CONTENTS | ANB-BIA HOMEPAGE | WEEKLY NEWS
by Peter Bahemuka, Uganda, February 1999
THEME = SOCIAL CONDIT.
With a per capital gross domestic product of US $300, Uganda is considered one of the countries with the lowest standards of living and one of the poorest countries in the world
Although Uganda is an agricultural country with abundantly fertile tropical soils, food which is locally produced is expensive, rendering some families to go with one meal a day. The majority of the people dress in second-hand clothes imported from Europe and North America, yet the country grows cotton. For some people, these clothes are washed once in a blue moon because of lack of soap, and are worn until they are tattered.
Housing conditions are so appalling that most of the citizens live well below the internationally accepted living conditions. Large families live in cramped conditions in single- room houses. The majority cannot afford the locally generated electricity and are left with only one option - wood fuel which exerts extreme pressure on forest resources, causing a disequilibrium in the environment. Women as mothers and home managers, and the children, are affected most because of the cuts in social sector expenditure and removal of subsidies on food. There have also been cuts in healthcare facilities.
Education is an expensive luxury. There is a large drop-out rate in high schools. Hospitals lack facilities and therefore cannot afford to cater for those who cannot afford private health care.
Disease is another problem that is characterised by a high infant mortality rate and rampant malaria. The whole situation in this sector has been worsened by the AIDS pandemic, which destroys the productive manpower between the ages of 18 to 55. The Ugandan government, through the Uganda National Expanded Programme for Immunisation (UNEPI), is to spend Ushs 1.3 billion (about US $1 million) on vaccines for immunization purposes, by purchasing diphtheria, tetanus and measles vaccines during the present financial year 1998/1999. In 1995/96, the government purchased vaccines worth US $360,000 for immunization against measles. In 1996/1997, US $320,000 was spent on vaccines.
There are conflicting assertions by politicians, the civil society and ordinary people who say that widespread poverty is increasing at an alarming rate, whereas the government and its economists assert that poverty is actually declining.
Emmanuel Tumusiime Mutebile, is permanent secretary to the Treasury in the Ministry of Finance. He says the per capita Gross Domestic Product (GDP) of US $300 does not give a true picture of the actual purchasing power of the income of the average Ug-andan. He cites an alternative measure of per capita income called the Purchasing Power Parity dollar (PPP$) with which per capita GDP is calculated for all countries by the United Nations Development Programme (UNDP). The PPP$ per capita GDP calculations take proper account of the difference in the cost of consumer items between countries. The UNDP estimates that Uganda's PPP$ per capita GDP is approximately $1,370, which is about $3.75 per day.
Mutebile also argues that 2 million Ugandans were lifted out of poverty between 1992 and 1995/96, largely as a result of the government's economic policies on their incomes. He states that between 1992 and 1995/96, four successive household income surveys were carried out using international methods of data collection and analysis. A poverty line was constructed, using the same principles as are employed all over the world in similar exercises, against which to measure the number of people living in poverty.
«The results of the four household surveys show that the proportion of the population living in poverty, declined by 10% points from 56% in 1992; to 46% in 1995/96. While it is true that poverty is still widespread in Uganda, these results demonstrate conclusively that the incidence of poverty in Uganda fell by two million people between 1992 and 1995/96, which is a very significant decline in such a short period of time,» he said.
The Uganda government published these results in August 1998 under the title «Poverty Trends in Ug-anda 1992-1996».
The Ugandan government, in collaboration with the University of Oxford Centre for the Study of African Economics, this year analyzed poverty trends in Uganda between 1992 and 1996, using an absolute poverty line reflecting the monetary cost of meeting certain basic needs.
Based on the 1993/94 household survey data, each person needed Ushs 11,500 (less than US $10) per month to meet the food requirements of 3,000 calories daily. Taking this as a food poverty line that classifies the poorest of the poor, 35.2% of the population in 1992 were existing in extreme poverty, but in 1996, this had come down to 26.2% of the population.
Using the same data, each person needed Ushs 16,400 (about US $12) per month to meet both the basic food and non-food requirements. Using this as the total poverty line that classifies those who are poor, there was a decrease in the poor population, from 55.6% in 1992 to 45.6% in 1996. This indicated an annual 2.5% decline in absolute poverty in Uganda between 1992 and 1996. Regionally, although overall poverty was on the decrease, it was still more marked in the northern and eastern regions of the country. In 1996, 65.1% and 53.3% of the population in the north and east respectively, were still unable to meet their basic requirements. The central region saw the sharpest fall in poverty from 45% to 28%.
The decline in poverty was predominantly a result of growth within the economy, as there was little change in the degree of inequality within the country. Poverty fell in nearly all sectors, except in mining and for the unemployed. The decline in poverty was a modest plus for the food crop farmers (5.8%) as compared to those engaged in cash crop production (19.1%) and non-crop agricultural production (10.7%). The following sectors had substantial reductions in poverty : public utilities (32.4%), manufacturing (18.4%) and transport and communications (17.6%).
