Museveni and the illusions of middle income

Moses Khisa

What you need to know:

…bottom line is that we are a very poor country despite decades of officially reported good economic performance

President Museveni has long obsessed about Uganda attaining middle income status. It was core to his 2016 re-election campaign message.

In the most recent series of declarations and projections, Mr Museveni and his government repeatedly promised that this seemingly magical status would descend on Ugandans by 2020. Given that the Covid-19 pandemic crashed economies and people’s livelihoods, harkening to the pandemic’s impact is a convenient cover and excuse that the president can point to. No!

Instead, last month, during the State-of-the Nation Address we were astounded with an incredible announcement that Uganda was now a lower middle income country having crossed the threshold of an average national income estimated at just over $1,000.

The World Bank uses $1,045 as the threshold of Gross National Income (GNI) per person (total income including money by nationals from abroad but not foreigners in the country).

 Last Thursday, the World Bank released a report that contradicted Mr Museveni’s claims of middle income status, insisting that at $840 GNI per person, Uganda was still a poor, low-income country.

Then on Wednesday, the head of Uganda Bureau of Statics dug in on the government side about the promised land of ‘middle income’. The difference between the World Bank’s $840 and the government’s quoted figure of $1,046 is huge.

The official explanation for this is that the Bank used data for the 2020/2021 financial year while the government’s figure is for the financial year 2021/2022. Most credible international organisations that collect such crucial data tend to have a one-year time lag, so it is standard for the World Bank to assess Uganda using data from a year ago.

Also, the Bank’s use of GNI instead of Gross Domestic Product (GDP) in a country heavily dominated by foreign economic actors is likely to give a more accurate picture. Population figures too are key in getting the average of wealth/income as against the number of people in a country. The World Bank reports a much higher population than what the Uganda government purports to project.

In all, even for all its many flaws and failings, one would rather bet on the World Bank to be more credible and accurate in evaluating the status of Uganda’s economy and the economic standing of Ugandans. For a government and president too eager to make a declaration they have long been promising, it is possible to doctor data or make up a story for what it is worth.

For the average Ugandan, figures and statistics from UBOS and the government or even the World Bank mean nothing. Poverty and middle income status and situation is a lived experience whatever the official figures.

Measures of poverty and other socioeconomic indicators are based on cut-off points and thresholds that don’t mean much. For example, what difference would it make if Uganda’s GNI per capita was $1,045, to meet the World Bank’s threshold, and not, say, $1,020? The World Bank uses a per-day living affordability of just under $2 to determine whether or not someone is poor. But what difference in real life does it make to live on $1.90 and not $1.80?

The big picture and bottomline is that we are a very poor country despite decades of officially reported good economic performance. Growth and transformation is a long-term and protracted process. Moving a country from poverty and prosperity cannot happen in a generation or two.

Attaining the kind of transformation that would mark out a country from its past poor status to a current status of advanced material wellbeing can only happen with structural change and sustained growth, not superficial improvements. Uganda has had the latter and not much of the former.

Government officials and regime supporters have for long trumpeted Uganda’s impressive growth figures, in fact one commentator with a ubiquitous media presence once ludicrously claimed that Uganda’s growth was unprecedented in human history!

Yet even by comparing with regional peers, there is actually nothing particularly outstanding about Uganda’s recent economic performance. Until a few years ago, for example, both Ethiopia and Sudan had years of better GDP growth than Uganda and our immediate neighbours Kenya and Tanzania have overall done far better, that is why both are middle income and we are not, not that this should matter much.

Last week, I indicated I would return to the question of why Museveni has failed to engineer an economic transformation for a country he has ruled for close to four decades. Instead he now presides over ‘bodanomics’ where our overall economic health and outlook can be discerned and deciphered through the trade of the passenger motorcycle whose ills I have attempted to sketch out in the past three weeks.

For a President who otherwise has an excellent grasp of the political economy of a poor country, Mr Museveni has spectacularly failed. I will turn to this next.