By Ronald Musoke
World Bank, experts want shift in strategy
In the week leading up to Uganda’s golden jubilee celebrations, President Yoweri Museveni made several optimistic speeches, the most vivid being a public lecture he delivered on Oct. 2 with the theme “A 50-year journey since independence (1962-2012): A good foundation for socio-economic transformation.” He said the nation is uniquely poised for take-off into a middle income country in the short-term and a first world country in 50 years.
The speeches smacked of deja vu and a return to 1986, to the time when Museveni, then a lean 38 year-old gun-toting guerrilla leader with hungry dry lips and an unkempt moustache who had just grabbed power, was rallying the country around the Ten-point Programme he had crafted in the bush.
After two decades of state terror and a derelict economy, many saw hope in Museveni’s vision of promoting democracy, ensuring security of persons and property, eliminating sectarianism, and building national unity. They believed him when he said his government would fight corruption, improve social services, address the problems of victims of past regimes, and vigorously pursue cooperation with other African countries to build larger markets.
After 26 years in power, Museveni, 68, still likes to act strong and visionary. That is what he did on the eve of Uganda’s Golden Jubilee when he launched Uganda’s biggest dam ever, the 250MW Bujagali Hydro power project, and the nation’s biggest Steel Rolling Mills, both in Jinja. Museveni also spoke of better security and an educated population as the fuel for future prosperity.
But Gideon Badagawa, the executive director of the Private Sector Foundation Uganda, these are “the same things Museveni has been talking about for a long time”.
But even among those who still care to listen to him; and all indicators are that their numbers are dwindling, most see no future in Museveni; only the past. They see a man in the twilight of his years, unable to deliver on even the most flimsy promises.
“It’s important that when you make statements about the future you reflect on the past (because) this helps to build confidence by explaining what failed,” says Prof Aaron Mukwaya, a political science don at Makerere University who believes it is important to examine Museveni’s statements at two levels; as points of rhetoric and as reality.
“I am not alone in saying that what President Museveni talked about at independence is no different from what he said in 1986,” Mukwaya says.
“These statements shouldn’t generate any new excitement.
“Many visions have been produced but why did the previous visions fail. What mechanisms have we put in place to ensure that we succeed with this new programme?” Mukwaya asks.
Mukwaya argues that Museveni needs to explain to Ugandans why the things he promised way back in 1986 have not materialised in the first place and what new conditions he has put in place to address whatever failed. Mukwaya says instead of promising new things, the president should have been highly apologetic to the nation for his failures over the past 26 years.
“You can’t tell people Uganda will be better in the next 50 years when the pillars are not yet there. You can only convince a dead person, not a living person,” Mukwaya says.
A recent World Bank report, ‘Africa’s Pulse’, released on Oct. 4 also appears to pour cold water on Museveni’s promises. It says at least ten sub-Saharan African countries, representing 200-million people are poised to transition to middle-income status by 2025 and Uganda is not among them.
Instead, the World Bank says, the country will not even be able to achieve middle income status within that timeframe even if it gains high economic growth rates of 7%.
No silver bullet
Museveni says the National Planning Authority (NPA) estimates that about US$ 13 billion is needed to push Uganda to middle income status and he reckons that with annual revenues of about $5 billion from petroleum and gas, Uganda will need only three years to raise enough money and transform her economy.
He argues that although Uganda’s current Gross National Income per capita stands at US$ 580, value addition to the country’s new oil resources, coffee, cotton, fruits, maize, leather, beef, would elevate Uganda’s GNI per capita over that period to US$ 2,700 even if they were traded as materials.
According to the World Bank classification US$2,700 GNI per capita would place Uganda in the lower middle income bracket of US$1,026 to US$4035. Upper middle income countries have GNI per capita of US$4,036 to US$12,275. Above that is the high income bracket.
But the World Bank notes that Uganda might not transition to middle income status because of its high population growth, high levels of unemployment and existence of a large informal sector.
Under Museveni, Uganda’s GNI per capita has doubled but since the population more than doubles every 20 years; from 11 million when he came into power to 35 million today, the number of poor people keeps increasing.
