About me.

Andrew M. Mwenda is the founding Managing Editor of The Independent, Uganda’s premier current affairs newsmagazine. One of Foreign Policy magazine 's top 100 Global Thinkers, TED Speaker and Foreign aid Critic

Tuesday, June 23, 2009

2009/10 budget good but will it deliver?

The 2009/10 budget in Uganda once again presents the puzzle to many analysts of our nation. In spite of a world-wide recession (advanced economies declined by 7.5% in the last quarter of 2008), Uganda’s economy grew by 7%, an impressive performance by any standard. Indeed, growth in absolute tax revenues was 17% above 2007/08 even though it will be about Shs 150 billion below the projected amount.

There is widespread belief among Ugandans and foreigners alike that our country is politically on the highway to Monrovia or Mogadishu. Our government exhibits unparalleled levels of institutionalised incompetence and corruption. So how do we explain this contradiction ‘ an impressively growing economy in the hands of such a government?

Max Weber argued more than a century ago that the state’s ability to promote capitalist development requires it developing some degree of autonomy from the surrounding society. Yet this has been the biggest failure in post independence states in Africa. Any observer of Uganda would easily see that the institutional integrity of the state is significantly compromised. Diffuse fragments of society ‘ ethnic, religious and political ‘ so easily wrestle control of resources from their intended public purpose to private pockets.

Over the last decade, the government has greatly improved the allocation of money to different sectors. We shall call this ‘allocative efficiency’. It has made infrastructure, health, education and energy major priorities. From 2000/01 to 2008/09, the budget for roads has grown from under Shs 314 billion to Shs 1.1 trillion; education from Shs 445 billion to Shs 980 billion and health from Shs 248 billion to Shs 700 billion.

However, institutions at the centre seem incapable of exercising effective control over those in outlaying areas and districts. Thus, they cannot ensure that budgets so allocated are spent on the intended purpose so that Ugandans can get value for money. Consequently, performance in these sectors has improved only marginally, has been stagnant in some cases or is declining in others. We shall call this ‘technical inefficiency.’

For example, the Yoweri Museveni administration has invested significant monies in the road sector. In 1886, Uganda had 2,000 kilometers of tarmac of which only 10% was in good condition. Government has since rehabilitated the old roads and built another 1500 kilometers of new tarmac. Yet according to information from the Uganda National Roads Authority, out of 3500 kilometers of tarmac, only 1500 are in ‘good’ condition ‘ the same number Uganda had in 1962 when we got independence.

In primary education, teachers are in class for only 18% of the time; the dropout rate from this freely provided service is 78%. Secondly, 65% of the pupils in UPE schools up to Primary Five can neither read nor write. Although there has been a dramatic increase in primary school enrollment, the number of pupils registering for PLE has grown marginally. If you factor in population growth, there has actually been a significant decline in those sitting for PLE.

President Museveni claims that his  government has built 750 dispensaries over the last ten years. That is the easy part. The real work is to build effective institutions to ensure that the dispensaries actually deliver healthcare to the citizen. However,  health worker absenteeism is very high. Medicines are smuggled from public to private pharmacies and clinics. There are few, if any, nurses, doctors, equipment and drugs. Thus, maternal mortality has not improved in 20 years. So, 80,000 mothers die in child birth every year, that is 800,000 mothers in ten years ‘ the same number as those killed during the genocide in Rwanda.

Yet, we see technical efficiency in some areas. For example, government has sustained a stable macroeconomic policy framework for two decades. Usually, when confronted with elections, many governments print money to finance popular programs leading to hyperinflation. The government of Uganda has resisted this temptation even when President Yoweri Museveni’s political life has been under serious electoral threat. He has intimidated, jailed, bribed ‘ and on occasion even killed ‘ to win elections. But he has not printed money to finance his political survival.

Museveni’s government has also ‘ with impressive commitment ‘ maintained a largely liberal economic environment. It is easy to set up a business in Uganda. Local and foreign investors are investing. This has led to an impressive growth in all sectors especially services ‘ telecommunications, hotels, restaurants, media and banking. Of course many of the changes we see in Uganda today are common across most of Africa since the 1990s. However, Uganda pioneered them in Africa.

Again, Uganda’s commitment to this liberal policy framework is a puzzle. A patronage-ridden regime like that of Museveni would prefer to limit access to economic opportunities in order to create rents for its cronies. Except for isolated incidents like dishing out prime public land, money and state enterprises to some of its cronies, it has restrained itself from an all-embracing policy of state control of the economy.

Museveni has presided over a fairly sound macroeconomic policy framework with highly competent and autonomous political institutions to undergird it ‘ Bank of Uganda (BOU) and Ministry of Finance (MOF). What makes such a choice possible especially given overall public sector incompetence?

One could argue that Museveni has respected the existing policy framework for fear that doing otherwise would force donors to cut off foreign aid taps. But this argument is weak because whenever they had been confronted with a choice between protecting their power and donor conditions, Africa’s rulers have always chosen power.

The fundamental explanation for Museveni’s resistance to temptations to alter existing macroeconomic policies must be his personal conviction; they are good for the economy. But he also realises that they are politically functional. By sustaining economic growth, these policies have ensured ever growing domestic revenues and foreign aid inflows to finance his politics.

