Impact of COVID19 on Sustainable Development Goals (SDGs): Early Signs in Uganda.

Impact of COVID19 on Sustainable Development Goals (SDGs): Early Signs in Uganda.

It was refreshing to read the call to action made by Her Excellency Erna Solberg (Prime Minister of Norway) and His Excellency Nana Addo Dankwa Akufo-Addo (President of the Republic of Ghana) who are both Co-chair of the UN Secretary-General’s SDG Advocates on the need to accelerate and deepen global efforts during this Decade of Action to ‘recover better’, and build a healthier, safer, fairer and a more prosperous world especially in the post-Covid19 era. https://www.un.org/sustainabledevelopment/blog/2020/04/coronavirus-sdgs-more-relevant-than-ever-before/

The insights offered in the above blog largely resonate with many countries in Sub-Saharan Africa like Uganda. Owing to the Covid19 pandemic, Uganda has revised down its GDP growth to 3.8% for the financial year 2019/2020 from the pre-pandemic figure of 6%., according to the Ministry of Finance's Performance of the Economy Report for March 2020. This comes on the back-drop of a month long lock-down, curfews, travel restrictions and closed borders (except for trade cargo and merchandise).

Prime Minister Erna and President Nana Addo Dankwa Akufo-Addo in their article talk of prevalence of poverty, weak health systems and lack of cooperation which we have seen manifest at regional level here in East Africa. Whereas the East African Community countries namely Kenya, Uganda and Rwanda imposed lock-down and travel restrictions, Tanzania the second largest economy in the East African region did not take similar stringent measures in its fight against Covid19 pandemic. Tanzania now accounts for more than half of Covid19 cases in the region.  Of Uganda’s 83 confirmed cases since March 2020, 25 of these are cargo transporters from Kenya and Tanzania. This indeed clearly calls for the shared and integrated efforts as proposed by the Prime Minister Erna and President Nana Addo Dankwa Akufo-Addo. We cannot fight the pandemic in isolation.

Prime Minister Erna and President Nana Addo Dankwa Akufo-Addo also highlight the aspect of countries having to reset their priorities, and reallocate resources to deal with the pandemic. Uganda’s government allocated a supplementary budget of Ugx 284 billion ($75million) towards fighting the pandemic in March 2020. https://www.bloomberg.com/news/articles/2020-04-01/uganda-seeks-75-million-in-supplementary-budget-on-covid-19 .The emergency budget funding was allocated to largely the Health sector to fight covid19 and also to the Security and Local Administration sectors to implement lock-down restrictions and other administrative activities in the fight against Covid19 at local government level.

In the absence of a pandemic, these resources would have gone to much need development expenditures in the education and health sectors. The emergency/ supplementary funding accounts for more than 10% of the Uganda’s health budget for the Financial year 2019/2020. This has both short term and medium term impacts on our fiscal position and also implementation of key initiatives towards the SDGs. Additionally, the slowdown in the economy shall affect the country as it implements infrastructure projects in the energy and transport sector that are crucial for SDG7 (Affordable and Clean Energy) and SDG9 (Industry, Innovation and Infrastructure).  

In the subsequent periods, it shall be evident the extent and scale of impact of Covid19 pandemic on renewable energy projects that are largely financed by private capital and or through multilateral cooperation frameworks. There are potential delays on attaining financial close for some of these energy projects and also potential project risks associated with extensions of time and additional costs. This is bound to affect attainment of targets under the SDG7 (Affordable and Clean Energy) in Uganda in the short and medium term.

Uganda has also faced a unique triple challenge along with the Covid19 pandemic. It has also been hit by locust invasion in February 2020 and floods/ heavy rainfall largely attributable to climate change. The rainy season has been longer and the rains have been more intense thus rising water levels in the Lake Victoria Basin that have affected major infrastructure like dams, hydropower plants and bridges. The floods and heavy rains have also affected local communities posing risk on hygiene and sanitation. The locusts have destabilized food security and the livelihood of communities mainly in the East and North of Uganda. These three (Covid19 pandemic, locusts and floods) shall have a negative impact on attainment of a wide range of Sustainable Development Goals including but not limited to SDG1 (No Poverty) and SDG2(Zero Hunger) in the short and medium term. 

