Uganda's gains go to the grassroots

Africa's first HIPC beneficiary, Uganda is devoting the proceeds to the social sector and to macroeconomic stability.

"We aim to increase access to clean water from the current 50 per cent to 90 per cent of Ugandans in about five years," as part of a drive to improve health, says Mr. Gabriel Opio, State Minister of Finance and Economic Planning. Also, the government is setting up a fund to finance, among other things, the "very expensive" push towards universal primary education. Such efforts "would have been much harder" without the Heavily Indebted Poor Countries (HIPC) initiative, he emphasizes. And the recent fall in coffee prices, which has counterbalanced the gains from HIPC relief, is further evidence of the benefits of HIPC, Mr. Opio argues.

Photo: Nii K. Bentsi-Enchill

The lesson for Uganda is to pursue diversification and reduce dependence on risky commodities. Also, "we have to exploit our comparative advantage, for example, in tourism," he adds, mentioning the efforts to consolidate security so that tourism can achieve its revenue-generating potential. Besides encouraging horticultural exports, and improving telecommunications and airport infrastructure, Uganda could also export power to Kenya, northern Tanzania, eastern Democratic Republic of Congo, and Rwanda, he adds.

On resource mobilization, Mr. Opio says that savings are a function of macroeconomic stability and predictability. Once confidence and stability are provided, "people will bring more money into the country. In the last budget, foreign remittances [from Ugandans abroad and other transfers] were $800 mn while export revenues were $600 mn. That shows the people's confidence in us."

Efforts to strengthen the financial sector continue, says Mr. Opio. "If that sector is weak, and there is uncertainty, you are going to have capital flight." He is confident that macroeconomic stability, good governance, stronger commercial banks, and greater security in the country will all help to raise savings rates.

And in order to make real progress in poverty reduction, priority areas include primary education and health, rural water supply and roads, and agricultural extension services. Compared to costs, the returns from primary education are much higher than from secondary and tertiary levels, so Uganda has launched its free and universal primary education campaign. More resources are going into health, rural water and roads because "an unhealthy population with no infrastructure cannot increase productivity." The government aims to provide every sub-county (containing 10-20,000 people) with a graduate agricultural extension officer and a graduate veterinarian. And budget allocations for these priority areas cannot be redeployed for any other purpose, Mr. Opio declared.

*******