Uganda National Household Survey (UNHS) 2016/17 released on September 27th,
2017 has interesting and perplexing statistics that reveal the weight of the
development challenges Uganda faces. The survey was conducted and issued with a
one year lag. Drawing from historical trend (1999/00, 2002/03, 2005/06,
2009/10, 2012/13), the next household survey should have been in 2015/16. As expected, slowing economic growth has
negative ramifications for poverty reduction and unemployment. With lower growth, the pace of poverty
reduction has also slowed and 27% of the population (10.1 million) were
categorised as poor in 2016/17 compared to 19.7% in 2012/13 (6.6 million).
Additionally, while Uganda remains at less than half the 1990 poverty rate
(56%), in absolute numbers there are approximately 700,000 more poor people in
2016/17 when compared to 1990 poor
people. This means the rate of poverty reduction has been lower than the lower
of population growth.
Interestingly while poverty has increased (3 in 10 Ugandans) are poor,
the level of inequality has decreased suggesting that the non-poor particularly
the small middle income class endured faster reduction in their incomes than
the poor. And yes the middle income class is small – for example an average
NSSF member (now estimated at 1.4 million) earns a gross salary of UGX 850,000.
This is consistent with survey finding that persons with education of a degree
or more earned a monthly median income of UGX 780,000. The survey further reveals
that the average monthly wage of an employee was UGX 168,000. A median rural
wage employee who earns UGX 120,000 monthly is essentially poor – less than the
USD 1.25 per day estimated at UGX 135,000. Juxtaposing the average wage
increment since 2012/13 with inflation, suggests that real wages reduced.
The struggles of the non-poor are in part exacerbated by the level of
dependency. One way to look at it is that nearly 1 in 4 Ugandans are employed
implying the 3 depend on the 1 employed. This weight of dependency is
discounted in the conventional definition of age dependency which is defined as
the ratio of the dependent population (0 to 13 and 65+ years) to the proportion
of economically productive population (15 to 64 years).The working age
population (15 to 64 years) is now at 51% (19 million), meaning the age
dependency ratio of 97 and declining from 107 in 2012/13.
Additionally, 21.2% of population (4 million) of working age population
are not working and therefore the working population, defined as persons who produce goods or provide
services for use by others or for own use, is estimated at 15.1 million. On the
other hand, the labour force which includes the employed and unemployed persons
is estimated at 10 million, out of which the total population in employment was
estimated at 9.07 million. This means 918,000 Ugandans were unemployed –
translating into a 9.2% unemployment rate. This also discounts the unemployment
magnitude since only 60% of the working are employed. The remaining 40%
(difference between the working and labour force) are simply doing voluntary
work. This added to the unemployment of
918,000 would defacto mean approx. 7
million are not employed. 21% of the
population are considered youth (between 18 and 30 years) and the respective youth
unemployment stands at 13%.
If government was to offer poverty transfer payments or safety nets, it
would need to spend UGX 79,300 per month (minimum consumption per adult
equivalent) on each of the 10.1m poor people. This translates into UGX 800
billion per month and UGX 9.6 trillion per annum (about 40% of the budget or
70% of domestic revenue). This would be seemingly unaffordable. To address the
poverty and employment challenges, targeting the basic factors of production
remains critical. Land is the primary factor of production and requires
institutional reforms to backstop the needed structural reforms. The recent
poverty surge is attributed to climatic and drought conditions that affected
the agriculture sector over this period. There were more frequent droughts -
2009/10, 2011/12 and 2016/17. The
survey indicates that agriculture remains the largest employer of the labour
force and arguably has the highest potential to reduce poverty; hence
addressing the entire value chain linked with agro processing industrialisation
is omni-warranted. Revamping growth to its historical averages is not only
essential for middle income status attainment but necessary for poverty
reduction and employment creation. The Uganda Growth Forum held on the 14th and
15th September 2017 at Speke Resort Munyonyo underscored areas necessary for
growth recovery including espousing public investment management.