Monday, May 6, 2013

Uganda's Middle Class, China and the Neo-Liberal Project.



 On Kalyegira's Uganda's Middle Class, China and the post-1986 Neo-Liberal Reforms.
Timothy Kalyegira’ s Uganda is a classless society in this week’s The Sunday Monitor is his latest jibe at Uganda’s emerging middle class. He finds fault in the consumption tendencies of this emerging middle class punctuated by wide spread adoption of mobile phones, internet usage, number of cars on our roads etc. He goes further to state that many an African fall short on the middle-class bar as measured by income, attitude, education, personal confidence and intellectual inquisitiveness.
It goes without saying that Kalyegira has been quite unfair in bashing the emerging middle class in Kampala and many upcountry urban towns; Gulu, Arua, Fort portal, Jinja, Mbale, Mbarara etc. Furthermore, he continues to divorce our Ugandan and indeed African historical context from this middle-class phenomenon. This context is defined by two angles; first, the colonial and neo-liberal reforms orchestrated by our former colonial masters and secondly the growing influence of China itself on Africa and Uganda in particular.

Robert Skidelsky, (the famous biographer of Lord John Maynard Keynes) while making a keynote address at the London School of Economics at the launch of his book; How Much Is Enough? Money And  A Good Life, noted that until recently, economists envisaged three stages of economic development. First was the Age of Capital accumulation started by the industrial revolution. The second stage is the Age of consumption; and this is the age where people enjoy the fruits of their frugality. Stage Three (3) is the Age of leisure, also known as the age of abundance.
During the first stage (Capital Accumulation), society saved up a large portion of their income to invest in capital goods and equipment. For Africa, and Uganda in particular, it is important to note that the era of capital accumulation was also the colonial era. So a lot of the capital goods and resources were in the hands of the colonial entities and foreign business firms. From banking to insurance to coffee and tea export, sugar production, manufacturing, electricity generation, construction and real estate etc., the bulk of the capital goods in these lucrative sectors were controlled by the colonial government, tribal chiefs, Asian businesses and foreign firms. This was not by chance. It was by design. The colonial establishment designed and preferred the architecture of our economic system this way. 

So all through Uganda’s early stages of capital accumulation, the indigenous or average Ugandan was sidelined both systematically and technically. Even after the end of colonial rule, there was little or no major effort to design a new paradigm on the allocation of resources and capital goods in the Ugandan Economy. Idi Amin’s expulsion of the Asian and British nationals and Sir Apollo Milton Obote’s The Common Man’s Charter could be seen as attempts at empowering the average Ugandan with the capital goods and the key factors of production. However, the results from the two approaches were not the best. This is best told by Charles Onyango-Obbo in his book Mixed and Brewed in Uganda. He notes, “By 1976, four years after the expulsion of the Asians and the flight of the large European expatriate community, Uganda was near economic waste land. The shelves in the shops were empty, the industries were run down and unemployment was high. Indigenous folks had taken over the bungalows and mansions that belonged to the Asians and the Ugandan middle class that had been forced in exile by persecution. Many of the new property owners had been peasants yesterday, and even those among them who were not had nothing to help them maintain a modern urban lifestyle. To make ends meet, many started growing maize, tomatoes, and potatoes in once manicured lawns in leafy suburbs. Then they brought in goats, chicken and even cattle.”

