Thursday, February 23, 2017

ARE UGANDA’S DEBT NUMBERS WORRYING?

In the last five years or so Kampala Capital City Authority (KCCA) has been laying tarmac on the roads around my home. Their work is extensive that between home and work my exposure to unpaved road is at most 100 meters most of which is within our communal compound.

This development means travel time to work has been from 30 minutes to just under 15 minutes without traffic, it has reduced visits to the mechanic considerably and beyond raising the average property prices has served to increase the economic activity in area. New construction, schools, shopping centers, bars are among the economic activities that have either sprouted up in the area or been boosted by the new paved road network.

Our own health serves as a good analogy for the health of economies. An economy is only as dynamic as the coverage of its transport network. The easier people and goods can get around the more efficient the economy is and therefore the more work that is done.

Since the body’s basic circulation infrastructure is laid out from birth, improving transport and communication networks can be analogous to how much water we take in. Adequate water intake means circulation is eased as waste is evacuated and build up of cholesterol and other blockages is minimised. Improvements in circulation show themselves in our lives in increased vitality and less ill health.

We have forgotten that when the roads are bad you cant move and the economy cannot grow.

"An indication of how far behind we are on average a middle income nation had at least 88.74 km of paved road for every 1000 square km of land area. In Uganda assuming about 4,000km of paved road our equivalent figure comes in at 16 km for every 1000 square km...

Averages can be deceptive but this means we need to increase our stock of roads at least five times to get to middle income status.

The 1970s and 1980s when little to no new roads were laid means that we are playing serious catch up and the need for speed is of the essence. And this goes for all other infrastructure – power generation, railway and water transport. Only in telecommunications are we ahead of the curve given international averages.

In appreciation of this deficiency government has gone out on a borrowing binge to finance the infrastructure development.

The Karuma and Nsimba dams will account for almost $3b between them, the standard Gauge Railway another $9b , this before you add all the road developments going on around the country which can account for easily another few billion.

The concern gaining momentum is how will pay for all this. Valid concern.

Given my localised experience it is clear that increased economic activity will follow their commissioning, and with increased economic activity the debt repayment sums will not look as daunting as they do now.

A sh500,000 monthly loan repayment requirement when you have sh2.5m salary looks more manageable when your salary doubles.

In 1986 our total debt was $1.4b which was more than half the GDP at the time and more than 3.5 times our export receipts. In that year we had debt repayment obligations of $45m. Today according to the latest IMF figures we estimate debt repayments will come in at sh1,682b or just under $400m this against exports of $2.7b.

But concern is in order given stories of over inflation of costs on all our major projects currently under way.

"If we do not get value for money for this infrastructure projects whether they come in at too high a cost or don’t deliver as they are supposed to, they may not generate the increased economic activity required to pay their way...

Even though I may be comparing oranges with fene, I choose to be optimistic about our prospects.
Between 1992 and 2011 China spent almost nine percent of its GDP on infrastructure development the net result of this – in addition to other things of course, is that the economy grew seven fold.

One, given our infrastructure deficit we are already underspending and secondly, that this sustained infrastructure spending will have to go on for at least another decade if China’s experience is to be considered.

Everyone wants to go to heaven but no one wants to die. The current cash crunch has a lot to do with our huge outlays on infrastructure. As they begin to come on line we can expect that more cash will start to flow.

Using China again, a graph of GDP against time shows that from 1978 when Deng Xiaoping declared “I don’t care whether a cat is a black or white one as long as it catches mice” to launch the country’s economic miracle it took 14 years up to 1992 before the graph got off the floor. During that time they were laying the foundation in infrastructure, training their people and getting over their communist hangover.


The process of development does not follow an exponential curve, at least at the beginning. 

Wednesday, February 22, 2017

MAKING OUR EDUCATION MORE PRACTICAL

Its examination results period. The anxiety among parents and their candidate children is at fever pitch.  A single line on a list will mean the difference between getting a “good” school, university or not. If the result is outstanding a trip via the newspaper for the now traditional mug shot is worked into the plot.

While distinctions and As are flying around like they are going out of fashion, increasingly the question is being asked about the products of our educations system.

Employers are tearing out their hair at how intending employees can barely read, write or count.
So somewhere outside the traditional  nursery-university path, we are looking to skilling people with practical skills that will make them employable on sight or even better, turn them into job creators rather than job seekers.

Which is all very nice but what about the bulk of the potential paper pushers we are ramming through our education pipeline, what can be done for them?

"First off as was pointed out to me a while ago, it is good that we are pushing out thousands of graduates a year regardless of the credibility of their scholarship. That even if we had thousands of graduates of the most mundane subjects ( I am not naming names), this army of job seekers have at least learnt the discipline of subjecting themselves to a higher authority, working to a time table and even seating still for an hour at a time. Invaluable skills for an aspiring industrial nation...

When you think about it or if you have ever been in a pre-school class you will appreciate the point.
Industry requires people who can take instruction, adhere to a laid out schedules and have some level of self-drive.

The British did not try to be too clever. They set a curriculum for us, which emphasised reading, writing and arithmetic. A solid foundation for higher learning and really all one needs – even today, to get by. Of course they then added some higher learning, which was exclusive well into the 1990s.

The thing with this kind of education is that it is based on rote knowledge, you are encouraged to cram predetermined facts.

But in the real world all questions are ambiguous, while they may require a solid knowledge base, they often require more creativity, team work and goal setting skills.

So for example you go into a history and they want to know when Vasco da Gama rounded the southern tip of Africa (1497) or in geography what kind of mountain the Rwenzoris are (block) or knowing that the complementary angles in aright angled triangle add up to 90 degrees (do you remember that?)

"But life’s questions are more open ended where there is often more than one answer and all of them correct....

So for instance in the work place an understanding of the office dynamics, historical and market context mean the answer to the question “How do we achieve 20 percent growth in sales?” can go in any number of ways.

Experience helps, but wouldn’t it be useful if our graduates could do more than regurgitate sterile facts maybe have the personal initiative, mental agility and intestinal fortitude to take on life’s challenges?

Going back to the British. Once they had churned out the cream of the readers, writers and counters they sent them to schools modelled after their own public schools in the UK.

Apart from teaching higher reading, writing and counting skills these schools singular characteristic was there extensive extra-curricular activities roster – sports, music and social clubs.

Beyond keeping hormones from running amok, sports for instance teaches concentration, team work, goal setting and performing under pressure, invaluable skills in the real world.

But also, all sport is an open question.

Will you win, lose or draw? How will you play? Who will play? How will we react to the opposition? The pitch? The crowd?

"In an increasingly competitive environment knowing how to read, write or count better than the next guy just won’t cut it....

You need the softer skills that are better taught on the playfields or camping site or in the choir.

To the extent that we are not doing this enough for our children is the extent to which our education system – the government, schools and parents, is letting us down.