INDPENDENCE DAY AND THE DUBAI EXPO

Tomorrow we commemorate 59 years of independence. This year’s celebration comes hot on the heels of an outcry about our underrepresentation, misrepresentation or representation at the Dubai 2020 Expo.

The long awaited Dubai Expo opened its doors to the world last week and for the next six months will be the one place to go to explore countries from around the world, what they are about and what they have to offer.

Uganda has a stall at the Expo and thanks to the magic of technology, Ugandans at home got near real time pictures and video on what we were up to. The criticism came fast and thick after pictures of a few tins of milk, boxes of tea leaves, handwoven baskets and pictures of gorillas came through.

"The critics were scathing in their condemnation --- a lot of it knee jerk reaction and the default mode of the chattering masses online....

The net reaction is that again we had embarrassed ourselves with a sub-standard display, we did not get value for money and of course the top heavy delegation came in for particular flack.

I had to look again.

As I said the critics were either being unfair, disingenuous or downright nasty. I couldn’t think of many other things other than the ones I saw on display that Uganda can be globally competitive in.

The now permanent secretary at the finance ministry, Dr Ramathan Goobi pointed out a while back (when he was s till a mere mortal) that the incoming lane on the Jinja-Kampala highway was lower than the outgoing lane, an indication that the loads coming in are much heavier than the loads going out. A useful proxy to indicate that we import more than we export.

According to the last Uganda Bureaus of Statistics (UBOS) figures in 2019 we imported $7.7b worth of goods while shipping out goods worth $4.4b.

Going by these stats alone it should come as no surprise that Uganda’s shelves at the Expo are a bit bare.

But we don’t have to travel all the way to Dubai for this truth to be evident. Our supermarket shelves are dominated by foreign imports. Granted, its less now than a few years ago but the bias is there.

So the Expo emphasizes a greater challenge, one that dogs us almost 60 years as an independent nation, that we produce little that is internationally competitive – our raw coffee beans, tea leave and fish are about it, low value commodities when we should have got around, a long time ago, to exporting these processed. We would have managed to have a foot in the door of those insanely competitive markets and by now be exporting meaningful quantities.

It can be argued that we have been up to our eyeballs in the business of digging ourselves out of the hole of the 1970s and 1980s, but that line can only go so far.

"The truth is to export we need to ramp up production to multiples of what we consume locally. So currently the only things we produce that could possibly sustain a local industry, let alone meet export demands are coffee, fish, tea, milk and grain...

To show how inadequate our production is, I learnt recently that we produce about 14,000 tons of tomatoes a year, all of which we consume. A cursory look online for plants to process tomato paste, I happened on one which could manage to process 2000 tons daily or would sort our national output in a week and be redundant for the remaining 51 weeks of the year. Ok even if we got a smaller plant that would process 100 tons daily it would have taken 20 weeks to sort out the nation’s harvest.

To have a tomato paste industry in Uganda we would have to increase production by multiples of its current number. And this goes for any other crop we produce.

Taking an industry from zero to exports has been done in our life time and the lessons are there to learn. We did it with sugar, milk and gold.

It takes the execution of a national strategy that includes increasing production, enabling market access, supporting research & development, availability of affordable financing and good management.

So the Expo has reminded us that despite our middle class speaking English and wheezing around in second hand cars, we really don’t amount to much...

One last point and which speaks to our inability to lift ourselves off the floor. The lineup of government officials who were in Dubai for the first week inspired little confidence in our chances of turning our current plight around.

While Uganda Investment Authority (UIA) was present we must know by now businessmen pay little heed to government officials in deciding to invest in one country or another. They prefer to talk to one of their own a fellow business person who has skin in the game.

If there were no serious business people to make the trip with the president at least Uganda Development Bank (UDB), Ugandan Development Corporation (UDC) would have pride of place ahead of politicians, bureaucrats and glad handers.

 

WHAT IF UGANDA HAD DONE THINGS DIFFERENTLY AT INDEPENDENCE

Fifty years ago at independence the economic challenges of the founding fathers were clear – to accelerate and sustain economic growth and spread the benefits around equitably.

At current prices the GDP per capita of Uganda was $62 and the total economic output was $449m, according to World Bank figures. The economy was biased towards agriculture with just over half of all GDP coming from agriculture with services accounting for 36.18 percent, industry 12.61 percent and manufacturing 7.56 percent.

