The Governor of Bank of Uganda Prof Emmanuel Tumusiime Mutebile has described Buy Uganda Build Uganda as an ill-conceived import substituting industrialisation policy, which endangers regional trade.
The Governor was on Thursday speaking at a policy workshop on export promotion and local content in Uganda at Sheraton Hotel in Kampala, where he cautioned that there are many potential problems with the BuBu campaign which he referred to as “fundamentally incompatible with our [Uganda’s] commitments to our partners in EAC, to implement a customs union and a common market.”
“BuBU essentially involves the use of trade distorting non-tariff measures which are a direct violation of EAC customs union protocol which prohibits partner states from undertaking any administrative measures which discriminate in favour of its own producers at the expense of those of its partners,” said Mutebile.
The Governor also stressed that Uganda gains important benefits from the economic integration in East Africa which provides the market for almost a half of Uganda’s merchandise exports and for more than a half of Uganda’s manufactured exports.
“Protectionist measures which discriminate against our partners states will put this market at risk, jeopardising the economic prospects of Uganda’s manufacturing exporters which are the most efficient manufacturing firms in the economy,” he said.
He also said that Uganda is to re-orient her economy towards producing for export markets, it must shift the scarce resources away from producing for the domestic market [as presupposed by BuBu] and this will require a deliberate reduction in demand for domestic products.
Most countries according to Mr Mutebile have grown on the basis of outwards-led export strategies and that it is participation in the main market that provides the main stimulation for productivity gain if Uganda is to follow suit.
Meanwhile, Ms Amelia Kyambadde, the minister of Trade Industry and Cooperatives said that the policy was not as perceived by the governor, arguing that it is intend to foster quality of locally produced commodities before they hit the international market.
“We are not stopping anybody from importing but what we are saying is that let those commodities first gain confidence here, for better performance out there,” she said.
Ms Kyambadde also said that through BuBu government will secure market for at last 30 percent of locally manufactured products including contractors in major development works.
As a benefit already underway, the minister said that local manufacturing companies in cement production and steel mills were already ear-marked for subcontracting in road construction works and Karuma Power station.
She also said that through BuBu, State security institutions are now buying domestic fabric for their uniforms unlike the case was in the past.
“The police, army and prisons all get their uniforms from NYTIL, a local textile manufacturer,” said Ms Kyambadde.
However, Mutebile said that its current outlook, BuBu has been given as a strategy for domestic production at least to encourage everything to be produced here.
“It is production, participation in export markets which provides the main stimulus for productivity gains and technical development in our countries, he said.
Prof Richard Newfarmer, the International Growth Center country director for Uganda said that in all its undertakings, Uganda must bare to the fact that countries that have boosted their exports have also got to do a lot of importation in form of raw materials used in production.