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

Monday, December 15, 2014

Inside Africa’s major contradiction

Why African elites sound angry and frustrated though continent’s economies grow faster than rest of the world

Over the last decade and a half, Sub Sahara African economies have been growing fast and creating prosperity for many. Today, our continent is exporting and importing more and our governments, investors, and consumers are spending in per capita terms. Yet many African elites, especially the chattering classes on social media, sound angrier and frustrated.

This is partly because growth and the accompanying increase in personal incomes, comes with rapid urbanisation and expansion of education.

As I have written in this column before, urbanisation and education are liberating influences. They expose people to the world, expand their horizons, and grow their ambitions.   The effects of growth, therefore, are first felt in cities and among the educated. Cities offer opportunities for trade, jobs, and a good life. This pulls more people to partake of the opportunities. However, the rate at which people migrate to cities is always faster than the rate at which the economy creates opportunities.

The initial resulting mismatch between growth in aspirations and growth in available opportunities creates social frustration.

People’s natural instinct is to look for a villain – some human cause of their frustrations. This can be the president of a country, the tribe from which he comes, the cronies around him etc.

I can see the young Yoweri Museveni blaming Milton Obote for everything that went wrong in Uganda; and let me face it, the younger me blaming Museveni for all Uganda’s ills.

As I wrote last week, this is not always entirely an incorrect assessment but it is an overly simplistic one. I have since grown older and more reflective.

I recognise the limits of individual agency. This way, I remain a little balanced even though I am also frustrated with governmental potholes, corruption, incompetence, and indifference in government.
My researched view is that Obote was an exceptionally successful president when it came to managing the economy. Obote did not fail on the things Museveni accused him of. He only failed to tame the army – so it kept overthrowing him. Museveni overcame this handicap.

Therefore, to find a neutral way to assess whether Uganda’s elite are right to be angry with President Museveni on matters of economic growth, I recently went to the IMF website and used its data to calculate Uganda’s performance under Museveni.

I found that over the last 28 years, Uganda has sustained a rate of growth of 6.8% (Uganda government figures put it at 7.3% – and the difference could be in the way I did my calculations). Next, I re-read the Nobel laureate in economics, Michael Spence’s great 2011 book `The Next Convergence: the Future of Economic Growth in a Multispeed World’.

Spence writes about a rule used in statistics and economics called The Rule of 72. This rule says that the time it takes in years to double in size at a specific rate of annual growth is 72 divided by that growth rate. This means that if anything grows at I%, it will double every 72 years; at 7% growth rate, per capita income (or even GPD) would double every ten years. Spence says that by 2007, only 13 countries had sustained a growth rate of 7% for over 25 years in the history of mankind – Botswana, Brazil, China, Hong Kong, Indonesia, Japan, South Korea, Malaysia, Malta, Oman, Singapore, Taiwan and Thailand.

If Uganda has sustained growth rates of 6.8% (or better still 7.3%), it has been the 17th (or 13th) fastest growing economy in the world between 1987-2012.  With these figures, Museveni can only laugh at his critics.

However, past leaders like Milton Obote would also laugh at Museveni because Uganda sustained growth of 7% per annual between 1962 and 1971.

So how come Uganda still seems far from the kind of structural transformation that one could see in South Korea or Taiwan after their first 25 years of high growth?

The answer is partly that by 1960, both South Korea and Taiwan had enjoyed a long history of statehood, a shared national identity and a level of education and manufacturing experience.

By 1986, Uganda may have been where South Korea was in 1800. Secondly the political process in these countries allowed their governments to promote manufacturing through the creation of an indigenous private enterprise class – what Marxists call a national bourgeoisie. But Uganda has been afraid of building a national bourgeoisie, hence slow growth in manufacturing. Consequently, growth has largely been driven by services and retail trade, which create few jobs.

As a result, Uganda has an enclave economy – a small modern sector surrounded by peasant agriculture. The small educated urban elite class in the modern economy is exposed to more developed economies through the mass media – television, films, social media etc. They are impatient to have their nations be replicas of the developed world. Yet they continue to see all around them this primordial existence in the villages. This makes many feel angry and frustrated at their governments whom they blame for the sorry state of their countries.  Yet this elite class cannot accept the solution to their nation’s problem – a robust and deliberate state intervention in the economy to create our own Samsung, LG, Daewoo, Hyundai, Kia etc. Why? To create such national conglomerates requires thinking big and making extremely risky investment decisions. Governments would have to throw billions of taxpayer money at individuals (often their own cronies) in a social experiment whose future cannot be projected except by the craziest optimist.

Today we look at South Korea and praise Park Chung Hee for being a visionary. Yet when he was throwing billions of taxpayers’ money to create their Samsungs and LGs, most enlightened South Koreans accused him of cronyism and corruption. So intense was resistance to his industrial policy that in 1972 he declared martial law and began to rule by decree. The problem with a dictator is that he can easily transform a country in a short time – if his policies are right. But he can equally destroy it as rapidly if his policies are wrong – witness Marshal Mobutu Sese Seko of Zaire.

What is clear, therefore, is that a democratic and accountable government, even if moderately so like ours – cannot achieve rapid transformation on the scale of South Korea or China – witness India. If we really treasure democracy, we should not be angry and frustrated by the slow incremental changes. We should be content in the hope that, in God’s good time, we can get to where South Korea is.


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