Trade not Aid, should be Uganda’s new development focus

Gen. Jeje Odongo and Serbian officials and the donation signing agreement

To date, Uganda is among the world’s top aid recipients. Between 2012 and 2019, the country received more than $15 billion in Official Development Assistance (ODA), and this figure is estimated to have significantly increased during 2020/2021, following the outbreak of the Covid-19 pandemic.

The obvious expectation with aid is, and has been, that it will bring sudden transformation or a total change in our country’s fortunes. But unfortunately, aid has not helped much in narrowing Uganda’s financing gap and we are still swinging in the gallows of poverty.

The conventional view about foreign aid is that poor countries are merely suffering from lack of money or resources, hence the need for financial support, through grants and loans. However, there’s a lot of evidence from independent research showing how aid has slowed economic growth.

Some economists and researchers argue that foreign aid has created dependency, fostered corruption, and worsened relationships between a government and its people. It has also prevented countries, such as Uganda, from taking advantage of the opportunities provided by the global economy.

I have always argued that Uganda’s development problems, as one of the world’s least developed countries, have little to do with lack of resources but have everything to do with the strength of our institutions, systems and the complementary policies.

To put this argument into perspective, I may refer to a survey conducted in 2021 by the Inspectorate of Government, where it was revealed that Uganda loses close to UGX20 trillion (about $5.7 billion) every year through corruption.

This is more than the ODA received for both 2019 and 2020 ($4 billion). It also outweighs the FY 2022/2023 budget amounts for Agro-industrialization, Energy development, Development plan implementation, Innovation, Technology, Regional development and Private sector development, combined. According to the framework paper, these were all budgeted at a combined total of Ushs5.6 trillion.

If Uganda is to transform her economy and make meaningful development strides, it must promote and prioritise trade. We need to start participating more effectively in the production of goods and services, by investing more in productive sectors, building skills, creating jobs and acquiring new technology, knowledge and market information.

But these interventions require sound complementary policies, as well as sustainable programs that are capable of yielding benefits for all Ugandans, especially the poor and disadvantaged.

Look at the Karamoja sub-region: Despite the long-term presence of development partners and billions of dollars invested overtime, food insecurity, poverty and healthcare challenges remain acute in the sub-region. This is partly because short-term, stop-gap measures, including cash handouts and food stamps, have been largely implemented.

Little efforts have so far been made towards empowering people in Karamoja, without ensuring financial sustainability. There have been few inclusive business models to facilitate access to productive assets, such as land and financing, enhance productivity, and to improve the resilience of smallholder farmers and business people.

Let me be clear: Not all aid should be re-directed, especially the humanitarian aid. It is important to note that aid programs that are humanitarian in nature have saved millions of lives, alleviated suffering and offered the much-needed hope to many needy Ugandans.

But humanitarian aid should be for emergency situations and short-term in nature. It should, therefore, not replace government programs but rather help build capacity and strengthen preparedness for such crisis situations. Government needs to effectively work to secure the future of those in need.

By the way, we should appreciate that people do not necessarily expect government to solve all their problems. Having worked in the aid space for a significant number of years, I have met lots of energetic Ugandans, men and women, who really want to get to ahead.

Every day, they desire and yearn for better livelihoods, not only for themselves, but also for their families and communities. They know that they have to work hard to get ahead, and they want to. But all they need is change in national priorities and prevailing conditions.

How can we expect a small-business trader in the deep village of Tegotattoo, Gulu district grow his or her business when they have no access to adequate capital, markets or technical expertise; when acquiring a business loan almost costs an arm and a leg; when they still have to choose between buying prescription drugs and food. Honestly, it’s hard!

There’s an urgent need to fight the dependence syndrome, and restore the spirit of hard work, self-assurance and patience in the lives of Ugandans, mainly the working class. Job opportunities, especially in the agriculture sector and along the agri-business value chain, should be created and remain open to all.

We should be capable of negotiating more profitable trade pacts with development partners and financiers. What use is it for Uganda to negotiate a multi-billion-dollar loan from China for a road construction project when all top and mid-level jobs end up with the Chinese while majority of the Ugandan workers earn close to peanuts in wages.

Government needs to negotiate better wages for its citizens. In fact, this is one reasons why hundreds of young and skilled people leave the country every year in search of better opportunities elsewhere. It is now unsurprising to find a young, budding accountant leaving her job to go and work as a maid in the Middle East in the harshest of conditions.

I personally believe that if we can strike the right balance between trade and aid and make the right choices, majority of our young population can have a decent shot at life. This should be Uganda’s new development goal!

