Middle-income status; Museveni’s missed 5th term goal

By URN

President Yoweri Tibuhaburwa Museveni has formally began his walk to a 40-year-rule on Wednesday, May 12, 2021 after taking the presidential oath at a ceremony graced by at least 10 African presidents.

This was the seventh time that Museveni took the oath, the first being on January 26, 1986, when he captured power following a five-year-guerrila war that he waged after rejecting the outcome of the 1980 election.

Into his new five-year presidential term, Museveni carries on his back a haunting failed pledge of turning Uganda into  lower-middle-income economy that he promised as he started his previous term he had christined “Kisanja Hakuna Mchezo.”  

For the World Bank to classify a country as a lower-middle economy, it must have a Gross National Income (GNI) per capita ranging between $1,036 (Shs 3.7million) and $4,045 (Shs 14.7million).


GNI is the total domestic and foreign output claimed by residents of a country, consisting of Gross Domestic Product (GDP), plus factor incomes earned by foreign residents, minus income earned in the domestic economy by nonresidents.

By 2016 Museveni made the declaration, Uganda’s GNI per capita was $790 (Shs 2.8million), a 4.2 percent decline from the status in 2015.

By 2017, GNI had slipped to $740 (Shs 2.7million) before going up to $750 (Shs 2.73million) in 2018 and $780 (Shs 2.8million) in 2019, according to data by macrotrends, a premier research platform for long term investors.

The GNI per capita is the dollar value of a country’s final income in a year, divided by its mid-year population.

Similarly, the Gross Domestic Product- GDP per capita, measured through the economic output divided by the population, was $733 (Shs 2.6million) in 2016 and increased to $747 (Shs 2.72million) in 2017, $770 (Shs 2.81million) in 2018 and $794 (Shs 2.89million) in 2019 – the same year the  World Bank updated its data which showed that Uganda’s GDP per capita had fallen to $794.3 (Shs 2.9million) from $933.43 (Shs 3.4million) as of 2016.


And last week, Museveni told the outgoing cabinet that before the coronavirus pandemic hit, the GDP rate was growing at 6.4 per cent, and the GDP per capita should have reached $1,000 per person but now stands at $900. 

In the 2020-21 budget framework paper, the Ministry of Finance noted that “nationally, the budget for the financial year 2020/21 will be implemented at a time when Uganda’s population will have crossed the 41 million mark and attained an average per capita GDP of $905,” a figure also carried by the National Development Plan. 

“When compared to regional peers for the same years (2016-2019), Uganda had the slowest GPD per capita growth except Burundi whose per capita went down from $282 to $261. Rwanda’s per capita grew from $745.3 to $820 which is an increase of about $85. Kenya’s per capita grew from $1,410 to $1,816. It has already achieved lower-middle-income status.

Tanzania per capita grew from $966 to $1,122. And it also achieved middle income in 2019, according to the World Bank.   

Paul Corti, a senior research fellow at Economic Policy Research Center, a government-funded think tank based at Makerere University, says that middle-income hopes could have been premised on oil money but production did not start in this term.

“One of the missed targets was oil-driven growth which was expected. With oil, we could grow 12-13 per cent,” Corti said.   

He further argues that the government should not be in a rush to achieve lower middle-income status.

“I think we should do things at our pace. Even if we achieved it in 20 years. We should not be in a rush; instead, the government should focus on growing a quality population. It doesn’t make sense to have a per capita figure that doesn’t reflect the quality of Ugandans,” he argued.   

But Julius Mukunda, of the Civil Society Budget Advocacy Group (CSBAG), says that Uganda needs to move faster and attain the middle-income status.

“It’s like telling a patient in a hospital to grow slowly to recover. We should rush to get out of this pain [poverty] that has crippled us,” he said.

However, he warns that it will be hard to attain middle-income status with endemic corruption in Uganda and skyrocketing expenditure in areas that aren’t critical for poverty eradication.   

“We have less money in areas that can get us out of poverty. For example, on average 70 per cent of local government money on budgets go to wage bills. This means a lot of money for few people, the technocrats and less money for we the people,” he says. 

SHARE

Leave a Reply

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.