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.
