Why Uganda is regarded poor

By Alex K. Taremwa

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According to Caesar Mercado, Development is a process of providing to the disadvantaged with the opportunities to realize and improve their knowledge, attitude and skill to utilize, sustain and improve productivity of available resources within their environment in order to improve on the quality of their life and society where they belong.

Uganda is a landlocked country located in the East African region bordering with Kenya to the East, Tanzania to the south, Rwanda to the south-west, Democratic Republic of Congo to the west, and Sudan to the North. It has a total surface area of 241,550.7 sq km of which 199,807.4 Sq km is land (arable land is only 21.6%), while water and swamps cover a total of 41,743.2 sq km. Uganda’s population was estimated to be 30.7 millions in 2009, of which 51% are females. The country’s annual population growth rate has remained relatively high at 3.2% well above the 2.6 percent for sub-Saharan Africa.

Uganda is an LDC with majority (72%) of the population still reliant on the agricultural sector for their livelihoods and employment. As an LDC, Uganda is part of the Brussels Program of Action (BPOA) since 2001. The reasons as to why Uganda is classified poor or less developed are discussed below;

Low standards of living; the largest population of the Ugandans are still living a life characterized by poor nutrition, poor sanitary services, poor housing statuses, poor transport and communication network coverage, Medicare that is poor or nonexistent, poor clothing and education facilities. These standards of living are below standard and can’t necessitate the transformation of the country into a middle income country without the transformation of rural livelihoods.

Agricultural Characteristics; for a country like Uganda where 72% of its total population are still reliant on Agriculture for livelihoods and employment, a lot of effort should be inserted in this sector since it’s the back bone of Uganda’s economy. By 2002, Uganda was Africa’s leading exporter of coffee accounting to foreign exchange earnings of 27%. Other agricultural produce on international market include tea, vanilla, cut flowers, vegetables, fruits and cotton. However, there’s less production in this sector with at least 60% of the growers consuming their produce at a subsistence level due to low yields, poor farming methods and poor capital equipments.

Exploitation; this is experienced both internally and externally where western powers established colonies in African mainly to enhance the supply of raw materials to their industries due to large effective industrial revolutions in the late 18th century in Europe. Due to this, there have been class divisions in Uganda on lines of ethnicity, income differences, corruption and bribery where Uganda ranks number one in East Africa at 42%. Subsidies are awarded to the favoured for a few rich/elite minorities.

Under utilization of natural resources; largely due to lack of technology, capital and markets worldwide. Minerals such as Gold, Diamond, iron ore, cobalt and others such as Oil are currently available in Uganda’s soil but less utilized.

Demography; this is largely characterized with high birth rates and low death rate, high levels of unemployment, dependants and a high and growing population. This is because Uganda’s highest population is below 15 years. They don’t contribute to the GNP but they consume. This is burdening hence undermining investment purpose and education.

Large unemployment: Uganda is facing an employment crisis where over 40,000 graduates hit the streets every year but the jobs are nowhere. This has increased urban unemployment, less industrial sector development, lack of human resource planning even with graduates. In addition, there is low initiative and enterprise characterized by low entrepreneurial skills due to lack of confidence, poor education system and lack of capital ventures.

Low technology characteristics; Uganda is primitive as far as technology is concerned largely comprised of traditional technology like wooden ploughs, hand sown seeds, oxen agriculture. In addition to that, there is poor techniques of production, no capital, no research, little technical know-how and absence of skilled labour.

Foreign trade orientation with the exportation of primary products and importation of consumer and capital goods in addition to reliance on few export productions for example agricultural and minerals that are securely affected by the price fluctuations that sharply affect the economy.

The third National Report for Uganda highlighting the progress made towards achieving the commitments of the Brussels Program Programme of Action for Low Developed Countries (LDCs) for the Decade 2001-2010. The first and second assessments were done in 2001 and 2005 respectively. As an LDC, majority of Uganda’s population (72%) is still reliant on the agricultural sector for their livelihoods and employment and poverty is still widespread.

However, Uganda has taken a number of steps to fight poverty and achieve sustainable development over the last decade. The development strategy implemented throughout the decade was anchored in the country’s Poverty Eradication Action Plan (PEAP). However, beginning 2010/2011 up to 2014/15, Uganda will implement a new National Development Plan that is focused on promoting economic growth and wealth creation.

Uganda has made significant progress towards implementation of the BPOA commitments.  Real GDP grew at an average rate of 7.9% while income poverty levels reduced from 37.7% 2002 to 31% in 2005/2006. At the same time, per-capita GDP has been growing at an average annual rate of 4.5%, which broadly meets BPOA targets. Gross Fixed Capital Formation as a percentage share of GDP however fluctuated between 22% and 23.7%, which is slightly lower than the BPOA target of 25%. With regard to progress in developing human and institutional resources, there has been an increase in primary school enrollment, number of primary and secondary schools as well as public and private higher institutions of learning occasioned by massive government investment in education and health.

