economic growtheconomicsKampalauganda

Is Uganda’s economy growing? It all depends on whom you ask.

With the exception of demand, they are also a sign of a growing economy. In the earlier stages there were jobs in the construction sector and this has now transitioned into service related jobs. To be specific these hotels have created jobs in the service sector. They also have other ripple effects. They require food. That means there is demand for food in the markets and subsequently from farmers. They will need drinks to quench the thirst of Ugandans. These drinks are produced in Uganda and this translates into indirect jobs in distribution. Also, there could be increased production in the breweries.

These are indicators of growing economy. The proprietors see the opportunity to make some money. They are targeting the middle-class Ugandans – some say these people don’t exist – and also the growing numbers of tourists. Now, when the proprietors of the hotels are asked, they will believe that the economy is growing or anticipating growth.

“The hotel industry in Uganda is an exciting and growing one. That is why we have decided to venture into Kampala. There are a number of good hotels around but we are determined to add more value to what is already available,” – Mike Jameson, GM Pearl of Africa Hotel (http://www.monitor.co.ug/Business/Markets/Museveni-open-Aya-hotel/688606-4118642-j3eekfz/index.html)

Pearl of Africa Hotel
Photo credit (https://suburb2suburb.com/wp-content/uploads/2017/12/2412976717788040854945095883037388264232357n(1)1513068546.jpg)

These hotel investments are in millions of dollars but like they say, “The Taste of the Pudding is in the Eating.”

For some, Uganda’s economy is simply not growing. An example is the closure of Nakumatt, which saw one-by-one its retail outlets closed. Nakumatt employed nearly 700 people in Uganda. With the closure, all these jobs are yet to be absorbed. At the time of its struggles, Nakumatt was the largest retailer in Uganda. Its closure is seen as a failure of the economy to generate enough demand to sustain the a retailer like Nakumatt.

“The economy is so bad that Nakumatt had to close. People are just purchasing goods.” This is a statement you will hear when you talk to a former Nakumatt employee.

Several people who were working in Crane Bank that was later acquired – in part – by Dfcu also lost jobs. The estimate is about 200. Several companies have also downsized and people have been sent packing.

Did all these people get absorbed?

For a government with the ambitions of turning into middle class economy, there is no centralized registry of the unemployed. It is also incredible that speeches by several government officials on the economy will hardly state how many jobs have been created in a year or given period of time. What appears to be one source of information is the Uganda Investment Authority (UIA) that would state the companies opening in the country and projected jobs to be created. If the country wants to generate more credible information in order to better show that jobs are being created or even lost, there has to be credible data collection.

Recently, thousands of students graduated from Makerere University. The narrative often is that most of these graduates are now entering into the official unemployment statistics. Total unemployment is estimated at about 3.6% of the total labor force, according to the United Nations Human Development Index 2017. As a percentage of the total population, unemployment is about 20%. Additionally, UNHDI also indicates that 78.9% of all those employed are in a vulnerable situation (unpaid, underpaid…).

Source: https://www.indiegogo.com/projects/a-mind-of-a-graduate-deserves-saving

So when you meet a graduate with a brown envelope and ask them whether the economy is doing well, you could as well guess the answer. If the number of jobs being created is not matching the demand, then the narrative on growth will remain a myth to some. With about 400,000 to 700,000 people entering the job market at least annually, the number of jobs created is less between 90,000 to 150,000 according to several articles.

Yes the economy grows but not fast enough to absorb all.

 

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