Uganda’s economy grew at 6.4 per cent in the first half of FY2018/19, up from 6.1 per cent in FY2017/18, according to the latest edition of the Uganda Economic Update released by the World Bank.
The report, “Economic development and human capital in Uganda: a case for investing more in education” attributes the growth to stronger investment and higher demand for goods and services, favourable weather conditions and strengthened credit.
However, rapid population growth means that real per capita growth is 3.1 per cent, which is not enough to achieve rapid socio-economic transformation.
Moreover, heavy reliance on rain-fed agriculture makes GDP and exports more volatile, with disproportionate costs for the poor.
The growth forecast for 2020 remains positive at over 6 per cent, driven by anticipated public and private investments, especially to support developments in the energy and oil sectors.
However, as the 2021 elections draw closer, heightened political activity and uncertainty could lead to a drop in investment and economic activity.
Prioritizing public spending more effectively, improving spending execution rates, and increasing revenue mobilization would maintain Uganda’s macroeconomic stability and ensure that public debt is sustainable. Investing in productive sectors that can drive growth and jobs, such as agriculture is critical for making growth more inclusive.
The special section of the 13th Uganda Economic Update (UEU), examines the benefits of increasing public spending on education to achieve higher levels of human capital, reduce poverty and boost economic growth.
A child born in Uganda today will only be 38 per cent as productive when she grows up as she could be if she enjoyed complete education and full health as Human Capital Index (HCI) suggests. Uganda’s low ranking in the HCI is mainly due to the country’s low education outcomes.
Indeed, a child in Uganda completes 7 years of education by age 18, compared to 8.1 for their regional counterparts. However, actual years of learning are only 4.5, with the 2.5 years considered ‘wasted’ due to poor quality of education.
For instance, only 6 per cent of children in Uganda can read a paragraph at the end of the fourth grade. New policies and higher public investments are needed to improve this performance.
“If Uganda’s population continues to grow at the current rate, the percentage of children going to school will equally go down regardless of investment from the World Bank and other development partners.
“Turning around this situation requires additional resources and implementing key reforms that would put at least a million children in school and improve the quality of learning which would generate significant savings and human capital gains for Uganda,” said Tony Thompson, Country Manager, World Bank.
At 2.6 per cent of GDP, Uganda’s current budget expenditure on education is the lowest in the region compared to Kenya, Tanzania, Rwanda, Burundi which spend between 3.2% and 5.2%.
About $2 billion of additional public funds are required till 2025 to ensure that all children complete primary schools and acquire basic literacy, numeracy and skills.
An additional one million places are needed in lower secondary schools to accommodate this additional intake. These significant financial needs might be halved to $1 billion if solid education system improvement measures are implemented in line with the best international experience.
Such measures include providing better pre-primary learning opportunities for poor children, eliminating repetition and dropouts, reducing the number of subjects taught at secondary schools, optimizing teacher workload, building lower secondary schools in a sustainable manner and increasing value for money from significant private resources already invested in education.
To close the remaining deficit, the Update recommends increasing public spending on education from the current 10 per cent of the national budget to the regional average of 16 per cent by 2025.
“An educated population can help reduce income inequality, promote social mobility and foster social cohesion,” said Richard Walker, Senior Economist, World Bank.
