Saturday, August 7, 2010


The privatization process had just survived a determined effort to scuttle it by the National Resistance Council. Celtel was labouring under the projection that Uganda was good for under 5,000 mobile phone subscribers. The production of beverages had more than doubled since 1986 but chronic shortages persisted around Christmas time. The New Vision sold for sh500 and to get connected to dstv would set you back more than $1,500.

Fast forward 15 years to today. Privatization is done and over with (we did not have much to sell anyway). There are more than 10 million mobile phone subscribers in Uganda all told today. Shortages of soft drinks and alcohol have not been experienced this century. The New Vision sells for sh1,200 and I saw the other day you can get hooked up to dstv for about sh300,000.

It is safe to say that the standard of living for Ugandans on average has improved somewhat but more significantly for those on top of the food chain – the urban elite.

Just one caveat, you know what they say, if your head is in the fridge and your feet are in the oven on average you are ok.

Our consumption choices have widened and deepened but as we have seen with the west, consumption can only go so far in driving economies.

But some key things have changed little or not at all during the period.

Most of our trade with the world is ferried by expensive road transport. Our power generation falls significantly short of peak hour demand. Our agriculture is mostly subsistence. Credit is expensive and we remain a largely cash economy.

As a result raw materials remain our predominant exports. We have no multinational concerns, either state enterprises or private concerns. Our output has shifted away from agriculture to service provision. And corruption, which cost business as mush as 30% of turn over in 1995, is more pervasive.

Economic growth is imperative especially if your population is one of the fastest growing in the world. Sustainable economic growth will come with the increasing application of technology to coax more and more out of the ground and the people. With application of more technology, value addition we can earn more for less. It is linear logic.

One thing you can say has happened over the last 15 years is that the government has given the private sector free reign to decide in its own helter skelter way what the priorities are, hence our shift away from production to services.

No doubt services are useful, after all if you are a manufacturer you need transport, financial and telecommunications infrastructure, but service provision also has a major attraction for business men, the capital outlay is small compared to potential returns. And in the event that the politics goes south you can up and go having recouped your initial investment and more.

Of course people are saying economics has changed we need not go through the process of industrialization before we join the knowledge economy – where services come in.

Two things I can see wrong with this argument in our context. To begin with our whole education system is geared towards producing workers for industry and the civil service and secondly, a development of industry especially agro-processing is the fastest way to create employment all through the value chain for a country in which up to 80 percent live off the land.

With that in mind you have to wonder then when share of agriculture in the economic out put is dwindling while that by services is more than 50 percent today.

The point is, from where I am standing we have gone as far as we can go on letting the private sector grow like a weed. No country in the world has developed like that.

There are certain investments that only governments can make, long term investments whose returns would not turn on the private sector.

Beyond maintaining law and order and infrastructure development, governments need to invest in more than strategic planning and even more in execution of these strategies – after all what’s a plan if it does not work.

Our development record over the last 15 years is not much to write home about and this is a function more of poor execution of strategy

To illustrate in 15 years of economic growth, from as low a base as we started in 1986 Singapore was a middle income country by 1980 and is now considered a developed country.

And meanwhile in the initial years of its existence there was a real danger of it being overran by Malaysia, so our numerous wars are no excuse, as Singapore too had to divert a lot of resources to building up an army from scratch.

Published in the New Vision on 7 August 2010

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