It is estimated that in 2032, Uganda’s population will have risen to 70 million.
The quality of this population will be critical because nations that have made giant economic leaps, such as South Korea, Singapore, Malaysia and Indonesia, did so after critically developing their human resource.
“It is possible in the next fifty years Uganda (could make it) but it won’t happen overnight and we need to benchmark and set milestones so as to evaluate them and see if we are making progress,” Mugyenyi says.
Experts say even oil money will not work miracles unless the quality of the population improves from the current educated, but unemployable, un-innovative population.
Mukwaya agrees with the World Bank about the government banking the economic future on oil.
“Young people have got no hope, where is the hope for this nation if the young generation has lost it? Students are studying but the question they ask is `shall we find jobs?’
“We should not deceive ourselves about oil. Why is it that resources have been mismanaged without oil?” Mukwaya asks.
“I don’t know whether Uganda has the capacity to manage oil at political, cultural, social and economic level. We have been uncomfortable and wasteful with the little resources we have to the extent that even if we got oil, nothing will change,” he adds.
“Oil is not copper. There are so many mafias involved in oil, to the extent that if we are not organised Uganda could get disorganised. There will be more big potholes when we get oil.”
Oil money will only be useful depending on how it is invested. For it to have impact, oil money must be collected and invested in an area that has a bigger multiplier effect.
“Oil is not a silver bullet; it is about how you manage the revenue, says Onesmus Mugyenyi, a Senior Research Fellow at the Advocates Coalition on Development and Environment (ACODE), a policy think tank. “Unless the situation changes, chances are very high that we will follow the classic examples of Nigeria, Chad and Angola.”
“We have seen oil money leaving Bank of Uganda without parliamentary approval,” he says.
Just like China
However, not everyone has written off Museveni’s vision. Lawrence Bategeka, the acting Principal Research Fellow at the Economic Policy Research Centre, at Makerere University says Uganda can become a middle income country because other countries, such as China, which had the same features as Uganda in 1980 have done it.
“The day they realised their (past) mistakes, put them right, they moved forward in just two decades,” Bategeka says.
There is also no doubt Uganda is making progress.
Mugyenyi recalls one particular day in 1986 when he and his father were ferrying a relative who was fighting for his life to Mulago National Referral Hospital from Rukungiri; a journey of about 350kms. It took them two days because of the terrible road.
Nowadays buses travel from as far as Kabale, which is 100kms further and return the same day.
“In 1986 (when Museveni took power), I had never heard of a bus making a return journey from Rukungiri to Kampala,” Mugyenyi says, ““We have made relative progress in all the sectors of the economy.”
“In 1986, the average life expectancy of Ugandans was 39 years; today it is more than 50 years despite the challenge of HIV and Malaria,” he notes, adding that “The UNDP’s human development index puts Uganda’s household incomes, education and health indicators above the regional average.”
He says the roads may still have potholes but overall the sector has improved. He mentions improvements in health, manufacturing and education.
“In the education sector, nobody can tell you that in 1986 there were many more Ugandans accessing education than now,” Mugyenyi says.
Bategeka also says it is important for Ugandans to appreciate where Uganda has come from over the last 50 years. He says Uganda’s post-independence government inherited a mixed economy, with a nascent private sector— which further shrunk following President Milton Obote’s 1969 launch of the Commons Charter and further worsened during Amin’s regime.
“His expulsion of Asians effectively killed the economy.”
The economy shrunk further by almost 25% of GDP when Amin assumed power (1971-1979), at a time when state-led growth was very weak. Although Ugandans expected things to get better after Amin’s oust, they only got worse. Bategeka reckons that the years 1962-1971 saw the economy grow by 4-5% and although this was good, it was not high enough, he argues.
Later regimes were dominated by war and famine to the extent that households were surviving on World Food Programme handouts and the entire country was not fully liberated. The years 1979-1986 were a phase of political chaos characterized by many fighting groups, many Ugandans desperate for quick fixes.
“There was no way you could think of economic transformation,” Bategeka says.
