In failing to create Jobs, we risk sacrificing our economic potential to instability and disorder
At The Independent we called it last week – that the key thrust of U.S. Government policy signals and message to Africa as reflected in President Obama’s visit to the 6th Global Entrepreneurship Summit would be the key Jobs Imperative. (Refer to: “After AGOA, GES shouldn’t be another missed opportunity” – The Independent July 22).
Rounding up the Africa visit in on July 28, President Obama in his speech to the continent talked about and dwelt on corruption, democracy, term limits and human rights – but it was clear that these variables were the ecosystem for the Jobs Imperative.
President Obama told African leaders present including our own President Yoweri Museveni what we now know – that in failing to create Jobs, we risk “sacrificing our economic potential to instability and disorder”.
The wrap up of the Africa visit in the Ethiopian capital, Addis Ababa, was not by accident. On the one hand while the Kenya visit had heavy undertones of a homecoming, President Obama and his delegation chose Ethiopia deliberately – a choice helped by the fact that it is the headquarters of the African Union (AU) – an obvious place to make a US Africa policy address.
Ethiopia has generated and continues to register an ‘infrastructure policy driven’ double digit growth rate year-on-year over the last decade or so – and is not slowing down any time soon.
In Africa, Rwanda, Ethiopia, and Kenya are also the only one of a select group of countries effectively using the traditional economic variables of energy and infrastructure – with an emphasis on the planning function.
Depending on what these three countries do next in how and when they engage the next gear for ‘Jobs creating Growth’ – they will be on the path to becoming net importers of jobs; that special zone of country economic activity where the phrase ‘economic expansion’ is used .
But that is a whole other subject for another time and unfortunately Uganda is still trapped in the defunct Washington Consensus ‘stabilisation’ policy matrix -trying but unable to break free.
In the speech to Africa , Obama pointedly referred to the clear and present danger as well as opportunity in Africa’s relatively large and young population .This is the so called ‘population or demographic dividend (my words) .He (Obama) said that Africa’s population presents opportunities – but without Jobs we might end up like the Middle East where the large and young population – without jobs has only the created anarchy, strife, and instability we currently are witnesses to.
Specifically he said the obvious – that Africa must create Jobs for its next generation (the current generation is also jobless) – that we must prioritise “creating jobs and opportunity”.
For the avoidance of doubt, the entire purpose of government in the leadership function anywhere is to engineer policies which create Jobs and Opportunity – and nothing else.
The democratic process, founded in constitutionalism, just provides the framework for contending policies which promotes and allows the jobs and opportunity ecosystem to be stable.
I know some clever Ugandans will point at Greece – where the democratic process is operational and founded in constitutionalism – but what happened?
The quick answer is that the Greeks themselves (like Ugandans) conduct economic policy on the short end of the yield curve , and send out signals of high risk on their own economy. The policy signals for domestic savings in Greece collapsed a long time ago and what they are left with is ‘Greek pride’ which on its own is worth nothing in the bank. In short, Greeks have no confidence in the management and future of their own economy -and in consequence do not invest enough to create enough jobs to keep the economy on an even keel.
But these notes are about US Government Africa Policy and how we respond.
Uganda has for the past 25 years been following a growth model defined by the AID-driven ‘Stabilisation Measures’.
Indeed the early PEAP frameworks and subsequent revisions which I participated in 2002-2004 mention ‘Jobs’ only grudgingly – the focus being on “halting economic decline”- which has been achieved.
Even President Museveni has often carefully and correctly described Uganda’s ‘achievements’ to date as “Minimum Recovery”.
Today it is clear that we have not understood the Jobs Imperative as a target of broad economic policy. In the developed world, jobs are a direct – not indirect target of broad economic policy.
Our Monetary Policy and Fiscal Policy continues to tip-toe around ‘Jobs’ – on the one hand that it is a ‘free market’ and that the labour issues in the labour ecosystem should not interfere with ‘investor imperatives’.
On the other hand we have serious attempts by the Labour Ministry in Uganda to ‘create’ ‘millions of jobs’ – outside any visible sustainable or coherent domestic policy framework.
Fortunately the narrative of economic development practice has long shifted from analysis of the problems and challenges during the last five development decades, to the development of policy driven solutions and policy options.
