The Observer | Oil Should Not Over-Dominate Uganda’s Economy, World Bank Regional Chief – Henry Kerali
Written by Richard M Kavuma & Ronnie Mayanja — HENRY RUPINY KERALI hails from Erussi in Padyere county, Nebbi district, but was born in Arua hospital in 1957. Now the World Bank country director for Ghana, Sierra Leone and Liberia, Kerali was born to a forester father and a teacher mother. He grew up ‘around the country’ – as his father was transferred from one place to another.
He recalls attending primary school in Moroto, secondary school in Teso College, and then going to Makerere University to study civil engineering. After a teaching-assistant stint at Makerere, Kerali did his master’s and PhD at the University of Birmingham in England.
He would spend 20 years in Birmingham, rising to professor of transport economics – with more than 100 publications. In 2002, Kerali joined the World Bank in Washington, before becoming a regional director for the South Caucasus (Armenia, Georgia and Azerbaijan) and then going to West Africa in mid-2015.
As one of the highest-ranking Ugandans in the World Bank, Kerali is this year being recognized by the Uganda Diaspora Network for helping to promote the country abroad, Richard M Kavuma & Ronnie Mayanja spoke to Kerali about his journey from Erussi to the oil-exporting country of Ghana, and about the economics of oil and development
Henry Rupiny Kerali
Let’s start at home, what kind of environment did you grow up in?
Home kept shifting; we moved as dad was moving and also as he moved up the ranks, until he became a regional forestry officer based in Gulu.
So, yes, home kept shifting, although our home village in Erussi was where the real home was. We visited every year for holidays. That’s where the grandparents lived and you know, the African sense of home is the home village.
What are your earliest vivid boyhood memories?
I think running around in the village. We had big market days – Thursday and Tuesday. It is a small trading centre but particularly for the Thursday market, the population almost tripled because everybody came to sell their produce to buy something from the village market.
The whole area was coffee-growing; it’s high altitude; so, we had Arabica coffee as the main cash crop as we used to call them. And of course it’s very fertile; so, we had lots of food – bananas, sweet potatoes…
If you look back at the little boy in Erussi, did you have an early sense of what you wanted to be?
Probably it was too early to think of what I wanted to be. But I know I wanted to be successful in school. I was one of those who were studious. I would study. I wasn’t talented in sports, but I played a lot of squash and badminton [from secondary school]. I was good with rackets in general.
We were very close. I would put them on the strict side, but not very strict. Very religious. God-fearing, Catholics. So they imbued in us that sense of being God-fearing, righteous, upright. Every day we had a prayer at home and every Sunday we went to Church. So in that sense, a very strict Christian upbringing.
You have been away for some 30 years, do you still feel Ugandan or do the ties loosen over time?
Very much so. Despite being away for so long, I have maintained a home. I have a house in Kampala. I visit every year once or twice. In those 30 years, I may have missed two or three years when I didn’t come, but I maintain… and every time, I make it a point to go to the home village to recharge the batteries – my feeling of belonging to Uganda. To me it’s home. As the old adage goes, home is where the heart is.
As a high-level Ugandan expatriate, do you feel there are enough of you, or could there be more at that level?
We definitely could be more – when I look at other African countries and I see the numbers – for example, Senegal, Nigeria, Cameroon. Particularly Senegal and Cameroon where the population numbers are [not very different from] Uganda, then the answer is yes, we could have a few more.
Is there anything that could help to make Ugandan professionals more competitive internationally?
The one thing that comes to mind immediately is language. When I look at why Senegal or Cameroon or even Ivory Cost nationals have been successful, it is that they speak both English and French. I think it is very important for international jobs holders to have that ability to speak another international language.
So, I would encourage young Ugandans to always take advantage when you have an opportunity to learn another language. I speak French. I can’t say I am very fluent but I do speak a bit of French. But I think our young generation should take this as a cue. We do have a number of Ugandans at the World Bank and IMF that are on the up and I do hope that they too will rise up to that level.
