World Bank chief economist for Africa discusses Uganda’s progress

On June
4, 2008
Paul Busharizi and Sylvia Juuko of the New Vision published
an interview report with Shantayanan Devarajan the newly appointed World Bank
Chief Economist for
Africa. The interview covered a wide range of
economic and social issues. The chief economist, however, said that he was
looking at the glass half full.

In order to give readers a full picture, it
is important that the story about the empty half of the glass be told as well.
While it is true that
Uganda has had twenty
years of uninterrupted growth, this growth has on average fallen short of 7
percent – the minimum required to meet the Millennium Development Goals adopted
by World Leaders at the United Nations Millennium Summit in 2000. The economic
growth has not improved social conditions as expected regarding food security,
quality education, healthcare, housing and clothing. For example, according to
UNICEF (2008), 32 percent of children under the age of five suffer moderate and
severe stunting, 20 percent suffer moderate and severe underweight and 12
percent of infants are born with low birth-weight, meaning that their mothers
are malnourished.

The benefits of economic growth have been
unevenly shared such that 53 percent of total household income has gone to 20
percent in the highest income bracket with only 15 percent going to 40 percent
in the lowest income bracket.

It is true that inflation has been kept at
a low level averaging 5 percent per annum – but at a price. Fiscal and monetary
policies were introduced to reduce the amount of money in circulation through
high interest rates and reduced government spending. The government has
therefore been unable to invest in infrastructure such as roads and energy and
in human capital essential for sustained economic growth and development.

High interest rates have constrained the
development of small and medium-scale enterprises which have the potential for
creating jobs. Accordingly,
Uganda is experiencing
high levels of un-employment, under-employment and rising poverty as well as
the associated crime, violence and other social ills in rural and urban areas
that are tearing apart the social fabric.

The policy of export-led growth encouraged
under the Washington Consensus conditions has resulted in
Uganda becoming a food
exporter to neighboring countries and beyond especially of nutritious
foodstuffs such as fish, beans and sesame traditionally produced for domestic
consumption. Consequently, many households are increasingly eating one meal a
day of maize or cassava without adequate nutritional supplements, leading to
serious deficiencies especially among children. Children that are malnourished
are mentally and physically underdeveloped. And that is not the proper way to
prepare our future generations.

Paradoxically, while Uganda has become a major
food exporter, it has simultaneously been categorized as a hunger ‘hot spot’
nation in need of food aid.

The Chief Economist like some Ugandans
believes that the current high food prices will benefit
Uganda’s farmers. “This
may be the best news for
Uganda in the long run.
They finally may be getting decent prices for their outputs”, said the Chief
Economist. However, the information to date from the western region, the
breadbasket of
Uganda, shows that small,
unorganized farmers have not benefitted and are unlikely to do so because they
are organizationally weak and have no bargaining power. As the saying goes, ‘in
the long run, we are all dead’.

The Chief Economist has, however,
acknowledged that poor urban and landless dwellers are hurting and need help to
pull through the hard times. He suggested targeted cash assistance programs.
The most vulnerable groups particularly the unemployed, the elderly who are
also taking care of orphans need urgent help by all stakeholders. Failure to do so is a violation of their
right to food.

Finally, the chief economist talked about Uganda becoming a very
open economy through structural reforms. He did not elaborate. This
development, however, may have hurt
Uganda in some ways
particularly in the area of manufacturing in large part because of cheap
imports such as used clothes. There is no country in the world that has
developed without industries and for industries to mature and compete at a
later stage they need protection in the early phases. Even
Britain, the first
European country to industrialize, protected its ‘infant’ textile industries
against cheap Indian imports. Therefore,
Uganda authorities need
to recast the open policy as soon as possible.