22 May 2017

Uganda: What Remains of Uganda's Economy

Photo: Daily Monitor
President Museveni is flanked by Speaker Rebecca Kadaga (left) and Finance minister Matia Kasaija (2nd right) at the Budget reading in 2015. The 2017 Budget will be read next month.
analysis

Every year in June, Ugandans wait eagerly and the media gives much coverage to the government's fiscal policies and budgetary proposals for the forthcoming financial year.

However, what is never explained to the nation is what became of the budget approved by Parliament in the just-ended financial year.

Figures of exports, tourism inflows and other data are published in tables at the back of the "Background to the Budget" booklet published by the ministry of Finance.

Going forward, tariffs on various goods and services are announced, some being raised, others lowered or dropped, monetary policy is proposed and budgetary allocations for various government ministries and agencies also mentioned.

The annual GDP growth rate of the outgoing financial year is stated. Everything is presented as plans and collective efforts about the way forward.

Very little is given by way of a review of how well the previous year's national budget was spent.

The barest of an overview of economic activity over the previous 12 months is given in a way the general public can understand.

After all, the economy is the sum total of purchases and taxes paid by the consuming and producing public made up of millions of consumers.

They should be accounted to in non-technical terms they can understand.

This series is intended to stand back and take an overall look at the Ugandan economy, not just from 2016 to 2017, but over the last 25 years from 1992 to 2017.

That will inform how we understand the current government budgeting.

Up to the early 1990s, the government was the chief instrument in the Ugandan State. It was the largest producer and consumer of goods and services.

It was the only body that set monetary and fiscal policies. It was the only planner of investment and was the main marketing agency for Uganda's main exports of coffee, copper, tea and cotton.

From the Uganda Hotels chain to Uganda Railways, Uganda Airlines, Uganda Transport Company, Uganda Breweries and Uganda Cooperative Transport Union, the government was the backbone of the economy.

It owned pool houses in every major town built in the 1940s and 1950s for its Cabinet ministers and civil servants.

There was even a Uganda Club in Nakasero, Kampala for the President, his Cabinet and other high-ranking government officials to relax and socialise.

So much has changed over the last 25 years, and even over the last five years.

Today, KCCA and UNRA commission most of the major road works and other infrastructure projects in Kampala and Uganda.

Uganda Transport Company (UTC), Uganda Railways and Uganda Railways corporations ceased to exist 20 years ago.

Since the mid-1990s, the media has undergone a transformation that makes the earlier Uganda almost unrecognisable.

The monopoly enjoyed for 40 years by Radio Uganda and UTV long ago ended, with more than 100 privately-owned radio stations and at least 30 TV channels.

The print media, likewise, is also mostly in private hands.

Furthermore, after the government sold off its civil pool houses in the early 1990s and Cabinet ministers and civil servants either own their own houses or rent houses on the open market.

Most of the economy is in private hands, even though the government remains the single-largest player in the economy.

Certain things have remained unchanged. The government is still the chief law enforcer in the land. It is the sole issuer of the country's legal tender in form of bank notes and coins.

Bank of Uganda, the central bank, still sets commercial interest lending rates and the government controls transactions in treasury bills, the issuance of travel passports, national identity cards, grants entry and exit visas across the borders, work permits for foreign citizens and companies, trade licences and settles legal disputes in the courts of law, as well as sets and publishes the results of the national primary and secondary school exams.

The areas in which much has changed, however, have not been accompanied by corresponding changes in national budgeting.

There is still an overlap in functions and departments of the government, which means that however well the budget is executed, much of it is spent in futility.

For example, what does the ministry of Works do that is not currently being done by KCCA and UNRA?

The Uganda Media Centre and the Uganda Communications Commission tend to be more in the news than the ministry of Information. What does the ministry of Information do that is not being done by the media centre and the UCC?

What does the ministry of Planning do that the National Planning Authority does not do (that is if the NPA does anything at all)?

Role of the ministries

The question then has to be asked: What then is the role of the ministries of Works, Housing, Information, Planning and Transport?

As for Parliament, that is the most-widely discussed.

The number of Members of Parliament is now about the same as that of the United States House of Representatives, for a country with only a 10th of that of the United States.

That alone indicates just how redundant Uganda's "democracy" is. Since last year, Kampala City traders have been protesting what they say is the way they are being outcompeted by Chinese retail traders in Kampala.

That protest in itself reveals the limitations of political representation. The Chinese do not have any political representation in Uganda and most can barely speak English.

They don't have a district, no Members of Parliament, no cabinet minister or Local Council chairman.

Ugandan traders in Kampala, meanwhile, have several MPs from each of the five divisions that form the city, have a minister for Kampala, a trade association, KACITA, and work in a city filled with media through which their voices can be heard.

And yet, even with all these advantages that include knowing Luganda, the lingua franca of Kampala business, Ugandan traders in Kampala cannot compete against the Chinese on their home soil.

This is the real background to the budget.

Next week, we look at Ugandan society - its mindset, work ethic, productivity and economic activities and how all these shape the national economy.

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