You are here with your family…
Yes. My wife and son are here. My daughter who is a medical doctor in the UK will be coming. The third one, unfortunately, cannot make it this time. She works in the United States.
Do they share your sense of home?
A little bit, maybe not as much. The unfortunate part of being part of the diaspora is that the next generation, your children, don’t have as much attachment as you do to your home country.
It is a common theme for most of us in the diaspora that we always lament about how to ensure that our children, and maybe grandchildren, will have the same level of attachment. I have tried to always come with them to Uganda but I don’t think they will ever have the level of attachment that I do. They may develop it gradually but it will take time.
Let’s now turn to issues related to your work at the World Bank. Ghana is an oil economy, and Uganda is preparing to pump oil; give us a sense of how oil in Ghana has impacted on the ordinary person.
Ghana discovered oil about  years ago and it’s only [in 2011] that they started to produce oil. The fortunate thing is that they have had time to prepare for it, to [make] laws on how to use revenues from oil and gas, and how to invest some of that revenue in future.
But they have also agreed to be part of the Extractive Industries Transparency Initiative (EITI). All that has helped Ghana because it is a much more transparent system than we have in other [oil-producing] countries in Africa.
In terms of how it has benefitted the ordinary person, it is still too early because it’s only in the last five years that they have really gone into producing oil and gas. And then you have had the impact of the downturn in commodity prices. So, the revenue stream from oil and gas has not been as much as probably expected.
But it has also had a negative impact because there was so much expectation that oil and gas would produce revenues. [And] in a way, the government started to spend on the expectation [of those high] revenues. So, this effectively resulted in very high debt levels in Ghana – now close to 70 per cent of GDP. The unfortunate side is that this has driven a lot of the macro-economic and monetary policies in Ghana at the moment.
Because of such very high debt levels, they have had a very high base rate or policy rate by the central bank – [around] 20 percent. This means interest rates at local banks are also going to be high; inflation is now coming down but it has been high – just under 20 percent for over two years.
In view of that, if you were to advise Uganda as regards oil, what would you say?
First and foremost is transparency, regarding the revenues from oil and gas. Second, diversification; let’s not get into the trap of what is commonly called the Dutch disease, of having one single commodity dominating the economy to the extent that all the other productive sectors are overshadowed.
It is very important for Uganda to maintain its levels of production – in fact increase its levels of production – in agriculture, tourism and so forth. Oil should not become the single most dominant factor in our economy. That would be putting ourselves in a very straitjacket – which is what Ghana is going through at the moment in that there was overdependence on oil that was beginning to creep up.
And so the drive in Ghana is to diversify. They are lucky they have land, and most of it is fertile. They are not as lucky as Uganda; they don’t have as much rain [or] water.
President Museveni commissions a road. Such infrastructure can only help reduce poverty if it is part of a broader package of interventions
You mentioned tourism; do you think Uganda should be doing more to benefit from tourism?
Definitely a country like Uganda has a lot of endowments which at present are underutilized. But tourism is very much a private sector-driven industry. It will require that there is the business environment – the regulatory framework, the licensing, permits, etc – that encourages investment by the private sector.
The government’s role will be to regulate and provide that environment where businesses can thrive – particularly the small and medium enterprises. Tourism, when you look at it in terms of per capita, is one of the highest employers that you can get anywhere in the world.
So, I would suggest that Uganda should look at its tourism strategy, and try to see: what are the bottlenecks that the private sector faces in investing in tourism facilities? What are the factors that at the moment limit the numbers that want to come to Uganda? And then it is the role of government to address these factors.
In Ghana at one point, GDP per capita was growing by 43 per cent but poverty headcount was falling by only 10 percent. How best would a country ensure that the benefits of oil-driven growth are shared more equitably?
To be fair to Ghana, they have been successful in reducing extreme poverty – incomes less than $1.75 per day. The challenge is what the World Bank [calls] sharing prosperity: how do you make sure that those in the bottom 40 percent of the income distribution also see their income increasing as the economy is growing?