Mr. Mukalazi is the Country Director of
Every Child Ministries Uganda.
bmukalazi@ecmafrica.org
Prioritising trade over Aid should be Uganda’s new development goal

To date, Uganda is among the world’s top aid recipients. Between 2012 and 2019, the country received more than $15 billion in Official Development Assistance (ODA), and this figure is estimated to have significantly increased during 2020/2021, following the outbreak of the Covid-19 pandemic.

The obvious expectation with aid is, and has been, that it will bring sudden transformation or a total change in our country’s fortunes. But unfortunately, aid has not helped much in narrowing Uganda’s financing gap and we are still swinging in the gallows of poverty.

The conventional view about foreign aid is that poor countries are merely suffering from lack of money or resources, hence the need for financial support, through grants and loans. However, there’s a lot of evidence from independent research showing how aid has slowed economic growth.

Some economists and researchers argue that foreign aid has created dependency, fostered corruption, and worsened relationships between a government and its people. It has also prevented countries, such as Uganda, from taking advantage of the opportunities provided by the global economy.

I have always argued that Uganda’s development problems, as one of the world’s least developed countries, have little to do with lack of resources but have everything to do with the strength of our institutions, systems and the complementary policies.

To put this argument into perspective, I may refer to a survey conducted in 2021 by the Inspectorate of Government, where it was revealed that Uganda loses close to UGX20 trillion (about $5.7 billion) every year through corruption.

This is more than the ODA received for both 2019 and 2020 ($4 billion). It also outweighs the FY 2022/2023 budget amounts for Agro-industrialization, Energy development, Development plan implementation, Innovation, Technology, Regional development and Private sector development, combined. According to the framework paper, these were all budgeted at a combined total of Ushs5.6 trillion.

If Uganda is to transform her economy and make meaningful development strides, it must promote and prioritise trade. We need to start participating more effectively in the production of goods and services, by investing more in productive sectors, building skills, creating jobs and acquiring new technology, knowledge and market information.

But these interventions require sound complementary policies, as well as sustainable programs that are capable of yielding benefits for all Ugandans, especially the poor and disadvantaged.

Look at the Karamoja sub-region: Despite the long-term presence of development partners and billions of dollars invested overtime, food insecurity, poverty and healthcare challenges remain acute in the sub-region. This is partly because short-term, stop-gap measures, including cash handouts and food stamps, have been largely implemented.

Little efforts have so far been made towards empowering people in Karamoja, without ensuring financial sustainability. There have been few inclusive business models to facilitate access to productive assets, such as land and financing, enhance productivity, and to improve the resilience of smallholder farmers and business people.

Let me be clear: Not all aid should be re-directed, especially the humanitarian aid. It is important to note that aid programs that are humanitarian in nature have saved millions of lives, alleviated suffering and offered the much-needed hope to many needy Ugandans.

But humanitarian aid should be for emergency situations and short-term in nature. It should, therefore, not replace government programs but rather help build capacity and strengthen preparedness for such crisis situations. Government needs to effectively work to secure the future of those in need.

By the way, we should appreciate that people do not necessarily expect government to solve all their problems. Having worked in the aid space for a significant number of years, I have met lots of energetic Ugandans, men and women, who really want to get to ahead.

Every day, they desire and yearn for better livelihoods, not only for themselves, but also for their families and communities. They know that they have to work hard to get ahead, and they want to. But all they need is change in national priorities and prevailing conditions.

How can we expect a small-business trader in the deep village of Tegotattoo, Gulu district grow his or her business when they have no access to adequate capital, markets or technical expertise; when acquiring a business loan almost costs an arm and a leg; when they still have to choose between buying prescription drugs and food. Honestly, it’s hard!

There’s an urgent need to fight the dependence syndrome, and restore the spirit of hard work, self-assurance and patience in the lives of Ugandans, mainly the working class. Job opportunities, especially in the agriculture sector and along the agri-business value chain, should be created and remain open to all.

We should be capable of negotiating more profitable trade pacts with development partners and financiers. What use is it for Uganda to negotiate a multi-billion-dollar loan from China for a road construction project when all top and mid-level jobs end up with the Chinese while majority of the Ugandan workers earn close to peanuts in wages.

Government needs to negotiate better wages for its citizens. In fact, this is one reasons why hundreds of young and skilled people leave the country every year in search of better opportunities elsewhere. It is now unsurprising to find a young, budding accountant leaving her job to go and work as a maid in the Middle East in the harshest of conditions.

I personally believe that if we can strike the right balance between trade and aid and make the right choices, majority of our young population can have a decent shot at life. This should be Uganda’s new development goal!

Mr. Mukalazi is the Country Director of
Every Child Ministries Uganda.
bmukalazi@ecmafrica.org

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