UGANDANS ARE RICH BUT CASH POOR

The recently released Uganda National Household Survey 2012/2013 showed that Ugandans living in poverty has continued to fall but the income inequalities are rising.

The survey showed that proportion of people living in poverty, or on less than a dollar a day, had fallen to 22% from 24.5% in 2009/10. Nearly a decade ago the same measure stood at 31.1%.

However the income inequality as measured by the Gini coefficient rose to 0.43 in 2012/2013 compared to 0.426 in 2009/2010.

The devil is in the detail but these contrasting developments  on one hand are consistent with the continued growth of the economy but on the other hand point to a disproportionate benefit from this growth by certain segments of society over the others...

It is not difficult to see why this is so. 

According to official statistics our economic growth over the years has been driven mainly by telecommunications, finance and transport services and construction.

But the national survey reports that the proportion of the population engaged in these sectors is about 12%. The bulk of our workforce 73% are in agriculture, forestry and fishing. Even manufacturing, which is more labour intensive only accounts for 6% of the workforce.

Meanwhile the growth in the economic output in the agricultural sector has been consistently under five percent for the last decade or so.

It is true of course that growth in the services sector aids agriculture but clearly something else needs to be done to see the agricultural community benefit more from its sweat.

Clearly there is a question of productivity. A classic 80/20 situation with the majority of Ugandans generating much less than the other three tenths of the population. 

It is not for lack of land. It is not for lack of labour.  The answer maybe in a shortage of capital but more importantly entrepreneurship – the ability to take advantage of opportunities to generate profit.

The survey suggests as much.  

The household survey shows that the 78% of all houses in Uganda are owned by their occupants and this has been more or less consistent in past surveys.

So how does one explain that more than seven in every ten Ugandans own a house but a significant proportion of them are existing on less than a dollar a day and a quarter of the working population is not gainfully employed?

"In his book The Mystery of Capital, Peruvian Economist Hernando de Soto suggests that the reason that capitalism – the manipulation of land, labour and capital in the quest for profit,  does not work in the third world like it does in more developed economies, is because of the ambiguity of or inadequacy of land rights...

All wealth is derived from the land he argues, making it the underlying asset of all assets. So if there are any doubts about the credibility of land ownership you will be building your economy on a shaky basis at best or not have a functioning economy – in the text book sense, at worst.

With proper titling of the land and verifiable property rights land assumes a value recognised by businessmen and financial institutions allowing its value to be unlocked. So if a land owner can prove ownership he can sell his land for its market value or mortgage it to finance the development of his land or other income generating activities.

If we agree with De Soto this has to be at the heart of Uganda’s poverty equation. The National Household Survey reports there are seven million households or about six million households can lay claim to their homes and the land on which they seat.

But recently the land’s ministry said that about half a million land titles had been issued and this includes titles on which factories, office buildings and stadiums seat. It will not be a stretch of imagination to assume five million of these owners have questionable claims to their land and can therefore not unlock the full potential.

So it’s true not true that Ugandans are poor, in fact they are asset rich – going by their land holdings, but cash poor.

"This government has worked out how to generate growth -- the economy has grown higher than five percent in all but one of the last ten years, peaking at 11% in 2006, according to official numbers. What we seem to be struggling with is how to distribute this wealth more equitably...

The usual suspects, corruption, poor health and education services and lack of market access can be blamed for our poverty but this scandalous inability to unlock the full value of our land has to be major drawback.

UGANDA’S STUBBORN DEVELOPMENT PARADOX

In 2013, a piece titled “Ugandans are rich but cash poor”, was published in this column.

It was based on the National Household Survey of the time and a reflection shaped by countless conversations and everyday encounters. It was hard to ignore.

From Kampala to Kabale, people owned land, cows, rentals—even the odd plot in the trading centre,but when a child needed school fees or a medical emergency struck, the scramble for actual cash began. There was wealth, but it was locked away, often in forms you couldn’t easily convert when life demanded liquidity. A country asset-rich, but perpetually broke.

Fast forward a decade, and the story seems—on the surface to have improved.

The recently released Uganda National Household Survey 2023/24 paints a picture of real progress. National poverty has dropped to 16 percent, down from 21.4 percent in 2016/17 and significantly lower than the 24.5 percent that hovered around in the early 2010s. That’s something to celebrate. Even the Gini coefficient, our favourite number for inequality, has eased down from 0.415 to 0.382—a sign that we’re a bit more equal than we used to be, at least in terms of income.

But if you zoom in, if you walk the dusty paths and speak to the people, you realise something sobering: that same old paradox still holds. Just better disguised.

Let’s start with wages. Back in 2013, a median salary in Kampala was around sh200,000—enough to cover rent in a low-end suburb and maybe transport and food for a small family. Ten years later, that number has risen slightly to sh260,000 for urban workers in paid employment. That’s not insignificant. But when you account for inflation, school fees, rising fuel prices, and the cost of milk, the money disappears just as quickly as it lands. Rural areas fare worse. Median wages there remain closer to sh120,000–150,000. In essence, the nominal wage has risen, but its real purchasing power has not kept pace.

And what of financial inclusion, that shiny term we love to throw around at conferences? In 2013, mobile money had just begun its ascent. People were excited—sending and receiving cash was suddenly fast and borderless. But real financial empowerment remained limited. Few had bank accounts. Fewer still could access credit. Fast forward to 2023, and mobile money is now the norm. Formal account ownership has grown too. But here’s the catch: 77 percent of household enterprises still rely on personal savings as startup capital. Access to affordable credit, the kind that turns ideas into income, is still out of reach for most...

