In the last five years or so Kampala Capital City Authority
(KCCA) has been laying tarmac on the roads around my home. Their work is
extensive that between home and work my exposure to unpaved road is at most 100
meters most of which is within our communal compound.
This development means travel time to work has been from 30
minutes to just under 15 minutes without traffic, it has reduced visits to the
mechanic considerably and beyond raising the average property prices has served
to increase the economic activity in area. New construction, schools, shopping
centers, bars are among the economic activities that have either sprouted up in
the area or been boosted by the new paved road network.
Our own health serves as a good analogy for the health of
economies. An economy is only as dynamic as the coverage of its transport
network. The easier people and goods can get around the more efficient the
economy is and therefore the more work that is done.
Since the body’s basic circulation infrastructure is laid
out from birth, improving transport and communication networks can be analogous
to how much water we take in. Adequate water intake means circulation is eased
as waste is evacuated and build up of cholesterol and other blockages is
minimised. Improvements in circulation show themselves in our lives in
increased vitality and less ill health.
We have forgotten that when the roads are bad you cant move
and the economy cannot grow.
"An indication of how far behind we are on average a middle income nation had at least 88.74 km of paved road for every 1000 square km of land area. In Uganda assuming about 4,000km of paved road our equivalent figure comes in at 16 km for every 1000 square km...
Averages can be deceptive but this means we need to increase
our stock of roads at least five times to get to middle income status.
The 1970s and 1980s when little to no new roads were laid
means that we are playing serious catch up and the need for speed is of the
essence. And this goes for all other infrastructure – power generation, railway
and water transport. Only in telecommunications are we ahead of the curve given
international averages.
In appreciation of this deficiency government has gone out
on a borrowing binge to finance the infrastructure development.
The Karuma and Nsimba dams will account for almost $3b
between them, the standard Gauge Railway another $9b , this before you add all
the road developments going on around the country which can account for easily
another few billion.
The concern gaining momentum is how will pay for all this.
Valid concern.
Given my localised experience it is clear that increased
economic activity will follow their commissioning, and with increased economic
activity the debt repayment sums will not look as daunting as they do now.
A sh500,000 monthly loan repayment requirement when you have
sh2.5m salary looks more manageable when your salary doubles.
In 1986 our total debt was $1.4b which was more than half
the GDP at the time and more than 3.5 times our export receipts. In that year
we had debt repayment obligations of $45m. Today according to the latest IMF
figures we estimate debt repayments will come in at sh1,682b or just under
$400m this against exports of $2.7b.
But concern is in order given stories of over inflation of
costs on all our major projects currently under way.
"If we do not get value for money for these infrastructure projects whether they come in at too high a cost or don’t deliver as they are supposed to, they may not generate the increased economic activity required to pay their way...
Even though I may be comparing oranges with fene, I choose
to be optimistic about our prospects.
Between 1992 and 2011 China spent almost nine percent of its
GDP on infrastructure development the net result of this – in addition to other
things of course, is that the economy grew seven fold.
One, given our infrastructure deficit we are already
underspending and secondly, that this sustained infrastructure spending will have
to go on for at least another decade if China’s experience is to be considered.
Everyone wants to go to heaven but no one wants to die. The
current cash crunch has a lot to do with our huge outlays on infrastructure. As
they begin to come on line we can expect that more cash will start to flow.
Using China again, a graph of GDP against time shows that
from 1978 when Deng Xiaoping declared “I don’t care whether a cat is a black or
white one as long as it catches mice” to launch the country’s economic miracle
it took 14 years up to 1992 before the graph got off the floor. During that
time they were laying the foundation in infrastructure, training their people
and getting over their communist hangover.
The process of development does not follow an exponential
curve, at least at the beginning.