Uganda’s productivity is lowest, World Bank says

The World Bank has warned that due to persistent underspending by the Uganda government on education, health, and social protection, the productivity of Uganda’s next generation of workers is projected to be among the lowest worldwide.

The World Bank on Thursday said according to the 2020 Human Capital Index (HCI), a Ugandan child born in 2020 was expected to reach just 38 percent of what their lifetime productivity would have been, had they enjoyed complete education and full health.

In its 23rd Uganda Economic Update, themed “Improving Public Spending on Health to Build Human Capital’’ released last week, the World Bank said this projection was based on health indicators. These include the child survival rate, stunting rate, and adult survival rate, as well as education indicators such as average years of schooling and average learning levels.

“Uganda had the highest stunting rate among children under age five of any country in the HCI, as well as one of the lowest adult survival rates (74). In addition to their immense human cost, weak health indicators are a major contributor to low productivity,” the World Bank said in the report.

The World Bank said Uganda’s public health spending is low by the standards of comparator countries. Households and external development partners finance a combined 85 percent of total current health spending. The report, however, reveals that about 84 percent of all external funding for the health sector is off-budget, which reduces the flexibility of resource allocation and limits the ability of policymakers to re-prioritise funding to address critical needs.

The World Bank said executing a larger share of health expenditures through the Budget could also improve public financial management systems.

“The share of the government’s resources that are devoted to health spending has declined in recent years, indicating that policymakers have not prioritised the health sector,” said the financial institution.

It added: “General government health expenditures from domestic sources fell from 6.5 percent of total public spending in FY2014/2015 to 3.9 percent in FY2020/2021. Over the past decade, domestic health expenditures have averaged 1.1 percent of GDP and have never exceeded two percent. At this level of public spending, Uganda is unlikely to achieve the health-related Sustainable Development Goals.”

Ms Mukami Kariuki, the World Bank country manager-Uganda, said the international lender is alive to the fact that “no country develops and transforms with quality human capital that is its people.”

She said: “Physical capital (man-made goods) and natural capital (natural resources) are essential, but human capital (health, skill, abilities, knowledge) is at the core, and necessary for driving growth and harnessing a nation’s potential.”

Results

The international lender said Uganda needs to increase its investment in health, education, and social protection to ensure its young people are both healthy and skilled enough to contribute to economic growth in an ever-dynamic and changing world. 

“…a focus on health is key among the priorities Uganda’s young and growing population face. The country is prone to public health emergencies such as Ebola yet its public spending on health is low and declining,” Ms Kariuki noted, adding, “At $6.8 percent capita, the level of investment in health is one of the lowest in the region. Even so, households and external development partners finance a combined 85 percent of total current health spending.”

Ms Mukami, however, also noted that public spending on health is relatively effective not least because Uganda’s Universal Health Care Service Coverage Index is similar to peer countries that spend more. She also said public spending on health is equitable because the lower-level health facilities are accessible to both the rich and poor. Policy reform is, nevertheless, crucial, Ms Mukami held if Uganda intends to reap a demographic dividend from its young and growing population.

Discussing the report, Mr Richard Kabagambe, an assistant commissioner, of health service planning in the Health ministry, said while health expenditure in Uganda has increased fourfold, more than 69 percent of the spending goes into wages and only six percent of domestic investment.

“Currently, 73 percent of the total spending goes into preventive disease medicines and 19 percent is spent on curative medicines,” he said.    

While presenting the report, Dr Rogers Ayiko, a senior health specialist at World Bank in Uganda, said while public health centres in Uganda are equitable across wealth groups, public hospitals are pro-rich. Providing recommendations to improve the health system in Uganda, Dr Ayiko singled out the need to strengthen the health financing system to enhance the adequacy, equity, effectiveness, efficiency, and sustainability of health.

He also made a case for investments in primary health care, health promotion, and disease prevention. He called for carefully managed investments in specialised healthcare, strengthening public-private partnerships and collaboration for health, improving the availability and productivity of the health workforce, increasing access to efficacious and affordable medicines and health technologies, improving quality healthcare services, and client engagement.