Why economic growth is not felt in people’s pockets
Sep 15, 2008
Why has poverty and deprivation persisted in Uganda while the Government holds that there has been significant economic growth? Is it true that there has been economic growth or are they telling us lies? These questions are common in public forums.
By Augustus Nuwagaba
Why has poverty and deprivation persisted in Uganda while the Government holds that there has been significant economic growth? Is it true that there has been economic growth or are they telling us lies? These questions are common in public forums.
There is a difference between economic growth and development. While economic growth is characterised by quantitative measures such as construction of roads, buildings, airports and other public facilities, development goes beyond quantitative measurements. For instance, it is not enough to consider construction of a road as an aspect of growth when this road has not been utilised to stimulate production, productivity and value-addition through improved marketing infrastructure. For instance, Iganga-Tirinyi-Mbale road is among the best roads in eastern and southern Africa in terms of size and quality of materials used. However, what has this road been used for? Drying of cassava chips weighing only 2kgs per household.
This shows that it is not enough to concentrate on the “public goods model†of harnessing resources. It is more beneficial to go beyond public goods and focus on “investing in human capacities.†In order for the people to utilise the Iganga-Tirinyi road, farmers need agricultural inputs, effective accessible and affordable extension services, and agro-processing to add value on their produce. People need feeder roads to connect production areas to consumption centres, seed capital to scale up production, training to improve technological innovation, hence high productivity. All these require micro level interventions that are directed at improving the capacity of the households to produce and market products.
Inequality hampers economic growth. Economic growth in Uganda has been thwarted by high levels of inequality.
Another reason for the failure to translate the high growth figures into people’s daily incomes is that the benefits of this growth have not been adequately distributed. The so-called benefits of growth are concentrated in few individuals, rendering the whole phenomenon a preserve of a minority.
In technical terms, while the economy has theoretically grown at 8.9% with poverty reduced from 56% in 1992 to 31% in 2005 (UBOS 2006), chronic poverty remains staggering at 9,000,000 (Chronic Poverty Report, 2006) out of a total 30 million people.
The Gini co-efficient, an index of inequality, also remains very high at 0.43 (UBOS 2006).
This index should be only 0.0 if the growth in an economy is well distributed and all people were benefiting. On the other hand, if all the resources are concentrated in one individual, this index will be 1.0. As Nelson Mandela stated, poverty and inequality are artificial phenomena, they can be corrected by the acts of human beings.
Therefore, there are many Ugandans that have not benefited from the windfalls of economic growth. The implication is that economic growth has not been translated into household welfare. People are concerned with real livelihood and not figures. People want to see development at the micro-level. It is when households have secure livelihoods and effective demand for goods and services that they will identify with economic growth. It has been asserted that the narrowing of the gap between the “haves†and “have nots†is the road map to ensuring security for all. Confining oneself in a 14-metre perimetre wall as most people have done in their mind-boggling homes in Kampala is not sustainable. It is not the best means of ensuring one’s security. The poor and disgruntled around you will still “pay you a visit†to have a share of the “treasures†protected there in. Islands of wealth amidst the sea of poverty is thus the major source of insecurity.
As Jeffrey Sachs (2006) has asserted, the end of poverty is a road map for ensuring peace and security for everyone. It is this need of ending inequality that Duncan Green, the author of the book From Poverty to Power has called “The Urgency of now.â€
The writer is currently a consultant for UNCDF- New Benchmarking in Local Economic Development and winner of International Award for Significant Contribution Toward Society
Why has poverty and deprivation persisted in Uganda while the Government holds that there has been significant economic growth? Is it true that there has been economic growth or are they telling us lies? These questions are common in public forums.
There is a difference between economic growth and development. While economic growth is characterised by quantitative measures such as construction of roads, buildings, airports and other public facilities, development goes beyond quantitative measurements. For instance, it is not enough to consider construction of a road as an aspect of growth when this road has not been utilised to stimulate production, productivity and value-addition through improved marketing infrastructure. For instance, Iganga-Tirinyi-Mbale road is among the best roads in eastern and southern Africa in terms of size and quality of materials used. However, what has this road been used for? Drying of cassava chips weighing only 2kgs per household.
This shows that it is not enough to concentrate on the “public goods model†of harnessing resources. It is more beneficial to go beyond public goods and focus on “investing in human capacities.†In order for the people to utilise the Iganga-Tirinyi road, farmers need agricultural inputs, effective accessible and affordable extension services, and agro-processing to add value on their produce. People need feeder roads to connect production areas to consumption centres, seed capital to scale up production, training to improve technological innovation, hence high productivity. All these require micro level interventions that are directed at improving the capacity of the households to produce and market products.
Inequality hampers economic growth. Economic growth in Uganda has been thwarted by high levels of inequality.
Another reason for the failure to translate the high growth figures into people’s daily incomes is that the benefits of this growth have not been adequately distributed. The so-called benefits of growth are concentrated in few individuals, rendering the whole phenomenon a preserve of a minority.
In technical terms, while the economy has theoretically grown at 8.9% with poverty reduced from 56% in 1992 to 31% in 2005 (UBOS 2006), chronic poverty remains staggering at 9,000,000 (Chronic Poverty Report, 2006) out of a total 30 million people.
The Gini co-efficient, an index of inequality, also remains very high at 0.43 (UBOS 2006).
This index should be only 0.0 if the growth in an economy is well distributed and all people were benefiting. On the other hand, if all the resources are concentrated in one individual, this index will be 1.0. As Nelson Mandela stated, poverty and inequality are artificial phenomena, they can be corrected by the acts of human beings.
Therefore, there are many Ugandans that have not benefited from the windfalls of economic growth. The implication is that economic growth has not been translated into household welfare. People are concerned with real livelihood and not figures. People want to see development at the micro-level. It is when households have secure livelihoods and effective demand for goods and services that they will identify with economic growth. It has been asserted that the narrowing of the gap between the “haves†and “have nots†is the road map to ensuring security for all. Confining oneself in a 14-metre perimetre wall as most people have done in their mind-boggling homes in Kampala is not sustainable. It is not the best means of ensuring one’s security. The poor and disgruntled around you will still “pay you a visit†to have a share of the “treasures†protected there in. Islands of wealth amidst the sea of poverty is thus the major source of insecurity.
As Jeffrey Sachs (2006) has asserted, the end of poverty is a road map for ensuring peace and security for everyone. It is this need of ending inequality that Duncan Green, the author of the book From Poverty to Power has called “The Urgency of now.â€
The writer is currently a consultant for UNCDF- New Benchmarking in Local Economic Development and winner of International Award for Significant Contribution Toward Society