COMMENT: By Geoffrey A Onegi-Obel
The capital markets industry offers solutions for the country’s middle income economy challenge
There has recently been an endless flow of ‘brilliant’ opinions about the way forward for Uganda’s ailing economy but none has so far had clarity that demonstrates understanding of the Economic Development Question.
Failure to understand the economic development question has consequences which lead to poor decisions and then wrong policies.
Some five failed and dubious development decades on, time has come for clarity – clarity which is brought by understanding the development question.
First the Economic Development Question is and has always been ‘Jobs Creating Growth ‘ – nothing more nothing less. It is that simple and understanding this question in this simple format is crucial for the decision making required to create the ecosystem for ‘ Jobs Creating Growth’. Anything else is just economists’ mumbo jumbo.
Secondly the false narrative of below/ or sub 8% GDP growth rates as ‘high’ is demystified by any investment banker as follows : A HIGH PERCENT OF ANY SMALL NUMBER REMAINS A SMALL NUMBER , AND A SMALL PERCENT OF A BIG NUMBER NUMBER REMAINS A BIG NUMBER .
There is a mathematical rendering for this expression -but this paper is meant to demystify and not confuse.
Thirdly, the jobs creating growth rate for Uganda is a minimum of 8% real GDP growth points sustained over two cycles of five years each.
So if you hear someone chest thumping that Uganda’s 6% GDP growth rate is high by global standards – it should be clear to you that such a person does not understand the Economic Development Question. You can easily compare Uganda with Kenya which grows by just 4% but because it has a relatively larger GDP base, it still outperforms Uganda economically. Even at this rate Kenya is still not in the ‘Jobs Creating ‘ zone.
Now that we have achieved a bit of clarity on the Economic Development Question, how and can Uganda achieve the Minimum Jobs Creating 8% GDP Growth Rate sustained over two cycles of five years each? What about the Middle Income Economic Indicators?
The answer is yes we can – and the infrastructure for realising this goal is the long ignored Capital Markets Industry. The new United Nations Sustainable Development Goals that succeeded the Millennium Development Goals can also help provide the clarity required to demystify the economic development question. The capital markets industry, however, provides the most credible, transparent, and sustainable path for financing the growth of any economy to move from stabilisation to growth with jobs – and even economic expansion.