M7 Assumes EAC Chairmanship

From L-R EAC Presidents Paul Kagame, Jakaya Kikwete, Yoweri Museveni, Pierre Nkurunzinza and Mwai Kibaki

From L-R EAC Presidents Paul Kagame, Jakaya Kikwete, Yoweri Museveni, Pierre Nkurunzinza and Mwai Kibaki

Uganda’s President Yoweri Kaguta Museveni on Friday 30th November assumed the chairmanship of the East African community at the 14th EAC Summit held in Nairobi, Kenya.

This comes a day after the opening of the new East African Community headquarters in Arusha, Tanzania.

Presidents Mwai Kibaki of Kenya, Jakaya Kikwete of Tanzania and Pierre Nkurunziza of Burundi attended the commissioning ceremony in Arusha.

In his acceptance speech, President Museveni highlighted the need for preparing for future generation.

“God helps those who help themselves. We must have the eyes to see what matters for the sake of the future of our children,” he said.

The East African Community includes member countries Burundi, Kenya, Rwanda, Tanzania and Uganda.

Below is the President’s speech

I thank you for entrusting me with the responsibility of heading our Organization for this year (2012/2013).  With your support, I will do everything possible to advance the cause of our Regional Organization.

Uganda made 50 years last month as an independent country having been colonized by the British for seventy years.  On the occasion of that Jubilee, I gave a Jubilee lecture in which I identified ten strategic bottlenecks.  These were:

i)                    Ideological disorientation of believing in the politics of Tribe and Religion instead of highlighting patriotism;

ii)                  A criminal State.

iii)                Suppressing the Private Sector;

iv)                Under-developed infrastructure which puts up the costs of doing business in the economy and, therefore, undermines the profitability of investments;

v)                  A population which was not educated, skilled and with no good health care;

vi)                A narrow internal market on account of colonial balkanization;

vii)              Lack of industrialization;

viii)            An undeveloped Services sector;

ix)                Undeveloped Agriculture;

x)                  Lack of Democracy;

When we revived the East African Community (EAC) in 1999, we were addressing strategic bottleneck number five above.  We have also created COMESA and we are working on the African Common Market.  EAC created a market of 140 million people.  COMESA is a market of about 385 million people.  SADC is a market of about 230 million people.  The three of them have got a combined population of about 755 million people.  Therefore, these markets are there.  However, as we concluded yesterday, these markets lack infrastructure to link them and electricity to power production.  That we are working on.  This is the Hardware aspect.

There is, however, the Software part – the non-tariff barriers such as the delays in the Port and at the borders.  It costs about US$ 4,000 to transport a 40-ft container from Hong Kong to Mombasa, while it costs about US$ 10,000 to transport the same container to Bujumbura from Mombasa.  The use of the wrong mode of transport – trucks (by Road) instead of Railway – contributes 35-50 % to this high cost.  The process of shifting from the Road back to the Railway will take a few years but, as we agreed yesterday, we are going to work on it.  With our new found Oil and Gas in the Region, this will be easier.  However, let us eliminate the delays.  In this year of my Chairmanship, with the permission of your Excellencies, I will fight this myopia by the parasitic public servants.  They do not know where the future belongs.

What is remarkable and very encouraging is that the East Africans continue to increase consumption in spite of these irrational extra costs that are imposed on them by a non-caring bureaucracy.  Consumption in Uganda is going up by 20% per annum in spite of these oppressive irrational costs imposed on them by the bureaucracy.  How much more would they consume if they did not have these oppressive extra and irrational costs?

In conclusion, I am in the habit of telling Ugandans that, with modern economies, there are two sovereign actors: the investor and the consumer.  If either of the two is missing, there will be no production.  If the consumer does not buy, the businesses cannot thrive or survive.  Some time ago, when I was Chairman of EAC another time, one of the Partner States, on account of internal political problems, could not pay some contributions to the EAC Secretariat.  Some officials tried to make an issue out of that.  I guided those officials that, that Member State was already a very good member of EAC because its citizens were buying massively from EAC.  The issue of Membership Subscription was a marginal issue.  Therefore, the consumer is one of the two kings of modern economies.  The investor is the other king.  He or she possesses entrepreneurship, technology and savings or ability to borrow.  If we do not attract or develop these investors, our Region will not develop.  The petty chauvinism that I, normally, notice being banded around by the petty bourgeoisie in, for instance, Uganda is injurious to the future of East Africa.

There are two measurements in economics, which can help us on this issue.  One is the GDP (Gross Domestic Product), which is the measurement of all the value of the production that goes on in a particular country.  The other is GNP (Gross National Product), which is the measurement of the value of production of the citizens of a given country either in that country or abroad.  One year ago, when I was combating false prophets in Uganda, I looked at the figures of China, which have climbed from the 10th place in the ranking of World economies in 1978, to the 2nd place in the world ranking by the year 2010.  The GDP of China is now US$ 7.3 trillion, but the GNP is US$ 5.4 trillion, which means that foreigners have contributed US$ 1.9 trillion in expanding the economy of China.

In Luganda, we say: “Lubaale mbeera, nga n’embiro kwotadde” – ‘God helps those who help themselves’.  We must have the eyes to see what matters for the sake of the future of our children.

We should, however, not be despondent. Even now, provided the manufacturers are using the local raw materials, the profit margins in Uganda are of the magnitude of 15%.  Even if you are producing for the export markets, using the present railway system with a bit of re-organization, you can make a profit of about 20%.  Now that the problem of electricity is being solved, we are beginning to move.  Exporting to the Region is, certainly, profitable as far as manufactured goods are concerned – the profitability is of the magnitude of 20-25%.

As we continue with our integration process, we need to always evaluate the factors available to us: the land area, the minerals, the water and the human resource.  These are all important and must be treasured.  The human resource, however, is the greatest wealth of Africa – they are the consumers, the innovators, the workers, etc.  It is the greatest stimulus to production.  China and India have again proved this, if it needs any proof.  They have become magnets of global growth precisely because of that vast human resource.  This is one of the greatest factors I value about East Africa.

I thank you.

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