Monday, September 11, 2006

Uganda's Economic Success: Building Itself from the Ground Up

Unfortunately, many people associate Africa with famine, starvation, corruptness, disease, and death. Yet, within this continent that is made up of hundreds of millions of people who are affected by these tragedies, there coexists areas that can provide a refuge for a struggling economy. Uganda, a country that borders Kenya in sub-Sahara Africa, “is ground zero for a startling transformation of African agribusiness that’s spawning scores of entrepreneurial opportunities. Uganda boasts two growing seasons, ample rain, rich volcanic soils, and millions of small farmers eager to expand production of cash crops. Output of everything from fish to rice, vanilla to sunflower seeds, roses to potatoes is soaring. Overall, Ugandan farm output increased nearly 50 percent during the past decade.” This boom is mostly on the back of small-scale farmers, some of them not owning more than half a hectare, that are willing to work for low wages and to sell their crops to foreign food processors as long as the farmers are making a good profit.


Two of the major crops that have been leading this success are vanilla and rice. Luckily for Uganda, but not so lucky for the victim, Cyclone Hudah destroyed Madagascar’s vanilla crops in 2003, which accounted for a large majority of the vanilla sold in the world market, and caused vanilla prices in Uganda to sky rocket. Some “80,000 small-lot farmers are currently reaping the benefits” by growing massive amounts of vanilla, or “green gold” to the Ugandans. At the peak of vanilla's upward spiral to success in 2003, vanilla beans sold for $200 a pound. The success of vanilla has improved the lives of many farmers in Uganda. Now, many more citizens are able to send their children to better schools, which is also positive for the country because Uganda will have a more educated generation to continue the prosperity.


“Rice offers even larger potential gains. Uganda’s rice production has doubled in the past five years and is projected to more than double again by 2011.” This is extremely good for the country, as well as the continent, because now, neither is forced to import rice at high prices. This will hopefully cut down on the number of starving people because rice will become more affordable. “‘Uganda is still five years away from becoming a major exporter,’ says Robin Kuriakose, the rice manager in Uganda for Singapore-based trading firm Olam. ‘But entering the market now can bring profits from domestic demand.’”


The sudden prosperity that Uganda is experiencing is definitely turning heads, but there are certain problems that need to be taken into account before companies dive into this economic opportunity head first. There is one aspect to keep in mind when deciding whether or not to bring business to Uganda: Africa is still, well, Africa.” Those five words sum up all of the problems that one might encounter when exploring a business venture in Uganda—corruption, guerillas, climate change, war, disease, famine, thievery, electricity, and limited materials. A big problem that involves rice production is countries like the U.S., Japan, and Korea all pay their growers heavy subsidies which restrict the market for smaller, less wealthy countries.


Even though Uganda might not have a smooth road to becoming a global power, there are definitely a lot of positive forces that could further its success. For example, rice and vanilla are not the only two resources that Uganda has to offer to the rest of the world and not all items are subsidized like rice either. Fish has become a major export out of Uganda because of the European and American desire for fresh and exotic foods year round. Many European and American companies have gone to Uganda and flown fish thousands of miles to the rest of the world. The same is true for roses. “Thanks to near-perfect growing conditions, low labor costs, and an influx of international expertise, Uganda is on its way to becoming a world power in roses,” which is one of the highest grossing crop in the world’s flower market.


As for the rest of the problems, with foreign investment and further development of the land, Uganda’s economic problems will diminish greatly. Hopefully this will lead to a more politically and socially stable nation, which in turn leads to a more stable business atmosphere. Modernization and wealth can alleviate some of the problems that Uganda is facing. The environmental problems are unpredictable, but that is no reason for companies to sit back and let a good opportunity go to waste. Calving Burgess, a real estate developer who lives in the United States, says “‘Americans are crazy if we don’t come…Opportunities like this around the world are rare indeed.’”


Although Uganda faces many obstacles politically, economically, and environmentally, if these obstacles are managed correctly, then Uganda will be able to continue to thrive and rank among some of the top exporting powers.

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