UGANDA has registered numerous successes in building her economy. The economy is currently “growing at an astronomical rate” of 8.9% per annum and this is one of the highest rates of growth in the world. However, the country’s economy boasts of the dominant 68% of the population solely engaged in a hand-to-mouth production! By implication, there is poverty amidst this highly acclaimed progress. Uganda has been ambitiously pursuing policies for achieving economic growth over the last 20 years. Some of these policies include curbing inflation that comprise; reduction in liquidity, practising fiscal discipline through reduced public expenditure in health and education; attracting foreign investors and enhancing export performance and controlling the capital inflows, among others. Uganda is experiencing an inflation rate at 13.7% (Bank of Uganda, July 2008) and this is attributed to exogenous shocks especially increases in prices of energy particularly petroleum products. It has not been so uncommon for the ordinary people to complain about high commodity prices for basic goods like salt, soap, paraffin and especially food which have almost doubled. This fuss was not only Uganda’s experience but the world over. Paradoxically, the measurement of inflation is based on “underline” which technically means that there is no consideration of food prices, yet it is foodstuffs that experience most price volatility. It is more ironical that it is the low income earners that spend their largest proportion of their incomes on food. Apparently, the local person suffers the full brunt of price escalation. The implication is that the control of inflation could have been more rewarding if the measures addressed “headline” inflation i.e. addressing price escalation including foodstuffs. It should be noted that macro-economic growth does not benefit the ordinary poor especially in Africa where most economies are agrarian largely dominated by subsistence producers (hand-to-mouth). This means that these people are spectators in the market system since they basically have nothing to put on the market. But if the poor remain excluded from the mainstream economic growth, the well-off will pay more in social costs associated with increasing poverty and joblessness. The cost will manifest through high expenses on personal security and crime prevention.As Robert McNamara, the former president of the World Bank and American Secretary of Defence argued, “widespread poverty amidst islands of wealth is more dangerous to the latter.” So, if governments do not deal effectively with poverty, then, poverty will deal more destructively with governments. Recall the reasons for the emergence of the French revolution where the people could not afford to buy bread but Marie Antoinette, the celebrated arrogant and extravagant wife (Queen) of King Louis XVI sarcastically advised the poor and hungry French mobs to “eat cake if they cannot afford bread”. Maintaining a favourable balance of trade (whereby the country’s exports’ receipts are higher than imports’ invoices) is a very necessary aspect of macroe-conomic performance. This makes foreign investment needed and welcome. Nevertheless, it would be more prudent to provide incentives to foreign companies based on their sourcing of local content like employment of the local labour force; local raw materials; and helping domestic manufactures to become more competitive. There is need to review the economics of Washington Consensus which is premised on “Less state and more market”. The state must not only remain relevant but actually must be effective if it is to cause transformation of the economy. This is what Robert Wade of the London School of Economics calls “the need for the state to govern the market”. The argument here is that while the market provides environment for efficiency, there is a danger of creating exclusion of the poor from the fierce competition usually worsened by imperfect markets. If imperfect markets are left unabated, it can be a recipe for conflict and disintegration in extreme cases. Poverty reduction is part and parcel of economic growth. The argument that growth must be achieved before redistribution is a mirage. The trickle-down mechanism based on the assumption that economic growth (first economy) will filter through to the poor (second economy) does not hold water. This implies that if the growth strategy turns belly–up, poverty reduction will sink with it. This reminds one of the old adage that “the poor man’s walking stick is support for the rich”. What is really needed is the welfare net to soften the blow. There are a number of examples which show that relying solely on the market has not created efficiency. The British rail system was privatised but there are serious efficiency gaps in keeping time, collisions, etc. Similarly, there is evidence that economic growth in many countries has not trickled down to the poor. It is therefore apparent that governments need to provide social security for those waiting for windfalls of economic growth. But even if economic growth finally arrives, it is unlikely to narrow the gap between the rich and the poor. For example, South Africa is the continent’s most successful economy with a GDP, amounting to a third of all 48 sub-Saharan African economies combined. Paradoxically, it is the same economy that is encumbered with widespread dissatisfaction by the unemployed, increasing poverty and crime. I was recently in South Africa and I travelled in one of the domestic flights but I hardly saw any other black person on this flight! There were only whites and Indians—the top beneficiaries of Africa’s most successful economy. Where are the benefits of the highly romanticised growth in South Africa? Similarly, Peru has been one of the most successful countries in Latin America with a GDP growth of 9.2% per annum but with paradoxically high levels of poverty, vulnerability and a disgruntled population. The Peruvian people give little credit to President Allan Garsia for the strong economy just as former President Thabo Mbeki of South Africa has been thrown out of the presidency yet, he has presided over a vibrant economy. Coming back home, the Uganda government has claimed an economic growth of 8.9% per annum in the 2007/8 financial year. This is among the highest economic growths in the world but how many Ugandans can identify with this growth? Ultimately, what Ugandans require are education and skills development; employment creation; improved livelihoods, improved productivity, and increased welfare, rather than figures and macro-economic policies that have little meaning to an ordinary poor hungry person. Poor people understand their needs better than anyone else and government must take its lead from them not the other way round. The ordinary people should be allowed to voice their needs and government action be based on the needs assessment of the people but not what the government thinks the people need. The writing is clearly on the wall.
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