UGANDA ECONOMY CONTINUES TO GROW, WHERE?

Last week auditor firm PWC issued their “Uganda Economic Outlook -2024”. The annual report which comes after the reading of the budget painted a net positive picture of the economy for the coming year.

"The economy grew by six percent in 2023/24 higher than the previous year’s 5.3 percent, and is expected to grow even faster at 6.6 percent in 2024/25 mainly driven by investments in the oil sector...

Our growth rates are even more mouth watering when seen against world figures of 2.9 percent.

In addition growth in household consumption more than doubled to 8.2 percent compared to the 3.6 percent growth of the previous year. Which suggests that the economic growth is being driven by improvements in our pockets, helped by a slowing down of inflation and a stable exchange rate.

But structural issues persist that ensure that this good fortune is not spread more equitably. PWC noted that most of the GDP growth is being driven by manufacturing, construction and mining sectors, in addition to the investments in the oil sector.

This means that the agricultural sector which employs almost four in every five Ugandans is not growing as fast as it should to support our huge rural populations.

"This a damning statistic but in it lies a huge opportunity and the hope that Uganda’s economic growth is not about to plateau soon...

First of all the continuous economic growth of the last 40-odd years is nothing to be frowned about. The last time the economy contracted was in 1985. Economic growth is critical to support development – a general improvement in the welfare of a population.

You can have economic growth without development but you cannot have development without economic growth.

By adopting liberalsied economic policies in the 1990s Uganda set the foundation for the economic growth rally we are seeing by unlocking private initiative. The problem is that while the market is the most effective way of growing wealth it does a horrendous job of distributing that wealth.

The market left to its own devices will see the rich grow richer and the poor grow poorer.

That’s where government comes in. by taxing the increasing economic activity they distribute the wealth or at least the ability to take advantage of this improved economic activity by funding public goods like law based governance, security, social services and infrastructure development.

In an economy like ours whose size has grown faster than the population, the fact that inequalities are widening is an indictment on government’s capacity to distribute the wealth. From an almost equal distribution of wealth or poverty in 1986, Kampala alone accounts for more than half of the nation’s GDP today.

Improvements in security, infrastructure, school enrollments and health care mean more people are getting half a chance of climbing the ladder, where there was none 40 years ago.

But if the tragedy at Kitezi waste disposal site last weekend is anything to go by, government still has a long way in delivering services to the least of our brothers. Most of that waste is generated by the top half of Kampala population, for who as long as they are spared the inconvenience of their garbage, could not care less where it is taken.

The Kitezi dump site is a public infrastructure that has been neglected as long as it provided a home for the rubbish fetched from the gates of the urban elite. The same urban elite were supposed to ensure Kitezi was run effectively and sustainably, but as long as it was far from public view (out of sight of the urban elite) we really did not care what happened there --  never mind that it was supposed to have been decommissioned a decade ago.

At time of writing this 34 people were confirmed dead, but those who know the area suggest this is a gross understatement.

Reports reveal the issues of waste have been neglected, underfunded and generally ignored.

"The Kitezi disaster can serve as a useful analogy of how the economy has been run to benefit the urban elite, either normally by making their life easier or by them creaming off the top jeopardizing the welfare of the lesser members of society.

Just because at a macro-level everything looks ok, doesn’t mean a Kiteziesque implosion of the economy is not an inevitable consequence, if we continue to sweep bad things under the carpet – corruption, domestic arrears for example.