Poverty Reduction in Uganda

stimulate Nguyen, Thi Hai Yen Student ID 2012470037 Subject Special topic in introduction-wide development African frugals and politic Topic Uganda The beamy in scantiness reducing for early(a) Sub Saharan African countries Uganda is a landlocked and relative small country in East Africa. aft(prenominal) independence in 1962, Uganda experience a decade of relative semipolitical and sparingal st top executive out front 15 years struggling under the power of Idi Amin who leading the country to conflict and depressd country to a failed state and a collapsed preservation.It stopped by 1986, when Yoweri Mu seveni took power brought a distributor point of sustained economic and political renewal to Uganda. Uganda is a relative naughty of natural resources including fertile soils, regular rainfall, small deposits of copper, gold, and other minerals, and re centimely spy oil. Just like other African countries, exportation of Uganda heavily depends on coffee with 63 per cent of total export revenues of the country. Uganda has been a bright point in Sub Saharan Africa by being the way out 1born country in the region to embark on liberalization and pro- merchandise policies in the late 1980s.Thanks to the right policies, the regime has maintained a s put back macroeconomic environs and sustained hole-and-corner(a) empyrean-oriented reforms that graduated Uganda into a mature crusader in 2006. gross domestic product appendage accele treadd from an average of 6. 5 per cent per year in the 1990s to over 7 per cent during the 2000s. unitedly with the sustained economic growth in the past two decade, Uganda enabled self-coloured need drop-off and some progress towards Millennium developing Goals (MDG).Although other MDGs such as achieving universal primary education, reducing child death estimate measures, meliorate maternal health, combating human beings immunodeficiency virus/acquired immune deficiency syndrome, malaria, and other diseases have been slow, the first remainder of distress reduction has been fulfild success amply in Uganda. In 2009/2010, Uganda surpassed the 2015 MDG of halving the 56. 4 per cent poverty rate recorded in 1992/1993 to 24. 5 per cent. However, in 2011, at a per capita income at 500 USD or 1300 USD in PPP, ranked 203 in the world, Uganda remains a very poor country and far from the oculus income status it aspires to achieve in peerless eneration. This theme in that respectfore reviews the economic background of Uganda examines the trends and patterns of poverty the authorities strategies to reduce poverty and concludes with challenges in sustaining the poverty reduction achievement and policy recommendations. stinting background Table 1. Sectoral contributions to gross domestic product and Growth Rates in Uganda (from 2001-2010) As can be seen from table 1, Uganda remained juicy growth rate during the period from 2001-2009 with 7. 9 per cent in average before cool d admit by 5. per cent in 2010 and 4. 3 per cent in 2011 because of the reduce of demand from the main export markets of Uganda, especially the USA and European countries since the world recession.. In terms of structure, Ugandan economy has a modern structure in which gross domestic product is attributed largest from the work sector, follow by the industrial sector and least by the clownish sector. However, in fact, tillage is the main sector of the economy, employing over 82 per cent of the work force even it contributed only 22 per cent of GDP (2011).The bud force deficit has improved by reducing gradually from 10. 2 per cent of GDP on average during 2000 2004 to 7. 9 per cent of GDP on average during 2005-2008 and reached 5. 9 per cent of GDP in 2011. Uganda remained high domestic investment rate at 23. 9 per cent of GDP, gum olibanum kept the matter debt rate at a safety rate analyze to other countries. However, after a decade remained one anatomy number of inflation, the consu mer prices in the country became worse in 2011 at 18. 7 per cent in 2011.Economic development has been made as the most eventful priority of Ugandan government and the economic policy is focusing on the private sector, attracting overseas direct investment, up(p) access to world markets and on achieving relief from excessive debt. Therefore, it has adopted a number of policy initiatives to skip the economy, including the National Development invention which is the master development plan device for the modernisation of Agriculture, the Medium Term combat Strategy for the Private Sector, the Competitiveness and Investment Climate Strategy, the Poverty eradication Action Plan among others.The trends and patterns of poverty in Uganda Table 2 Number and percent of Ugandans that are utterly poor, insecure non-poor and middle class (from 1992-2010). Table 3 The characteristics of poor, insecure non-poor and bourgeois households Table 4 Inequality based on the Gini coefficient (f rom 1992-2010). Source UNHS confused years and IHS 1992/3 Table 2 indicates that during the 1990s, the proportion of Ugandans whose incomes below the poverty line fell dramatically from 56. 4 per cent in 1992 to 33. 8 per cent in 2000.It meant there were 2. 5 million of Ugandan deal escaped from absolute poverty at bottom 8 years they move to the group of non poor but insecure which join on significantly by 10. 5 per cent. During 1990s, the per cent of middle class in Uganda also flush sharply from 10. 2 per cent to 22. 4 per cent. The middle class own much household assets, are much more educated and put down more money in education quite an than on sustenance items like the poor. The key reason of these trends was annex in average income, rather than by redistribution in rescript.Income inequality was basically decreased from 1992 to 1997, but increased thereafter the Gini coefficient was between 0. 37 and 0. 35 until 1997, but go up to 0. 39 in 2000. After 2000s, Ug anda did not remain the success which was achieved in the preliminary decade, when the proportion of people lived with 1. 25$ a day rose by 5 per cent from 2000 to 2003, meanwhile the inequality also increased which legal profession by the GINI coefficient rose from 0. 365 in 1992 to 0. 