So, what kind of strategies would you recommend?
Making sure that the revenues are used to benefit the masses. So, public investments in infrastructure, for example, in health and education, are some of the things that these revenues should give a priority to. Those investments that will underpin growth that benefits the majority of the people.
The second aspect – all these extractives have a lifespan, 20 or 30 or 40 years and you run out. So, being able to create a reserve for future generations, a sovereign wealth fund, so that after you run out of oil, future generations can benefit from this.
You mentioned infrastructure, and we are big on infrastructure in Uganda. But when you do a road, for example, is it automatic that the new road will lead people out of poverty?
There are tools that we use to be able to assess whether a road or any other infrastructure will have a net economic benefit. The issue then is, is the investment implemented efficiently? In some cases you end up with the road costing two or three times more than was envisaged. So, what are the causes of those inefficiencies that result in doubling or tripling of costs? Some of it is pure and simple corruption – let’s not get away from that.
The second aspect is, if you build a road and you do not do anything else – you don’t help the farmers to increase their productivity; you don’t help the industries to improve their efficiency; that road will be there and you will have a few vehicles running up and down but it will never really generate the economic benefits that were intended. So, it’s not a question of just building [infrastructure] for the sake of it; it’s got to be a package of other things that have to be done in order to ensure economic returns.
What do you think about Uganda’s economic prospects?
I am not an expert on Uganda’s economy. But what I have observed is that we need to focus on and improve what is generally referred to as the business environment. How easy is it particularly for small and medium enterprises to thrive and to grow? Statistics show that most jobs are created by the private sector.
Out of that, the vast majority is small and medium enterprises. These are the companies, the shops, the small farms that employ anywhere up to 100 people. But if you have a million of these and each is employing just 20 people, that means you have 20 million jobs. So, Let’s think of it in those terms: what will it take for us to improve the business environment for small and medium enterprises to be able to expand?
You also mentioned agriculture, but how do you modernize and commercialise agriculture in a place like Uganda as you know it?
I see this as a significant potential and that leads me into what I hope to do when I retire. A part from tourism, we have an endowment in terms of land, very fertile land. We have a second endowment in terms of water in lakes and rivers and rainfall. [Let us] focus on increasing the productivity of our agriculture, particularly for the poor.
We have a major issue anywhere in Africa – not just in Uganda – where our inheritance system is such that the landowner divides the land among the children, and so you have an ever-decreasing parcel of land which leads to inefficiencies in production. So, let’s think of a way of helping particularly the poor and the rural communities to be able to aggregate the land.
And by so aggregating, they are not selling the land; they still own it but they cooperate in what they produce, which will then allow people to mechanize. And once you mechanize, once you have proper inputs, then you begin to increase productivity.
So, the concept of getting people to always sell their land [and] move out so that an industrial-scale farmer comes in, we need to revisit that. Don’t throw the [rural poor off the land] because if you do, they will end up in the slums in the towns and become another problem.
So, let’s work together. We are doing this in Ghana and Sierra Leone, where we help commercial farmers to work with individual smallholders and help them to aggregate the land and they all produce the same thing – whether it is rice, maize or cocoa. I know it’s working here, for example in the sugar industry, but let’s try and expand it to other crops.
What does it take to organize this?
It is getting people to understand what you are trying to do. If people misunderstand the concept, maybe they think you are trying to grab their land, then you get a lot of resistance. So, being able to get the people to understand, particularly the small farmers to understand that this is being done for their benefit and you are not here to steal from them, is the most critical part.
Then the second is being able to provide the inputs initially. The initial investments are quite high and farmers won’t have the kind of money. So, being able to assure them of that is very important.
Source — The Observer.
A related video interview was also recorded with Mr. Henry Kerali see link below — http://www.ugandandiasporanews.com/2016/12/23/diaspora-stories-mr-henry-kerali-world-bank-country-director-for-ghana-liberia-sierra-leone-talks-developmental-economics-and-uganda/