Poverty levels on the decline

By Umaru Kashaka

POVERTY in Uganda has reduced largely due to an increase in more secure and productive forms of employment, according to a report of the committee on national economy.

The report about the performance of the economy during the financial year 2012/13 was adopted by Parliament recently.

“If current trends continue, Uganda is on course to achieve the national target of reducing poverty rate to 10% by 2017,” the committee chairperson and Buliisa County MP, Stephen Mukitale, said.

He said the ratio of the people employed to the population is rising, meaning those above 25 years are getting into employment.

“Overall, unemployment is rising, currently at 3.6% in 2010, compared to 1.9% in 2006. The largest contributor to this rise is the urban unemployment that stands at 8.7%, while youth unemployment was at 5.4% during the period 2005-2011,” he stressed.

Mukitale said the poverty gap ratio, which measures the depth of poverty by establishing how far individuals are below the poverty line, had declined faster than the headcount index.

This, he said, implied rising average consumption among Uganda’s poor, meaning that individuals below the poverty line are less poor today than in the past.

Lawmakers, however, noted that inequality remains a concern with the poorest (the bottom 20% of the income distribution) accounting for only 6.2% of national consumption, although this has remained stable over time.

“The country is unequal in terms of individual income distribution. Compared to other countries in the region, Tanzania (37.6) and Burundi (33.3) are more equal societies in terms of income distribution,” they said.

The report noted that even as the electricity firm Umeme seeks to increase tariffs in 2014, insufficient power generation, losses and exorbitant tariffs have led to low electricity consumption in Uganda.

The report also noted that the electricity tariff code that came into effect in October 2012, which provides for monthly tariff adjustment to allow reasonable returns to investors while passing on some savings to the end users to enable utility companies get the necessary resources for effective operations, has not helped to reduce the prices.

“The consumption is now at 215kWh per capita and the average electricity tariff paid by customers is about 27.2 US cents per KWh compared to averages of 4-8 and 13 US cents per KWh for developing countries and Sub Saharan Africa respectively,” Mukitale said.

He said the dominance of hydro in the electricity generation mix is a challenge to availability as witnessed by the period 2006-2009 when Lake Victoria witnessed the lowest water levels in 50 years.