“Once you accept that profit and greed as practised on a mass scale create the greatest possible benefits for any society, pretty much any act of personal enrichment can be justified as a contribution to the great creative cauldron of capitalism, generating wealth and spurring economic growth – even if it’s only for yourself and your colleagues,” Naomi Klein, The Shock Doctrine
Andrew Mwenda took out a full page in the New Vision to write a piece on Uganda’s growth. The title “How Uganda has been performing exceptionally well” is an indicator of how the piece aims to heap praise on the current government whereas playing down the opposition demand for change. It would be intellectually dishonest not to admit that Uganda is in a better place than it was in 1986. But then it would be intellectually dishonest to claim that Uganda’s has been exceptional. Mwenda’s narrative ponders on the economic growth indicators that point Uganda to be the 11th fastest growing economy in the world – according to the IMF. The problem with this analogy is that growth banter often used at an international conference, IMF books, and World Bank board rooms. In our daily reporting as journalists, we also quote economic growth as an indicator of the improved – or not – status of a country.
Growth is an indicator of progress, but it is quantitive and tends to ignore the quality of life factors. Mwenda’s argument borders on the theories of free markets that often reap apart quality of life for some. The World Bank has stopped at just saying “Economic Growth.” It now uses a phrase; “Inclusive growth.”
In April 2012, the World Bank wrote;
“Uganda remains one of the fastest growing economies in Africa, leading to a considerable reduction in poverty and a good quality of life for some. However, as one travels across the country, it becomes evident that the growth of the economy is not necessarily translated into equitable living standards.”
One indicator of growth as Mwenda highlights should be the value of exports.
In his piece, Mwenda notes that he wrote to the IMF for statistics on our exports. Well, he has a figure of exports growing from $200m in 1991 to $5.4b in 2015. This he sums up as our exports growing 21 times. Available statistics indicate that at the time of economic reforms in 1990, Uganda exported goods and services $311m. As of 2013, this figure was $4.9b. This is a 1475% rise. More than half of these exports $2.8b (2013) were goods. Impressive. Right? Not quite. Considering our addiction to imports, the benefits of exports have been offset by the cost of importing.
Over the same period, Uganda was importing goods and services worth $833.7m in 1991. By the end of 2013, imports were $7.5b. That is a rise of about 800 percent. The gap between imports and exports is now $2.6b. In 22 years, the net gain of exporting has been about 12.6 percent. That means each year, exports improved by 0.5%. That is not remarkable enough to make it exceptional. It is okay.
“The external current account deficit widened in FY2014/15 and is expected to expand further as a result of high infrastructure-related imports, stagnant exports, and weak tourism receipts stemming from the difficulties in neighboring countries,” The IMF noted in a November 2015 PSI review of Uganda.
The recent depreciation of Uganda Shilling has brought the conversation of boosting exports to the public domain. This can be done by value addition. For now, we keep talking.
On Coffee, he points out that in 1990 Uganda was 94 percent dependent on coffee exports. I do not have the 1990 statistics, however in 1994, coffee represented 64% of total exports. Mwenda says as of 2015, that percentage is 7.4%. Indeed, Uganda had escaped its exposure to fluctuations in the world market prices of a single commodity. Then again, tell me a coffee brand from Uganda that is competing on the global market? Better still, why don’t we have the likes of Nestle or Nescafe setting up shop here? Andrew Rugasira in his 2013 book, “A Good African Story” describes how adding value to Uganda’s coffee and exporting it has been troublesome. The improved coffee exports have not trickled down to the farmer as well as they should.
“Coffee farmers in Africa are not just poor because the world commodity prices have been low, but fundamentally because these farmers operate at the bottom of the value chain, have little crop diversification and limited access to farm inputs and other appropriate technologies,” Rugasira writes.
Mwenda points to a report done by the Standard Bank Group – I would think this what he suggests and not Stanbic Bank Group -, which I have not seen or read. The report according to Mwenda, “…aimed to provide a picture of the most reformed and best-managed economies where investors can put their money and expect the best rate of risk-adjusted return. It identified six countries – Uganda, Rwanda, Tanzania, Burkina Faso, Ethiopia, and Mozambique.” The justification for bringing this into his piece is to indicate that some do not have term limits, some are ruled by military leaders and that none has ever seen an opposition party defeat a ruling party in an election. I am not sure where this ties in with Uganda’s impressive performance rather than justify the long stay in power. This is not denying the amount Foreign Direct Investment Uganda has received over the years.
