The global recession is about to be brought to a successful end thanks to good macro economic policies by the new administration in the United States of America. Economists in developing countries including Uganda waited with abated breath wondering how the credit crunch would affect their fragile economies. Some argued that it would only be a matter of time before the depression would spread to our country while others reasoned that given the fact that a country like Uganda is not yet a highly monetized economy, the impact of the crunch would not have the same shock it had on well developed economies in the Western World. Today we can state with certainty that the credit crunch is waning having had a slight brunt on Uganda’s economy.
Economies world wide react to depressions differently. The world has witnessed various economic slumps during the last one hundred years although the most pronounced have been that of 1920’s and the current one that peaked in 2008. In between these periods however there were intermittent shocks and distresses with varying magnitudes. Some have been handled by technocrats without allowing the world to get to know about their extent.
Although Uganda did not experience the true recession as some people had anticipated, no body in government should claim that the crunch did not happen here because of any preconditioned policies and programmes that shielded us from the depression spank. It is true that the crunch did not affect our financial institutions because very few are engaged in mortgages. It did not affect our industries because most of them do not directly rely on inputs from the developed countries which were experiencing the real chomp.
The direct effect however came in the form of increased prices of food throughout the country brought about by the hike in international oil prices. Analysts are already predicting that the price of food in Uganda may never normalize to the former cost that most of us had been accustomed to for a very long time. Prior to 2008, Uganda perhaps, was one of the few countries in the world with the lowest prices of food. All this has been altered and is likely to remain so for quite a long time. As readers may recall, during peak harvest period, one would buy a bunch of Matooke at as little as 1000 shilling or less especially in villages. As of today, you can not get the same bunch at twice this amount even in the most remote part of western Uganda, the leading Matooke producing area in the country.
This state of affairs is explained by largely two factors; namely the credit crunch and secondly by a general decrease in production of food in the entire country. The former is not as strong a factor as the latter. It is critical that policy makers in government take careful procedures to address the problem of food shortage in Uganda before it gets out of hand. What has happened is that, of late, there is an unprecedented movement of persons from rural areas into towns and cities by young energetic persons. Majority of them are engaged in petty business but mainly in boda boda business. In effect this means that the people who would have provided the much needed labour to produce the food, have instead migrated in search of other jobs which are considered “superior” to farming using the traditional hand hoe.
The little food that is being produced by the few, (moreover old and weak) farmers that remain in the villages can not satisfy the demand from the ever increasing numbers of people in towns. This in itself would not be a problem if there was a premeditated plan by government to encourage people to start large scale mechanized farming that is capable of meeting the food needs of the country both during and out of season. Large scale farming in Uganda is very difficult to implement because of continued land fragmentation that makes it almost impossible to get one whole piece of land that favors such type of agriculture. Indeed, it is hard today to get free land, say of 1000 acres, in the western and central parts of Uganda without human settlement. Therefore, if our agriculture sector no longer has small holder farmers because of rural-urban migration, and at the same time our land tenure system does not support large scale farming, the obvious, which unfortunately has already happened will continue to ensue until the same people who flocked into towns go back to where the came from or government implements a not-so-popular maneuver of pushing people off the land en-mass to release it for large scale agriculture and farming. In the meantime, while the credit crunch shall be history in a few months or years to come in the countries like USA, Uganda shall have its share of a serious depression that may last longer and is difficult to deal with because of no other reason than not acting in good time.
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