While we were all fixated on the drama surrounding the presidential campaigns this week, the World Bank released its Uganda Economic Update, a forward looking report that rose above the noise of the day.
The bi-annual report titled “Investing in Uganda’s demographic transition,” addressed itself to the ongoing demographic transition from a largely youthful population to one, which in a few years will have a much huger workforce that can either be a loadstone on the economy or a force for continued growth.
But while that was happening a report from financial information services provider, Bloomberg filtered through, which said that Uganda’s economy is set to grow by 2.1 percent in 2020. Much lower than in 2019 when the economy sprinted to a 6.7 percent growth, but still amongst the fastest growing economies in the world.
The report said that Uganda will be the fifth fastest growing economy this year, behind Bangladesh, Ethiopia, Vietnam and China and ahead of Cote D’Ivoire, Egypt, Ghana, Rwanda and Kenya.
The report gave no details about Uganda’s growth outlook but noted that
African countries, which made up seven of the top ten fastest economies, had seen the shift away from raw material exports to becoming ICT hubs accelerated by the COVID-19 crisis...
Local observers pointed out that ICT output grew 33 percent compared to contraction in the last two years, driven by an increasing reliance on e-commerce and mobile money.
It was also reported that agriculture was among the sectors that grew, as rural-urban supply chains were left open and recent initiatives to push up farm production continued to pay off.
However, while this macroeconomic resilience is cause for celebration but will mean nothing to the everyday man, if they don’t trickle down to the man on the street.
"The trick to doing this is building an economy that not only fosters economic activity but also uses these gains to ensure continual improvement of the business environment and invest in its citizens, through education and health services to make them more productive....
Unfortunately for Uganda, after years of neglect and mismanagement, we have huge deficits in infrastructure and human capital.
This is a dilemma because we have the choice to try bridge all these deficits simultaneously or on the other hand try and sequence the investments.
We don’t have the luxury of doing either. In the first instance because of our wanting resources and in the second instance, because it cant be an either or question – do you let school enrolments stagnate as you build transport, communications and energy infrastructure or the other way around.
Truth be told we have leaned towards the latter rather than the former.
The World Bank counsels though, that a better balance has to be found if we are to reap a demographic dividend in coming years.
The demographic dividend refers to the benefits from a huge working population that is skilled and productive and contributing to the country’s growth.
Uganda will have to double its annual investment in education and health over coming decades if it is to reap this dividend.
Given our current population growth rate the population is doubling every 25 years, which means beyond the doubling growth in these investments, these will have to at least match population growth rates.
The World Bank doesn’t say it but
a huge youthful population without gainful employment is a recipe for social unrest and chaos...
The challenge is financing these investments – at the same time ploughing money into infrastructure.
We have to collect more taxes. The existing tax payers are already overstrained and hence a need to rope in more people into the tax base. Taxing land – all land, can not be put off much longer. With one stroke we will collect more, while making the land more productive.
Secondly, we have to plug the leaks. We cant have a connected few plundering state coffers to finance their first world lifestyles while the vast majority cant get quality health care or a decent education, ensuring that income and wealth disparities are perpetuated down the generations...
And then we must save more, by force if necessary, as a way to increase domestic long term funds to finance this same development.
Our ability to feed ourselves as a nation has continued to support us in our hours of need – our lockdown experience would otherwise have been worse, but
if we do not take a long view and make the hard decisions that need to be made to ensure sustainability, even quack prophets can see the future.