Today, there is no problem in development finance or development economics which has not been resolved already somewhere – the Jobs Imperative and Challenge is no exception.
It is difficult yes, but definitely not impossible to manage and address it with the appropriate policy tools.
So how does Uganda resolve the Jobs Challenge? The first answer lies in policy – both Fiscal Policy and Monetary Policy must and can manage the jobs challenge directly and not indirectly. There is no solution outside policy directly targeting jobs. Hoping for natural resource windfalls is not a solution.
Is our current monetary and fiscal policy ecosystem ‘Jobs Compliant’? The answer is an ambiguous no.
It is clear that while our monetary and fiscal policy framework was suitable for halting economic decline immediately after 1986, by the mid-1990s, we were ready to engage the second policy gears of jobs creating growth – but we ‘powered on’ with stabilisation measures – even when the economy was already ‘stabilised’ and crying out for the strengthening of the yield curve.
President Obama says it is ‘urgent’ that we begin to ‘prioritise jobs and opportunity’. We have always known this – because the Ugandan household preoccupation with education is so that our children obtain – or create jobs.
So the first thing to do is to ‘rejig’ our Monetary and Fiscal Policy Framework so that it becomes and is a ‘signal for Jobs and Opportunity’.
Currently our Monetary and Fiscal Policy Framework is a signal for the management of the AID-ecosystem, otherwise called poor quality Foreign Direct Investment (FDI).
But what do we do with this entrenched AID ecosystem which has spawned an entire industry of ‘stabilisation disciples’ of ‘Jobless Growth’ over the last five development decades?
The fact is that the AID framework has its uses in any economy – but it must not crowd out quality FDI – which it does right now.
I have written elsewhere that AID is by definition and origin an ’emergency product’ – never meant cause development.
Fortunately new literature ( including by American Economist Jeffery Sachs] which generated the movement to replace the AID driven Millenium Development Goals (MDG’s) with ‘Sustainable Development Goals (SDG’s) effectively puts AID where it belongs – as an antidote for emergencies (my words) .
The Washington Consensus is also dead – but someone in Uganda should officially make the announcement so that its disciples in our policy infrastructure adjust in the direction of more planning and domestic resource mobilisation.
This will help reposition the National Vision Program and the National development Plan Frameworks at the centre of monetary and fiscal policy.
Currently this Vision (Vision 2040) and ‘Strategy’ Documents (NDP2) remain just documents.
In fact NDP2 is not even the strategy document it is supposed to be for implementing Vision 2040- it is a smaller version of the wish-list which Vision 2040 is.
As mentioned in my previous article, the National Housing and Population Census data becomes extremely valuable if we must move into a ‘problem solving mode’ as required by Prof. Jeffrey Sachs and the new SDGs dispensation.
On this note it appears our recent ‘National Census’ exercise must be also be refreshed for compliance with even the SDGs.
The Jonam have a saying: “Ka pe imako rec, dok cen inam”. In long- speak this means that if you fail to catch fish one time, repair your canoe, go back again to the lake, and drop your net at a different location.
For our country specific growth models in Uganda and Africa, ‘creating jobs’ means catching fish by constantly dropping nets in different locations for the best catch.
To the extent that we have not done well with job creation we must go back again to the drawing board – after repairing the canoe (policy) and the fishing nets (policy signals).
While there is no need to change the fishermen (policy makers) – there is need to constantly and periodically adjust the roles they play as policy champions at various levels.
President Obama has offered American support to all African countries in this new problem solving approach to our challenges
With a perhaps a ‘competitive dig’ at China on their Africa infrastructure position in relation to job creation, President Obama has also offered Africa partnership in the new Africa jobs creation initiative.
Curiously though, the U.S. delegation signed bilateral agreements with Kenya on Transportation – specifically the 1700km LAPSSET Corridor where China is already signed on to finance Lamu port and the Standard Gauge Railway (SGR) to Juba, South Sudan.
What is important to note here is the corridor – the 200m wide alignment of LAPPSET- all the way to South Sudan.
The clever Ethiopians will be supplying the electricity to power LAPSSET/ SGR – rendering the rail, pipeline roads and airport corridor on both sides of the alignment ‘a hotbed for and of investment’.
It appears this corridor is where the Americans have set their sights to invest and it is projected that LAPSSET shall contribute up to 5 % of Kenya GDP.