The Last Word — Recently I wrote to the International Monetary Fund (IMF) to find out how Uganda's economy has been performing over the last five years compared to other nations of the world and particularly within Sub Sahara Africa. Over the last five calendar years (2016-2020) Uganda's economy grew at an annual average rate of 4%. This makes it the 27th fastest growing economy in the world, 14th in SS Africa. For a country perceived to have once been one of the fastest growing economies in Africa and the world, these results were disappointing but also illuminating.
Looking at the top line, I rushed to conclude that the management of our economy has declined. Like most people, I needed a villain to blame and President Yoweri Museveni was an easy target. I thought that as he has grown old, the speed of his decision making has significantly reduced. My evidence is that delays in making decisions on vital public sector investments in such areas as the Standard Gauge Railways, the Kampala-Jinja Expressway, Ayago Dam, the Umeme concession, oil production etc. I also felt age may have significantly compromised the quality of his decisions thereby negatively impacting the economy.
But one lesson I have learnt over the years is to interrogate my own assumptions by looking closely at data. When I did this, I realised that in 2016, which was an election year, our growth fell to 0.35%. But it bounced back to 6.26% in 2017, 6.14% in 2018 and 6.66% in 2019. In 2020, the growth rate fell to 0.28% due to COVID19. Therefore, when we remove the instability of the 2016 elections and the effects of COVID19, Uganda's average growth for 2017, 2018 and 2019 is 6.7% which is great by global historical and contemporary performance. When we remove the distortions of the 2016 election and COVID19 from the sample, Uganda becomes the 8th fastest growing economy in Africa.
Again, I felt at 8th position, Uganda, which used to be a "star performer" in Africa, has lost its shine. But again, we needed to interrogate this assumption. Therefore, we looked at Uganda's performance in the early years of the Museveni presidency when it is assumed the speed and quality of his decisions were very good. We actually found that in the first five years of his presidency (1986-90), Uganda was the 40th fastest growing economy in the world, 10th in Africa. Therefore, the claim of being best in Africa is a myth.
Looking at the data closely, we found that in the first ten years of the Museveni presidency (1986-95) it was the 28th in the World, 5th in Africa. In the first 15 years (1986-2000) it was 23rd in the world, 7th in Africa. In the first 20 years (1986-2005) it was 18th in the world, 5th in Africa. In the first 25 years (1986-2010) it was 14th in the world and 4th in Africa. Over the last 35 years, Uganda's economy has grown at an annual average rate of 6% making it the 11th fastest growing in the world, 4th in Africa behind Equatorial Guinea, Ethiopia and Mozambique.
The take away from this data is that Museveni's Uganda has never had a fast growth sprint i.e. a short period of rapid growth lasting say five or seven years when it topped the charts in the world or Africa. On the contrary, our growth has always been fairly good but not (as) rapid. The critical aspect is that it has been sustained over a very long period of time i.e. 35 years. That is why the longer the time-duration studied, the better the performance of Uganda in the global and Sub Sahara Africa league tables.
If Uganda has been the fourth best performing economy in Africa over the last 35 years, how come it has not yet entered the proverbial middle-income status like Tanzania?
Uganda began at a very low base like Tanzania but has had a very high population growth rate of up to 3.3%, the second highest in the world. With an average age of 15 years (compared to China's 38.4 years) it means half our population don't work i.e. are dependents. Rapid population growth cuts down per capita income growth to 2.7%. But having a young population also means most people have not lived long enough to work and accumulate savings in form of assets.
Uganda's per capital income growth is impressive. For instance, the United States has the 8th highest per capita income in the world. But this is because it sustained an annual average rate of per capita income growth of 1.5% over a period of 150 years from 1860 to 2010. This shows Uganda's 2.7% over 35 years as impressive, which many of our elites ignore. In fact, in his great book, Capital in the 21st Century, Thomas Piketty argues, based on the study of historic data, that "per capita income growth of 1% is extremely rapid, much more rapid than many people think."
What has distorted people's minds is the rapid growth of East Asian countries such as Singapore, South Korea, Taiwan and now China, the latter registering a staggering 10% annual average growth in per capita income over 40 years. For instance, per capita income growth for the whole world in the 100 years from 1913 to 2012 was 1.6%. Of this, Europe did 1.9%, America 1.5%, Africa 1.1% and Asia at 2%. That small difference in per capita income growth in Africa explains our poverty.
Yet there is an interesting take from these IMF numbers for Africa. They show that our economies have actually joined the global growth marathon. Of the ten fastest growing economies in the world over the last five years, Africa has five. These include Ethiopia (number two in the world, first in Africa with 7.37% growth), Guinea (number three in the world, two in Africa with 6.9%), Rwanda (number five in the world and three in Africa with 5.98%). Rwanda's performance is also distorted by the 2017 election year when its growth fell from an average of 7.5% to 3.98%). Ivory coast is number seven in the world, four in Africa with 5.93% and John Magufuli's Tanzania number eight in the world and five in Africa.
But looking at the long-term (taking the last 30 years - 1991 to 2020) SS Africa has four of the fastest growing economies in the world - Equatorial Guinea, Ethiopia, Mozambique and Angola. In the top twenty countries, Africa has seven countries. So the claim of Africa Rising has a lot of truths in it.