State of the Nation Address by H.E. President Yoweri Museveni, June 07, 2005

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President Museveni delivered a State of the Nation Address to Parliament attended by the Speaker, Hon. Edward Ssekandi, Members of Parliament, and
other diginitaries on June 07, 2005. Below are excerps from his Address.

Economy

Strong investment growth has been the backbone of overall economic growth. Real investment growth has averaged 9.7% since 1986, with the investment ratio rising from 9.3% of GDP in 2004/2005.

Investment growth has been driven primarily by the private sector, supported by growth in foreign direct investment (FDI). Annual FDI growth has averaged over 20% in US$ terms since 1993/94, with its share of GDP doubling. In 2004/ 2005, real investment growth exceeded 10% for the fourth successive year.

Export earnings of goods and services have more than quadrupled since 1992/ 1993. Equally important, dependence on coffee export earnings has fallen from over 50% of total exports in the early to mid 1990s to just 11.4% in 2004/2005. Export diversification has been achieved by reinvigorating other traditional export sectors (cotton, tea and tobacco) and promoting non- traditional goods export sectors (such as fish and flowers) and tourism.

Total exports of goods and services are projected to exceed US$ 1bn. for the first time in 2005/2006 due to continued growth in non- traditional exports such as fish and flowers.

This figure does not include the transfers of US$ 600m from Ugandans living abroad. However, one of the major challenges facing the export sector in 2004/2005 has been the appreciation of the shilling against the US dollar. The effect of appreciation has been to erode gains in favourable world price movement, thereby squeezing profits and putting downward pressure on farm prices.

This experience has reiterated the need to i) reduce aid dependency so that aid flows do not cause our exchange rate to appreciate unnecessarily and ii) add more value to our exports through improved quality, branding and processing.

As I told you in my new year’s speech, too much undirected aid is injurious to the economy, not only by causing the exchange rate to appreciate artificially, as pointed out above, but also increase the interest rates. Therefore, any aid should go for infrastructure such as roads and rail to make Uganda more competitive by lowering the costs of doing business here:

Structural transformation:

Industrial growth has averaged 10.2% per annum in real terms since1986, outpacing growth in both services (7.1%) and agriculture (3.8%). As a result, the share of industry in total output has increased from 11.0% of GDP in 1986/87 to 20.4% in 2004/ 2005, while subsistence agriculture shares have fallen from 28.9% to 17.2%.

These shifts constitute the process of structural transformation, whereby production moves slowly away from subsistence-based agriculture towards a mix of commercial agriculture, industry and services.

Employment

Mr. Speaker, Honorable Members, the creation of employment is a top priority of the Movement government. For this we have solicited investment from within and outside the country and we established the Uganda Investment Authority to handle investors.

Although we are trying our best to create employment opportunities, unemployment still remains one of the greatest challenges of our time. In the agriculture sector which employs most Ugandans, there are many in varying degrees of underemployment and until the sector is modernized this will remain the case.

Most of the 38% of Ugandans who live below the poverty line are to be found in the rural areas earning a living through the practice of archaic agriculture.

Our objective is that every household should earn at least sh20m per annum. To that end we have established the Bonna Bagaggawale (All get rich) Programme to oversee diversification of production as well as the addition of value in the rural as well as urban areas.

Today this initiative is being implemented in 30 districts of Uganda and we hope to cover the whole country in the near future. Government will make direct intervention in at least 1,000 homesteads in each district and we intend to take the private sector on board in this exercise. The intervention will include training in modern agro practices, establishments of agro production export villages, and production of high value crops.

Tourism is growing at the rate of 15% per annum, and between 2001 and 2003 the number of people employed in this sector rose from 30,000 to 40,000. Uganda has concluded an agreement with China for promotion of tourism. It is anticipated that by 2010, 1.5 million Chinese will be visiting Uganda annully earning us $1bn.

Conclusion

Mr. Speaker, I appeal to Members of this august House, whatever political beliefs they hold, not to divide our country.

Over the last 19 years we have urged unity because our destiny as Uganda is truly joined. Religion and ethnicity divided us; they polarized our nation, let them be consigned to history.

With the coming era of political pluralism, let us have principled standpoints, and let us not be carried away by our emotions and hatred. Unity should be the thread running through the politics of our country.

The struggle to end the tyranny in this country will have been in vain if we go back to the old political habits that led us there.

We in the Movement have always worked for the prosperity of our nation. You the leaders of this country, in this House, should be at the forefront of this crusade.

You should show those you represent how to conquer the extreme poverty in which most of them live. This is what we should all aim at; to pull those we lead out of depths of misery and despair to which poverty condemns them.

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