Wednesday April 9 2014

Beyond small-time politics: Where Uganda’s money will be in 2025

By Charles Onyango-Obbo

There is too much noise in Africa, and Uganda currently is as good an example as you can get. There are fights in the ruling NRM for pork; the government is distracted with passing Amin-era laws covering everything from the hem lengths of women’s dresses to where groups of like-minded Ugandans can have lunch.

However, if one steps back a bit, you see events in Uganda differently. First, a few years ago, Uganda liked to picture itself as a shaker and mover in Africa. Seeing the country in that context was important for our local politics, because it is the only way President Yoweri Museveni and his men and women could present themselves as something bigger than tribal chiefs.

Indeed, among other things, the UPDF’s role in the African Union peacekeeping force in Somalia Amisom; the recent intervention in South Sudan; and our role in the Central African Republic (CAR) was to make the point that the government is relevant in a global context. So while it might be corrupt at home and public services are falling apart around it, it was serving a higher African purpose. And there is, indeed, some value to that.

But that same Africa might soon delegitimise the NRM government at home. Someone crunched the numbers recently and noted that Africa is indeed growing richer, but just 19 countries together hold $2.052 trillion - or 76 per cent – of the continent’s total wealth. The remaining 35 control only $648 billion.

Even, of the 19 countries, 14 of them accounted for 90 per cent of Africa’s GDP! Those 14 countries are South Africa, Egypt, Ethiopia, Ghana, Kenya, Morocco, Algeria, Mozambique, Angola, Nigeria, Cameroon, Senegal, Cote d’Ivore and Tanzania. Towards the close of the 1990s, Uganda had not just the fastest growth in Africa, but the world. If it had stayed on that trajectory, it would have cracked that list of the top 14 because one time, it had a leg up on Tanzania. Then we fell off the wagon.

If a country like Uganda whose leadership drew some of its legitimacy from beyond its borders become irrelevant in shaping the continental economy and its citizens see other Africans who were “behind” 15 years go galloping ahead, the regime could face a loss of credibility as big as anything it is dealing with now. It cannot be enough for us to be Africa’s (and for a while in Afghanistan and Iraq America’s) security guards.

Still, if you flip that, it might not matter where Uganda as a country stands in Africa’s economic pecking order. I was struck by reality recently when I was in South Africa and sat in on a presentation by McKinsey on Africa’s future prospects.

They introduced a very delightful subversion idea, i.e. that if one looks 10 years ahead it might not matter where countries as such stand. African cities, McKinsey suggested, might be more important than countries.

By 2025 nearly 40 per cent of Africa’s GDP will be driven by cities. Up there will be Luanda, turning in $118 billion, followed by Johannesburg, Cape Town, Pretoria, Lagos (though Lagos will probably rise), Durban, Accra, Huambo (a provincial city in Angola), Port Harcourt and Ibadan in Nigeria, Nairobi, Dar es Salaam and other cities in South Africa. Kampala is in the mix, but it will be notching less than $10 billion.

However, if you dig deeper into the data, to look for households that will be earning more than $7,500 (Shs19.2 m?) the picture looks different. Lagos is top, with 1.5m households earning $7,500, followed by Johannesburg (1.3m), Luanda and (890,000), Dar es Salaam, Accra, Nairobi, Cape Town, Kumasi, Durban, and Ibadan and Kampala level at 400,000 households making that by 2025. So here Kampala gets to 11th position—not bad!

That tells us, echoing the words of Bank of Uganda Governor Tumusime Mutebile sometime back, that Kampala is actually becoming the Ugandan economy. Little is happening elsewhere. Which is not a disaster, except that Kampala or Uganda, is hardly anywhere in the countries where innovations and investments in digital technology is driving growth (what McKinsey calls iGDP).

Of the many companies creating new age jobs and wealth in Africa, not a single one is from Kampala (or at least not yet). My sense is part of the reason is the dismal level of investment in IT infrastructure by both the State and private sector.

Clearly, then, a lot of the politics we are seeing today is largely irrelevant to the ways the future economy of Uganda is headed, where Kampala will be like a city state if it followed the path of others on the continent. The only worry is that with the current government and its neglect of investment in “I” infrastructure, Kampala will not be a city state. It will be a village state. Imagine for a second, what the rest of Uganda will be like, then. & twitter:cobbo3