Besigye
is right. Museveni has presided over a rapidly growing economy. This has led to
significant growth in tax revenues. For example, in 1990 when Besigye was in
cabinet, government revenue was Shs 134 billion which, when adjusted to
inflation comes to Shs 954 billion in 2015 prices. This financial year,
Uganda’s tax revenue is Shs 11.3 trillion – that is a more than1000% growth in
real terms (i.e. adjusted to inflation).
I am very critical of Museveni on
his government’s record on corruption and poor performance in the delivery of
some public goods and services especially health, education and agricultural
extension services. But I reject Besigye's doomsday view that he has destroyed
Uganda. Museveni’s presidency has been a success in some public goods and
services such as supply of clean water, electricity, security,
telecommunications and most recently national trunk roads. But his most
important achievement has been on sustaining economic growth over three decades.
Over the last 25 years Uganda has had the 11th fastest growing
economy in the world, performing better than the growth miracles of the 20th
century – South Korea, Taiwan, Botswana, Singapore, Malaysia, Hong Kong,
Mauritius, etc.
I am also conscious of the fact
that in spite of this growth Uganda is till a very poor country. In this budget
Uganda will spend $150 per person, not enough to pay for a large basket of
public goods and services to the quality we desire. But if the economy has been
growing impressively well, why are our revenues still this small? Kwame Nkrumah
said: “Those who would merely judge us by the heights we have achieved would do
better to remember the depth from which we started.” Let us use this wisdom on
Uganda’s record.
Uganda’s growth began on a very
low base. In 1990 government revenue per person was $16.2 in 2015 dollars. This
financial year, it is $ 97 revenue per person – a 500% growth in 25 years. If
you think this is small, compare Uganda’s record against the USA. America was
almost at the same level of revenue per person as Uganda is today in 1864 i.e. $117
(in 2015 dollars). But 26 years later i.e. in 1890 its revenue per person had
grown to $178 in 2015 dollars – a 52% growth. Thus, revenue per person in
Uganda over a similar period of 25years grew almost 10 times faster than in the
USA. Even when we compare same period (1990 to 2015), Uganda performs much better.
Revenue per person in USA has grown by 30% from $7,200 (in 2015 dollars) to
$10,400 in 2015 while Uganda has grown 500%.
Now
we can address Besigye’s promise to increase wages of government employees.
First, public sector wages in Uganda suffered consistent decline in real terms from
1971 to 1987. But because of sustained economic and revenue growth, this trend
began a steady reversal. In 1990, the least paid civil servant earned Shs 2,591
(Shs 18,446 in 2015 prices). The highest paid civil servant earned Shs 12,155
(Shs 86,537 in 2015 prices). Today, the wage of the least paid government
employee has grown in real terms by 900% to Shs 187,000 while that of the
highest paid public service official (head of public service) by 5500% to Shs
4.9 million. This is significant.
Yet public sector wages are still
low hence a need for pay raise. A 1995 World Bank study showed that a primary
school teacher in Uganda would need Shs 1m (or Shs 3.46m in 2015 prices) as a
living wage. Besigye has promised to raise salaries for primary school teachers
from Shs 408,000 to Shs 650,000 i.e. by 38.7%; secondary school from 720,000 to
Shs1 million (28%); doctors from Shs1.2 million to Shs3.5 million (by almost
300%), police officers from Shs 350,000 to Shs 650,000 (by 71%). Given that Besigye
cannot increase wages for some public sector workers and ignore others (because
of the problem of moral hazard), his promises will increase the public sector
wage bill by 40% from Shs3.0 trillion to Shs4.2 trillion i.e. by an extra Shs
1.2 trillion. Can Uganda afford this? If yes: at what cost?
Note: PriceWaterhouseCoopers does
studies on wages in Uganda across all sectors comparing private and public
institutions on an annual basis. So I asked them how bad public sector wages
are relative to the private sector. They told me that outside of the top banks
and telecom companies, public sector salaries in Uganda are competitive with
those offered by the private sector. Indeed, most private schools, hospitals,
security companies etc. pay their workers less than government pays its
teachers, nurses and policemen.
Besigye has also promised to
increase the budget for agriculture from 3% to 10% of the national budget. Next
year’s budget will be Shs20 trillion. His agriculture will go from Shs480
billion to Shs2.0 trillion i.e. by 1.5 trillion. He has also promised to give a
computer to each of the 1.5m students in secondary school. Assuming every
laptop will be Shs1 million, the bill comes to Shs1.5 trillion. If amortized to
three years, it is Shs500 billion per year. These three promises alone demand
Shs 3.2 trillion.
