Economic Growth Stagnates, As World Bank Offers Shs500bn

Economic Growth Stagnates, As World Bank Offers Shs500bn

By John V Sserwaniko

While interacting with journalists on Monday, PSST Keith Muhakanizi and World Bank Country Manager Christina Malmberg Calvo reflected on Uganda’s economic growth rate which for the last so many years has stagnated at 3.5%.

The duo agreed the stagnated low growth rate is of great concern to the respective organizations they represent. The WB boss demanded that something robust must be done by the Ugandan government to check on population growth which is also at the same rate-3.5% annually.

This means its annually increasing with over 1m in absolute terms. Flanked by their juniors, the two officials agreed that this high population growth is eating away the growth
figure-stagnating it at 3.5%.

“It has also put too much strain on the social services meaning the GDP per capita growth is stagnating at zero,” Muhakanizi said adding that, without unchecked population growth, the 3.5% growth rate would still be very good.

To him there are many things that can be done to get the growth rate beyond the current 3.5% but checking on population growth is the most critical intervention Uganda must undertake.

“Women fertility rate is too high in Uganda and must be brought down mainly through education so that people see the benefits of having fewer children,” Muhakanizi explained as Malmberg nodded in approval.

He added unchecked birthing of too many children was also exacerbating the problem of income
inequality “because when you go to villages you can easily see that families with fewer children tend to be more prosperous and more developed than those with very many children.”

While acknowledging that economic growth will be essential to achieve the poverty reduction goals in Uganda, the WB boss stated: “Progress of your economic growth won’t be seen unless population growth is checked.” She hoped Uganda will register increasing levels of economic growth and break the 3.5% ceiling at which it has currently stagnated as seen in new improvements that are beginning to be realized.

She gave the example of public investments that are better managed today than three years ago. She said going forward money to fund such large projects will only be available after all preliminary work has been done to the satisfaction of the development partners like WB.

In the past problems like mismanagement of Project Affected Persons’ compensation have hampered and delayed mega government infrastructural projects and WB in August last year protested by suspending funding to Uganda.

Muhakanizi defended GoU against fears that we may default because we have borrowed too much as a country.

“Borrowing isn’t a problem but borrowing in a sustainable way otherwise there would be no essence for
banks to exist if borrowing was a problem parse,” Muhakanizi said.

He said today there are many lobbyists representing different lending institutions which are competing to lend Uganda “which is proof we [Uganda] aren’t debt stressed and won’t become so anytime soon.”

Headded: “Even what we are borrowing is still sustainable.”He prided himself in the fact that he has always had the courage to caution colleagues in government that “not all money available for lending to you is free money.”

He concurred with Malmberg that the two WB twin goals of poverty reduction and shared prosperity will only result from improved economic growth rate from the current 3.5%. Muhakanizi, who has for decades worked with the Ugandan treasury, commended WB for its relentless support that has enabled reforms like single treasury account, IFMIS and others which have enabled Uganda to not only have Africa’s cleanest public service payroll but also save $38m that would previously have been lost due to accounting systems inefficiencies.

WB/GoU OPEN DAY Muhakanizi and Malmberg had called reporters to unveil preparations for the pioneer World Bank Group-GoU open day slated for next Tuesday 30th May at Kololo Airstrip where, according to WB Communications Officer Sheila Kulubya, different government agencies and ministries
(MDAs) will showcase their achievements and benefits Ugandans citizens have reaped from WB-funded projects.

Entrance will be free and the event will run 8am-5pm. It’s an opportunity for both GoU and WB officials to account to Ugandans who will be free to interact and ask any questions relating to WB-funded projects.

Malmberg said GoU had in the past made mistakes relating to low consumptive capacity of the
disbursed funds which have since been addressed hence the resumption of WB funding. “The [MDAs] consumptive capacity of the disbursed funds had declined for the last 4 years but things have improved and the curve will soon be on upward trend.

