The government of Uganda set 2020 as the year in which the country would achieve a middle income status. With less than three years to go, we need to assess and see whether this is possible.
According to the World Bank, a middle income country is one which has an annual per capita income (or income per person) of between $1,024 and $12,615.
Uganda has set its target as $1,033 per person per year which is on the lower end of the bar. This means that all Ugandans, including children who are not working, should on average earn at least $86 or Shs290,000 every month.
The easiest way to achieve the middle income status would be to increase the GDP by having a few productive people increase their output.
If they maximised their income, say to a million dollars a year and divided it among the rest of other Ugandans, we would have a good average income. This could be achieved by 2020 without much sweat. I hope our economist will not go for this quick solution.
This would mean nothing. A more meaningful although more difficult position to attain, is where every individual actually earns a minimum of Shs290,000 per month.
According to the implementers of the National Development Plan, if the NDPII is implemented to the dot, this is achievable.
The NDPII identifies five lead sectors which if well focused on, can propel Uganda to the middle income status by 2020. These sectors include agriculture, tourism, mineral oils and gas, human capital development and infrastructure development.
However, in a recent report released by the World Bank, considering the trends of growth, World Bank economists have stated that for Uganda to reach the middle income status, the country’s GDP has to be growing at a minimum of 9 per cent per annum.
Since 2009, Uganda has been able to grow above this rate twice - first in 2005 when it grew by 10 per cent and in 2008 when it grew by 10.4 per cent. However, for the most part, our GDP growth rate has been less, averaging at about 5.5 per cent. Therefore, a rate of 9 per cent is possible, but unlikely.
A rate of 5.5 per cent in essence, is not a really bad rate of growth. Many of the developed such as countries in the European, actually grew at much lower rates, between 1 per cent and 2 per cent. The level of development they achieved was more of a result of sustaining this growth over a long period of time than growing at a fast rate. These nations have enjoyed peace and stability for more than three centuries.
Developing countries on the other hand have not even been in existence for a hundred years and for a great part of these years, they were in unbeneficial trade serving the interests of their colonial masters. And even after they obtained independence, many of these countries, Uganda inclusive, went through turbulent period of bad governance and coups.
In context, therefore, Uganda’s economy growing at an average of 5.5 per cent, has therefore, been a fair performance. However, with the high poverty levels countrywide and the need for our country to catch up with the rest of the world, it would be unwise for us to settle for mediocre performance. There is an urgent need to improve our growth rates.
With the exception of the last three years since 2014, Uganda’s economic performance has been average. However, in the last three years, our GDP growth rate has been dropping from 5.2 percent in 2014, 5.0 per cent in 2015 and finally 4.7 per cent in 2016.
The provisional results by World Bank experts, unfortunately, also predict a GDP growth of less than 3 per cent for 2017. Therefore, the attainment of the middle income status seems to be getting out of our grasp with each passing year.
Our hope, therefore, will now lie in more vigilance in implementation of existing plans, or bringing in new strategy and ideas. In the absence of such renewed efforts, we shall have to do what many Ugandans are now doing ie “sow a seed” in churches, buying “holy rice” or visiting Mama Phina and wait for a miracle.
For God and My country
Edward Makobore is an economist, farmer and Businessman. emakobore@gmail.com
