22 September 2017

Ugandans Getting Poorer, States PWC Expert Report

Photo: The Observer
Whereas government maintains that only 19.7% of Ugandans are below the poverty line, analysts claim that as many as 70% of Ugandans are vulnerable and occasionally fall below the poverty line depending on the season.

More Ugandans have become poorer in the last five years despite the improvement in the size of the economy, an update by audit firm PricewaterhouseCoopers (PWC) says.

PWC's economic outlook covering July to September 2017 also indicates that most of the poor are hard-hit by disparities in access to social services such as education and health.

"The number of poor people has risen in line with the population growth. High levels of in- come inequality are negatively affecting the conversion of growth in the economy into poverty reduction," PWC said. "While economic output as measured by GDP has doubled over the past five years, poverty incidence has only fallen slightly."

Whereas government maintains that only 19.7 per cent (seven million) of Ugandans are below the poverty line, analysts claim that as many as 70 per cent of Ugandans are vulnerable and occasionally fall below the poverty line depending on the season.

For instance, more Ugandans will be better off when it is harvest season and be poor when the season is off. PWC says the National Development Plan II prioritization on agriculture, tourism, infrastructure, mineral, oil and gas and human capital development was meant to ensure that the economy grows.

It was assumed that between 2016 and 2020, there would be increased productivity in all the five sectors and more value addition to our commodities, especially agricultural and mineral products. This would also feed into an environment where industrialization can flourish, and consequently major improvement in the delivery of public services.

But this would have an impact if the economy grew at 6.3 per cent per annum.

"Unfortunately our annual growth over the first two years of the current NDP II period has been disappointing," PWC said, noting that growth in 2015/16 was 4.7 per cent and in 2016/17 it was only 3.9 per cent.

This translates to an average annual growth of 4.3 per cent for these first two years of NDP II - not enough to have an impact on poverty reduction.

Uganda's population expands at an annual rate of three per cent, making impact of growth less likely to impact the lives of majority of the poor.

PWC's assessment is in sync with Oxfam Uganda's findings in a March, 2017 report that showed poor Ugandans grew poorer while the rich grew richer. Oxfam said Uganda has seen 'growth with exclusion', where relatively few have benefited from economic gains.

It found that the richest 10 per cent of the population enjoy 35.7 per cent of national income while the poorest 10 per cent claim a meagre 2.5 per cent.

The size of Uganda's economy is estimated at $26bn. Despite accommodating the highest number of Ugandans - about 70 per cent - agriculture's share is only 23 per cent.

The low productivity in agriculture means that hardly a sizeable number of Ugandans saw improvements in their lives.In 2016/16, the sector grew at 1.8 per cent compared to 2.8 per cent registered a year before.

PWC said the long drought of 2016 affected agricultural output, tight financial conditions saw private businesses struggle to get loans while slow implementation of government infrastructure projects has delayed the realization of the economic benefits expected from these investments.

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