As far as figures go, Ugandans are a lot richer than earlier thought. Forget the usual whining of how tough life is in Kampala new official data concludes that there is more money flying around than we care to notice.
Why some of that money is not in our pockets is a discussion for another day. For now, the frequent transactions we make over our phones, the oil wealth in the western part of the country that many of us are proud of, and the panicky rides we take on the boda bodas – some of the factors that were not captured earlier while calculating economic figures – are partly the reason behind the new growth figures.
After Uganda rebased its economy – more on that jargon later – Gross Domestic Product, the value of goods and services produced in a year, is now at a cool $24.7bn, up from the earlier estimate of $21bn, but less than half of Kenya’s. Income per capita, or rather the money each person earns in a year, is now $700.
These figures do not place us anywhere close to the top 10 economies of sub-Saharan Africa, nor do they even hint at the country achieving middle-income status in the foreseeable future rather, they offer a better picture of the economy.
Rebasing an economy is simply using a different calculation to measure the weight of some economic numbers. It usually looks at sectors that were earlier ignored. For example, if a country such as Netherlands, which has a sizeable number of prostitution rings, decided to rebase, the value of that sex industry would do well in increasing that country’s GDP.
Africa appears to be on a race to rebase its figures. Ghana, Kenya, and Nigeria have already rebased. When Nigeria rebased, it became Africa’s biggest economy with its GDP of more than $500bn, surpassing South Africa. While adjusting the growth figures comes with a few bragging rights, rebasing the economy is usually a big attraction for investors.
In the wake of dwindling aid inflows, many economies like Uganda will now have to look for other avenues, such as rebasing, to attract private funds. Rebasing the economy also helps in luring the informal sectors into the formal bracket. In considering some of the informal sectors while calculating the new economic figures, the government now has a better idea of the areas to tax.
The ministry of Finance now knows all too well what’s happening in the mobile money industry. It is no wonder that the mobile money industry has become a usual suspect for tax revenue whenever the budget is read. Do not be surprised when, at the next budget reading, new sources of tax revenue are announced.
Investors now have better data to work with. One of the reasons as to why some foreign investors have been cautious about channelling their money to Africa is that the region was too small to offer them a good return. That’s no longer a valid reason after a number of economies rebased.
And yet, Uganda has to do a lot more than rebase its economy to convince its citizens that all is well. Rebasing the economy sounds like Mandarin for many people in Uganda who still grapple with the erratic price movements of such basics like rent and transport. There is a need for better data on the micro level, which can therefore be transferred to the macro front for a better picture of a rebased economy.
There is a need for such simple stuff like a property index, that shows clearer movements in land and rent prices. My neighbour in Namugongo is selling his unroofed shell house for Shs 70m, an amount that is so laughable that you would probably pay that amount if he also convinced you that there might be diamonds underneath the 50 feet by 100 feet of land on which it sits.
In Naalya, two fuel stations that are less than 300 metres apart have a more than Shs 100 price variation on a litre of petrol, which has left consumers debating whether this is a price war or a bold attempt to sell adulterated fuel on the market.
The manner in which power utility firm, Umeme, sets the power tariff is being contested. Umeme is said to use wayward assumptions in its methodology that has left many Ugandans paying for a price that is said to be grossly unfair.
Uganda needs to improve its data to deal with all the speculation that is rampant all over the economy, and has left many of us paying unfair fees. Coming up with a property, fuel, and electricity index – areas many of us are closely connected to – would have more credible data for the public and investors than the rebased figures.
Twitter: Jeff_Mbanga, The author is the Business Editor of The Observer
Source : The Observer