emmanuel tumusiime - mutebile : achieving middle income status by 2017 – prospects and challenges remarks by mr emmanuel tumusiime - mutebile, governor of the bank of uganda, at the first economic dialogue on the vision 2040, kampala, 26 august 2013. * 1. * * need for a realistic time scale the world bank defines middle income countries in terms of gross national income ( gni ) per capita, with a lower bound of $ 1, 036 for lower middle income countries. uganda ’ s gni per capita was $ 510 in 2011. to attain the minimum threshold of $ 1, 036 for lower middle income status, uganda must double its gni per capita in real terms. with real gdp growth of 7 percent and population growth of 3. 2 percent, per capita incomes will grow at 3. 7 percent per year. at this rate of per capita income growth, it will take 19 years for uganda to double its real income per capita. it is, therefore, clearly not possible for uganda to double its real income by 2017. a more realistic target would be to reach middle income status by the early 2030s. to achieve middle income status, government needs to adopt a long term approach to economy strategy, focusing on the policies which can generate sustainable high rates of growth for the next 20 years. uganda has established a good track record of macroeconomic management over the last two decades. it is imperative that macroeconomic stability is maintained over the long term, which means that demands for public spending must be accommodated within the available budget resource envelope so that public debt remains sustainable and does not crowd out private sector borrowing from the banking system. but macroeconomic stability is a necessary but not sufficient condition for sustainable growth over the long term. it must be combined with structural reforms which strengthen the supply side of the economy, enabling the economy to generate growth in productivity. there are three crucial areas pertinent to the supply side of the economy where uganda needs to do much better if it is to achieve middle income status and transform the structure of its economy. these are : i ) the modernization of agriculture ; ii ) accelerate the demographic transition and iii ) raise private sector investment rates. 2. modernisation of agriculture there are very few developing economies, other than city states, which have successfully transformed their economies and reached middle income status without modernizing their agriculture. agricultural modernization is a prerequisite for industrialization, for three reasons ; i ) to generate agricultural surplus

part in reshaping the global thinking on this front. the effects of the global financial crisis on markets are indeed still fresh in our minds. 1 / 4 bis central bankers'speeches history – and a too late array of empirical evidence and research – has shown how the lack of awareness on the part of consumers in advanced economies drove them to make flawed decisions on the subprime mortgages and synthetic instruments used for trading. the drive for higher returns, coupled with a lack of visibility on the risk side, prompted many people to invest in these securities. these events eventually highlighted the critical importance of financial literacy, prompting its inclusion as a matter of priority on the agenda of policy makers globally. in september 2009, at the g - 20 leaders ’ summit in pittsburgh, a pledge was made, i quote, t “ o support the safe and sound spread of new modes of financial service delivery capable of reaching the poor ”. unquote. the pledge also called on financial standard - setters to promote successful regulatory and policy approaches and elaborate standards on financial access. a year later in seoul, the g - 20 committed to the launch of the global partnership for financial inclusion and developed a financial inclusion action plan. at the level of the united nations, financial inclusion is positioned as an enabler of other developmental goals in the 2030 sustainable development goals, where it is featured as a target in eight of the seventeen goals. ladies and gentlemen, poor financial decisions are often not only the result of financial recklessness, but also of bad planning, and lack of information. the implications of these shortcomings can easily spiral beyond control. undeniably, in today ’ s world, many of these decisions originate from – or are based upon – the increasing use of technology. add to that the consequences of ‘ buy now pay later ’ targeted campaigns which can unfortunately fuel poor spending habits and ballooning debts. we are all aware that trust is the cornerstone for the effective functioning and stability of the financial system. as the system evolves and becomes more complex, access to financial services also becomes easier. what this implies is that there needs to be an appropriate level of financial education to enable customers to make informed decisions about the suitability of financial products to their specific situation. concurrently, a robust financial consumer protection framework must be in place to shield consumers from abuse and make them become judicious users of financial products and services. this is precisely the rationale behind the elaboration of our 2022 financial literacy strategy