It is evident that all through the colonial and post-colonial periods, the average Ugandan was at the bottom end of the economic pyramid. Furthermore, the design of the economic system was indeed intended to dis empower the local Ugandan and it is no surprise that the post 1980 neo-liberal reforms indeed served to buttress economic marginalization and dependence. The Ugandan had to stay at the consumer end of the economic cycle with little or no empowerment to have an input. The neo-liberal project created a critical mass of elite corporate workers with jobs in banking, finance, government, manufacturing, media, telecommunications, real estate, transport etc. thus easing the pressure on unemployment in the early 1990s. It is only natural that this Ugandan corporate class with meager resources and no access to capital goods, would prefer consumption to the frugal saving for future investments. 
Globalization also offered wealthy individuals, firms and business in western capitals and stock markets an opportunity to venture into the virgin African markets for cellphones, internet, fabrics, electronics, cars, cereal, construction etc. The foreign firms that  set up shop here in the early 1990s did not only transfer capital that was looking for a healthy return on investment but they also transferred skills, technology and more importantly work cultures and lifestyles. A Sales Representative of a bank or telecommunication company in Kampala was expected to look and act the part like a sales executive in London or Johannesburg. 

China has also played a role in the creation of this “shallow” middle class in our humble Uganda. Deng Xiaoping, the post – Mao leader of China, famed for leading China to a market economy is known  to have famously stated that “to be rich is glorious”. He encouraged people to start businesses and accumulate wealth and capital. This approach bred the “Fast Growth and Quick Money Culture”, amongst Chinese entrepreneurs, firms and the general population too. Dr.Fang Yang, one of China’s most widely known economists and Director of the National Economic Research Institute,   in a BBC Documentary; China An Insider’s View notes that the lure of quick money is also part of the first stage of economic development.  Dr. Fang argues that the first generation is mainly interested in making money and the lure of quick money is high, the second generation is more interested in public issues, public goods and services and the third generation is more into academic issues ,intellectual curiosity, science, technology etc. He believes the Chinese will have to go through all these stages of economic development. More and more Chinese individuals and firms are increasingly thirsty for capital goods, money and wealth. This lure for quick money explains China’s approach to capital accumulation and wealth creation. China has adopted the low-cost-mass-production paradigm for fast growth and quick money. This low-cost-mass-production approach in China and the hunger to double their capital and wealth in the short term has made it possible for Uganda’s peasantry and middle class to access a wide range of cheap but poor quality consumer goods (the buy-one-get-two-free-type-of-goods) in shops and retail stores. To feed this hunger for fast growth, quick money and capital accumulation, China continues to make in-roads in both Africa’s markets and resource fields. The East African May 4-10 2013 carries a report on China’s $11bn worth of investments in East Africa in the last decade. 40% of this went to Uganda alone in form of infrastructure projects and direct investments. China’s cocktail of market ideology and nationalism is in stark contrast to the neo-liberal gospel preached by the western powers; USA and EU. China combines market ideology with nationalism and central planning. This is not the case with most African countries and Uganda in particular.
 
With Globalization, it no longer matters who owns and or controls the capital goods. Capital will always follow the markets and consumers. (At least that is what we’ve been made to believe). As President Museveni has noted before, a factory in Uganda owned by an Indian or Arab investor is indeed considered a Ugandan factory! The reality is that we are deficient on a critical mass of Ugandans with the desired competences, attitudes, capital goods and technology to compete both regionally and globally in regard to design, development and production of goods and services.  
One could make the argument that unlike the Chinese, our Ugandan society and economic system tend to discourage communal economic links and social groupings that would ideally be more efficient in capital and wealth accumulation. Furthermore, there isn’t much incentive for savings and investment in our economy. The interest rates on savings accounts with financial institutions or return on investment on small enterprises are quite slim. Ugandans have indeed cut their losses and moved on to the consumption stage, with or without strong savings, investments or capital goods.

Robert Skidelsky further offers insight on the conspicuous consumption tendencies evident in both the developed world and Africa’s emerging middle-class too. “Having more seems to make us want more or different; this is partly because we are by nature restless, easily bored. This is because wants are relative, not absolute; the grass is always greener on the other side. The richer societies become, the more individuals in them feel their poverty to others. There is the bandwagon effect, when we want goods because other people have them, and then the snob effect when we want goods because other people don’t have them.” 
I guess the historical context and our inherent desire for more and more explains the consumerism culture exhibited by our emerging middle class in Uganda.

Rugaba Agaba