Of course Uganda’s economic achievements have been possible because the institutions managing our monetary policy (BOU under Emmanuel Tumusiime Mutebile) and our fiscal policy (MOF under Chris Kasami, Keith Muhakanizi etc) enjoy a high degree of institutional independence and competence. But again, this has only been possible because Museveni respects such independence and competence.

But why has Museveni built (or respected) competences in only those areas of macroeconomic management but not in the realm of goods-and-service delivery? It seems that at a broader level, Museveni’s project of political consolidation is built on sustained economic growth and its resultant revenues. Money is a vital political resource in building and sustaining his political coalition. This is the part of Museveni’s rule that reflects an enlightened president breaking away from Africa’s past of state control of the economy that was strangling private economic initiatives.

Yet at a tactical level (how to manage different political groups and interests) Museveni’s approach has followed the age-old African syndrome of personalised patronage. To win over different ethnic, religious and other political groups into his coalition, he personally gives privileged access to state resources to persons of his choice. By giving state jobs and contracts to powerful opinion, religious and traditional leaders from the different social groups, Museveni has been able to integrate large sections of the elite into power. In turn, the elites so privileged create a link between him and their followers.

That is why the accent of any analysis of his rule needs to focus more on how he has included rather than excluded people from power. The creation of many semi autonomous government bodies, security organisations, enlargement of cabinet, creation of numerous districts etc has given many elites access to ‘eating’ as it were. Indeed, the creation of new districts has ensured that even areas like the north that have little access to ‘eating’ at the center can get some crumbs at the local level. Therefore, although new districts may be fiscally expensive, they are politically integrative.

In his search for electoral success, Museveni confronts the twin pressures of elite demands for patronage and popular desires for service delivery. Of course the two pressures do not constitute a zero-sum game i.e. the achievement of one does not necessarily mean the loss of the other. But they do compete with one another. I think Museveni has given a disproportionate attention to patronage because it is more cost effective.

Given Africa’s ethnic and religious polarisation, the appointment of powerful individuals from a given community gives its members a sense of belonging to the nation-state. Such a symbolic gesture often counts in people’s hearts more than building a hospital, road or school. Take Bushenyi for example: Appointing powerful individuals like Kahinda Otafiire, Prof. Tarsis Kabwegyere and Ephraim Kamuntu to cabinet can create a sense among their followers that Bairu are part of the power structure. The people of Bushenyi will therefore vote for Museveni and NRM even when public service delivery is poor.

Thus, in societies where emotive issues of identity carry more political weight than functional issues like education and healthcare, politicians will be more inclined to privilege patronage over service delivery. In any case, it costs a lot of money to build a hospital, a school or a road compared to appointing a few elites to cabinet. More still, it also takes a lot of time to build public institutions capable of delivering such goods and services. With elections every so often, politicians find patronage more profitable.

This is not to say that a politician like Museveni will focus entirely on giving patronage to the complete exclusion of a services delivery agenda. Rather, he may treat it as secondary. Museveni has paid some attention to service delivery. Universal primary and secondary education, immunisation, roads etc, are good examples. But his focus on technical efficiency to deliver these services has been cavalier. Why? Because service delivery has lower political returns compared to patronage.

This suggests that all too often, Africa fails because of lack of effective social organisation. Foreign aid makes a mockery of its purpose because it is difficult to achieve set objectives without effective social organisation. Free market policies have done a lot of good for Africa because it is dangerous to have an activist government in weak, corrupt and incompetent states; you would be putting hyenas in charge of the meat market.

Museveni is not an oddity but rather a representative of Africa’s general norm. I find Rwanda’s President Paul Kagame an African exception because from a purely rational point of view, he is very inefficient. He invests huge amounts of time, money and effort on improving the capacity of the state to deliver public goods and services. Yet he can retain power by investing in patronage and repression. What drives him in such pursuits? He must harbour an unusual ambition to serve his country.

The other leaders in Africa who are building effective state capacity are Meles Zenawi of Ethiopia and Issayas Afeworki of Eritrea. I am told by Timothy Kalyegira that the state in Eritrea is highly competent in building roads, schools, hospitals and in providing fairly good education and healthcare services. Yet although the Eritrean state enjoys relative insulation from societal pressures, its pursuit of growth destroying policies will undercut its developmental ambitions.

The state in Ethiopia, on the other hand, has developed high capabilities in designing policies and programs and implementing them without individuals and groups diverting it from its intended objective. Zenawi is doing a great job in increasing hydro power generation (to 8,000 MW), high quality roads etc.

What makes the building of effective state capacity possible in Rwanda and Ethiopia but not in Uganda? Fighting strong and entrenched military regimes required a high level of organisational efficiency to survive, leave alone win the war. By his own admission, Museveni fought a largely incompetent UNLA. Therefore he did not have to cultivate highly effective organisational skills to win.

In sum, Uganda’s effectiveness in macroeconomic management (allocative efficiency) has been possible because it is politically profitable. However, the failures we see at the level of service delivery (technical inefficiency) are a result of the specific nature of Uganda’s identity politics ‘ or at least of how Museveni has chosen to play it. Secondly, Museveni lacks the core managerial competences to deliver such services. Thus, although the budget is good, its benefits will most likely go unrealised.


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