The structure of the economy has changed since. In 2016 services assumed pole position accounting for 55.8 percent of GDP, agriculture’s share plummeted to 24.4 percent, industry is up to 19.7 percent and manufacturing saw some growth to 8.8 percent.

During the same period the economy has grown to $25b from $449m in 1962. The population too has grown more than fivefold to 41.5 million from 7.2 million at Independence.

"Clearly one goal has been met with economy growing about 55-fold during the period or at about 7.7 percent growth per year on average. The argument can be made that the economy would have grown even faster were it not for the chaos of the 1970s and 1980s....

Kenya which has been relatively stable during the same period saw its economy grow more than 80-fold to $70.5b in 2016 from $868m in 1962. This makes for an average annual growth of about 8.4 percent.

A 0.7 percentage point difference between the growth averages may look insignificant but when you stretch over half a century it’s the difference between the size of the Kenyan economy doubling six times while ours only doubled five times.

So we not only started from a lower base but also because seeing as our economy fell below 1970 levels by 1986, new growth was only seen around the late 1990s, when the economy recovered to its previous heights.

The economic prescriptions in 1962 would still obtain today – increase agricultural production to not only raise rural household incomes but also to serve as a base from which to launch industrialisation; boost school enrollments to prepare the future workforce for industry; expand the infrastructure to support these ambitions among other things.

Even if Idi Amin had not upset the apple cart with his coup in 1971, we were already toying with centralising the economy – a disincentive for private initiative, and like other sub-saharan African countries would have taken us till the 1980s to liberalise the economy and attract private capital.

The motivation was purely political and not based on hard economics. The idea that the government should control the commanding heights of the economy in order to foster development for Ugandans rather than continue to feed the “imperialists” insatiable appetite for profit.

What ended up happening was mismanagement and corruption as government used state enterprises as avenue for patronage and looked the other way as their allies gutted them for personal gain.

Using the same method we put a halt to productivity gains in the agricultural sector to the point that the proportion of agriculture to GDP suggests not only that we are not producing very much more than we were per capita at independence but also indicates that we have failed to launch a credible agro-industry sector.

Kenya probably shows what would have happened to us had our momentum not been interrupted by the messy 1970s and 1980s.

But even better is the island nation of Mauritius, which had a smaller economy than either Uganda or Kenya at $213m. With no natural endowments except the weather and the soils, it has grown its economy to $12.2b in 2016. The World Bank’s figures for Mauritius GDP start in 1976 at $706m, so it safe to say that 14 years prior their economy may have been around the size of Uganda’s at Independence.

Given the figures the Mauritian economy grew by a factor of 17 in 40 years from 1976 to date, representing an annual average growth rate of 7.38 percent.

But while the size of their economy is nothing to write home about the per capita GDP of $9,627 – their population has grown to 1.2 million from 700,000 in 1962, set them apart from most on the continent.

How did they do it?

"The graduated from a monoculture economy that grew only sugar, went into textile manufacture —importing cotton from Madagascar and further afield, following the same principle became a hub from small industry by exploiting Export Promotion Zones, promoted themselves as a premium tourist destination – they have more than a 300 five-star hotels, and have set themselves up as an offshore financial hub – they have more deposits in the banks than the GDP of the country....

Maybe it helped that they were an island nation isolated from the madness of the continent, but clearly there was a clearness of purpose by its founding leaders in 1968, which allowed even encouraged  private industry and a democratic traditional that has ensured the sustainability of their economic model.

WHAT IF INDEPENDENCE HAD HAPPENED DIFFERENTLY?

Last week New Vision to commemorate Independence Day had a 40-page plus supplement of stories and accounts surrounding the events.

The serialisation of Phares Mutibwa’s book “Uganda since Independence: A story of unfulfilled hopes” was an eye opener whose excerpts showed that the political manoeuvres by the key political actors sent against the background of a country divided by tribe and religion meant the Independence project got off to a shaky start at best.

"But even beyond that the country had serious deficiencies in social and physical infrastructure that meant the new government would, even with every citizen behind it, struggle to deliver the promise of a better Uganda for its citizens quickly enough to forestall any unrest...