Thus the call made by Prime Minister Erna and President Nana Addo Dankwa Akufo-Addo to fight against poverty, hunger and climate change is indeed timely and resonates with countries like Uganda in the post-Covid19 agenda. We hope the UN Secretary-General’s SDG Advocates shall continue to rally players across the board to take bold actions on implementing the SDGs as part of the recovery of the global economy and towards a safer, fairer and more prosperous world.

Author:

Nicholas Agaba Rugaba (REng)

Civil Engineer and Renewable Energy Professional (Dams and Hydro Power), Uganda.

Twitter: @RugabaAgaba

Co-Author.

Ruth Ashley Nansubuga

Monitoring and Evaluation Specialist

On Uganda’s Electricity Supply and Economy.

Dr. Fred K Muhumuza’s Open Letter to the President on “Uganda’s weak and sick economy” in the Daily Monitor of Friday 23^rd June 2017 highlighted the structural challenges related to Uganda’s recent slow economic growth and low demand for electricity. (http://www.monitor.co.ug/OpEd/Editorial/Letter-to-President--The-economy-is-actually-weak-and-quite-sick/689360-3983062-6dmq0iz/index.html) 

I will not purport to be a spokesperson or representative of the President’s Office, but since the letter was an open one, I felt I should add my two cents to the debate on Uganda’s electricity supply and economy at large. Does Uganda have excess capacity today? No. Total available capacity of generation plants in Uganda was 715MW in 2015 according to the Performance Report of the Electricity Regulatory Authority for 2010 – 2015. This available capacity comprises 250MW Bujagali, 265MW Nalubale/Kira Complex and many other licensed independent power producers, small hydro projects e.g 3.5MW WENRECO in West Nile. Apart from the 10MW solar project in Soroti that was commissioned late last year, there isn’t a substantial amount of generation capacity that has been commissioned in the last 24 months. Uganda’s total available capacity is slightly over 750MW. So do we have excess capacity today? No, we don’t. Shall we have excess capacity in the next one or two years when Isimba and Karuma projects are fully commissioned? I guess that is the issue Dr Fred Muhumuza is raising. 

For starters, he posits that we are paying a high opportunity cost for investment in these energy projects. Opportunity cost is the alternative forgone when a choice is a made. If i buy a bottle of beer at Ugx 5,000, the alternative I have foregone is a basket of mangoes or a pack of maize seed, which i could have bought with the same Ugx 5,000. So the question that economists need to help us answer is, the funds invested in the energy projects, if invested in another venture, for example buying meals and milk for all school children in public schools, would Uganda earn better returns on investments and higher multiplier effects compared to investment in Isimba HPP and Karuma HPP? Or to put it clearly, would we prefer government stimulus spending to be on public capital assets like energy projects or on re-current budget expenditure that may create aggregate demand for imports not necessarily locally produced goods? I believe the public infrastructure investment option is a better deal in the medium and long term term. I gather Keynesians (followers of John Maynard Keynes, the famed grandfather of macroeconomics) also believe that when governments choose to spend to stimulate the economy, the efficiency of allocation of these resources in the short term is not the main agenda. The main issue is to get the economy moving, and efficiency is sorted out in the medium and long term. 

The public investment in energy projects has also had strong local content linkages for example the bulk purchases of cement on the local market, transportation and logistics contracts, employment of skilled and semi-skilled personnel on construction works etc. Can we do more as far as local content is concerned? Yes we can. The Buy Uganda and Build Uganda strategy and the implementation of the Local Content Policy can only take us to better places. In this regard, I am convinced that public infrastructure investment is bound to improve productivity and efficiency in the wider economy in the medium and long term despite the minimal turbulence in the short term.

Where will the demand for this electricity come from? Some may ask. Uganda’s population is surging. One million babies are born in Uganda every year, in tandem with our 3% annual population growth rate. Total population is projected to rise to 50 million and 100 million in 2020 and 2050 respectively. This creates more demand for food, medical care, educational services, public facilities etc. This demand is a strong incentive for private firms (milk processors, maize millers, commodity factories etc.) and traders to produce more, increase their production capacity, increase their trade stocks etc. to meet this ever growing demand for milk, cereal, pampers, clothing, corn, shelter, water etc. All these private firms and traders need and or will need more electricity to expand their production capacity to meet production targets, in line with population growth and increased demand. 

