Uganda needs transformation to maintain growth

Posted on June 16, 2015 12:01 am

Following years of recording over six percent annual growth, Uganda, now in the midst of an economic slowdown, needs to institute transformational policies to maintain its current rate for the long term, an economists said to me few days ago.Prominent Ugandan scholar, an economist, said that while Uganda growth has been relatively strong over the past two decades, the current level would not support the country’s booming population, which is expected to rise from 35 million to 60 million in 2040.This is especially the case if the goal of development is to double prosperity within the next few decades. This requires a 7 to 8.5 percent growth rate for 2015-2020, which seems difficult to achieve.He added that growth was fueled by mostly raw material exports and natural resource extractions, which provided no significant added value.The future calls for a fundamental ‘get things done’ institutional transformation to tackle the emerging agenda of development to meet the future challenges of increasing competition in a more integrated globalized world.

High international prices of raw materials in recent years,have resulted in there being no incentives to move up the ladder of value added for many Ugandans.According to the Professor of Economics, it was predominantly the high-income group that enjoyed the benefits of these industries.This kind of development, is not inclusive growth and is characterized by rising inequality in Uganda.From a political perspective, the current five-year electoral cycle is creating a short-term political vision that negatively affected development, in Uganda.Political survival dictates that local leaders in Uganda are becoming more interested in short-term development projects rather than long-term development goals. Leaders and local business class are also reluctant to go beyond their comfort zones and continued to maintain the formula of a raw material-exporting economy and avoid tough measures required for sustained development.This may perhaps explain why the developmental outlook of Uganda political leaders is focused on the short term, why tough decisions ‘to get things done’ have not been implemented and why Ugandan development in the long-term perspective needs to be re-evaluated.

The pressure of regional competition is increasingly felt.Uganda cannot afford a political system that does not produce get-things-done managers at the ministerial, provincial and district levels.To achieve the level of growth it aspired to, Uganda should no longer merely rely on reactive and proactive policies but must implement profound readjustments to its  economic framework.Transformative policies that involve a more integrated strategy and evolving sustainable reforms that can promote more dynamic and lasting change.The Professor of Economics outlined six key areas Uganda need to address, including measures to extend and integrate the domestic market, reducing logistics costs and transaction costs, expanding the private sector, addressing the declining “Total Factor Productivity” and building policy approaches across different sectors.When I sought his views on preconditions to adequate growth that are badly needed in Uganda especially the good infrastructures like the ongoing construction of Kampala – Entebbe Expressway, more technology, increased knowledge and and good governance as has been witnessed with radical reforms in the country, the Professor who was born and bred in Uganda but left 30 years ago, said they are secondary to building policies of different sectors of the economy in Uganda.

Contador Harrison