The government, through the Modernisation of Agriculture Plan, intends to foster higher growth in those sectors where the majority of the poor are engaged. The government will also continue to provide an enabling environment for the booming sectors to grow and create greater employment opportunities. In its Poverty Eradication Action Plan (PEAP), the government has a two-pronged strategy for poverty er-adication, consisting of measures to increase incomes and measures to improve the quality of life of the poor. It is projected that if the PEAP is successfully implemented and annual economic growth rates of above 7% are achieved, Uganda could eradicate mass poverty from its society in the next twenty years and reduce absolute poverty to less than 10% of the population.
The policy of coffee liberalisation was one of the most effective poverty reducing actions by the government. In 1986, a coffee farmer obtained only the equivalent of US $0.10 for a kilogramme of coffee; by 1998, the farmer was getting US $0.60 at prevailing exchange rates. While the head count fell by 18% for the country as a whole, for the households engaged in cash crop farming, the fall in the incidence of poverty was 32%.
Although the government is aware of the people's sufferings as a result of rampant poverty, its hands are tied with a debt burden of US $3.6 million, and continues to borrow more. There are also assertions that the country is heavily dependent on donor aid and foreign loans for the majority of its budgetary needs, without which the economy would collapse and the people would be worse off.
However, Mutebile says that the driving force of the economy is the private sector, in agriculture and in a diverse range of industries, not foreign aid. He points out that Uganda recorded a 19% rise in private investments in real terms in 1997/98. He points out as well that foreign aid, net of loan repayments, has actually declined slightly in dollar terms over the last four years.
He says that during the same period, real growth in manufacturing averaged 15.9% per year and real growth in cash crop agriculture averaged 11.1% per year despite the drought and El Niño rains in 1997. Over the same period, real growth in construction averaged 17.8% per year and in transport and communications it averaged 13.2% per year. Fishing, tourism and trade are other sectors which also experienced strong real growth in output during this period, as a result of economic liberalisation and the maintenance of low inflation and macroeconomic stability.
Mutebile says further that in the 1997/98 fiscal year, government tax and non-tax revenues accounted for 65% of total government expenditure. The tax and non-tax revenues were more than sufficient to finance all of the government's recurrent expenditures, as has been the case since 1994/95. He says donor aid, a large proportion of which is grants or very soft loans with a grant element of about 80%, is now only needed to fund some of the development projects, such as road construction, alongside other development projects financed from the government's own funds.
The Treasury secretary also points out that the Ug-andan government has been steadily increasing the share of its expenditure which is financed from its own resources. In 1991/92, government and non-tax revenues were sufficient to finance only 62% of recurrent expenditures. He says that in the 1998/99 fiscal year, tax and non tax revenues are projected to amount to 114% of recurrent expenditure.
Uganda's high indebtedness has been a topic for debate for years now. In October 1998, the Uganda Debt Network launched the Uganda Chapter of the Jubilee 2000 Campaign. The Uganda Debt Network is an advocacy and lobbying coalition of Ugandan NGOs, institutions and individuals, whose purpose is to ensure that Uganda's debt burden becomes sustainable. It advocates a prudent approach to contracting loans and grants so as to improve the social and economic development of the Ugandan people.
Jubilee 2000 is a worldwide campaign which advocates the total cancellation of the backlog of unpayable external debts of poor countries by the year 2000 so as to have a debt-free start in the next millennium. However, although much of Uganda is impoverished as reflected by the living standards of its population, government officials continue to mismanage public funds. The millions of shillings lost in graft are never recovered. This consequently leads to mistrust of the government by the people, who wonder why the country needs to continue borrowing money at all.
One of the demands of the Jubilee 2000 campaign is that governments in highly indebted poor countries should establish open, transparent and accountable systems involving the civil society to regulate the contracting of loans. This is crucial if the debt burden is to be lifted from the shoulders of the poor citizens of the poor indebted countries. The Jubilee 2000 campaign has received support from over 60 Ugandan organisations, mainly NGOs.
Mutebile is keen to point out as well that Uganda became the first country to benefit form the Highly Indebted Poor Country (HIPC) debt relief initiative, on account of delivering macroeconomic stability. Under the HIPCinitiative, US $650 million of Uganda's external debt has been «forgiven». He notes that Uganda's debt has been reduced to prevent it from becoming an impediment to more rapid economic growth and to free additional resources for the government to spend on key poverty reducing programmes, such as the Universal Primary Education Programme.
«This ensures that the remaining external debt is manageable and can be serviced on a timely basis, using the country's export earnings without putting undue pressure either on the government budget or on the balance of payments,» Mutebile said.
The Minister of State for Industry and Technology, Vincent Nyanzi, says the Uganda government is committed to creating more jobs by ensuring that the population is engaged in gainful employment. He observes that with a young population growing at a rate of 2.8% per annum, it is imperative to establish a mechanism through which gainful and productive employment is created.
Worried by the rampant poverty among the population, Minister Nyanzi advocates the establishment of a healthy and sustainable industrial sector, capable of modernising society and creating much needed economic growth that will spur job creation, raise the standard of living of the people and eradicate poverty. Nyanzi says the government will continue to create a conducive environment for investment, citing the private sector-led development which the government is facilitating.
«The government's overall macroeconomic policy, is to establish a strong, viable, sustainable, private sector-led, and export- orientated industrial sector».
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