How Counterfeits will Fail Plan for Middle Income in Uganda

by Fred Muwema

The government push towards middle income by having an estimated 5 million working class Ugandans earn a minimum of USD 1,040 p.a ( approx. Ushs 3.7M) is an ambitious plan which is desired but may instead benefit counterfeit business in the process.

To understand the magnitude of the problem, you need to know that the global value of counterfeit traded goods has surpassed the national GDP of more than 150 economies in the world according to the World Bank .If you consider that the combined nominal GDP of Africa is USD 3.3 Trillion and that of Uganda is only USD 26 Billion, you can contextualize the problem.

This means that counterfeiting which is a form of organized crime, also politely referred to as illicit business has the capacity to break or distort any economic programme or economy in any African Country.

As the Government attempts to increase the income of Ugandans, it needs to find out what economic activity will produce this income, what the positive linkages of this economic activity are to the wider economy and lastly what Ugandans will spend this increased income on.

The one thing which is often concealed and ignored but which is seriously affecting and distorting the economic activity which produces this income in Uganda is the selling and buying of counterfeit goods and services. The consumption trends of many consumer goods in Uganda reflects huge expenditure on imported products , more than 70% of which are imported from Asia.

 Most of the current income of Ugandans standing at USD 780 p.a (approx. Ushs 2.8M) is being spent on these products, 60% of which are reported to be substandard and fake goods. Local manufacturing which should contribute to increased household income is not only minimal but it is also mainly squeezed out by imported and locally manufactured counterfeit goods.

The high urban food prices are not necessarily translating into higher incomes for the rural farmers because middle men and suppliers of a sizeable quantity of fake agricultural inputs are taking most of the profit. It is still not clear how manufacturing and the agricultural sector which employ the majority of Ugandans will meaningfully benefit from any increased incomes which are bound to be spent on foreign sourced goods and counterfeits.

Government should appreciate that improving people’s income must be a drastic call to action by all the people in government and the private sector. It cannot happen automatically as it requires a conducive performance environment to safe guard and increase local quality production so as to generate more money to government and the citizens. Household incomes in Uganda cannot be boosted so as to majorly support foreign industries and counterfeiters.

In our largely consumptive economy, it matters very much that we have a sub culture of selling and buying counterfeits which has taken root. I contend that any of our economic policies cannot afford to ignore the rising importance of counterfeits in the production and supply chain. We better take heed or face the disastrous consequences.

                                                        

                                                           Dated: 27th March 2017.

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                                         by Fred Muwema © 2017. All rights reserved