Happy people, empty pockets

By Ronald Musoke

As Uganda celebrates its 53rd Independence anniversary at the Kaunda Grounds in the northern town of Gulu, it looks like a good point to assess how much the country has achieved, especially in comparison to its neighbours.  The theme of this year’s celebrations – `Striving towards a prosperous people and country; the true meaning of independence’ – also appears to favour an evaluation.

Within the first three years of the 1960s, all the East African countries had gained independence -Tanzania on December 9, 1961; Rwanda and Burundi on July 1, 1962; Uganda on October 9, 1962 and Kenya on December 12, 1963.

Those three years were probably the best years of collective happiness among East African citizens. For the majority of East Africans, that euphoria was short-lived as the countries soon experienced varying fortunes in the economy and peace.

In the case of Uganda, when the British colonialists handed over the reins of power, the country was bubbling with potential across the economy.

With a population of just about seven million, Uganda’s economy registered substantial growth; most of it in agriculture. There was also a fledgling industrial sector mainly focusing on food processing for export.

By 1967, Uganda’s economy boasted a growth rate of approximately 6.7% per year and by the end of the 1960s, commercial agriculture accounted for more than one third of GDP. With Uganda’s population growing at a rate of about 2.5% per year, net economic growth of more than 4% suggested that people’s lives were improving.

At the advent of the 1970s, the first government of President Milton Obote hoped for annual economic growth rates of about 5.6%. But then Obote was in January 1971 toppled in a military coup by Gen. Idi Amin. Soon afterwards, in August 1972, Amin proclaimed the “Economic war” in which previously private assets of mainly Asians, including industries, agricultural estates, and financial institutions, were nationalised. Soon after, Amin ordered the expulsion of all non-citizen Asians. All moves rattled the international community which soon isolated him and the country. GDP declined each year from 1972 to 1976 and registered only slight improvement in 1977 when World coffee prices rose again. Civil war which had been simmering since 1971 was soon upon the country as Amin gained notoriety for murdering citizens. In 1979 he was deposed by a liberating force backed by the Tanzanian army.

The economic and political destruction of Amin’s regime contributed to a record decline in earnings by 14.8% between 1978 and 1980. By the time Amin fled Uganda in 1979, Uganda’s GDP measured only 80% of the 1970 level.

Happiest East Africans

It was only after 1986 that Uganda rebounded from the abyss of civil war and economic catastrophe to become relatively peaceful, stable and prosperous. Thanks to Western-backed economic reforms, President Yoweri Museveni’s new government has produced solid growth since then.

According to the World Bank, Uganda was among the first Sub-Saharan African countries to embark on liberalistion and pro-market policies in the late 1980s. In 1987, GDP rose 4.5% above the 1986 level.

This marked Uganda’s first sign of economic growth in four years as security improved substantially in most parts of the country except the north. After years of stagnation, factories resumed and increased production.

The government has since worked closely with local manufacturers to revive the manufacturing sector. The result is that most of the country’s household items consumed by Ugandans are now manufactured domestically. Previously, Kenya had become Uganda’s only source of manufactured products.

In 2013 a UN survey of the happiest people in the world put Ugandans top of the pile in the East African region.

The benchmarks for happiness included generosity, having someone to count on in times of trouble, feeling a sense of freedom to make key life choices, objective circumstances of life expectancy, and perceptions about corruption prevalence.

Another survey, this time by the international research organization, Afrobarometer, found that 62% of Ugandans felt that their living conditions were at least “fairly bad”. Just two years earlier in 2010, that figure was 42%.  Apparently, even as economic conditions improve, it appears that dissatisfaction also grows. This is not unique to Uganda.

The same 2012 Afrobarometer Survey noted that 40% of adults in Tanzania felt that current economic conditions there were very bad, compared to 25% in 2008.

In Kenya, 84 % of adults described the current economic conditions as either “very bad” or “fairly bad” in 2011, a point jump from 54% in 2005.

In terms of economic growth, Uganda has come from far and probably the citizens are too harsh on themselves when they do comparisons with their more stable neighbours, Kenya, Tanzania and Rwanda.

