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2009/10 budget good but will it deliver?

By Andrew M. Mwenda

The 2009/10 budget in Uganda once again presents the puzzle to many analysts of our nation. In spite of a world-wide recession (advanced economies declined by 7.5% in the last quarter of 2008), Uganda’s economy grew by 7%, an impressive performance by any standard. Indeed, growth in absolute tax revenues was 17% above 2007/08 even though it will be about Shs 150 billion below the projected amount.

There is widespread belief among Ugandans and foreigners alike that our country is politically on the highway to Monrovia or Mogadishu. Our government exhibits unparalleled levels of institutionalised incompetence and corruption. So how do we explain this contradiction ‘ an impressively growing economy in the hands of such a government?

Max Weber argued more than a century ago that the state’s ability to promote capitalist development requires it developing some degree of autonomy from the surrounding society. Yet this has been the biggest failure in post independence states in Africa. Any observer of Uganda would easily see that the institutional integrity of the state is significantly compromised. Diffuse fragments of society ‘ ethnic, religious and political ‘ so easily wrestle control of resources from their intended public purpose to private pockets.

Over the last decade, the government has greatly improved the allocation of money to different sectors. We shall call this ‘allocative efficiency’. It has made infrastructure, health, education and energy major priorities. From 2000/01 to 2008/09, the budget for roads has grown from under Shs 314 billion to Shs 1.1 trillion; education from Shs 445 billion to Shs 980 billion and health from Shs 248 billion to Shs 700 billion.

However, institutions at the centre seem incapable of exercising effective control over those in outlaying areas and districts. Thus, they cannot ensure that budgets so allocated are spent on the intended purpose so that Ugandans can get value for money. Consequently, performance in these sectors has improved only marginally, has been stagnant in some cases or is declining in others. We shall call this ‘technical inefficiency.’

For example, the Yoweri Museveni administration has invested significant monies in the road sector. In 1886, Uganda had 2,000 kilometers of tarmac of which only 10% was in good condition. Government has since rehabilitated the old roads and built another 1500 kilometers of new tarmac. Yet according to information from the Uganda National Roads Authority, out of 3500 kilometers of tarmac, only 1500 are in ‘good’ condition ‘ the same number Uganda had in 1962 when we got independence.

In primary education, teachers are in class for only 18% of the time; the dropout rate from this freely provided service is 78%. Secondly, 65% of the pupils in UPE schools up to Primary Five can neither read nor write. Although there has been a dramatic increase in primary school enrollment, the number of pupils registering for PLE has grown marginally. If you factor in population growth, there has actually been a significant decline in those sitting for PLE.

President Museveni claims that his  government has built 750 dispensaries over the last ten years. That is the easy part. The real work is to build effective institutions to ensure that the dispensaries actually deliver healthcare to the citizen. However,  health worker absenteeism is very high. Medicines are smuggled from public to private pharmacies and clinics. There are few, if any, nurses, doctors, equipment and drugs. Thus, maternal mortality has not improved in 20 years. So, 80,000 mothers die in child birth every year, that is 800,000 mothers in ten years ‘ the same number as those killed during the genocide in Rwanda.

Yet, we see technical efficiency in some areas. For example, government has sustained a stable macroeconomic policy framework for two decades. Usually, when confronted with elections, many governments print money to finance popular programs leading to hyperinflation. The government of Uganda has resisted this temptation even when President Yoweri Museveni’s political life has been under serious electoral threat. He has intimidated, jailed, bribed ‘ and on occasion even killed ‘ to win elections. But he has not printed money to finance his political survival.

Museveni’s government has also ‘ with impressive commitment ‘ maintained a largely liberal economic environment. It is easy to set up a business in Uganda. Local and foreign investors are investing. This has led to an impressive growth in all sectors especially services ‘ telecommunications, hotels, restaurants, media and banking. Of course many of the changes we see in Uganda today are common across most of Africa since the 1990s. However, Uganda pioneered them in Africa.

Again, Uganda’s commitment to this liberal policy framework is a puzzle. A patronage-ridden regime like that of Museveni would prefer to limit access to economic opportunities in order to create rents for its cronies. Except for isolated incidents like dishing out prime public land, money and state enterprises to some of its cronies, it has restrained itself from an all-embracing policy of state control of the economy.

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