What a man sows is what he reaps, is how President Museveni starts his July 6 letter to the media in which he discusses the ailing Shilling and its economic implication. Mr Museveni, in this slightly edited letter, says the economy is sound and current situation only hurts importers.

There have been stories in some of the local newspapers talking about the “collapse of the Shilling.” The Shilling will never collapse because the economy is well-managed, the indiscipline of the various actors and their lack of foresight notwithstanding. It will simply become more expensive for those who import goods and services from outside to buy the dollar. Therefore, there should be no talk of the collapse of the Shilling. There should be talk of a more expensive dollar for those who import.

On the other hand, provided the economy is well-managed internally, especially the monetary policy (supply of money within Uganda), a more expensive dollar is good for Uganda’s exporters. Why? If I was exporting pineapples to Juba and getting $4 per piece, when the dollar is selling at Shs2,450, I would be earning Shs9,800.

When the dollar becomes more expensive and it sells at Shs2,600, then my pineapple earnings will bring me Shs10,400. Of course, some of the exporters import inputs. Those inputs will become more costly.

That rise in the input costs will not affect the profitability of the export business if the major portion of the inputs is local, for example labour.

Even the tourists who are coming into Uganda will be happier because their dollar will give them more Shillings. This is provided the inflation is brought under control on items that are not imported, which is already happening. The monthly food inflation for March was 17.4 per cent and the annual food inflation for the same month was 29.1 per cent while the monthly food inflation for June 2011 was negative 7.8 per cent.

Nevertheless, we must think of our traders, such as Kampala City Traders Association (KACITA), who make a livelihood by importing. They will, definitely, have a hard life. It is, therefore, good that the profitability of exporters in Uganda should not only depend on the weakening of the Shilling, but should depend on more permanent factors such as cheaper electricity and cheaper transport costs.

Export more
We must, therefore, bring more dollars into the country by exporting more. The more dollars we bring into the country, the cheaper the dollar will become against the Shilling. This will be good for our importers and will not affect the exporters if the costs of electricity and transport have been brought down. That is exactly what the NRM government has been fighting for all these years in spite of so many obstacles.

To promote sustainable growth and development, we must take hard choices targeted at improving the investment climate for both domestic and foreign investors. We should avoid cosmetic options that provide short-term relief and sustain distortions.

Economic saboteurs
Soon we are going to start on Karuma. In the meantime, we are going to have an exporting sector not based on the opportunistic elements of an expensive dollar and a weak Shilling, but on low costs of doing business on account of cheaper electricity and lower transport costs. That is why we are tarmacking roads.

Right from the bush days, the NRM has been clear on all these points. That is why Point No.5 of the NRM Ten-Point Programme talks of building an independent, integrated and self-sustaining economy. In other words, an economy that imports less and exports more. Since coming into government, I am always pushing for this cause in spite of being opposed by different elements even within the NRM. I will quote the following cases:

(1) Leasing the Dairy Corporation at Bugolobi to a Thai investor to make it more efficient. The Thai was fed up and went away. I got Sameer from India. Instead of processing 25,000 litres per day as was in the past, the Bugolobi dairy facility is now processing 280,000 litres per day. They are able to process one million litres per day. We are no longer importing milk. Instead, we are exporting and bringing in $5 million (figs. 2009) per annum because of the dairy sector. This, however, came amid stiff opposition. When I brought in Sameer, I was ridiculed as an idiot who ‘sold’ the Dairy Corporation for one dollar. Rent for that facility was not the issue. The issues were: to process our milk, to create jobs, to save on imports of milk and to export.