Uganda’s rich and the rest

Special Report on the future of poverty in Uganda

Ugandans often jokingly say people from western Uganda “are eating” to mean that they are economically prospering. It is also often a jibe at westerners because they are the “ruling clan” since President Yoweri Museveni hails from western Uganda. So when the World Bank report released a report on poverty in Uganda on Sept. 20, and Ministry of Finance officials and others were showing off Uganda’s leading role in Sub-Saharan Africa in reducing poverty, many observers still were determined to focus more on the unequal distribution of the prosperity, technically called the spatial heterogeneity of growth.

The World Bank figures fed into the anecdotes as they showed most poor people living in the northern and eastern parts of the country, while central and western regions revel in the relative prosperity. This distribution is not new but, according to the World Bank figures, while ten years ago, the north and east were still the poorest regions in Uganda – but had 68% of the poor – now they have 84%.Meanwhile, western Uganda and Central which had 32% of the poor 10 years ago now have only 16%.

Western Uganda has seen the greatest prosperity as levels of poverty there have dropped by 11 percentage points. It is followed by central region where poverty has dropped by six percentage points. Central region, however, remains the most prosperous region with only 6% of people there being considered poor.

So when a local television station NTV on Sept.25 convened a panel to discuss the report, income inequality was on top of the points discussed.

“That is something to worry about,” said Onapito Ekomoloit, who is a former Presidential Press Secretary, journalist and Member of Parliament and is now corporate affairs director of a leading company. “There are two extremes in the country where those who are progressing are doing so real fast while those who are not appear to be in reverse gear.”

In a separate interview, Prof. Augustus Nuwagaba, an international consultant on economic transformation also told The Independent that the skewed distribution of what he called “the benefits stream from the reduction of poverty is almost non-existent.”

“Income inequality is increasing, which negates the poverty reduction dividend,” he said, “This essentially means that poverty reduction is actually being enjoyed by very few people.

“While poverty has reduced statistically, parametrically, it has not.”

Most people pushing the line that westerners are eating because a westerner (Museveni) is the President also tend to blame the government for the poverty in eastern and northern Uganda. In reality, the World Bank numbers tell a totally different story.

Politics of poverty

Since most poor people spend the largest percentage (over 90%) of their income on food, eating or consumption appears to be a good and very basic way to measure who is poor and who is not, even by World Bank standards.

In Uganda, someone is considered poor if they spend less than US$0.94 and US$1.07 per day by statisticians at the Uganda Bureau of Statistics (UBOS). Based on this, an adult Ugandan would require about Shs66, 000 (Approx.US$20) to buy enough food for him or her for a month today.

A home with two adults would require double that amount and children a little less.

They factor in the next major spending items for Ugandans after food; which are rent, followed by buying non-durable personal goods, health, and clothing and footwear which would possibly push spending per person per day to just over one U.S. dollar.

Based on this calculation, Museveni’s government concludes that nearly all 38 million Ugandans – except just eight million or 19.7% are not poor.

Not so fast, say experts from the World Bank. They are joined by other experts like Ramathan Ggoobi, who teaches economics at Makerere University Business School in Kampala. He told The Independent on Sept. 26 that Uganda’s poverty indices from the 2013 National Health Survey by UBOS are “headcount indices and do not mean a lot”.

He said they are a poor measure of poverty because they look at income poverty alone without bringing in other dimensions, which the new World Bank report does.

“There is no way you can say that it is only 19.7%who are below the standards which are not commensurate with a human being,” says Ggoobi, “The percentages are quite massive when you look at other dimensions such as health, education, and employment opportunities for the youth. These are much more meaningful indices than the household survey which [only] looks at headcount of income poverty.” Ggoobi prefers a more comprehensive measure of poverty that looks at median income which when used can tell the level of income that satisfies a person’s basic needs.

Fred Muhumuza, a development economist and former advisor to the Ministry of Finance, also told The Independent on Sept. 26 that the current national poverty line may make more Ugandans appear rich but the government needs to raise the bar.

“If the bar were to be raised, more Ugandans would be poor,” he said, “We have been having a good pass mark but that is because the government set it too low.”

The World Bank would agree

According to them, Uganda is setting the bar below which a person is considered poor; the so-called `poverty line’, too low. According to them, the poverty line should be around the US$1.90 mark. According to the World Bank report, buying the same types and quantity of foods that costs Shs66, 000 today would have cost Shs12, 000 in today’s prices back in 1993.

The World Bank argues that even if Uganda insists on sticking to its national poverty line, since countries and regions within countries, can have their own poverty line, it should use an updated one. It argues that the poverty line Uganda is using was determined in 1993 and needs an update.Sounds logical, does it not? So why has the government not adopted it?

Partly it is politics. If new poverty lines are drawn, more Ugandans would fall below the poverty line.