But to go back even further the colonial project was not intended to empower Ugandans to take over the reins of power sometime in the future. Its main objective was extractive, to use our raw materials to stock Britain’s industry. With that in mind the British administration wold build only as many roads, railway lines, school only so many people as was necessary to execute the project.

It is unlikely if they had stayed any longer this state of affairs wold have changed.  One of the major reasons we got independence when we did was because Europe was reeling from the aftermath of the Second World War and was all but bankrupt. It did not have the resources to continue the political project in the shape and form it had since the beginning of the 20^th century.

In addition even those colonial powers that sought to hung on struggled once the momentum for independence was set in motion beginning with Sudan’s independence in 1956.

As a bare minimum a better educated population – only 700 students graduated from O-level in 1960, may have tempered post-independence tensions. To put this in perspective if we were graduating O-Level students at the same rate today we would only have 3,600 graduating to go to A-level. Today there at least 1.3 million students in O-Level and even these are not enough.

Unfortunately it takes at least 13 years of schooling to produce a clerk and while the post-independence government went on a tear in building schools for political purposes, white administrators had to be replaced by indigenous Ugandans immediately, often regardless of competence.

A long serving bureaucrat has suggested that it’s these capacity inadequacies that triggered the continent’s endemic of official corruption. He argued that we blame the Amin era for our descent into darkness but he pointed out that the same is happening in much more peaceful Kenya and Tanzania, which inherited similar if not worse human resource deficiencies.

Our physical infrastructure was just as lacking. The argument would have been that with adequate infrastructure we could have imported manpower as our own learned the ropes and we would be fine. 

To show how far behind we are comparisons with South Korea, which it is sometimes suggested we were at the same level of development in 1960, would be instructive.

"In 1960 the stock of South Korea’s road network stood at 27,000 km in Uganda 56 years later our road network stands at about 20,000 km. In the 1960s South Korea consumed about 1,500Gwh of electricity we currently only just double that number. Currently South Korea consumes about 5000 Gwh of power a year....

And to crown it all we had serious leadership gaps at independence. Our leaders really had no clue what they were getting themselves in to, did not have the tools or predisposition to run a modern state and were clearly out of their depth.

It did not help that the issue of Buganda’s status at the heart of an independent Uganda remained unresolved and sat like a ticking time bomb at the center of our collective conscious.

In hindsight its clear we really did not have a chance. The deck was so stacked against us as to guarantee failure. It was a matter of when not if the implosion would come.

WERE WE READY FOR INDEPENDENCE?

Fifty four years ago the Union Jack came down at Kololo airstrip and the Uganda flag went up signalling the end of colonial rule and a descent into chaos that we are only beginning to unravel.

In hindsight we were not ready for independence – we were a small little country in the middle of Africa, mostly illiterate, with huge infrastructure deficits and institutional inadequacies, without the capacity or the temperament to run a modern state.

Some disagree.

“We were ready for independence,” insists Kavuma Kagwa, who turned 26, weeks after Uganda gained independence.

“The British concentrated on education, agriculture and later on medicine. At independence we had an agricultural officer at every Gombolola (LCIII). We were graduating doctors from Mulago. The leaders of our political parties were very educated men,” he added.

For good measure he threw the anecdote of Dr Dionysius Bamundaga, a pioneer graduate of Mulago medical school, who was the first indigenous doctor to operate a European.

“The provincial commissioner of northern Uganda’s wife in 1953 got an appendicitis attack while in Gulu and there was no time to get her to Nakasero Hospital which was where European’s were treated. Bamundaga who was the provincial medical officer at the time volunteered his services which the PC grudgingly accepted. The operation was a success and soon after Governor Andrew Cohen made a radio announcement that indigenous medical doctors could operate on Europeans.”

The case of Dr Bamundga is more case of an exception to the rule.

"According to the 1962 Civil Service Survey there was no chartered accountant, solicitor, architect or pathologist and there was only one geologist, one veterinary officer, one entomologist and two dentists in public service....

This should not have come as a surprise since total enrollment at Makerere at that time, the sole university was only 364. There were about seven million Ugandans at independence.

While the civil service was not the only employer at the time it dominated the private sector especially in its employment of specialist skills.