Since the beginning of the decade, the annual budgetary allocations to education and health have averaged over 15% and 10% respectively. Some improvement was registered in reducing child and maternal mortality but challenges still remain and the BPOA targets in this area may not be met. However, there was an improvement in Uganda’s HDI from 0.508 in 2000 to 0.581 in 2005 although there has been some slight stagnation for the period to 2009. Uganda has met all MDG and BPOA targets with regard to HIV/AIDS. Progress has also been registered in removing supply side constraints, enhancing productive capacity and promoting expansion of domestic markets to accelerate growth, income and employment generation. In order to improve infrastructure provision, the percentage budget allocation to the works and transport sector for road construction and maintenance increased since 2005/06 from 10.1% to 16.4% in 2009/10.

Total road network (excluding community roads) increased from 35,700 km in 2001 to 43,100kms by the end of 2008, an increase of 21%. Paved roads increased by 37% (840km) to 3,120km between 2001 and 2008. Uganda still scores low in Research and Development (R&D) and expenditure on R&D remained at 0.8% of GDP during the decade.
However, Uganda has registered tremendous telephone penetration and improved coverage and has met the BPOA target relating to telephone density. Although substantial progress has been made, Internet usage is still low and below the BPOA target of 10 users per 100 inhabitants.

The business environment has generally improved in some areas although more work still needs to be done. Uganda has registered reasonable increase in electricity supply in the last decade but demand increased faster than supply and at the same time there has been an increase in electricity tariffs. The high electricity tariff remains a constraint to competitiveness.

Although the government implemented a number of programs to address the constraints in agriculture, the output and productivity from the sector continued to decline and more work still remains to increase agricultural productivity and value addition. Uganda has made some positive progress in meeting some MDG targets in ensuring environmental sustainability and access to improved water sources although there has been a decline in some others. Targets were met with regard to the proportion of the population with access to improved water source in rural areas while a decline was noted with urban population. The country still faces challenges related to environment degradation, ever decreasing forest cover and global climatic change.

Also, Uganda has made progress in reducing malnutrition but little progress was made in reducing food insecurity. The proportion of the population considered to be food insecure increased by 2007. Uganda was assessed to be potentially able to reach the MDG target of the proportion of the population below minimum level of dietary energy consumption of 11.5%.

Progress has also been made in enhancing Uganda’s share in world trade and global financial investment flows. Exports and imports have grown at rates above 20% but imports grew from a bigger base than exports and thus the trade deficit has been widening. The technology component of imports and exports has improved. Uganda has diversified her exports and earnings from non-traditional exports consistently exceeded those from the traditional ones. Uganda is an active member of the EAC and COMESA under which it is negotiating market access with the EU and other regional markets.

Despite the achievements and progress registered, challenges still remain. The rate of growth of gross capital formation is low and has remained stagnant at about 22.4%.

Further still, infant mortality; child mortality and maternal mortality rates are still high due to inadequate resources. Attaining the 15% budget allocation to the health sector remains a challenge.

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Promoting good governance has remained difficult due to the limited capacity of the anti-corruption institutions.

Again due to inadequate resources, Uganda’s productive capacities have remained weak with a poor road and rail network and as well as other physical infrastructure. In addition, a relatively weak institutional framework, existence of non-tariff barriers, high cost of trade finance as well as shortage of specialized technical and entrepreneurial skills remain key constraints to Uganda’s ability to trade. Finally, Uganda is still faced with high population growth rate and high level of rural poverty which continue to hinder environmental protection efforts.

The way forward for the country to fulfill its commitments under the BPOA includes among others: increasing private sector investment into agricultural value addition; addressing the challenge of high population growth, increasing investment in disease control and prevention, building the capacities of the different anti-corruption institutions, and lastly but not least substantially increasing investment in physical infrastructure to improve the business climate.

Since the decade, Uganda has registered a strong economic growth and political stability. Uganda’s real GDP has been growing at an average rate of 6.8% for much of the decade while the income poverty levels reduced from 37.7% in 2002 to 31% in 2005/06.

However, the national poverty level estimates for 2009 are yet to be made. Much of the economic growth has been attributed to macro-economic and political stability that Uganda has experienced since the coming of National Resistance Movement (NRM)

Government to power. The main macro-economic objective of the Government during this decade was to have a strong and stable macroeconomic environment favorable for private sector development.

On the whole this has been achieved including the Macro-economic management targets of an inflation rate of 5% per annum (although during 2008/09, the country experienced a high annual inflation rate of 15.2% mainly resulting from a dramatic increase in food inflation that reached the peak of 33.7% in the same year); foreign reserves to cover 5 months of imports; and a competitive exchange rate. The realization of the robust growth rate and other macro-economic targets was made through the Government’s consistent pursuit of a market-based economic growth strategy led by the private sector; a prudent fiscal regime geared to gradually improving revenues and restraining expansion in Government expenditures, while maintaining a strong focus in poverty eradication as outlined in the Poverty Eradication Action Plan (PEAP).

 

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