Uganda marked the 47th birthday as an independent nation under thick clouds of famine, riots in the nation’s capital, demonstrations in the United States during the president’s visit there and government’s formal admission that the development model implemented since 1987 had failed to produce the desired results – all happening in September, a few days before the anniversary on October 9, 2009.
Although the theme of the celebrations was unity, the president chose to address the nation on economic developments whose scope and format resembled a budget speech. The president talked about peace and political stability and prudent macroeconomic management. He omitted the term “security” because the country still suffers from food, employment, health, political, ecological and income distribution insecurity. Unity was mentioned as a condition in the protection of Uganda’s destiny and independence rather than in terms of what NRM government had accomplished in building, consolidating and sustaining unity. Notwithstanding heavy investment in international relations, the president mentioned it in one sentence in the last paragraph of his address.
The president’s address left out important information of vital interest to most Ugandans. We shall focus on major omissions.
The president reported on impressive growth rates in GDP averaging 8.3% per year over the last five years and a growth rate of 7 % in 2008/09 driven by strong performance in transport, financial, health and manufacturing services located mostly in the nation’s capital. He also reported that per capita income had doubled from US$264 in 1986 to US$504 by June 2009.
Since the overwhelming majority of Ugandans (over 85 percent) depend on agriculture, they have not enjoyed the benefits of this urban based growth – hence the acceleration of income inequality. Second, in a recent report commissioned by the president of France, Joseph Stiglitz and colleagues have once again discredited GDP and per capita growth rates as indicators of social progress. The Uganda government should take note of that in future reports.
Third, the representative of Algeria, speaking on behalf of the Africa Group at the Second Committee of the United Nations General Assembly on October 13, 2009 observed that Africa was expected to grow at a low rate of 3.2% in 2009, down from 5.75 in 2008 and 6% in 2007. Uganda being a least developed and landlocked country facing serious drought, famine, corruption and a very difficult global economic environment needs to explain convincingly to Ugandans and the rest of the world the ‘miracle’ driving Uganda’s 7 percent growth rate.
The president also reported that poverty had declined from 56% in 1992 to 31% in 2006. It is important to note that the original poverty figures upon which subsequent statistics have been built were based on a belief – not fact – by the World Bank and IMF that “poverty must be receding, given Uganda’s growth numbers” (S. Mallaby, 2004). The figures were doubted by participants at the 1995 Paris Club meeting on Uganda and have remained so since then. Second, since the president reported on growth rates to 2009 and made projections for 2009/10 and 2010/11, similarly he should have given poverty figures for 2009 and projections for 2009/10 and 2010/11. He avoided doing so presumably because of the high incidence in the diseases of poverty that signal spreading and deepening extreme poverty in the country.
The president praised government diversification efforts in the economy. Diversification has been strongest in the export sector with non-traditional exports including fish, beans, sesame and maize increasing fast. There are two problems the president did not address. First, the export of foodstuffs has deprived Ugandans of adequate and balanced diet contributing significantly to hunger that has affected more than 17 million (compared to 12 million in 1992 when export diversification began) out of Uganda’s total population of 31 million, forcing children especially girls to drop out of school and contributing to rapid population growth associated with early marriages. Second, the diversification into primary commodities without value addition has not enabled the country to raise enough foreign exchange. Consequently Uganda continues to depend on remittances and foreign donations and loans with severe conditionality.
The restoration of macroeconomic stability through low inflation was singled out as one of the key achievements of the NRM government because it had inter alia maintained “the monetary value of our wealth”. First, with over 85 percent of Uganda’s labor force unemployed there is ‘no monetary value’ to protect except for a few rich families. Second, controlling inflation to single digits has been achieved by reducing money in circulation through severe cutbacks in government expenditure by retrenching workers, neglecting investments in social and infrastructural sectors and raising interest rates to discourage borrowing. In the latter case there has been severe constraint on establishment and expansion of small and medium-scale enterprises that create jobs more than any other sector. The result has been high rates of unemployment and under-employment that contributed to the riots in Kampala.
Notwithstanding the omissions stated above, the government should be congratulated for dropping the Washington Consensus model like the rest of the world did. Hopefully the new national development plan with a new team of advises and staff will build a new platform for economic growth and development drawing lessons from the bold steps Pinochet (former president of Chile) took to get the country out of recessions onto a path of public and private partnership.