The scarcity continued into the administration where the same survey showed that of the 408 executive class posts in the civil service Ugandans only filled 102 of them while another 106 were vacant.  In the super scales which were just below executive class it was even worse with Ugandans only filling 269 or about 20 percent of the 1,250 positions available.

But this should not have come as a surprise. In 1962 there were only 364 students at university, JC Ssekamwa reported in his book “History & Development of Education in Uganda” going on to reveal that there were 1991 students enrolled in O-Level in the whole country at the time. The number of students graduating from O-Level in 1960 was 700. It is not clear whether this means they were moving on to A-level or not.

"To get a sense of how deficient our manpower training was at independence, if O-level enrollment had kept pace with population growth there would be just under 10,000 students in lower secondary school today...

Today there are about 1.3 million students enrolled in secondary school.

In lamenting our backwardness they never tire of reminding us how Uganda was at par with some South Eastern Asian nations – South Korea and Singapore, who now enjoy developed world standards in 1962.

A cursory look over the data not only shows that not to be true, but more embarrassingly shows in key areas like human resource  and infrastructure we are only just catching up to where they were in 1962!

If we take South Korea as an example. In the year of our independence, South Korea was still reeling from the after effects of civil war that had split the peninsula into two.

They had a per capita GDP of $103 while we were at $62. That may give the impression we were nearly toe-to-toe with them at that point but place this figure against a figure like secondary school enrollment and the chasm between our two situations becomes apparent.

While as noted above our O-level enrollment was about 2,000, South Korea had an enrollment of 620,000 for the comparable age groups. Note too that today we only just double their 1962 secondary school enrollment figures.

By another measure the doctor to patient ratio in South Korea was 0.344 per 1000 it is now about 2 doctors for every 1000 South Koreans. Figures for Uganda were hard to come by but today we have a patient to doctor ratio of 0.41, we are just better than South Korea in 1962.

These disparities are reflected wherever you look.

South Korea had 27,000km of road in 1962, today Uganda has about 20,000 km. The Asian nation was generating 1,512 Gwh of power 54 years ago we are now doing about 3,000 Gwh according to official figures.

The point is that comparing ourselves against the south eastern nations when we attained is a false base.

"Of course the colonial authorities’ primary mission was not to educate or empower Ugandans, so our deficiencies in manpower and infrastructure should come as no surprise...

And there are no guarantees that they would have worked hard to bridge those deficiencies except for the benefit of an elite few. But knowing this puts into sharper perspective the losses to the country caused by the lost decades of the 1970s and 1980s, which can be argued were due to the very same shortfalls in human capacity that we inherited.

So for those who were there, do they still think we were ready?

“Very much so. For me those comparisons with Asia don’t interest me very much, after all when are you ready,” Presidential media advisor John Nagenda asked.

“I wasn’t interested in politics at the time but the feeling was it was time and we would sort ourselves out on our own.”

THE NEXT 50 YEARS OF INDEPENDENCE, LET'S PLUG THE HOLES

This week we commemorated 51 years of independence from British colonial rule.

We are a far cry from what the generation that saw in independence hoped for as a country by this time.

They hoped that by now that the nation’s resources would be managed by indigenous Ugandans their children and their children’s children will have these resources work directly for their benefit improving their lifestyles in the process.

Unfortunately the legacy of more than fifty years of colonial left a legacy that had to be unwound before these aspirations would begin to kick in.

Barely four years into the honeymoon and unresolved issues regarding Buganda’s relationship with the central government came to the fore. Things had been festering for a while but arguably the attack on Lubiri, was the shot that sent the country into a twenty year spiral of political uncertainty, economic implosion and civil war.

Fast forward to 1986. 

The takeover of Kampala by the NRA put a pause to this downward trend. Once in power the NRM found that, not only did they have to deal with the unresolved colonial hangovers but also with the legacy of the previous 20 years of chaos.

Twenty seven years down the road and the NRM—the longest serving postcolonial administration, can lay claim to having done its part to turning around the country.

As an indicator of progress since 1986 the size of the economy has grown many times over, there is no civil war in any part of the country and for the first time in a while there is light at the end of the tunnel for many people.

In terms of the economic statistics the NRM has managed a recovery to just beyond the 1970s levels of development, a real springboard for vaulting to the next level.