428 in 2003, and in urban part the inequality was more clear and increased faster than rural rural area.The trends were primarily driven by the slowdown of the economic when the GDP growth rate dropped from 8. 5 per cent in 2001 to 6. 5 per cent in 2003 and the market-gardening sector which employed mass of the workforce was disappointing when the growth rate fell dramatically by 5 per cent during that period, while the assist sector decreased slightly and the industry sector even performed well up (according to table 1). The slowdown in factory farm relative to other sectors tended to increase inequality in this period, both because the poor are concentrated in agriculture and the share f intentness in the incomes of other sectors whitethorn be quite small. The reasons for the recent patterns include a slowdown in rude growth during the decision three years, declines in farmers prices reflecting world market conditions, insecurity, high population growth rate and morbidity related to HIV/AIDS. The trends of poverty in Uganda changed differently in the next period from 2002 to 2010 compare to the previous time the poverty proportion fell sharply and surpassed the first terminus of 2015 MDGs of halving the 56. per cent poverty rate recorded in 1992/1993 to 24. 5 per cent. Uganda became the first country in Sub- Saharan Africa countries achieved the first goal of MDGs before due date of 2015. However, together with this achievement, the inequality in the country rose which measured by the increase of GINI coefficient from 0. 408 in 2005 to 0. 426 in 2010. It seem aristocratic to explain those two diverse trends because of the growth of economic also lead to the ris ing of income inequality even in the country who have safe(p) social welfare system.The middle class of the country also reached one third of the population in 2010 who was claimed that benefited from small business rather than agriculture sector. The emergence of the middle class will lead to greater pass power and, the ability to invest in the future re flummoxs an opportunity to revivify the socioeconomic transformation process. However, the insecure non poor (42. 9 percent) are other group requiring specific attention, while the fight against absolute poverty continues for 24. percent of Ugandans. Ugandan governments strategies to reduce poverty Uganda is among the very fewer countries which surpassed the MDGs before 2015, especially in Sub- Saharan region. As mentioned to a higher place, over the last 20 years, Ugandan government has implemented a number of policies to jump-start the economy and it has been worked well and lead to the relative high and sustained economic growth rate as well as eradicating significantly the poverty.Among those policies, there were two main programs geared towards reducing poverty which were the Poverty Eradication Action Plan (PEAP), Plan for the Modernization of Agriculture (PMA). First, the PEAP was adopted in 1997 as the framework for addressing the key poverty challenges. The plan was made to footslog the public policies and interventions relevant to poverty reduction. It was highly participatory with the central and local government, the donors, non government organizations, civilized society and economic scholars.The plan was succeeded because it was implemented by the governments budget and a medium term outlay framework. Right after the adoption of PEAP, the public expenditures on basic service were significantly increased in 1997. One part of Ugandan governments budget for PEAP came from the assistance of World Bank and International pecuniary Fund to uphold the low incomes countries develop poverty reduction strategies. The PEAP was rewrite twice in 2000 and in 2005. The latest version was launched in 2005 which aimed at contributing towards transforming Uganda into a middle-income country.The PEAP was based on five pillars (1) economic care aims to sustained relative high growth rate by advance to investment improve infrastructure modernization and commercialization of agriculture, with emphasis on value-addition improve rural access to finance and to strengthen SMEs focus on HIV prevalence reduction (2) Enhancing production, competitiveness and incomes (3) Security, conflict-resolution and disaster management (4) keen Governance (5) human development to strengthen the human resources by improving education system and social health care system in order to improve sanitation, community mobilization, family planning and reduce malaria, HIV/AIDS improve the water supply in urban and rural areas and increase the role of private sector.In implement of the PEAP, the central gov ernment was responsible for ensuring a basic framework of legality, rights and freedom, nondiscrimination among citizens and intervening in the economy to promote economic efficiency, equity and growth, meanwhile the private sector played the key and mobile role in investment the private sector is responsible for the majority of productive investment and it supports public goods for altruistic, cultural or prestige reasons civil society works free from the government to handle to advocacy for the interests of groups who cogency otherwise be neglected support conflict resolution and finance service in sectors not covered by the government and the donors plays consequential role in providing financing public expenditure. Second, Ugandas Plan for Modernization of Agriculture, PMA, was issued in 2000, and it has been implemented since 2001. The PMA is an integral part of the strategies of the PEAP, and contributes directly to two of the quad overarching PEAP goals (1) rapid and sus tainable economic growth and structural transformation, and (3) increased ability of the poor to raise their incomes. The PMA is a framework which sets out the strategic reverie and principles upon which interventions to address poverty eradication through transformation of the agricultural sector can be developed.The tidy sum of the PMA is poverty eradication through a profitable, competitive, sustainable and dynamic agricultural and agro-industrial sector. Rural poverty is seen to be crush addressed through promoting the commercialization of agriculture, and in particular providing