Back then, I wrote about how people would own three cows and five acres of land but still fail to raise school fees. That story hasn’t changed. Formalization of wealth is still rare. Land is often unregistered. Titles, too few to go around – less than two million at last count, which is a travesty when seen against the fact that more than 80 percent of Ugandan families own their homes. So the wealth sits there—visible, impressive even—but untapped. Ten years on, the form of wealth is the same, but its utility remains frustratingly limited.

There have been other changes. Food, once consuming over 50 percent of most poor households’ budgets, now accounts for 44.2 percent. That’s progress, modest as it is. Expenditure on housing, electricity and water stands at 15.9 percent—steady, though hardly relieving. These improvements have come, in part, from better infrastructure and cheaper services, but they still leave the average Ugandan living on a knife’s edge. The room for saving, investing, or even affording a modest treat is wafer thin.

Even in education, the signs are mixed. Primary gross enrolment has ticked up from 117 percent in 2016/17 to 120 percent today—still bloated by over-aged learners. Secondary enrolment is better, rising slightly from 30 to 34 percent, but we’re still nowhere near where we need to be. Literacy among adults aged 15 and above has improved from around 70 percent a decade ago to 87 percent, which is one of the few unequivocal wins in this story. Yet, cost is still the second most cited reason why children don’t go to school. Some things never change.

Perhaps most telling is the persistence of regional disparity. In 2013, I hinted at it. Today, the data confirms it. Karamoja’s poverty rate stands at a staggering 74.2 percent. Ankole, on the other hand, is at 3.2 percent. Kampala sits at 1.1 percent. These aren’t just numbers—they’re entire realities apart. When the same country yields both those figures, it begs the question: are we really talking about the same Uganda?

Inequality may be statistically narrowing, but that’s income. Not opportunity. Upcountry, the roads are worse, the schools poorer, the hospitals fewer. And when a child is born into that setup, no Gini coefficient can capture how far behind they’ve started. As I noted in 2013, inequality in Uganda is a structural problem—it’s not just who earns more, but who can do more, access more, live more.

So yes, Uganda is better off today than it was a decade ago. Fewer people are living in extreme poverty. Incomes have inched upward. Financial tools have spread across the map. But the core problem of cash poverty—the inability to access and use money when needed remains deeply embedded. We are richer, statistically. But not necessarily freer.

Uganda is moving. But many are still limping.

THE SCENT OF ROSES AND WEALTH CREATION

Last week we arose to news that a company belonging to Kampala businessman Sudhir Ruparelia has been allowed to lease land at Namulonge, part of the National Crops Resource Institute.

Premier Roses intends to utilise the land for growing roses, vegetables, fruits, herbs and spices mainly for the export market.

"The knee jerk reaction to the deal was a throwback to the rabid opposition to the sale of government properties in 1990s. Then like now, the chattering masses prophesised that, nothing good would come from selling the badly tarnished government silver, buyers would strip the companies of their assets and live us holding a worse carcass than we had sold them and finally that we were enriching foreigners at the expense of locals by selling the revenue sapping enterprises...

Almost 20 years down the road the doomsayers are conspicuously silent reminding us they still live among us when they pop up to throw feeble punches for their lost cause.

At the heart of this debate is the question of how best do we drive development given the resources we have and the context in which we find ourselves.

We are a country wealthy beyond measure, and we are not even talking about oil. Our arable soils, benign climate, abundance of animal and plant specii, resourceful people and central location on the content among other attributes means it is a scandal that more than half our population live in abject poverty (forget the low standards our officials use to measure poverty).

We are asset rich but cash poor. We are poor as a country because we have failed to unlock this embarrassment of potential riches.

The formula to unlock this wealth is simple, but not easy, is time tested and replicable.

Through entrepreneurship you manipulate the factors of production – land, capital and labour to generate value recognised by the market and which the market is willing to pay for at a high price than the cost of production. The resulting profit is used, some of it, to pay the entrepreneur and the rest ploughed back into the business.

The reinvested money if employed properly will grow the company and increase its capacity to create more value and the cycle continues.

However the entrepreneur does not operate in a vacuum and he needs a good political environment to do his magic.

"It is interesting how the wealth of nations is determined largely by the imaginary lines that separate one country from the next. Our political boundaries will determine that people in western Uganda live a better life than their neighbours in eastern Congo or northern Ugandans compared to south Sudanese....

 Governments thanks to the incentives that drive them – entrenching themselves in power through spreading patronage, are terrible at business, but they can help the private sector unlock wealth through maintaining law and order and enacting progressive policies.

Which brings us full circle to the case of the Namulonge land.

"The land in question is largely unused or severely underutilised. It’s creating no jobs or new knowledge as was intended. The government is hoarding it, depriving Ugandans of the economic output that would result from it if properly utilised...

Sudhir’s company comes along offering to put it to use and even willing to pay for it. The only concern would be were it not put to use, which is unlikely as every businessman needs to make a return on his investment, his very survival depends on it.

We are within our rights to ask that proper procedure in allocating the land was followed. We are within our rights to insist that the land is put to productive use. We are even within our rights to reject the application altogether.

That last option however would be counterproductive even destructive. It would send out the signal that reason does not prevail in Uganda either out of jealousy or malice. But worse still it would discourage entrepreneurship and by extension the betterment of our collective lot.