ERIC KASHAMBUZI

Written by Eric Kashambuzi, on 23-06-2008 23:00

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On June 4, 2008 Paul Busharizi and Sylvia Juuko of the New Vision published an interview report with Shantayanan Devarajan the newly appointed World Bank Chief Economist for Africa. The interview covered a wide range of economic and social issues. The chief economist, however, said that he was looking at the glass half full.

In order to give readers a full picture, it is important that the story about the empty half of the glass be told as well. While it is true that Uganda has had twenty years of uninterrupted growth, this growth has on average fallen short of 7 percent – the minimum required to meet the Millennium Development Goals adopted by World Leaders at the United Nations Millennium Summit in 2000. The economic growth has not improved social conditions as expected regarding food security, quality education, healthcare, housing and clothing. For example, according to UNICEF (2008), 32 percent of children under the age of five suffer moderate and severe stunting, 20 percent suffer moderate and severe underweight and 12 percent of infants are born with low birth-weight, meaning that their mothers are malnourished.

The benefits of economic growth have been unevenly shared such that 53 percent of total household income has gone to 20 percent in the highest income bracket with only 15 percent going to 40 percent in the lowest income bracket.

It is true that inflation has been kept at a low level averaging 5 percent per annum – but at a price. Fiscal and monetary policies were introduced to reduce the amount of money in circulation through high interest rates and reduced government spending. The government has therefore been unable to invest in infrastructure such as roads and energy and in human capital essential for sustained economic growth and development.

High interest rates have constrained the development of small and medium-scale enterprises which have the potential for creating jobs. Accordingly, Uganda is experiencing high levels of un-employment, under-employment and rising poverty as well as the associated crime, violence and other social ills in rural and urban areas that are tearing apart the social fabric.

The policy of export-led growth encouraged under the Washington Consensus conditions has resulted in Uganda becoming a food exporter to neighboring countries and beyond especially of nutritious foodstuffs such as fish, beans and sesame traditionally produced for domestic consumption. Consequently, many households are increasingly eating one meal a day of maize or cassava without adequate nutritional supplements, leading to serious deficiencies especially among children. Children that are malnourished are mentally and physically underdeveloped. And that is not the proper way to prepare our future generations.

Paradoxically, while Uganda has become a major food exporter, it has simultaneously been categorized as a hunger ‘hot spot’ nation in need of food aid.

The Chief Economist like some Ugandans believes that the current high food prices will benefit Uganda’s farmers. “This may be the best news for Uganda in the long run. They finally may be getting decent prices for their outputs”, said the Chief Economist. However, the information to date from the western region, the breadbasket of Uganda, shows that small, unorganized farmers have not benefitted and are unlikely to do so because they are organizationally weak and have no bargaining power. As the saying goes, ‘in the long run, we are all dead’.

The Chief Economist has, however, acknowledged that poor urban and landless dwellers are hurting and need help to pull through the hard times. He suggested targeted cash assistance programs. The most vulnerable groups particularly the unemployed, the elderly who are also taking care of orphans need urgent help by all stakeholders. Failure to do so is a violation of their right to food.

Finally, the chief economist talked about Uganda becoming a very open economy through structural reforms. He did not elaborate. This development, however, may have hurt Uganda in some ways particularly in the area of manufacturing in large part because of cheap imports such as used clothes. There is no country in the world that has developed without industries and for industries to mature and compete at a later stage they need protection in the early phases. Even Britain, the first European country to industrialize, protected its ‘infant’ textile industries against cheap Indian imports. Therefore, Uganda authorities need to recast the open policy as soon as possible.