News feature: How strong is Uganda’s middle class?

These are some of the questions that may pop up in one’s mind when the word “middle class” is mentioned.

For Uganda’s case, sometimes it may not be easy to tell what kind of people are in the middle class. This could be because a big number of people categorised as middle class, according to economic experts, easily fall in and out of this category.

Peter Ssemboga (33) is an attendant in one of the retail shops in Namugongo. Two years ago, he says he was employed as an IT officer in a major corporate company earning up to sh1.5m monthly. This ceased to be when he was laid off following the financial struggles the company he worked for faced at the time given the COVID-19 pandemic effects.

Even with the money he earned as an IT officer, Ssemboga says he was unable to save enough money to channel into a business of his desire when he lost his job. He says most of his money was channeled to taking care of his young siblings (about 4 of them) and his mother. Basically, he was the family’s breadwinner.  

“Yes, I worked as IT officer in a major corporate company, but for the 3 years I worked there, I didn’t save enough money I can channel in to a business I’d love to start. This is because I had – and still have – responsibilities such as taking care of my 4 siblings and my mother. Being laid off was a blow to me and my family,” he says.

Ssemboga says he has since struggled to find meaningful employment. As a shop attendant he earns only up to sh150,000 monthly. He says the money he currently earns isn’t enough for him to meet most his needs and take care of his family.

Before losing his IT officer job, he was categorised in middle class.

Ssemboga’s story represents a number of people out there in Uganda who are falling in and out of the middle-class year in and out, perhaps pointing to the gloomy reality that the thought of a strong middle-class is just smoke.

How is the middle class determined?

A new report from the Ugandan Government, put the number of people categorised as middle-class residents at 15.64 million.

This information is courtesy of the Uganda National Household Survey (UNHS) and the Ministry of Finance Poverty Status Report, 2021.

The study released a week ago after being introduced on February 9 indicated that at least 1.52 million Ugandans entered the middle class which led to the increase of people in the middle-class from 14.12 million to 15.64 million.

According to the World Bank and Uganda’s National Development plan III (NDP III), for a country to be considered as a lower middle-income country, its annual Gross National Income must be $1036 (sh3.8m).

Uganda, according to the World Bank, is not yet in the lower middle-income category contrary to what President Museveni and the Uganda Bureau of Statistics executive director, Chris Mukiza, said early last year. But some of its people, who are earning a gross income of at least more than sh3.8m in a year like Ssemboga, have been categorised in the middle-class category.

With a monthly gross salary of sh1.5m and a net pay of sh1,073,000 (sh12.8m annually), Ssemboga was categorised in the middle-class before losing his job. 

According to Prof. Augustus Nuwagaba, a Ugandan development economist, the middle-class at the national level is determined after assessing one’s real (net) income annually.

“One is considered to be in the middles class after examining their real (net) income earned annually. If a person is able to earn a net income of at least sh3m a year, it means they are in the middle-class category,” he said.

Referring to Ssemboga’s case, Nuwagaba said majority of Uganda’s middle class is made up of working class (corporates). The stability of their annual income, he says, is determined by how stable their employers are.

Nuwagaba says the mushrooming private schools, hospitals and recreation centres in the country is an indication that the middle-class has grown over the years.

He however says the middle-class is still weak making it easy for people to fall in and out easily. Nuwagaba explains that this is so because the middle-class has not grown organically.

“Uganda’s middle class is not strong because it has not grown organically like what happened in Europe during the industrial revolution. We have a lot of people who can’t explain their source of wealth,” he said, adding that some people have become rich because of engaging in unsustainable ways of making such as corruption and other illegal activities which makes it easy them to fall out of the middle-class category.

Bob Twinomugisha, a senior economist at the Uganda Development Bank in-charge of macroeconomics and trade, differs from Nuwagaba saying a weak middle-class in Uganda is as a result of economics dynamics which directly affect the standards of living of people in the middle class.

“People fall in and out of the middles. It happens. This happens because of the economics dynamics we face as a country. For instance, the Bank of Uganda may increase the central bank rate which means people in the middle class can’t borrow, can’t invest and if they can’t invest, it means they can’t earn which makes it easy for them to fall out of the middle class,” he said.

Both economists, at least according to their submissions, agree about one issue: Uganda’s middle-class is still weak and therefore vulnerable. What can be done to make it stronger and grow in size?

What needs to be done?

Government of Uganda has had a series of efforts to fight poverty in the country. According to the World Bank, a person living on less than $1.9 a day is considered to be living below the poverty line.

The different Government efforts such as Entadikwa, Bonabagagawale, emyooga among others seem to have done little to help uplift people out of poverty.

Nuwagaba attributes this to the poor implementation on the side of Government.

“Uganda always has very good programmes that can help alleviate poverty, but the biggest challenge Government faces is poor implementation. The programmes are good but poorly implemented. That could be the reason why they haven’t been of help at all,” he said.

For Uganda to grow its middle-class, he says, Government would have to invest a lot in the education sector mostly when it comes to skills development.

“The Chinese Government has invested a lot in skills development. If a person studies a degree economics, it is usually accompanied by something that is hands on such as plumbing. Government of Uganda should copy that model. It will surely work here given our conditions. What can change is the approach,” he said.

Nuwagaba also says Government should put in place policies that support the development of particular products such as coffee for export.

“It is very crucial for a country to have a product (s) they can export. It helps in improving the balance of trade of a country which in turn improves foreign exchange earnings. It is these earnings that can be used by the middle class to invest back into the country,” he said.

Twinomugisha, on the other hand, says there have to be efforts to urbanise since people in urban areas are much more likely to engage in productive work compared to their counterparts in rural areas.

“I think urbanisation would play a crucial role in growing the middle-class. This is because people in urban areas are much more likely to engage in productive work compared to their counterparts in the village,” he said.

About 56% of people categorised in the middle-class live in urban areas, according to the Ministry of Finance’s Poverty Status Report, 2021.