The mining industry, industrial parks and regional power pools are strong potential demand centers for this electricity. For perspective, 183MW (Mega Watts) is equivalent to 183 million watts. A watt is a unit of power. The bulb in your bedroom is rated in watts, indicating for example 30 watts or 100 watts. If you run the 183MW Isimba HPP you should be able to switch on 4 million bulbs/lights each rated below 50 watts. Do we believe in the next decade, we won’t have enough households, business premises, street lights, offices etc. to consume this electricity? UMEME, the electricity distribution company indicated 19% growth in customer numbers for FY 2016. The projection is that they will cross the 1,000,000 customers mark in 2017. Year on year growth was 13% in 2014. The demand for electricity is there, and seems to be growing. 

The other key issue around energy projects is their turnaround time! How long, on average, does it take to deliver an infrastructure project, from pre-feasibility, through feasibility and design stages, to construction and commissioning? Industry practice is that depending on size and complexity, this ranges from 4 to 10 years!  This is premised on the assumption that the financing is readily available and the contracting firms are doing an excellent job! With this potential electricity demand, it is only prudent that government runs ahead of the pack, to invest massively in energy and other infrastructure projects. Failure to do so, would indeed create fertile ground for the economy to get sick and weak in the medium and long term.

Agaba Rugaba

Twitter; RugabaAgaba

  

On Timothy Kalyegira and US Mission to Uganda's "A Report to the Ugandan People"

Timothly Kalyegira’s column in the Sunday Monitor of 18^th June 2017 (http://www.monitor.co.ug/Magazines/PeoplePower/-US-embassyUgandans-Chinese-/689844-3974784-kecnc5/index.html)drew my attention to the recently released “Report to the Ugandan People” by the US Embassy in Kampala. Whereas Timothy didn’t not have many charitable things to say about Ugandans (the intended receipts of the report), I agree with him that the report was well structured, clutter less, incisive and colorful. It makes for easy reading and understanding on what the U.S government supported programs are up to in Uganda. 

A few highlights from the report (https://ug.usembassy.gov/our-relationship/report-to-the-ugandan-people/)that covers their last fiscal year (from October 2015 to September 2016), the US government and associated agencies spent $850 million on five key focus areas namely Health, Stability, Prosperity, Justice and Democracy, and Education. Health, at slightly over $500m took the lion’s share, accounting for approximately 60% of the total spend. Stability (which covers defense spending, peace initiatives, refugee programs etc.) came second with $280m accounting for 33% of total spend. The other three focus areas shared the remaining 7% of the total spend in the fiscal year. Other key nuggets in the report are that average age in Uganda is now 14 years, implying that if you sum up all the ages of the 35 million Ugandans and divide this sum by the total population, you get 14 years! This reinforces our position as the country with the youngest population in the world. 80% of our population is below 18 years, and total population is projected to rise to 50 million and 100 million in 2020 and 2050 respectively.

I am not tempted, like my friend Timothy to suggest that our average Ugandan is naïve and clueless, consigned to a life of in-ability to be competitive in the Ugandan economy and the global scene at large. The Ugandan population, and by extension the Uganda government have the right ingredients at hand and or in the pipeline, to harness our potential for full scale production and economic activity to raise millions out of poverty and provide quality social services like health and education. There are two avenues that I believe the US Mission in Uganda and its partner’s may need to engage in and or support in the short and medium term as they work in partnership with the Uganda government to ensure a better and brighter future for all Ugandans.

As noted in the “Report to the Ugandan People”, over 70% of the Ugandan population rely on agriculture for income and food. It is also well known that the majority of these are small holder farmers on small acreage of land, with minimal or no mechanized equipment or technology to boost agriculture production. Whereas the wheat farmer in Kansas, America has access to a futures market, agricultural subsidies, machinery, fertilizer, etc. to boost productivity and quality in their farming enterprise, the average Ugandan farmer is up against the vagaries of climate change, poor farm inputs, high labor and technology costs etc. in their attempt to graduate from subsistence farming to commercial farming. I believe that the US Mission in Uganda can share best practices of the Futures Markets/ Commodity Exchange Markets so that local farmers have supply contracts and are guaranteed good prices for their produce in the short and medium term. This should be a good incentive for local banks and insurance firms to offer credit and insurance products to farmers to boost production. The warehousing initiative, as highlighted in the report is a good place to start. Could it be possible for the US government program to underwrite some private firms to invest in large warehousing facilities at district level, as a first step to decentralized commodities trading and futures market? I believe this would go a long way in building the foundation for all-inclusive economic growth.

