Oil and gas may be seen as the in-thing for cash-hungry governments in Africa, but agriculture will outlast it.
By Chris Musiime and Arthur Larok
Sir Winston Churchill reverently called Uganda the Pearl of Africa in his 1908 book, “My African Journey.” Churchill’s affection for Uganda was driven by what he described as the country’s “variety of form and colour” and its “profusion of brilliant life.”
Indeed Uganda is gifted with diverse flora and fauna supported by conducive weather and climate. Just as an example, Uganda hosts more than 1000 bird species, representing over half of the bird varieties in Africa. In terms of mineral wealth, besides oil and gas, Uganda is underlain with over 27 commercially viable mineral resources. These include gold, copper, cobalt, tungsten, wolfram, tin, rare earth elements/metals, kaolin, marble, iron ore, phosphates to mention a few.
Oil and gas may be seen as the ‘in-thing’ today for cash-hungry governments in East Africa, but agriculture will outlast it. The wise choice now, therefore, would be to use a good chunk of the money earned from oil and gas to, among other things, support investment in agriculture.
Agriculture will remain the most profitable, infinite resource to Uganda, not just because the majority of our people are involved in it, but because it is a sector of both comparative and competitive advantage. We should dispel the myth that agriculture is backward, traditional and Uganda should move on from it. With the steadily increasing global population and rising demand for food in the foreseeable future, Uganda could easily earn much more from exporting agricultural products than it expects to earn from oil, and at the same time have every individual agricultural family in the rural areas earning money and feeding properly.
Unlike oil which will surely run out someday, Uganda is endowed enough to support agriculture for a long time to come. Right from our days in Primary School, we were told that ‘agriculture is the backbone of Uganda’s economy’. It still can remain so despite the rather forced ideological arguments and misguided strategies that have rendered the sector quite unprofitable.
Even with the vast mineral wealth indicated above, agriculture remains the one sure sector that can lift Uganda and its people out of poverty for research shows that agriculture-induced growth globally can reduce poverty 4-6 times faster than any other sector. Agriculture, if well harnessed can be the foundation for an agro-based industrial transformation that can see us add value and become very competitive regionally and globally.
A number of countries that have made significant progress in poverty reduction have invested massively in agriculture. For instance, China’s success in modernising agriculture and transforming the rural economy over the last 30 years provided the basis for its rapid growth. From 1978-2008, China’s economy grew at an average rate of 9% with agricultural GDP rising by about 4.6% per year. Farmers’ incomes in the same country grew by 7% annually. As a consequence, China’s poverty incidence fell from 31% in 1978 to 9.5% in 1990, then to 2.5% in 2008.
Uganda can do even better than China. While China has about 200 million small scale farmers each working on averagely half a hectare of land, Uganda’s population is much smaller, allowing individual farmers to utilise bigger chunks of much more fertile land. Uganda has other advantages over China: like the world’s most favourable template climate for food production with potential for all year round harvests. 75% of Uganda’s geographical area is suitable for cultivation, pasture, or both. Uganda has over 202,000 hectares of potential land for irrigation fed by abundant fresh water sources.
A painkiller that will not cure the disease of poverty
Over the last eight years, there has been a lot of talk about Uganda’s oil and gas potential. There seems to be a lot of excitement within the political, elite and business class that oil will redeem the country and achieve the prosperity that the government badly craves for. The country seems firmly on course to start producing oil at the turn of this decade, exporting some of it through a crude export pipeline to the coast and refining the rest at a refinery that is planned to be built in Hoima.
However, the prevailing fall in prices of crude oil should serve as a reality check that oil will not solve all the country’s problems and its habitual price volatility should encourage the government to build a solid fall-back position-agriculture.
The global political economy of oil reminds us about the volatility of oil prices controlled by larger players, fears about oil funded terrorism, Russia’s resurgence with all the problems it comes with as we have seen in Ukraine and Crimea and America’s focus on alternatives to conventional oil creating a kind of ‘race to the bottom.’
Africa is littered with examples of countries that are regretting the consequences of neglecting their agricultural sector. Nigeria is the largest oil producer in Africa and its economy is heavily dependent on the oil and gas sector, which accounts for over 95% of export revenues, 85% of government revenues, and about 52% of GDP. But the vast majority of its 178 million citizens have seen little benefit from this legacy of wealth, with the country which is said to be the biggest economy in Africa, ranking 152 out of 187 on the UN Human Development Index. More than one third of the population lives in extreme poverty—defined by the World Bank as earnings of under $1 per day—while 9 out of 10 Nigerians live on under $2 per day. Most people lack access to basic services such as clean water, electricity and health care.
Interestingly, Nigeria is predominantly still an agricultural society with approximately 70 percent of the population engaging in agricultural production at a subsistence level. Nigeria has vast arable land-84 million hectares, suitable for almost every kind of agricultural produce. In fact before that country attained independence, agriculture was the most important sector of the economy. But now the country allocates only 1.6 percent of its budget to agriculture and has moved from a position of self-sufficiency in basic foodstuffs to one of heavy dependence on imports.
Let us ‘Oil Agriculture’
Both Oil and Agriculture are blessings to Uganda – gifts of nature from God just like the iconic Rwenzori Mountain. However, by far, agriculture remains the fore-runner in Uganda’s context and we must work to ‘oil’ that sector for the ripple benefits it will come with.
Mr. Musiime is the Managing Editor, Oil in Uganda. Mr. Larok is the Country Director, ActionAid Uganda.