The government has laid out its Vision 2040 which envisages Uganda becoming and upper middle income nation in 30 years.

This would mean raising our per capita GDP to $9,500 from the current $600.

"In purely mathematical terms, accounting for a continued three percent population growth, this would mean an average economic growth rate of 14% year for the next 27 years to meet this target....

An ambitious proposition especially since in the last two decades when the country has been one of the fastest growing economies in the world, has averaged about six percent.

One thing that could work against us managing this prodigious growth figures is that unlike 1986 when we started from a low base this time around we will be starting from a $21b economic base.

However unlike the last 27 years when we had serious power shortages that could not support industry, this time around not only have we just matched supply with demand for electricity we have the possibility of oil production and more power generation potential.

That is power alone but in many other aspects – general infrastructure, human resources and national savings, we are far ahead of where we were in 1986 and by simple compounding these can make a serious difference going forward.

But natural endowment or the place at which you find yourself at a point in time are not an automatic guarantor of future progress.

The key for Uganda going forward is going to be whether political expedience will trump long term development in our leaders’ decision making processes.

For instance, the fight against corruption has to take on added impetus. Corruption – concentrating resources in the hands of a few while making the rest pay, is what is going to prevent the growth of general economy trickling down to the rest of the population. 

This failure is not sustainable over the long run. 

It will generate disgruntlement among the majority, force more investments into law enforcement instead of the productive sectors of the economy and eventually force an implosion like we saw in North Africa two years ago.

And we will look back fifty years from now and wonder what happened to all the promise of 2012.

IN UGANDA THE MORE THINGS CHANGE, THE MORE THEY STAY THE SAME

“Over the last 60 years, Uganda’s economic growth has been unspectacular but steady. Uganda remains an agricultural country: two-thirds of gross domestic product is derived from farming and over 90 percent of all exports are produced from the land. Agriculture is in large part subsistence farming (mostly done by women with hoes) with a growing, but as yet smaller, proportion of total output produced for the market: three-fifths of the area under cultivation are used to produce food for the consumption of the cultivator and her family”

Except that this was an excerpt from a World Bank report “Development of Uganda” authored in 1962 one would be forgiven for thinking it was a more a current report.

At the time of the report Uganda’s population was just over 6.5 million, GDP stood at $230m (sh620b) and per capital income was about $35.

Fast forward to today the population is 34 million, economic output is at about $15b and per capita GDP is about $450.

In addition agriculture accounts for less than half of GDP and coffee and cotton are not the biggest foreign exchange earners.

"The report was requested by the Uganda government following a collapse in the world prices of coffee and cotton, proceeds from which pre-independence Uganda had relied to balance its budget and set up the Owen falls Dam and Kilembe mines....

The reduced income from these cash crops was putting a strain on government’s ability to provide services, a delicate situation given that independence was around the corner and the new government would need all the resources it could muster to drive its expansion of social services.

When you read the report its amazing how as much as things have changed things have  not really changed at all.

“Industrialisation is nevertheless still in its initial stages. The small size of the home market has been a dominant limiting factor …. The birth and growth of small backyard enterprises is still slow because of the slow pace of development of indigenous small entrepreneurs.

“The labour force is still quite distinct in character from that of industrialised countries. Wage labour like the cash crops, has been grafted on the subsistence economy.”

"The World Bank reports that there were 13,000 miles of road of which a fourth were main road. This has remained largely unchanged at 20,000 km with less than a quarter paved...

But the researchers saw deficiencies in our national human capacity which gaps they foresaw would cause trouble in coming years.

While noting that there were 240,000 people working outside peasant agriculture the

15,000 skilled, technical, managerial and administrative personnel needed for running and development of the economy were mostly Asian and European.

"Uganda is seriously short of trained senior administrators and technicians for government posts …. The closer the date of independence the greater the need for “localization” of the civil service. The skills acquired can be acquired only through higher education and experience, and Uganda will have difficulty supplying them for many years to come,” the report said.

We may never know the loss to the economy after 1971 when little or no new education institutions were set up but the population continued to grow, and the shortages in manpower were aggravated by the fleeing into exile of many middle class professionals.

And this human capacity deficiency is at the heart of any problems you may think of in the country today inadequate medical care and education services, corruption to name a few.

