VENTURES AFRICA – Following the lead of Nigeria, Africa’s largest economy, and Kenya, the Government of Uganda has released updated figures that raised the country’s GDP by 13.1 percent from 63.9 billion shillings ($24.7 billion) to 68.4 billion shillings ($26.9 billion) for the fiscal year 2013/2014.

The new figures, which came as a result of changes to the base year from 2002 to 2009/2010 will provide the basis for more accurate economic indicators that are crucial for evidence-based policy making and will reveal the contributions of more economic activities in the economy, especially those from the informal sector and non-profit institutions.

The most significant implications stemming from this development, however, will be on the economic size of the East African Community (EAC) as Uganda is the third out of five member states to revise and rebase its GDP. In September, the rebasing of the Kenyan economy – the largest in Eastern Africa – resulted in a 25.3 percent increase of its GDP, and Tanzania has taken the first step in releasing a preliminary estimate of its rebased GDP for 2007 of 27.8 percent. When all this is considered together, the size of the East African market could be as much as 20 percent larger than previously thought.

In line with this, the regional GDP of $110.3 billion for 2013 earlier cited by the EAC secretariat may be upgraded to $134.9 billion when the rebased figures for Kenya, Tanzania and Uganda are fully factored in. These new figures would definitely prove compelling to domestic workers, foreign investors and the entire international community.

Uganda has also seen a transition with respect to national accounting. The accounts are now classified according to the International Standard Industry Classification (ISIC) Revision 4 as opposed to ISIC Revision 3 for the 2002 base series. Under this new accounting regime, there has been a number of notable shifts such as the decline of the contribution from industries – from 26.6 percent to 20.8 percent – because of the revaluation of the contribution of construction. Contrariwise, manufacturing, a sub-component of Industry, rose from 8 percent to 10 percent while Agriculture and Services increased slightly.

As is usually the case with GDP rebasing in Africa, GDP per capita has moved up from $697 to $788 under the new base year, but this neither implies a higher standard of living nor a reduction in the poverty rate. The new figures will merely alter the values of macroeconomic aggregates, like the ratio of tax revenues to GDP, where the GDP is used as a denominator.

This is a big win for Uganda, the EAC and Africa, but it must be kept in perspective, and efforts to further push the continent forward in its economic development trajectory must remain consistent and targeted.

Source: Ventures

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