On poverty reduction, he notes that poverty level dropped from 56% in 1992 to 19% in 2010, according to the Uganda Demographic and Household Survey for 2012. If we use the more recent statistics, Uganda Poverty Status Report 2014, poverty levels in the country were 19.7% in 2012/13 from 24.5% in 2009/2010. This shows an improving trend but that is not the whole story.
“However, even with the significant reduction in poverty over the last 20 years, the majority of the population remains vulnerable. In 2012/13 more than half of the nonpoor population was classified as insecure, living below twice the poverty line. The large number employed in the agricultural sector are vulnerable to climatic shocks pests, plant and animal diseases and price fluctuations; and those working in the informal sector usually receive low and irregular income. We will not be able to sustain the progress made unless the underlying structural causes of economic vulnerability are addressed, particularly in light of growing demographic pressures,” Reads the 2014 Poverty Status Report.
Mwenda ignores something important; inequality. Using the World Bank, which Mwenda widely quotes, society is becoming unequal. In 2013, Moustapha Ndiaye, World Bank’s Country Manager for Uganda then noted that whilst Uganda made gains in economic growth and poverty reduction, “…some groups are at risk of being excluded from Uganda’s gains. Income inequality is on the rise, showing that something has to be done differently.”
When Besigye moves around the country, is his aim showing you the good things that government has done? The opposition is expected to be critical of the government and challenge it where it is not doing right. If a hospital is in a terrible state who will highlight it? Why would one expect the opposition to praise government if services have been delivered – isn’t that their job anyway? When Besigye says defiance, here is my understanding;
“Not only do market forces threaten to colonize society, the state too threatens to devour society. Free markets are not a solution for poverty; they are one cause of modern poverty. State sovereignty is not a guarantor of freedom; it threatens to undermine social freedom. The challenge is not how the state can regulate the market, but how society can regulate both the state and the market,” Prof. Mahmood Mamdani (July 16th 2012 at the 20th Joseph Mubiru memorial lecture).
Mwenda argues that Uganda has limited resources to deliver quality services to the people. In fact, he compares Uganda’s low budget allocation per person compared to Kenya. This is no justification for some of the quality of healthcare and education we have in the country. Even with the “limited resources” money is lost to inflated costs, corruption in contracting and buying cars for government officials – during the campaign season. It should be noted that Mwenda has argued before that there is no scientific evidence to prove that corruption affects economic development. He believes corruption is just a moral argument.
However, if money meant to build a school or a hospital is diverted into individual pockets, do Ugandans benefit? That money, since it is stolen will go to the unregulated real estate sector. It will be used to purchase land. A mall and rentals will be constructed. The landowner will benefit. The civil servant will be a mall owner. The landowner will have some extra cash to set-up a business. A poor person in Abim will not afford healthcare. A teacher will keep teaching under the mango tree. The quality of education also keeps falling.
Look how easy it is for those in positions of power increase their salaries. When teachers ask, “we can’t afford it.” Look at the state of the Public Service Pension Scheme. Ugandans work for the government. When they retire, the process of getting paid is tedious. Some die of stress-related illnesses. Others give up. When their money gets stolen by corrupt officials, we’ll argue “there is no scientific evidence to prove the negative effects.”
Of course, the argument will be that jobs will be created with the corrupt money. But who benefits the most? The Ugandan? The private sector is also guilty. But hey, it is a private sector-led economy.
It is capitalism. Stupid!
If Uganda had been exceptional, why do we still have foreign banks dominating? Where is that Multinational from Uganda dominating East Africa? Where is our textile sector? What is the cost of corruption? Where are the jobs? What were the benefits of privatization? Are Ugandan’s so bad at management? It is important to ask presidential candidates all the tough questions because they’re our servants. In as much as Uganda has had good growth, increased FDI, and poverty reduction, it doesn’t take away the fact that we could have been a better country – 30 years later. The question is, how we leap from being okay to exceptional?
Categories: bank of Uganda, uganda