a coordinate framework for support services and public goods in rural areas. The PMA philia document sets out these principles, but also identifies priorities for interventions and activities in the form of seven pillars, to be implemented by various government ministries and local government, and a non-sectoral conditional grant. The PMA identifies seven pillars where priority actions are recommen ded.These are (1) research and technology, (2) national agricultural advisory services, (3) agricultural education, (4) improving access to rural finance, (5) agro-processing and marketing, (6) sustainable natural resource utilization and management and (7) physical infrastructure. These two above key programs succeeded in helping Uganda surpass the poverty reduction goal in MDGs. However, Uganda is still very poor country and is still approach with many challenges from internal as well as external factors. Thus, the Ugandan government has launched a new policy framework, the National Development Plan as a response to the success of the PEAP in poverty reduction.It continues the vision of poverty eradication and more focus on economic transformation, copiouses creation and equally distribution in order to transform Uganda society from a peasant to a modern and prosperous country within 30 years. Due to the limitation, this make-up just analyzes the two main programs which helped reduce poverty from 56. 4 per cent in 1992 to 24. 5 in 2010 and in brief introduces the new strategies of Ugandan government in the next period. Conclusion and recommendations What Uganda economy has achieved is outstanding among Sub-Saharan Africa region, however, Uganda is still among the poorest countries in the world, the income per capital ranked 203 in 2011 and the inequality has been raising which means majority Ugandans still live in bad and vulnerable condition. 0% of the workforce is working in agricultural sector which contributed only 22% of GDP and the sector easily get negative impacts from climate conditions or the reduce term of trade. Therefore, the Ugandan government needs to take action to sustain the poverty reduction, create more equal opportunities for citizens and improve economic performance. The country could learn from experiences of South Korea, which experienced one of the most dramatic declines in absolute poverty that the world has seen. Compare to So uth Korea in 1960 when South Korea started its industrialization, Uganda economy at present is in a best(p) status. At that time, South Korea was destroyed by the Korean War, high absolute poverty rate, in the 1950s the majority of Korean people lived in absolute poverty.Even as late as the mid-1960s, between 60-70 per cent of the population was estimated to be living in poverty. The area of Uganda is about 2. 4 times bigger than South Korea with relative rich natural resources. Moreover, the official language of Uganda is English which is very useful and blue to do business abroad. Thanks to the economic transformation, since early 1960s, Korea has been able to achieve rapid growth with equity, and by the mid-1990s, the absolute poverty had dramatically declined to levels as low as 3. 4 percent of the population. Indeed, by 1999, the Korean averages for poverty in single person households was comparable to other OECD countries.There are number of lessons that Uganda can learn fro m South Korea on its development path fully utilize the foreign aid which highly supports government expenditure for education, improving health care system, infrastructure encourage domestic savings and private domestic investment the government intervention needs to be lively and relevant to create stable macroeconomic with a favorable environment for private investment growth with job-creation, initially led by labor intensive export promotion highly invest in development human capital especially primary and secondary education for better educated labor force create favorable environment for foreign direct investment with careful collective technology which can spillover to help develop the domestic industry later on In brief, human capital and technology should be more focus to achieve growth in the long run.Being a latecomer, Uganda has chance to learn from successful economic development model, but the model should be modified to adapt the site of the country and avoid fai lures of the early comers. References CIA World Fact book (2011), Uganda, https//www. cia. gov/ program library/publications/the-world-factbook/geos/ug. html, accessed on 7th October. International fiscal Fund (2005), Uganda- Poverty reduction strategy constitution, IMF country paper No 05/307. International Monetary Fund (2010), Uganda- Poverty reduction strategy paper, IMF country paper No 10/41. Government of the Republic of Uganda, Plan for modernization of agriculture eradicating poverty in Uganda. Jeffrey Henderson, David Hulme, Richard Phillips, and Eun Mee Kim (2002), Economic governance and poverty reduction in South Korea.John Mackinnon, Ritva Reinikka (2000), Lessons from Uganda on strategies to fight poverty. Ministry of Finance, Planning and Economic Development (2012), Ugandan government, Poverty status report. The World Bank, Uganda Country at a glance, http//www. worldbank. org/en/country/uganda, accessed on 7th October. 1 . The World Bank http//www. worldbank. o rg/en/country/uganda. 2 . Ministry of Finance, Planning and Economic Development (2012), Ugandan government, Poverty status report. 3 . 4 CIA World Fact book 2011 https//www. cia. gov/library/publications/the-world-factbook/geos/ug. tml 5 . Uganda Poverty reduction strategies paper, IMF country paper (2005). 6 . Uganda Poverty reduction strategies paper, IMF country paper (2005). 7 . John Mackinnon, Ritva Reinikka (2000), Lessons from Uganda on strategies to fight poverty. 8 . Ministry of opposed Affairs of Denmark (2005). 9 . Government of the Republic of Uganda, Plan for modernization of agriculture eradicating poverty in Uganda. 10 . Uganda Poverty reduction strategies paper, IMF country paper No 10/41 (2010). 11 . Jeffrey Henderson, David Hulme, Richard Phillips, and Eun Mee Kim (2002), Economic governance and poverty reduction in South Korea.