This week’s budget speech maintained the heavy emphasis on infrastructure development, saw dramatic increase in the agriculture budget against the backdrop of slower than projected economic growth.
The budget allocated to the works, energy and ICT ministry accounted for one in every four shillings of the sh26trillion budget. The agriculture budget jumped by 65 percent to sh823b. The economy grew by 4.6 percent a percentage point lower than was projected last year.
The expectation is that the budget will grow by 5.5 percent this year.
There was a lot more detail of course. The trick is how do you make sense of the budget these days, especially since the finance minister is no longer in charge of raising or lowering milk and bread prices.
Beyond spelling what government priorities are – putting money where their mouth is, the budget is an indicator of progress or lack of thereof of the economy.
So to look back ten years to the budget speech of then finance minister Ezra Suruma reminds us where we are coming from and could help us see the forest from the trees.
In the 2007/08 budget Suruma was gleefully rubbing his hands at the opportunities that abound and counselled the country that we needed to step up to take advantage of these.
"He listed the opportunities then as coming from the transition to peace in northern Uganda – Joseph Kony and his dreaded Lord’s Resistance Army (LRA) had been flushed out of northern Uganda and were being harassed by the UPDF in the DRC...
Relatedly Suruma talked of the dividends of regional peace. The World War of Africa in the DRC had cooled off and South Sudan civil war had come to an end, so with peace returning to the region it was realistic to expect an uptick in economic activity as people settled down.
The rise in commodity prices was another opportunity he pointed out. Commodity prices were hitting record highs as China was in the throes of an economic boom, driving demand for everything from oil to fish gall bladders. That year oil would cross the $100 a barrel mark fuelling spending binges in the oil producing countries and make more remote oil fields – like in Uganda, viable.
And finally he reported that the breath taking developments in information technology would be harnessed to drive the next stage of our growth.
He said that growth had risen to 6.5 percent from 5.1 percent the previous year but was unimpressed as the country needed to be growing by seven percent consistently to make a significant dent or eliminate poverty all together.
"First forward to today and the picture of opportunity could almost be a mirror opposite of that bright June afternoon a decade ago...
Peace prevails and northern Uganda has not missed a step in taking advantage. While there have been significant growth in economic activity in the region more importantly we have seen school enrolment, immunisation and mortality levels improving in the last decade there. The absence of regional animosity has seen regional trade flourish to the extent that for a brief moment South Sudan was our biggest export market before all hell broke loose at the end of 2013.
But since then there has been the global financial crisis where capitalist greed tripped over itself bringing the US and Europe to their knees and the contagion spreading to China, whose economy has since cooled down with the unwelcome effect in plummeting commodity prices. Oil prices bottomed at $26 a barrel in February unthinkable a decade ago when the price of a barrel peaked at $140.
And yes Sururma’s prediction about the benefits of information technology have come through.
During Sururma’s speech Facebook had only just nine months prior been opened up to the public, Twitter was still finding its feet and Whatsapp was yet to be founded. And there were only 4 million mobile users in Uganda, none of whom could access the internet via their phones.
The explosion in communication in the last decade has lowered the cost of doing business (everyone is available now), speeded up processes and created a whole new financial infrastructure, mopping up our smallest savings and bringing them into the formal financial sector.
In 2007 Safaricom’s Mpesa, the precursor to our mobile money, was launched in Kenya. Last year more than sh30trillion changed hands in all mobile money platforms in Uganda.
This last figure is interesting because it was seven times the size of Suruma’s sh4.35trillion budget a decade ago. The technology dividend Suruma foresaw has come with its potential not within the realms of our conceptual capabilities.
Just one more thing.
"Uganda’s economy is estimated now at about $30b two and half times the size of the economy reported in 2007 of $12b interestingly the population growth has not kept pace with economic growth now reported at about 35m compared to 30.7m in 2007...
It was around that time ten years ago that we shifted our emphasis towards infrastructure. We have a new dam and a few more kilometres of tarmac to show for it. Imagine where we would have been if we had built more road – in 2008 Uganda National Road Authority (UNRA) became operational and had another dam – Suruma was talking of starting on Bujagali and fast tracking Karuma then.
The growth in the economy is concrete the challenge now is to spread the love more evenly.