Wednesday, August 6, 2014

UGANDA’S TICKING ECONOMIC TIME BOMB



Last week the United Nations Development Programme (UNDP) released their annual Human Development Report.

The key feature of the report is its Human Development Index (HDI), which measures the standard of living or general wellbeing of a nation’s people. It’s all very nice for your economy to be growing at gallop but if the benefits are not trickling down to the people it’s all for nought.

So while Uganda has been recording an average of six percent annual economic growth over the last decade its rankings on the HDI is a lowly 164 out of the 187 polled. This is in sharp contrast to its 45th position of fastest growing economies in 2013, which was in the top quartile of the 219 countries surveyed, according to the CIA World Factbook.

And the naysayers will jump up and down and allege government must be cooking the books, hence the contradiction. Not necessarily. It’s possible for an economy to grow but the benefits are not evenly spread around. 

In our case this is easy to see. When the NRM marched on Kampala agriculture accounted for nearly all of Uganda’s GDP. Over the last three decades agriculture’s contribution to the economy has shrunk to under 30 percent. 

This is a good thing and a bad thing.

Good because the economy is more diversified with services, manufacturing and construction producing more. Good because we are less and less at the mercy of changing climate or international market conditions.

Bad because it is estimated that as many as four in five Ugandans still depend on agriculture – the subsistence, soil scratching, type for their livelihood.

In effect more and more people are getting less and less access to the economic pie.

So the billion dollar question for us is why is this happening and what can we do about it?

As has been pointed out before the majority of our people are in the least productive sector of the economy, the agriculture sector has been growing by under two percent compared to industry and services which are growing at more than triple the rate.

Secondly, the fastest growing sectors are concentrated in the urban areas construction, manufacturing, hospitality and real estate activities and therefore benefiting the majority.

And related to that the sectors that would allow for upward social mobility are also concentrated in towns – education and health services, energy and transport infrastructure.

If you think about it the current crop of Uganda’s leaders came from poverty and got a leg up from a system that ensured they had inexpensive (often free), quality education and health services. This allowed them to get higher paying jobs than their cousins in the village allowing them, to pass on the legacy down the generation.

Economic growth must continue. There can be no development without economic growth. We need to exercise our minds on how to spread the love more equitably.

Where to start? Corruption is as good a place as any. The text book definition of the vice is using public goods for personal enrichment, when you think about it every shilling that a top official appropriates with his grubby fingers negatively affects service delivery to the people.

So while the majority have no access to health and education services, these officials appropriate the entitlement of thousands of Ugandan patients and students to take their own abroad to benefit from quality learning and treatment abroad.

Whichever way you look at it corruption is at the heart the growing inequality in our country. The economy is growing – only politicians with jaundiced eyes will dispute that, but clearly not all of us are the high table.

This state of affairs if it goes on unchecked will have an averse effect on economic growth – as more and more people shift attention towards corruption and away from production. To ignore these signs means this economy is a time bomb waiting to explode.


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