Economic Diversification and Growth

Chapter 3
Table 3.2: Addressing Horizontal Inequality and Poverty through Cash Transfers Policies, 2012/13
Unconditional cash transfer to aged going kids (6 to 15 ) (monthly transfer)
Poverty Poverty Gap Gini
Baseline 25,000 50,000 Baseline 25,000 50,000 Baseline 25,000 50,000
North East 74.5 67.8 64.3 32.3 26.2 20.8 0.4279 0.3981 0.3744
West Nile 42.0 33.7 25.9 11.7 8.2 5.6 0.3369 0.3199 0.3065
Mid-North 35.6 31.1 24.5 10.2 7.3 5.1 0.3636 0.3477 0.3345
Others 13.0 13.0 13.0 2.8 2.8 2.8 0.3888 0.3888 0.3888
Uganda 19.5 18.2 16.9 5.2 4.4 3.8 0.4003 0.3944 0.3893
Budget (in billion UGX) 36.0 72.0 36.0 72.0 36.0 72.0
Conditional cash transfer to aged going kids (6 to 15 ) (monthly transfer)
Poverty Poverty Gap Gini
Baseline 25,000 37,500 Baseline 25,000 37,500 Baseline 25,000 37,500
North East 74.5 62.4 53.9 32.3 18.3 12.7 0.4279 0.3553 0.3326
West Nile 42.0 28.1 19.6 11.7 5.7 3.9 0.3369 0.2992 0.2857
Mid-North 35.6 23.2 16.0 10.2 4.5 2.8 0.3636 0.3242 0.3088
Others 13.0 13.0 13.0 2.8 2.8 2.8 0.3888 0.3888 0.3888
Uganda 19.5 16.8 15.1 5.2 3.7 3.2 0.4003 0.3884 0.3834
Budget (in billion UGX) 62.0 93.0 62.0 93.0 62.0 93.0
Source: Authors’ tabulation from UNHS (2012/13).
3.38. There have been repeated calls on governments to
distribute oil earnings directly to households in the form
of lump-sum transfers based on the Alaska distribution
model. The proponents of such argument are motivated by
the lack of trust in political leaders for the management of
oil earnings on behalf of the population. In the case of Uganda,
the horizontal and vertical inequality is so serious that a
mix of policies may seem appropriate. However, the government
is right when it argues that infrastructure improvements
financed by oil earnings will also benefit the poor.
Below, are the results of a simulation using a partial equilibrium
framework about the impact on poverty and inequality
of a cash transfer distributive policy.
3.39. The increase in fiscal space due to the coming on
stream of oil would enable the government to increase
social protection programs in Uganda. Uganda spends less
on social protection than most of the other developing countries.
8 Excluding the contributions to the Public Service Pensions
Fund, Uganda spends around 0.4 percent of GDP on
social protection schemes compared to 2–3 percent in other
developing countries. Increasing spending on social protection
would enable the poor to better participate in the growth
8. We have also simulated the case of a conditional cash transfer on primary
school attendance, which revealed similar but improved patterns of poverty
reduction and decline inequality. However, the budgetary implications are larger
since the cash transfer is commensurate to the number of children (6-15) going
to school.
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Uganda Country Economic Memorandum: Economic Diversification and Growth in the Era of Oil and Volatility