Where is Suruma’s 9% growth?
Jun 14, 2008
In reading the budget speech on Thursday, finance minister Dr. Ezra Suruma, announced that the economy had grown by 8.9%, far above the projected 6.5% he planned for.
By Paul Busharizi
In reading the budget speech on Thursday, finance minister Dr. Ezra Suruma, announced that the economy had grown by 8.9%, far above the projected 6.5% he planned for.
In fact a revision of the way economic growth is calculated shows that the economy over the last few years has been doing much better than previously reported.
The Government’s economic growth target for the last five years has been 7 %, which it has never attained since it set the target, but with the new calculations, which gives more prominence to growth in financial services, real estate and aviation services, the economy actually exceeded this target in the last three years.
A rethink of the components of a statistical series is not uncommon and should not be.
This begs the question, “So if we have actually been growing at a much faster rate than we thought, how come I am not feeling it in my life?â€
To begin with, the economy does not grow uniformly, some sectors grow faster than others, so the growth figures are actually an average of the growth of various sectors of the economy.
The latest finance ministry figures show that there are three areas polled to derive this figure - agriculture, industry and services. Services were the biggest gainers this year, growing by 13%, which growth more than doubled the industry sector’s 6.4%, while agriculture came a distant second growing by less than 1%.
It does not take a degree in statistical analysis to make out that, the majority of the population is being left out of the party.
About 80% or about 25 million Ugandans live in the rural areas and derive their livelihood from agriculture. These multitudes are having to share in the pathetically small 0.7% growth in the agricultural sector.
Two other factors make this an even more dire statistic. To begin with because of poor agricultural practices and unclear tenure systems, Uganda’s agricultural sector is not among the most productive, measured as output per unit area of land, in the region or on the continent.
Secondly, even among our farmers productivity varies widely across regions, so last year eastern Uganda suffered a drop in productivity because of the floods, while in other parts there were booms.
Understandably for the majority of Ugandans, economic growth is something for the newspapers and the well crafted donor agency papers, they are not feeling it. The growth is being felt in the urban areas. Financial, road, rail and water transport and aviation services all registered growth of more than 20% last year, while wholesale and retail, transport and communications, telecommunications and health services all registered double-digit growth during the same period.
The question taxing Sururma’s mind must therefore be, how to spread the love, without slowing down the growth or distorting the economy unsustainably?
We will not be reinventing the wheel in trying to restructure this economy to better distribute the benefits of growth.
In fact it is quite simple to do. Simple but not easy.
In the last 20 years, we have done it with coffee, with milk, with fish, with vanilla to name but a few. All we have to do is create the markets for agricultural produce, improve the access to these markets and improve farmers’ production methods.
And when we talk about markets, we are not talking about the impossibly regulated markets of Europe and America, we are talking about our own urban and regional markets.
It was an inspired move by Suruma to exempt agro-processors from income tax. These along with other investment incentives will go some way in making agro-processing more attractive for investors. A proliferation of these industries will definitely push up agricultural production. One need only look at the fish sector which has exploded in the last 15 years with the setting up of basic fish processing plants on our numerous lakes.
Suruma is also committing significant amounts to road building and maintenance. But using more of local resources as projects funded by donor monies take forever to come to fruition.
The only fear here is that local bureaucrats and contractors left to their own devices are a recipe for poor workmanship and are likely to defeat the minister’s original intention.
The sh97b commitment to rollout NAADS to more and more corners of the country is a good start. NAADS, which supports the agriculture ministry’s extension services, should help improve farmer production methods.
A reinvigoration of the co-operative movements will also allow farmers to access inputs and credit at more favourable prices.
Industrialisation in our life time need not be a pipe dream if Uganda can harness the untapped energies of rural populations to drive the dream.
pbusharizi@newvision.co.ug
In reading the budget speech on Thursday, finance minister Dr. Ezra Suruma, announced that the economy had grown by 8.9%, far above the projected 6.5% he planned for.
In fact a revision of the way economic growth is calculated shows that the economy over the last few years has been doing much better than previously reported.
The Government’s economic growth target for the last five years has been 7 %, which it has never attained since it set the target, but with the new calculations, which gives more prominence to growth in financial services, real estate and aviation services, the economy actually exceeded this target in the last three years.
A rethink of the components of a statistical series is not uncommon and should not be.
This begs the question, “So if we have actually been growing at a much faster rate than we thought, how come I am not feeling it in my life?â€
To begin with, the economy does not grow uniformly, some sectors grow faster than others, so the growth figures are actually an average of the growth of various sectors of the economy.
The latest finance ministry figures show that there are three areas polled to derive this figure - agriculture, industry and services. Services were the biggest gainers this year, growing by 13%, which growth more than doubled the industry sector’s 6.4%, while agriculture came a distant second growing by less than 1%.
It does not take a degree in statistical analysis to make out that, the majority of the population is being left out of the party.
About 80% or about 25 million Ugandans live in the rural areas and derive their livelihood from agriculture. These multitudes are having to share in the pathetically small 0.7% growth in the agricultural sector.
Two other factors make this an even more dire statistic. To begin with because of poor agricultural practices and unclear tenure systems, Uganda’s agricultural sector is not among the most productive, measured as output per unit area of land, in the region or on the continent.
Secondly, even among our farmers productivity varies widely across regions, so last year eastern Uganda suffered a drop in productivity because of the floods, while in other parts there were booms.
Understandably for the majority of Ugandans, economic growth is something for the newspapers and the well crafted donor agency papers, they are not feeling it. The growth is being felt in the urban areas. Financial, road, rail and water transport and aviation services all registered growth of more than 20% last year, while wholesale and retail, transport and communications, telecommunications and health services all registered double-digit growth during the same period.
The question taxing Sururma’s mind must therefore be, how to spread the love, without slowing down the growth or distorting the economy unsustainably?
We will not be reinventing the wheel in trying to restructure this economy to better distribute the benefits of growth.
In fact it is quite simple to do. Simple but not easy.
In the last 20 years, we have done it with coffee, with milk, with fish, with vanilla to name but a few. All we have to do is create the markets for agricultural produce, improve the access to these markets and improve farmers’ production methods.
And when we talk about markets, we are not talking about the impossibly regulated markets of Europe and America, we are talking about our own urban and regional markets.
It was an inspired move by Suruma to exempt agro-processors from income tax. These along with other investment incentives will go some way in making agro-processing more attractive for investors. A proliferation of these industries will definitely push up agricultural production. One need only look at the fish sector which has exploded in the last 15 years with the setting up of basic fish processing plants on our numerous lakes.
Suruma is also committing significant amounts to road building and maintenance. But using more of local resources as projects funded by donor monies take forever to come to fruition.
The only fear here is that local bureaucrats and contractors left to their own devices are a recipe for poor workmanship and are likely to defeat the minister’s original intention.
The sh97b commitment to rollout NAADS to more and more corners of the country is a good start. NAADS, which supports the agriculture ministry’s extension services, should help improve farmer production methods.
A reinvigoration of the co-operative movements will also allow farmers to access inputs and credit at more favourable prices.
Industrialisation in our life time need not be a pipe dream if Uganda can harness the untapped energies of rural populations to drive the dream.
pbusharizi@newvision.co.ug