Monday, January 4, 2016

Value addition, the way to go for Ugandan producers.




By Kiwewa Faisal
 
Value addition could be defined in these 3 ways,
Accounting:Alternative term for gross income

Economics
Difference between the total sales revenue of an industry and the total cost of components, materials and services purchased from other firms within a reporting period (usually one year). It is the industry’s contribution to the gross domestic product GDP and is the basis on which value added tax (VAT) is computed.

Marketing
This is Creation of a competitive advantage by combining or packaging features and benefits that result in greater customer acceptance.

For a long time, farmers in Uganda have earned low returns because they lack the means or the partners to convert their harvests into products with a longer shelf life and a bigger market.

Low levels of agro processing have also denied young people jobs, especially in the rural areas, which lack factories to process farm produce such as fruits, milk, grains and vegetables.

As a result, the poverty levels in these areas have remained high as much of the harvest goes to the waste due to lack of equipment to preserve and process the produce for example why do we still ferry produce like matooke, cassava potatoes with their peelings to the market, the farmers would be better off peeling them and packaging them, because by doing so they would get more money.

This waste in turn just fouls the cities and frequently blocking drainage channels. Look at the grain market for example in Busia, why do we export maize grains to our neighboring markets of Kenya, Congo, we could earn more money if we add value to those grains and export floor. The cocoa too could earn more revenue if we exported finished products like chocolate instead of cocoa beans.

When it comes to our exports; we are lagging behind. Uganda being the leading producer of coffee in Africa and 17th in the world still exports coffee beans. By now we could be exporting packaged coffee with our brand names meaning we would earn more money and our coffee would be competitive to the outside world.

The country lacks a tax regime that offers incentives to farmer’s societies to help them venture into value addition. This adversely affects rural incomes even as middle men exploit growers through poor prices
 
The investors too should be encouraged to embrace agro processing to spur Uganda’s agriculture industry which contributes to 80% of the national wealth.

SME’s could be financially assisted to venture into value addition at the rural areas, with multinationals given tax incentives to partner with farmer’s societies and SME’s in rural areas. SME’s and farmer societies could cut on operation costs by marketing their products / services jointly. Government has to come up with a business policy that helps emerging companies to secure their investments rather than focus on individual issues, the government needs to address the needs of the SME sector as a whole. A stable policy environment, supportive tax measures and conducive investment climate will facilitate growth of SME’s.

Buy Ugandan, build Uganda, could create a ready market for locally made goods. When the government buys foreign goods, it creates jobs abroad rendering more Ugandans jobless while draining the much needed foreign currency reserves. And some of the imported goods are counterfeits that should be eliminated from our market.













About The Author,

Kiweewa Faisal (Hons. BSci.Finance)
 

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