Why resource-based industrial devt provides the springboard for our economic takeoff

Reacting to my opinion published in The New Times Tuesday, December 15 about industrialisation in the EAC, my high school classmate (now a big man in Kigali) argued that the future is in hi-tech, not growing potatoes. Yet this is where the future of our economies lies. Potatoes. And no better an illustration of this than an incident we took for a joke over a decade ago, but which on deeper analysis, revealed the goldmine the East African farmer is sitting on. And the story revolved around potatoes. Yes. Potatoes. When we launched the Isuzu platename in Rwanda for the first time ever in 1997, one of our first clients outside government was a potato farmer in Musanze, doubling as a transporter. And this, according to our director of sales and marketing (an American guy then), was where the future of this market lies. ‘Rwanda is a market of the future, on the strength of its agricultural potential’, was his argument, as we in sales and marketing, convinced engineering to adopt the turbo-charged engine on the pick-up trucks, specifically for Rwanda due to its terrain. Coming from an economy whose agriculture is at industrial level, our director rightly saw the Rwandan potato through the lenses of the potato crisps in the supermarkets and the dehydrate potato slices in dry rations for institutional consumption (the forces, schools and universities, relief and other mass consumption needs). We all do consume these imported potato crisps from supermarkets, where one popular brand has become synonymous with the product itself. Pick a tube of Pringles potato crisps. The basic product is not different from the one packed in a polythene paper (thank God Rwanda banned this) that a vendor carries around in our cities and towns. Let’s unravel the Pringles crisps. The tubular container is made of Kraft paper, whose production is another sector of industrialisation altogether. The designing, printing, rolling all require another set of skills (with a degree of light and medium technology), while the bottom, top and rims come from another industry. All because of the potato. Yes. The potato. How many skilled, semi-skilled and unskilled people are employed in the production of this tubular container for potato crisps? How many are employed in support sectors such as transport, insurance, adverting linked to this container? All because of the potato. And because of this valued added, it means that the farm-gate price paid to the Musanze farmer will be high enough to translate into disposable income, thus the demand for hitherto aspirational and luxury goods. This, I am told, was the secret behind South Korea’s industrial development. The agricultural sector was developed to a level where farmers earned enough income to have effective demand that drove the establishment of the manufacturing sector. Food security at the household level is another dividend to be reaped from resource-based industrialisation. This is because food security is a function of balancing the ‘fate-ratio’ of the harvest. The ‘fate ratio’ refers to what is done with the harvest, and there are three alternatives here: eat all; eat some, sell some; sell all. The golden mean is ‘eat some, sell some’ and the ratio between what is eaten and what is sold is the determinant of food security at household level. If a farmer sells a kilogramme of potatoes at Rwf5,000 farm-gate price to the crisps processing factory, then he will need to sell less kilogrammes than if he were to sell at Rwf500 per kilogramme. This means he earns more income selling less food, thus keeps more for domestic consumption. As Nziyonsenga comments on the same discussion, graduates of BTVET/TVET will find their skills and innovations in resource-based industrialisation. Indian Technicos, the drivers of BTVET/TVET education are massively into agricultural engineering: producing machinery for the agricultural sector, for virually every stage of the value chain across all crops. And talking of India, the numbers here do come to mind as another variable in resource-based industrialisation, notably agriculture. The numbers, especially when it comes to consumers. A few months back, we were commissioned to undertake a market feasibility study for a potential investor in the spices sector in Uganda. Our findings revealed a very instructive fact: one food processing firm owned by an Asian-Ugandan family, averages daily sales of three million 50-gramme sachets of curry powder. At Ugx100 (about Rwf25) per sachet, this translates into a daily turn-over of Ugsh300 million (about Rwf75 million). From kamurari, urusenda, pilipili! Recalling that during the recent Afro-Indian Summit in Delhi, President Yoweri Museveni of Uganda decried the imbalance of trade between Uganda and India. Perhaps we may begin from curry powder. We agree with India to let one Indian citizen consume 50 grammes of East African pilipili once a week. The author is a partner at Peers Consult Kampala and CET Consulting, Kigali. bukanga@yahoo.com

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Why resource-based industrial devt provides the springboard for our economic takeoff