Seeing the enormity of the task the researchers proposed a long term strategy.

“Educational patterns cannot be changed overnight. Educational planning must take place on the basis of generations rather than in terms of a five-year cycle,” they wrote.

 The report a 520 page tome, studied all aspects of Uganda’s economy and suggested the way forward. It would be useful even today given that the same challenges the authors pointed out at the time persist almost unaltered, today.

UGANDA EXPECTED TOO MUCH AT INDEPENDENCE

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If our independence fathers were to rise from the grave today, they would be badly shocked at how we have turned out as a country.

Not because progress has not been made. Progress has definitely been made, but because we have not lived up to the vision they had for Uganda fifty years down the line.

It is safe to say that had World War II not bankrupted the colonial powers, independence for Africa may have taken a bit longer to come.

The War also dymstified the mzungu, with our returning troops – many of who saw action in the carrier corps, filling the ranks of many resistance movements in the region.

The agitation for independence was not as bloody in Uganda as it was in Kenya, Zimbabwe and South Africa.

Britain set Uganda up as a protectorate and not a colony, the difference being they never saw themselves settling here permanently like they planned to in the colony states.

For obviously selfish reasons the infrastructure both physical and institutional, in the colonies was more developed than it was in Uganda in view of their longer term plans for those countries.

Whereas the colonies begun to develop industrial capacity, Uganda lagged behind as a provider of raw materials to Britain through Kenya. The colonies had big education institutions at every level intended to educate the settler children, which Uganda did not. The colonies had a well manned civil service, familiar with negotiating with the wealth creating class of businessmen, manufacturers and commercial farmers relative to Uganda’s smaller bureaucracy.

So when independence came along Uganda was less prepared than the colonies.

"Politically, independence was sold as a project to take state control for the benefit of the African. Africanisation or the filling of all influential positions by indigenous Ugandans was going to be an overriding theme, as in other post-independent governments.
The challenge with this popular move was not only were the local elite not competent to run a modern state, they had underdeveloped state structures to work with...

Developed institutions would have put a check on the excesses of the executive and prevented the slide into mediocrity and worse. At first gradual, the slide gathered pace during the Idi Amin era and slowed down later but its hangover is still with us today nevertheless.

Also mature institutions, which would have previously served the colonialists would have been leveraged to jump start development targeted at uplifting the previous marginalized indigenous population.

Uganda since independence is a classic case study of what happens when a transition as significant as independence occurs in an environment of institutional immaturity.

Beyond the colonial institutional legacy Kenya’s post-independence rulers were businessmen, in fact Kenya’s first President Jomo Kenyatta and his main rival Jaramogi Oginga Odinga were for a time business partners in a trading company.

Business not only likes stability, but thrives in a rule based environment where property rights are secure beyond the lives of the main actors of the day. Businessmen therefore prefer rule by institutions than by the whims of one strongman or the other. It comes as no surprise that whereas Kenya is battling corruption, the underlying institutional structures remain and are widely exercised.

The business minded forefathers of Kenya may have cut numerous corners on their way to their immense fortunes, but they also recognized that when push comes to shove its institutions that would safeguard their wealth.

It is no surprise that almost four decades after the patriarch died, his heir Uhuru Kenyatta is listed as one of the wealthiest men on the continent with an estimated fortune of $500m to his name.

They may have benefitted disproportionately from their positions but Kenyan society is all the better from the experience.

A similar thesis can be overlayed on Botswana’s experience, without the kleptocratic ruling class.

Institutions prevail or not, depending on the ruling class’ interests.

"One is always wiser in hindsight but clearly destiny was rigged against us – at least for the next fifty years as a country, when the Union Jack was lowered on the night of October 9^th 1962. Our dreams for our young nation were over ambitious given the facts on the ground and the context of the day...

People may argue that if we had good, patriotic leaders who would put their country before their own parochial ambitions things would have been a lot better. Maybe.

But as they say if you want to know the true character of a man give him power.

The fruits of our post independence leaders are there for all to see, whatever their long term vision for the country they led.

Evolutionary theory suggests though, that everything that has come before serves to strengthen. We may have wandered in the wilderness for more than 40 years but there is cause for optimism looking ahead to the next 50 years as we resolve our human resource and institutional deficiencies.