The myth of Uganda’s economic ‘miracle’

Saturday April 20 2019

 

By Moses Khisa

Uganda’s economy has grown modestly over the last three decades. But there is no miracle. We have had an ad nauseam claim by my friend Andrew Mwenda, and other supporters of President Museveni and sympathisers of the regime, about Uganda’s economic performance being out of the ordinary and unprecedented in history. It is a misleading narrative.

To get a better picture, we need to place Uganda’s performance in comparative perspective and see how the country has fared against regional peers.
The standard measure of economic performance is GDP growth – growth in the total stock of wealth or goods and services every year. Its counterpart is GDP per capita – the average wealth per person. The other, perhaps more accurate measure, is Gross National Income (GNI) per person, which combines domestic and foreign income by nationals, but excludes income by non-nationals.
Let’s look at six major countries in the eastern African region since 1990 and see how they compare. These are Ethiopia, Kenya, Rwanda, Sudan, Tanzania and Uganda.
The GNI for Ethiopia (in current US dollars) was $260 in 1990 and $740 in 2017, Kenya’s was $380 and $1,460, Rwanda’s $350 and $720 in 2017, Sudan’s $530 and $2,380 in 2017, Tanzania’s was $200 and $910, and Uganda’s $320 in 1990 and $600 in 2017.
This means that for the last 30 years, Ethiopia’s GNI has increased nearly three times (2.8), Kenya’s almost four times (3.8), Rwanda’s doubled, Sudan’s and Tanzania’s both more than four times (4.5) and Uganda trails at 1.8.

What about GDP per capita? Ethiopia’s (in today’s US dollars) in 1990 was 253 and 768 in 2017, Kenya’s 366 and 1,594, Rwanda’s 352 and 748, Sudan’s 479 and 2,898, Tanzania’s 172 and 936 and Uganda’s 247 in 1990 and 606 in 2017. Again, Sudan tops performance with 6 times expansion in GDP per capita followed by Tanzania with 5.4, Kenya at 4.3, Ethiopia 3, Uganda 2.4 and Rwanda 2.

Over the three-decade period, the average GDP growth for the six countries is as follows: Ethiopia 6.75, Kenya 3.75, Rwanda 5.65, Sudan 4.93, Tanzania 5.44 and Uganda 6.49. While Uganda comes second here, behind Ethiopia, the difference with Rwanda and Tanzania is very small while Kenya and Sudan have much bigger economies and can still do very well even if the average annual growth is lower.

Looked at from another angle, since 1990 Uganda has had only two years of double-digit GDP growth, 11 per cent in 1995 and 10 per cent in 2006. There are countries on the African continent that have had more years of double-digit growth and several Asian economies had many years of the same at the peak of their periods of rapid growth.

Yet, and this is a crucial difference, Uganda’s annual population growth rate since 1990 has consistently been over three per cent while the other five countries have all had many years of less than three per cent, Sudan having the lowest. This means that much of Uganda’s otherwise decent annual growth rate is wiped out by an equally high population growth rate.

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I should mention that when the above figures are expressed in PPP (Purchasing Power Parity), meaning the actual value of the dollar in terms of how many goods and services it can buy when converted into the local currency, Uganda does better than Kenya, Rwanda and Tanzania, but not Ethiopia and Sudan. This is because of a better annual rate of inflation and superior performance in production of basic consumables, specifically food, which makes the cost of living cheaper.

That said, we have to get out of the obtuse world of figures and speak directly to the conditions of the ordinary person. Even if Uganda had superior figures on these different measures, they would still mean nothing for the majority of Ugandans who still struggle to manage a decent standard of living.

Officially, Uganda’s absolute poverty, meaning the number of people leaving on less than a dollar and 25 cents per day, dropped to under 20 per cent in 2017. But when the threshold is pushed up a little bit to, say, 1.5 or $2 per day, the percentage of the poor goes up dramatically. One has to ask what difference there is in real life between surviving on a dollar versus $2: It’s all ugly poverty.

Uganda’s growth has for the most part happened in areas that don’t affect majority of the poor. Growth in services, real-estate and construction sectors benefits speculators and a small click of economic actors. By contrast, agriculture has often suffered negative growth while manufacturing lags behind and has a paltry share of total GDP. We have a very long way to go.

Dr Khisa is assistant professor at North Carolina State University (USA).
moses.khisa@gmail.com

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