Besigye claims he will fund all
these promises by reducing ministers from 80 to 40, cutting the 378 Members of
Parliament by a half, doing away with the 100 presidential advisors and
assistants and 112 RDCs and their 70 deputies. I agree with Besigye on his
desire to cut down on this obese political patronage. But the savings are
miniscule relative to his promises. Ugandan ministers earn their salaries as
MPs and there are only six who are not MPs. Therefore, even if Besigye cuts cabinet
by half, he will only save on the cost of minister’s motor vehicles, each
costing Shs400 million. Amortized for five years, it is Shs 266 million per
year for 40 ministers. They also earn a monthly responsibility allowance of Shs
2m and Shs 200,000 for telephone calls. Total
savings per year here are Shs 1.3 billion.
Total wages and benefits for MPs
this financial year are Shs127 billion. Even if Besigye cut parliament by half
he would only save Shs63 billion. Total annual cost of RDCs’ wages is Shs4.5
billion, presidential advisors/assistants is Shs7.2 billion; plus allowances
the total comes to Shs15 billion. He can also cut presidential donations of
Shs80 billion. Besigye’s total savings bonanza amounts to less than Shs160
billion. I agree this money can do a lot of good. It can build 60km of paved
roads, 4,000 classrooms or train 4,000 doctors. However, it is a drop in the
ocean of Shs3.2 trillion on only three of his promises – public sector wages,
agriculture and laptops for students in secondary schools.
Besigye has made an even broader
claim i.e. that the public sector in Uganda is bloated. Is this true? There is
an objective way to test this i.e. by looking at the necessary level of
government employees per 100 citizens in other countries. The Sub Sahara Africa
average is 1.9 public sector employees per 100 citizens, Latin America is 3.5,
Middle East and North Africa is 4.0, and Asia Pacific is 2.4. Uganda is at 1.09.
Another away is to look at the ratio of wages to GDP. This should not exceed
7%. Ghana is 11.3%, Kenya 12.2% and Uganda is 3.86%. Yet another way is to look
at the ratio of total government wages to revenue. This should not exceed 30%.
Uganda’s is 25.4%. In Ghana it is 41.2%, Kenya is 52% and Ivory Coast is 45.5%.
All these facts show that in
spite of his oversized parliament, districts, advisors and assistants, Museveni
is running a very prudent fiscal regime on public sector wages. His ratios meet
the best fiscal practice globally. Indeed compared to Kenya, Museveni has
ensured that his political hangers-on and civil servants earn modestly. This is
contrary to the claims by Besigye’s group.
Indeed, this financial year, 33.5% of our nation’s total budget is
devoted to roads and dams. I can claim part of this credit. In 2006/07 I worked
with ACODE to campaign against the high cost of political patronage and called
for funding of roads and electricity. It seems someone in government listened and
acted.
If Besigye increases Uganda’s
wage bill to Shs4.2 trillion that will make public sector wages 33% of next
year’s projected revenue of Shs13 trillion – above the economically recommended
ceiling of 30%. That is a slippery slope Kenya has fallen onto as 52% of its
budget goes to pay public sector wages alone. In October, the Kenya government,
with four times Uganda’s budget, had to borrow from abroad to pay its
employees. Uganda has managed its fiscal regime very well. What is shocking
(but not surprising) is the apparent inability of Museveni’s campaign team to
defend their candidate’s record.
Yet there are
better arguments to make against Museveni’s government. One of them is the very
small growth in the tax to GDP ration from 11% in 1997 to 13% now. This is in
spite of growth in both monetary and taxable GDP. If Uganda broadened the tax
base and improved tax administration, it can collect about 18% of GDP in taxes.
This would bring in an extra 3.8 trillion in revenue. What is needed to achieve
this?
The other issue is
growth in agriculture, which has been sluggish. Museveni is promising a return
to the hoe. Should the hoe be our future or our past? Besigye is calling for increased
funding of agriculture to 10% of the budget. But is government spending the
missing catalyst in agriculture? Finally is industry. Without growing a manufacturing
sector to export value added goods, it will be difficult (if not impossible)
for Uganda to break from poverty and rampant youths unemployment. Museveni has
talked big about this and done little. What are Besigye’s policy proposals on
manufacturing?
Museveni’s campaign
message (“steady progress”) is a call to maintain the status quo. Besigye says
the status quo must change. He therefore has greater responsibility to show us
his alternative vision. For now, most of his promises are of a transactional,
not transformational nature. If met, it is because Museveni has grown the
economy and government revenues to pay for them. Therefore Besigye should have
the modesty of Isaac Newton when he said: “If I have seen far, it is because I
was standing on the shoulders of giants.” If elected, President Besigye will
build a greater Uganda largely because Museveni has given it a strong economic
foundation.
This extended
version of the last column was published in The New Vision of Monday December 7th
2015.
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