There is willingness and readiness to improve management of public investments,” said Malmberg the
Swedish national who has managed the WB Uganda office since May 2015. She praised WB funding for its flexible terms including longer repayment period (30 years and above), interest being at zero and the 7 year grace period.

Only an administrative fee of 0.7% is charged on the disbursed amount. She said in the coming years, there will be increased emphasis on agricultural projects specifically prioritizing investments in irrigation technologies.

This is so because agriculture has potential to employ majority Ugandans especially the economically most vulnerable in rural areas. Malmberg also announced WB board’s readiness to in June approve two funding requests by the GoU.

These include $40m to fund the GoU and CSOs to intensify efforts to reduce community violence-and priority will be the districts with high prevalence of violence. Another $200m funding will go in physical
projects in health and education programs for the district local governments.

The idea is to reduce inequality in access and performance indicators prevalent in different districts regarding access to these two social services namely health and education. The total is $240m (approximately Shs500bn) and according to Malmberg, this is evidence of renewed WB confidence in the GoU.

According to Muhakanizi, the World Bank Group has been a GoU funding partner since 1963 and plenty of funding has gone into infrastructural development, energy/power generation, water & sanitation, roads, transport sector, education, health, environment conservation and capacity building for the decentralization program.

Muhakanizi also saluted WB for funding research work which guides policy formulation by the GoU. Some of the ongoing GoU projects in which the WBG has put colossal sums of include: Uganda Rural Electrification ($13.7m), Gender Ministry’s Supporting Children Opportunity through Protection & Empowerment (SCOPE) project ($0.67m) and Uganda Reproductive Maternal and Child Health Services Improvement Project ($110m) in the Ministry of Health.

Others are Girl Child Expansion & Reinforcement Project/GERP ($100m), Uganda Clean Cooking Supply Chain Expansion Project ($2.2m), Northern Uganda Business Support Program ($2.86m), Uganda Energy for Rural Transformation II ($135m), Uganda GEF Energy for Rural Transformation III ($8.2m), Third Northern Uganda Social Action Fund/NUSAF3 ($130m) implemented by the OPM, Skills Development Project aka Skilling Uganda ($100m) in the Education Ministry, Agriculture Cluster Development Project ($150m) under MAAIF, Uganda Multi-Sectoral Food Security & Nutrition Project ($27.6m), Uganda Reproductive Health Voucher Project ($13.3m) under Health Ministry, Support to Preparation of the 2nd NDP Project ($0.33m) under NPA, Uganda North Eastern Road Corridor Assessment Management Project (NERAMP) at $243m, Uganda Albertine Region Sustainable Development Project ($145m), Second Kampala Institutional & Infrastructural Development Project ($175m), Electricity Sector Development Project ($120m), Water Management & Development Project ($130m) in the Ministry of Water & Environment and Innovative Integrated Approach to enhance smallholder family nutrition

In the Lands Ministry, whose PS/Accounting officer is Dorcus Okalany, the WBG has funded Uganda Support to Municipal Infrastructure Development Program (USMID) to the tune of $160m and Competitive & Enterprise Development Project (CEDP) to the tune of $100m. The two projects started in 2013 and will respectively run up to 2021 and 2019.

The total sum in the Lands ministry alone comes to $260m. Again in the Ministry of Health, the WBG has funded the Uganda Health Systems Strengthening Project (UHSSP) to the tune of $130m. The project has been running since May 2010 and is purposed at improving the quality of human resources in the sector, improving physical infrastructure and improving management leadership and accountability for the health service delivery.

Focusing on realization of Uganda’s National Minimum Health Care Package (UNMHCP), UHSSP seeks to register verifiable impact on maternal health, newborn care and family planning services. Under the UHSSP program, hospitals’ operational capacity has been improved, medical equipment provided and several health facilities renovated by the Ministry.

The referral system also continues to be strengthened under UHSSP. According to Malmberg, when
all the ongoing active projects are combined the WBG financial support portfolio to the GoU currently stands at $3bn (approximately Shs10tn).