fabric sourcing for 3 years and AGOA up to 2015. We count on President Bush to stand by the African Peoples by causing the proclamation of this law as soon as possible.
How can the G-8 and African leaders speed up the growth of Private sector –led growth?
How, then, can the G-8 and the African leaders help in promoting the private sector-led growth? As you can see, the strategic bottlenecks I have enumerated above, fall into two categories. Some are endogenous, they are from within
Africa; and some are exogenous – they are generated by external factors. The G-8 Leaders need to handle the exogenous and the African leaders need to handle the endogenous factors. The endogenous factors are:-
Ø Democracy within Africa;
Ø Emancipating the Private sector;
Ø Liberalising the economy;
Ø Ending political balkanization of Africa;
Ø Developing the human resources;
Ø Adding value to Africa's raw material;
Ø Fighting corruption etc.
The exogenous factors that need to be dealt with by the G-8 are:
Ø Market access and ending subsidies;
Ø Debt cancellation on HIPC terms;
Ø Encouraging companies from the G-8 countries to base some of their operations in Africa, so as to add value to our raw materials and earn for us more value as well as creating employment;
Ø Helping Africa to develop infrastructure that is a sine qua non for most of the private sector operations; and
Ø Stop interfering in the decision-making processes within Africa beyond friendly consultations. Consultations should not, necessarily, mean compliance with G-8 viewpoint – this will, inevitably, lead to mistakes and failures. The
Ø Africans need policy flexibility to deal with a host of issues including alternative sources of investment in case the FDIs do not materialize. Specifically, the USA should approve AGOA III now. Otherwise, the whole exercise will suffer irreparable damage. Third Party fabric sourcing should be renewed for another 3 years and AGOA should run up to 2015. The Bill is ready to be past by Congress. Our partners in the USA should act in a bi-partisan manner on this issue. The mere opening of the American market under AGOA had pulled Asian and American Companies to Africa.
Trade and value addition are medium-term solutions for backwardness in Africa. Aid has failed to cause that development. In the long-term production based on the intellect is the real target of all modern societies. Through educating her population, Africa will (in addition to finished procedures have to produce products based on her raw materials) have to produce products based on intellect – electronics, etc., We must, however, shift from the reliance on raw materials.
I thank you.
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