But the comparison may not be far-fetched considering that all the five East African countries have celebrated at least 50 years of independence, albeit with varying degree of economic success.

For instance, which country has relatively done better in terms of economic development and welfare for citizens? Is it Kenya or Tanzania—the two countries that have largely been peaceful since independence?

Could it be Rwanda that has miraculously pulled itself out of the abyss from which the 1994 genocide had sunk it? How about Uganda which has commanded robust economic growth over the last 30 years?

Making use of independence

Kenya which probably fought the most ruthless battles to gain freedom from the British has for decades been the industrial hub for the region. It remains the largest East African economy. In 2014, Kenya became a middle income country following the rebasing if its economy which increased the size of the economy by 25.3%. This effectively made Kenya become Africa’s ninth largest economy.

Isaac Shinyekwa, a research fellow at the Makerere University based Economic Policy Research Centre (EPRC) says there is need for historical perspective when comparing these countries. He says in the 1960s, Kenya was always ahead economically and Uganda was slightly ahead of Tanzania. Then in the 1970s, Uganda fell off because of the political upheavals which gripped the country for close to two decades.

Today, Shinyekwa says, Kenya’s middle income status makes it a better economy than the rest in the region.

“Kenyan citizens on average earn better than the rest of their counterparts in the region because they have bigger incomes,” he says, “Kenya has better infrastructure, better health and education services; just to give you some perspective, Kenyan teachers are the third most well paid on the continent although they are clamouring for more.”

Shinyekwa says Tanzania started off badly with its socialist (Ujaama) programme under President Julius Nyerere but, thanks to change in economic outlook about 30 years ago, the biggest country in the region appears to be catching up. It is mainly exploiting its mineral potential. On Rwanda, Shinyekwa said the country has recovered very well from the 1994 genocide. Only Burundi, which is the poorest country in the region, seems to be stark in the old cycle.

Frederick Golooba Mutebi, an independent researcher and analyst says Kenya and Tanzania have enjoyed robust economic growth because they have been mostly politically stable save for a few skirmishes in 1982 (attempted coup) and 2007 (political violence) for Kenya.

“Political stability has generally translated into the robust economy that Kenya has projected over the last 50 years.

“Tanzania too has been politically stable for the 54 years the country has been independent but the country’s economy has not fared much better,” he says.

Golooba says the same appears to be happening now in Rwanda which started its independent life amidst political unrest.  The country has made substantial progress in stabilizing and rehabilitating its economy.  GDP has rebounded with an average annual growth of 7-8% since 2003.

Fred Muhumuza, a research and advocacy specialist at the Financial Sector Deepening Uganda says Rwanda has been able to achieve much over the last two decades because the government has been committed to implementing the programmes which it has initiated.

“Uganda is mostly into planning and documentation but when it comes to moving forward with implementation, that is where it finds problems,” he says.

Rwanda has done well because its political leadership above all exhibits zero tolerance for corruption, says Mary Goretti Nakabugo, the Country Coordinator of Uwezo, an education NGO.  But even relative political stability, improved aid flows, and economic activity, may not be a panacea for economic prosperity if there are major underlying weaknesses—high poverty rates, poor education rates, a weak legal system, poor transportation network, over burdened utilities, and low administrative capacity risk undermining planned economic reforms.  That appears to be the case with Burundi. The country has been characterised by coups and civil war and political violence. Following President Pierre Nkurunziza’s coming into power in 2005; Burundi has probably been the most peaceful. Many experts in the region said he would lead the ‘Miracle’ of Burundi. Recent events, however, show that Nkurunziza, who recently won a controversial third term, has failed to break the cycle.

Overall, according to the 2013 State of East Africa report, the East African economy continued with its impressive growth rate trend with an average of 6% growth and a GDP of $83 billion achieved in 2011, albeit with intra-regional differences in income per capita. When you talk to the people, however, there is a pervasive feeling that the economic conditions have worsened in the past five years.

According to Nakabugo of Uwezo, only Kenya “has probably made better use of its independence”.