Tuesday, April 26, 2016


Uganda’s economy has grown at a steady clip over the last three decades or so.

So much so that the economy has grown five-fold during the same period. Aside from a rebooting of the economy, experts say the country can credit this fact to the low base from which we begun, but which results would have been so much better if, during the same period, the population had not doubled in size.

What is also clear, is that not everyone has benefited from these statistics. In fact the figures show that the benefits of this exponential economic growth are being enjoyed by a few and the majority are getting poorer.

Clearly something is wrong.

"To paraphrase the great teacher, “GDP was made for man, not man for GDP”...

The question then is are we measuring the wrong thing by emphasizing GDP growth?

They say what you focus on grows, which explains the growth in the economy in the last 30 years. We have really focused on that number.

Last week the World Economic Forum on its twitter handle, released five other measures that work better than GDP growth – good jobs, well-being, environment, fairness and health.

They are not the first. In 2011 the United Nations passed a resolution calling on member states to measure the happiness of the people as a way to guide policy.

Prior to that there was the Human Development Index, also by the UN, which measured individual countries ability to improve standards of living of their people by measuring against such things as infant mortality, life expectancy, literacy and access to water.

It is an interesting debate that has been thrashed out in the deepest annals of economic theory, but has only burst into the fore in recent years, as people have put the aid industry’s record under closer scrutiny, especially in Africa.

How is it that tens, even hundreds of billions of dollars have been poured into Africa over the last few decades with little or nothing to show for it in the way of the improved livelihoods for the continent’s people?

"The obvious answer seems to be that the overemphasis on growth, which wold inevitably trickle down to the masses, is a fallacy...

So maybe we should focus more on the improving the citizen’s well-being, which sounds like the obvious end product that politicians and planners strive for.  Then why didn’t it happen?

To paraphrase another former Kenyan president Jomo Kenyatta in responding to his Tanzanian counterpart Julius Nyerere’s call for a move towards socialism for the region, “So what are you going to distribute? Poverty”

The logic is irrefutable.

The trick clearly is to see GDP growth as a means to an end – improved well-being for everybody, and not an end in itself.

But what one can see how the technocrats got so enamored with GDP growth.

How is economic output and hence growth measured? It is the sum total of consumption, investment, government expenditure and the difference between exports and imports.

"So to move the GDP growth needle government can just spend more, like they are doing now on roads and dams and there will be a corresponding growth in the economy...

However imagine if our targets, which we tracked monthly or annually were such things as the social indicators listed above and celebrated them as widely and as much as we announce improvements in GDP growth, one would expect more dramatic improvements.

Interestingly all these targets are there but as has been mentioned we don’t trumpet them from the rooftops like our macroeconomic gains and secondly, and as a consequence of the first, we don’t place much emphasis on the outputs from investments in the things that will have an enduring effect on people’s living standards – health, education and other social services.

So we have statistics flowing out of our ears and noses on how inflation or monetary aggregates or balance of payments are progressing or not, but nothing comparable in terms of quality of the outputs of our education and health facilities. There we are content with such amorphous figures as enrollment, literacy and life expectancy and not quite into the finer details of curriculum relevance to the environment or preventative medicine.

Again what you focus on is what expands.

"The problem with focusing on the outputs – improved quality of life rather than input – classrooms or health center built, is that it is too hard. The interventions needed for example to increase academic achievement across the board, needs more interventions than form only the education ministry. You would have to rope in the works, health, energy and all other ministries at once to achieve meaningful progress....

So we take the short cut and focus on GDP and may the devil take the hindmost.

In the last three decades we have demystified growth. Our planners know what to do to keep the growth machine going even in their sleep. A legacy not to be frowned upon.

To cement their legacy they need to learn how to translate that growth into meaningful development for the majority.

In trying to do that they may even realise that five percent economic growth is nothing to write home about.

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