Shs 68 Trillion Economy

On Nov.28, the Uganda Bureau of Statistics (UBOS) announced a 17.3% growth of Uganda’s economy following the rebasing of the country’s Gross Domestic Product (GDP).

The agency in charge of compiling statistics for the government says, using 200910 as the new base year, Uganda’s economy is now worth Shs 68.4 trillion and is being driven mainly by the services, agriculture and manufacturing sectors. But Uganda’s GDP per capita is still short of the lower middle income threshold of $1,000.

Rebasing refers to the substitution of an old base year (in this case 2002) to compile volume measures of GDP with a new and more recent base year.

Rebasing of GDP is necessary because economies are essentially dynamic–they grow or shrink, and new sectors emerge with new products and technologies while consumer behaviour and tastes change over time.

The compilation of the data in developing the 200910 base year estimates significantly improved the coverage of economic activities in the economy especially for the informal sector and non-profit institutions.

Benchmark surveys and studies were undertaken for the 200910 period, which provided more comprehensive data in providing information on the economy and industry structures identifying new products and activities thus providing more accurate estimates for the activities.

Samuel Echoku, the head of national accounts at UBOS, recently told The Independent that besides utilizing the freshest national population census figures, the Bureau used the base period of 200910 since UBOS had carried out an agricultural census in 20089 and the livestock census in 2008. It also carried out the household survey in 200910, the non-profit institution survey in 200910, the Uganda business inquiry of 200910, and had secondary data sources from the government– Ministry of Finance and Bank of Uganda among others.

Rebasing, he noted, is supposed to offer a clearer picture of the size and structure of the economy by including new economic activities, which were not previously captured. It is also useful in ensuring that national accounts, statistics and figures reflect the actual situation of the economy.

“The recommended period is at least five years. If you have a long time between the reference period and the series, you miss out on many things which happen in the economy,” said Echoku.

Countries measure economic activity using GDP — the total monetary value of goods and services produced within the country over a period, usually a year.

It requires the national statistical agencies like UBOS to carry out a survey of businesses in different sectors and allocate weights to each sector based on the importance to the economy in the base year.

Until recently, Uganda used a base year of 2002 but since then the structure of the economy has significantly changed.

Although petroleum production is yet to begin, UBOS noted that activities surrounding the discovery of oil eight years ago had contributed to the changing economic position.

Mobile phone services such as mobile money have since been introduced and grown exponentially, more banks and telecommunications players have entered the market, and there has been a heightened increase of foreign direct investments mainly into the extractives, manufacturing and the services sector.

In September, Kenya revalued its base year from 2002 to 2009, which saw its GDP rise by 25%. The GDP revision also confirmed Kenya’s new position in the middle income category.

However, Uganda’s improved statistics do not mean that Ugandans are better off economically, rather their status quo has been more accurately defined, a fact not lost on Maria Kiwanuka, the minister for finance and economic development.

“Our task is to make sure that the 17.3% comes off the paper and is felt in the people’s pockets,” she said recently at a forum to celebrate 50 years of the Uganda–Germany cooperation.

Echoku agreed saying rebasing the economy only means that an individual’s welfare is much higher than what was originally estimated.

“Our GDP was revised upwards by 17.3% in 200910 but the census also recently revealed that the population is actually much lower than what we expected by almost two million people,” he said.

“An increased GDP and lower population imply that on average, the per capita GDP is much higher Ugandans are richer and better off than what we had originally expected.” Lawrence Bategeka, an economist, says rebasing of a country’s GDP is meant to neutralize the time and money element and present the most current picture of a country’s economy.

Although income inequality is still big, the quality of life the people are living is not as bad as is often portrayed, he said.

While the UN Statistical Office recommends that countries base their GDP calculations on a year within the last five, only ten African countries have managed to meet the criteria. The Ugandan process illustrates the complexities of rebasing but it is not yet over.

Echoku said since the East African Community Member States are heading towards a monetary union, the countries have agreed to use 2015 as the newest base year. As a result, UBOS expects to rebase Uganda’s GDP by 2017 using the 2015 rebased GDP figures.

Uganda has already committed to the EAC agreed-upon economic performance criteria that require a fiscal deficit, including grants as a percentage of GDP of 3% presenting value of public debt as a percentage of GDP of an utmost 50% as well as the revenue to GDP ratio of about 24%.

Source : The Independent

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