 The second proposition is on Energy. The Report highlights some of the energy efficiency initiatives currently undertaken by Power Africa including hybrid solar-diesel power project in Kalangala. There is a multitude of opportunities and projects in the energy sector that would undoubtedly enhance access to electricity and value addition across the country. Renewable energy projects like solar and wind at district level targeting health and education facilities would go a long way in improving service delivery at these social facilities. Small/ mini hydro projects and mini-grids targeting production zones, upcountry industrial zones, commodity processing plants, emerging urban centers etc. have potential for strong multiplier effects across the economy. Power Africa may have to cast its net wider in partnering with private developers and government agencies in harnessing the opportunities for energy supply, distribution and access in Uganda. It is evident that support to both the energy and agricultural sectors , coupled with Government of Uganda’s massive investment in public infrastructure, will yield dividends for the wider population, boost incomes and competitiveness on the regional markets. May be then, US Mission’s “Report to the Ugandan People” will highlight success stories that will be pleasant reading for my friend Timothy Kalyegira.

http://www.monitor.co.ug/OpEd/Editorial/Investment-in--agriculture--energy-will-boost-incomes/689360-3983066-13yy774z/index.html

Twitter - @RugabaAgaba

STATE OF THE NATION ADDRESS 2014; PRESIDENT MUSEVENI WAS SPOT ON.

The aftermath of this year’s State of Nation Address has been characterized by mixed reactions and reviews across the political and social divide. Most of the reviews have been scathing and largely dismissive of the President’s speech as mere rhetoric that punctuated the annual political “ritual”. I think this State of the Nation Address was actually spot on, with fundamental issues and statistics brought to the fore by the President. The address was largely stimulating and insightful on the salient issues in our economy.

For starters, during last year’s address, President Museveni tackled the ten (10) bottlenecks to social transformation for example developing human development through education and health, developing infrastructure, developing the private sector, modernizing agriculture, regional integration etc. In this year’s address, he did a rejoinder to last year’s speech and comprehensively addressed the key sectors of the economy that are key to wealth and jobs creation i.e. agriculture, services, ICT, industry and manufacturing. The context given to the agricultural sector was spot on. The issues of markets, quality, value and returns on investment are integral to our agricultural sector and I think it was insightful to contextualize these issues in regard to both global demand and regional markets for our agricultural produce.

The total headcount/ employment numbers per sector i.e. 841,704 and 2,684,290 for the industrial and service sectors respectively was also an insightful nugget. Youth unemployment continues to be a big challenge in our economy! For long, we have been seeking the head count per sector and the number of jobs created per year. It will be interesting to see the growth in the head count in the next financial year since we now have some benchmark figures for comparative purposes. This is integral to designing the best policies and programs that support inclusive economic growth i.e. GDP growth that creates both jobs and wealth for the wider population.

The other key insight was the number of agricultural inputs e.g. seedlings distributed to households that are engaged in agriculture (68% of total households as per 2002 Census).  This is fundamental since many a household lack the basic agricultural inputs and start-up capital to engage in commercial farming. This thus calls for the need to re-organise NAADs so as to reinforce these efforts to drive both profitability and efficiency in the agricultural sector.

Perhaps the most insightful statistic from the address is the reduction in poverty from 24.5% in 2009/2010 to 19.7% in 2012/2013! For starters, the Ministry of Finance in the Poverty Status Report May 2012 defines poverty as a situation where one can’t afford to buy and consume food worth 3,000 calories per day based on the CPI food basket. That implies that for a household of five, the daily consumption would be 15,000 calories of food per day. But the same report indicates that a sizeable percentage of Ugandans who are not necessarily poor are vulnerable to falling back below the poverty line in case of unemployment, poor harvests, job loss, reduced incomes or challenging economic conditions. The economy has performed below expectation for the last 3 or so years. It would also be interesting to establish the correlation between the 5% average economic growth rate per annum for the last 5 years and the 5% fall in poverty levels of the 5 year period! It is apparent that the population growth seems to be eating into the GDP growth that would buttress poverty reduction and wealth creation. It is in this context that the President’s emphasis on building sustainable agricultural enterprises for both wealth and job creation is key for both the short and long term.

Agaba Rugaba

Civil Engineer and Socio-Economic Commentator

Twitter; @RugabaAgaba