Growth without equity: Why Uganda must tackle  inequality for sustainable happiness 

By Sebaggala Richard 

 

Introduction

    Uganda, like many developing countries, faces an urgent challenge: how to achieve sustainable economic growth while ensuring that the benefits are shared equitably. Despite significant economic progress in recent decades, a substantial proportion of the population continues to struggle with poverty, low wages, and limited access to essential services. This inequality highlights a fundamental flaw in the pursuit of growth without equity.

    The Easterlin Paradox, formulated in 1974 by Richard Easterlin, then a professor of economics at the University of Pennsylvania, states that rising income does not necessarily lead to greater happiness. This concept provides a valuable perspective from which to examine Uganda's development path. While economic growth is important for improving living standards, it is not enough on its own. If the benefits of growth are concentrated in the hands of a few while the majority of the population remains marginalised, it is unlikely that the nation will achieve lasting social and economic progress.

The pursuit of prosperity and happiness

    Uganda, like many other countries, is at a crossroads where economic aspirations, poverty, and the relentless pursuit of prosperity collide. A significant proportion of the population, struggling with poor pay and unfulfilled aspirations, is caught in a cycle of trying to earn more money in the belief that this will solve their problems. However, a growing body of research suggests that this pursuit of wealth may be taking us further away from happiness, rather than closer to it.

    Recently, at the Young Researchers Night Agder 2024 in Norway, a neuroscientist pointed out a worrying trend in modern society: The pursuit of higher incomes, especially by dual-income households, has not brought the expected benefits. Instead, it has contributed significantly to the sharp rise in property prices. Before the emancipation of women, a single-earner household could often afford a house. Today, it is almost impossible for couples to buy a house unless both partners are working, driving up property prices. This emphasises a crucial point: striving for more income does not necessarily solve our problems. Instead, it can drive up the cost of living, making us even more dissatisfied.

    This argument is particularly relevant to Uganda, where many strive for higher wages but realise that a higher income does not necessarily lead to a better quality of life. A practical example illustrates the power of reducing inequality: a friend who recently received a substantial pay rise that doubled his salary from 4 million to 8 million Ugandan shillings. While this increase may seem like a step towards financial comfort, the reality was more stressful than gratifying. Due to the huge income inequality, he is the only one in his extended family, in his village and even in his wife's family who is doing well financially. As a result, the burden of supporting a large number of relatives, including seven siblings with low-paid jobs, falls solely on him. Despite the pay rise, he barely feels the benefits as he struggles to fulfil these expectations.

     Now imagine if his siblings each earned between 700,000 and 1 million shillings instead of relying on his income. Improving their financial situation together would reduce his stress and improve their overall well-being. This example illustrates the broader benefits of income equality: when more people earn relatively well, the pressure on a few people to support many is reduced, leading to shared prosperity.  Translating this to an economy, a more equal distribution of wealth would lead to greater happiness and less economic strain overall, rather than a system in which a few people grow while many remain poor. 

The role of institutions

    Governments, religious institutions, and families play a crucial role in taming the pursuit of wealth and promoting well-being. In countries such as Norway, the government has taken specific measures to prevent excessive accumulation of wealth. For example, property laws make it difficult to speculate on property. If you build a house and want to sell it without having lived in it for at least a year, you have to pay a 25% tax. This policy discourages speculative investments that drive up property prices and ensure that more people can afford a home. Norway also ensured that public goods remain accessible to all. This policy is designed to prevent the rich from hoarding resources that should benefit the entire population.

    Uganda, on the other hand, is struggling with inequality. Public resources are often privatized or restricted for the benefit of a few. The government could adopt similar strategies to ensure equitable access to resources and protect the common good. For example, the introduction of a progressive tax on luxury goods and speculative property investments could limit the accumulation of wealth through unproductive means and redirect resources towards improving public infrastructure and services.

    In addition, recent research shows how income inequality undermines the effectiveness of economic growth in reducing poverty. A study by Adeleye et al. (2020) found that while economic growth has poverty-reducing properties, its positive impact is greatly diminished when inequality is high. This suggests that without addressing income inequality, Uganda could continue to experience economic growth without substantial poverty reduction.

    Religious institutions can play a central role in promoting moral values and addressing societal ills. In Uganda, religious institutions could do more to promote justice, moderation, and contentment. Biblical and Quran teachings warn against the dangers of greed and emphasize the value of community and generosity. Religious leaders, including bishops, clergy, and pastors; and Islamic religious leaders at various levels, should model these principles by avoiding the pursuit of material wealth. This will strengthen their moral authority to spread these messages and help Ugandans resist the temptation of materialism by reminding followers that true happiness does not come from wealth but from meaningful relationships and social cohesion.

    Families are also important in curbing the pursuit of wealth. In Uganda, the traditional values of sharing and communal living are often passed down through generations. However, these values are in danger of being undermined by the growing influence of consumer behaviour. Families need to teach their children the importance of balance. They need to teach them that while financial security is important, it must not come at the expense of their own well-being or moral integrity.

Conclusion

Economists argue that a nation cannot survive morally or economically if wealth is concentrated in the hands of a few while a significant proportion of the population remains impoverished. This is particularly true in Uganda, where a Gini coefficient of 0.42 indicates a high level of economic inequality (Naku, 2020). The pursuit of higher incomes, salary increases, and dual-income households does not always lead to an improvement in well-being. Instead, it often leads to a vicious cycle where rising salaries drive up the cost of living. This pattern can already be seen in Uganda’s urban centers, where the cost of goods, education, and housing has risen faster than wages. The result is that people are working harder but feeling more stressed and dissatisfied.

    To overcome these challenges, Uganda needs to prioritize policies that narrow the gap between rich and poor. Programmes that support financial inclusion should be expanded to ensure that even the most marginalized members of society have access to economic opportunities. Introducing higher taxes on luxury goods, speculative investments and top earners can help narrow the income gap and generate revenue for social programmes, healthcare, and education.

    If Uganda follows Norway's example, it could introduce inclusive policies aimed at reducing income inequality and promoting equity for all citizens. Similar to Norway, Uganda has also discovered oil, and just as Norway has used its oil revenues to improve the welfare of its people, Uganda has a similar opportunity. Despite the differences in context, such as population size, the discovery of oil presents an opportunity for Uganda to effectively manage its resources (Polus & Tycholiz, 2017). However, this requires addressing challenges such as patronage and a personalised bureaucracy (Golooba-Mutebi & Hickey, 2009). Reducing economic inequality in Uganda requires political will, committed leadership, and policy reforms that protect the country’s poorest households (Naku, 2020; Lustig et al., 2016).

    Uganda's economic crossroads offers an opportunity to rethink our relationship with money and wealth. The lessons from Norway, the role of institutions, and the warning from neuroscientists all point to the same conclusion: More money does not necessarily mean more happiness. In fact, the unchecked pursuit of wealth often leads to more inequality, inflated cost of living, and greater unhappiness.

    As a nation, Uganda must take deliberate steps to ensure that wealth is distributed fairly and that economic growth serves the well-being of all citizens. By curbing greed, promoting financial literacy, and ensuring access to public resources, Uganda can chart a path to sustainable prosperity— - a path where happiness is not measured by the size of the bank account, but by the strength of our communities and the quality of our lives.