The Average Ugandan Is Thriving

Somewhere in Uganda lives a man who is doing well. I have never met him. I have only seen him in the data, prospering at 6.4 percent a year. In June, he learned that his income had reached $1,278 and that Uganda had crossed into lower middle-income status. On the first of July, the World Bank told him he was still low income. One counts what is produced inside Uganda; the other what Ugandans earn. Same country, different verbs. Our man is calm because inflation in July was 4 percent. Serene. It's nearly Swiss.

Diesel rose 39 percent over the year. Petrol, 29. Water, 17.8. Transport, 9.3. Insurance, 10.1. Inflation is an average too. The economy experiences inflation as a basket. A household experiences it as a bill.

As incomes rise, people buy more of the things that are expensive to secure and difficult to avoid: housing, transport, insurance, education, reliable utilities. The reward for climbing is a steeper hill. The salary is rarely just a salary. It is school fees, rent, fuel, a mother's prescription, a brother's tuition, a cousin's funeral, a parent who has stopped earning.

And this arithmetic is not confined to the middle class. Somewhere, a security guard is making Shs150,000 last a month. He eats. He gets to work. He sends something home. Someone asks him for help and, somehow, sometimes he helps. A househelp performs a similar calculation on very little money. We call this resilience because the alternative word is uncomfortable. The remarkable thing is not just how little most Ugandans earn. It is how many people each shilling is expected to support.

More often than not, economic risk is carried privately. Lose your job and the first insurer is often your savings. Get sick and it may be your bank account. Grow old and the first pension may be your children. In other words, you are your own social security fund. Once you accept that, "save more" stops being useful advice. The better question is what each shilling of savings is supposed to do. The first financial upgrade is separating the jobs. Some money should be liquid and boring: cash, savings, or a money-market unit trust for emergencies. Some can sit in instruments such as Treasury bills and bonds for medium-term goals. Some risks are better transferred through insurance. Only then does patient money become possible: money that can own businesses, buy productive assets, or sit in diversified investments long enough to compound. A prosperous middle class is not created simply when people earn more. It is created when more of those earnings survive emergencies long enough to become capital.

The average Ugandan may indeed be getting richer. I would love to meet him. I'd like to introduce him to a group whose money has stopped standing guard and started building wealth.