“We also engaged in so many wars that disorganised everything in the country. The governments of the day were so much rooted in tribalism, sectarianism and religious feuds as well as constitutional manipulation right from 1961. These were political questions that led to insecurity and this affected the economy.”
Myth and reality
Bategeka is, however, advocating a radical shift in strategy.
For years, President Museveni’s government has focused on rural-based economic reforms like rural poverty alleviation schemes, rural electrification, and rural agricultural extension services.
Bategeka says such programs are misguided, costly, and their ability to transform the country is a myth. He says although 80% of Ugandan households are in rural areas, the government should not entrench a peasantry economy.
“The cost of taking services to these people is quite high in the long run and the quality of services will never improve because government does not have adequate capacity to inspect,” he says.
“If for instance health services were concentrated at Sub-County, level (which are about 900), these would be manageable.”
He wants focus to shift to urban planning and development, and investment in pull factors; electricity, good education, and potable water.
“We should have concentrated on putting up good schools and health facilities in growth centres. This move would have pulled people out of the rural areas,” he says, “Urbanisation is inevitable and reshaping the economic geography of the country is necessary.”
This debate is critical because, as World Bank Chief Economist for Africa, Dr. Shantayanan Devarajan, who is also the lead author of Africa’s Pulse, a bi-annual analysis of the economic issues shaping Africa’s economic prospects report said, resource-rich African countries’ investment in better health, education, and jobs, and less poverty for their people does not happen automatically when countries get richer.
It is a conscious decision.
Bategeka says all these will depend on how land reforms will go. Much as government steered clear of this, the land reform issue is clear dynamite.
“Urban planning is clearly messed up because of land issues. There is no country in the world where land belongs to the people in perpetuity. If it is there, then there must be an authority that compels government to buy the land for government developmental programmes.”
“Once we solve the internal divisions that have set us back, we will move forward.”
“Inevitably I see us getting there because the foundation for private sector led growth has been set, the state is playing its role and we are moving forward,” says Bategeka, “Deepening democracy is the way to go. How long it can take us to get there is another matter.”
Gideon Badagawa, however, has identified four critical areas that government must address: human resource development, infrastructure, energy and good governance. Badagawa says the infrastructure development especially railway transport should be given priority this time round.
“Uganda is land locked and more than 60% of inputs which are bulky are imported and yet we continue using road transport,” says Badagawa, who also wants cross-border infrastructure developed to boost regional trade which he says is still on the low side.
About 20% of Uganda’s trade is regional but experts reckon with better infrastructure, it could grow by 40-60%.
Badagawa says the East African governments need to regulate, harmonise, and standardise fiscal policies across borders.
For Museveni’s new development strategy to succeed, Mugyenyi says, the leadership question needs to be sorted out or else the gains made could be reversed.
“The government can say there is peace in the country and that there are no people holding guns but we are experiencing negative peace,” he says.
To him, although Ugandans have not taken up arms to fight, they are ‘fighting’ and rebellious in offices—in public offices, in police, in hospitals and schools.
“This is dangerous,” Mugyenyi says.
He attributes the rebelliousness and failure to progress on a lack of pride in and love of their country.
“What is it that Ugandans can talk about this country with pride? Nothing,” he says, “The government says there is no money and (yet) they see people squandering money and not being punished.
“Leadership should handle corruption so that even when the people feel that we have meager resources, at least they know those resources are doing the right things.”
Mugyenyi also notes that Ugandans seem to be suffering from fatigue because President Museveni has been in power for so long that people feel there must be some change but lose hope when change never comes.
“It is not about the opposition but there must be some change including the presidency,” he says.
“Government needs to open up by first being realistic. We need to revisit all the political ills which exist in the country—corruption, poor education, health and unemployment,” adds Mukwaya.
Mukwaya says Uganda has been under military administration since the colonial days and this must be addressed.
“When you have a by-election and you deploy a whole barracks and you cannot allow the opposition to do things, then nothing is being achieved.
“The NRM has tried but certain things have panned out badly and if we don’t guard ourselves well, oil will only escalate our current problems. We should start by calling a spade a spade. The best way to make government responsible is by being critical,” says Mukwaya.