Uganda: Who Is Fooling Who On Goodness of Our Economy?

opinion

In times like these, one has to resist being dragged into the territory of petty discussions by those who think economics is statistics and vice versa. To sustain a political or rather a politicking argument, individuals (no names of friends), who are neither economists nor statisticians, will even question the academic credentials or nationalism of professionals. Truth of the matter is that politicking cannot override nor replace basic statistics and economics.

For example, a statement like "Uganda has recorded strong growth of 6.1 per cent" loses meaning when compared with China's worst growth rate of 6.6 per cent in more than 25 years.

Economics demands that qualifying words such as "strong" be used within the context of the entire categorical scale of: "very weak, weak, moderate, strong, and very strong." We should also agree on whether this is a local or global grading so as to qualify claims that Uganda has one of the fastest growing economies in the world.

For example, the US economy that grew by 2.2 and 2.9 per cent in 2017 and 2018 respectively, created a monthly average of 182,000 and 220,000 jobs in those two years. It should be 'foolishness' to talk of "strong growth" without a global standard.

I am reminded of the book: Fooled by Randomness by Nassim Taleb, which sets forth the idea that human beings ignore the existence of randomness, and proceed to explain random outcomes as non-random.

People tend to overestimate causality and "see elephants in the clouds instead of understanding that they are in fact randomly shaped clouds that appear to our eyes as elephants."

Humans also view the world as more explainable than it really is, and proceed to look for explanations even when there are none. Most real life events are represented by skewed counter-intuitive distributions rather than normal 50:50 distributions like tossing a coin.

The failure to realise such facts has led to economic plans that follow the "survivor's bias" of seeing winners and trying to learn from them while ignoring the larger number of losers. Studies and the media would rather project the successful farmers than the multitudes who struggle all season and fail even to get a decent meal for the family.

I am yet to see statistics of those who lost jobs in a given year or an indicator for quality of jobs in Uganda where the average monthly income for employees is below Shs200,000 ($53) or $1.7 per day for the family bread winner. While access to financial services has increased due to creativity and innovation, the impact is not yet strong as poverty rates are on the increase.

The bulk of the assumptions expected to support economic growth in Uganda are nothing but random events like rain, sterile investments backed by corruption, low productive infrastructure, and mining of oil/gas that remains elusive - 15 years since the discovery of the hydrocarbons.

Based on survivor's bias, Uganda has religiously pursued the path of industrialisation for growth, jobs and shared prosperity despite the evidence that the time for such economics is long past. Little wonder that after decades of investing in roads, energy, industrial parks, provision of free land, tax exemptions, etc, the contribution of manufacturing to the economy remains below 10 per cent.

While we take pride in the new factories created, we ignore several that close or struggle daily to "balance the boat". Unfortunately for the economy, genuine investors (micro, small, medium and large) live with the realities and cannot be fooled by the randomness of politicking.

Muhumuza (PhD) is a development policy annalyst committed to inclusive growth.

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