The passage of the $260 million supplementary budget in January this year has provoked heated controversy in Uganda, for the impact that it inevitably had on the February 18 general elections.

Less discussed than outright political corruption, is the damaging impact that Ugandan politics has on the economy: To win and maintain presidential and parliamentary majority votes, the NRM government has, over the past decade, created 60-plus new districts in Uganda, bringing the total to 112; to reward loyal constituencies and politicians, the Ugandan Cabinet was increased from the 42 allowed by the Constitution to 72.

With Electoral Commission figures showing that President Yoweri Museveni won the hitherto-impossible northern vote, it is expected that the Cabinet will put on yet more weight.

The increase in the number of districts has brought in additional Members of Parliament and Resident District Commissioners — officials appointed by State House.

“The cost of government is very high and it has expanded at the cost of service delivery,” said John Mary Matovu, research fellow at the Economic Policy Research Centre in Kampala.

Dr Matovu says Uganda is at a point where the money it allots for payment of administrators is threatening to overrun that set aside for what they are meant to administer.

The 8th parliament, which is now giving way to the 9th, had 332 MPs, a figure that has now grown to 377 directly elected members — which excludes youth, disabilities, workers, the 10 army seats and ex officio membership.

At 8th parliament rates, each of these MPs will be paid Ush14.5 million ($6,300).

By 2009, Uganda had the fourth highest number of sub-national administrative units in the world, and the highest in Africa.

At the time, Kenya, whose GDP is twice that of Uganda ($25 billion against $13 billion), had only eight such units, compared with Uganda’s 80 before the 2011 elections; South Africa, with a $261 billion economy made do with nine provinces, while Ghana, whose economy was $14.89 billion, had only 10 regions.

As of 2008, Uganda spent Ush18.5 billion ($7.8 million) on the Office of the President, in addition to Ush67 billion ($33.5 million) on State House.

The extra ministers drew a salary of Ush13.95 billion ($7 million), while each of Museveni’s presidential advisors — of whom there are an estimated 70 — drew an annual emolument of Ush48 million ($24,000).

Resident District Commissioners were earning Ush2 million as at 2009, about $1,000, or $80,000 in total, enough to treat at least 63,000 cases of malaria.

Public watchdog Action for Development, Acode, in a 2009 paper argues that while more administrators have been appointed, service delivery in such areas as health (three ministers), education and agriculture (four ministers), has stagnated.

In 2008, Acode points out, 463,631 children sat for Primary Leaving Exams. Out of this number, only 17,021 (3.7 per cent) achieved the Grade 1 pass.

Reduction in child mortality has stagnated at the 2005 figures of 69/1,000, and with 505 women out of 100,000 dying in childbirth, maternal mortality rates in Uganda are the eighth highest in the world.

More than three-quarters of all Ugandans, 77 per cent, are employed in agriculture, but the sector’s contribution to the economy has declined from 50 per cent in the 1990s to 21 per cent currently.

The cost of administration can best be gauged vis a vis the performance of the national economy. 

Following the military coup of 1986 that brought Museveni to power, the country embarked upon radical economic transformation, which saw it move away from a mixed-economy model in which the private sector existed alongside state-supported sectors, particularly agriculture and agro-processing.

The liberalisation that followed, together with rehabilitation, drove economic growth, making Uganda at the time one of the fastest growing countries on the continent.

Says Dr Matovu: “Usually, when a country is growing from a low base, you expect such figures. It has happened in Rwanda and Angola.”

The paradox that vaulting economic growth did not translate into income growth, nor meaningful poverty reduction, experts explain, is due to the fact that it was a recovery growth, hobbled by the fact that Uganda was continuously at war, with the significant agricultural northern region contributing very little to the economy.

This left it to two sectors to drive the growth. Liberalisation of the economy gave impetus to the service sector, as hotels, once under government management, expanded in private hands, tourism returning to the peaceful south and west, while the media and telecommunications were virtually reinvented.

But according to Dr Matovu, there is a limit to what you can secure from services.

Employment in the sector, he says, is limited to a skilled workforce “Telecommunications takes only people with degrees.”

With the return of stability to the south, private investment started rising, particularly in property construction, something that has also begun to happen in northern Uganda.

The sector that would really cement long-term growth in the economy, agriculture, did not grow in the post-SAP (structural adjustment programme) period, and in fact, declined.

The National Agricultural Advisory Services rewards a few well-performing farmers, but its reputation has been badly damaged by the fact that the NRM used it in what was widely seen as an exercise in electoral bribery.

“The focus, if we are to take the Kenyan route, is to get into sophisticated manufacturing, where industry is linked to agriculture. But for now we import processed milk from Kenya.”

To get the economy onto real growth, Dr Matovu says, Uganda should focus on three key things: Improve and put up new infrastructure; expand energy production, which would have to go hand in hand with reduction of electricity tariffs; and reduce production costs.

For years, pundits have argued for the deregulation of business. Compared with Rwanda, which runs a one-stop investment centre, in Uganda, an investor has to navigate through 13 different institutions.

Currently, Uganda’s economic performance is assessed on its macroeconomic status, chiefly the government’s achievements in controlling levels of inflation to single-digit figures, and maintaining the fiscal balance within 10 per cent.

“The question people ask is if at the macroeconomic level the country is performing well, how come incomes have not improved?” Dr Matovu partly attributes this to the widening gap between the rich and the poor — the little the country achieved, has gone into the hands of a few.

The sector that would make the most differences to most people, agriculture, remains hamstrung by the lack of a fertiliser policy, while financial support was axed under the IMF and World Bank-sponsored structural adjustment programme.

The key problem for the economy is that it is not making headway at two consequential extremes; agriculture has been in decline, but manufacturing has not picked up.

A reduction in the costs of production would have to entail a reduction in interest rates, which is where politics meets economics most crucially: “The cost of government is very high,” Dr Matovu says. “If you transferred the cost of government to other areas, you could raise the GDP by 1 per cent.”