Effect of Territorial Capital on Sustainable Development. A Special Focus on Kampala City, Uganda

Abstract

More than 195 countries subscribed to sustainable development goals to help in poverty alleviation and fight inequalities and injustices. The other important objective of sustainable development goals is to fix climate changes. The eleventh sustainable goal states that countries should work towards having sustainable cities and communities. Little attention has been paid to these in spite the countries’ commitment to support sustainable development. The role of this study is therefore to evaluate the key variables of territorial capital like the system of territorial assets of economic, cultural, social and environmental nature that ensure the development potential of the city and their effect on sustainable development. An evaluation of the MDGs by 2015 showed that Uganda had failed miserably to fulfil most of the goals. Drawing lessons from this, sustainable development goals are the only way forward proposed to integrate Uganda’s development in relation with territorial capital. Therefore there is need to measure and address patterns of resource use that aim to meet human needs without depletion of resources. The aim of this study therefore will be to find out the relationship between social capital and sustainable development. Also, the study will establish if there is a relationship between economic capital and sustainable development. The findings from the study will be important to the government of Uganda in enlightenment on how best to measure territorial capital and economic development that is conducted without depletion of natural resources. It will assist the government of Uganda to adopt policies that are intended to promote sustainable development. The study will present an empirical case study investigating the effect of territorial capital on sustainable development in Kampala, Uganda.

Key Words: territorial capital, sustainable development, economic development

Introduction

According to Giovanni Perucca (2012), territorial capital is defined as the system of territorial assets of economic, cultural, social and environmental nature that ensures the development potential of places. The potential of any place to develop resides in the recognition of elements of different nature that meet the needs of the present without compromising the ability of future generations to meet their own needs. The 2030 Agenda for Sustainable Development presented in September 2015 shows that Uganda has embraced the principles for sustainable development to ensure that “No one is left behind.”

Uganda is a country with variety of resources but still struggles for decades with issues of poverty and low sustainable development as its capital city is no exception to the migration of residents from rural to urban areas leading to the growing poverty in the city. According to the Uganda Bureau of Statistics (2013), Kampala is the capital and largest city of Uganda contributing 60% of the country’s GDP. Kampala was named the 13th fastest growing city on the planet, with an annual population growth rate of 4.03% by City Mayors. Mercer, a global development-consulting agency based in New York City (2016), has ranked Kampala the best city to live in East Africa ahead of Nairobi of Kenya and Kigali of Rwanda. However, it is so clear that sustainable development is not attained in the city yet and still has a long way to go unless territorial capital is put into play.

Materials and Methods

In order to measure territorial capital in developing countries such as Uganda, this study is devoted to discussing the effect of territorial capital on sustainable development in Kampala, taking into account the characteristics of territorial capital. The study will discuss the relationship between territorial assets of social, economic, cultural and environmental nature and sustainable development. And this in return will enlighten Uganda on how best to measure territorial capital and economic development that is conducted without depletion of natural resources and therefore assist the government of Uganda to adopt policies that are intended to promote sustainable development.

Empirical Orientation of Territorial Capital

Human capital

Becker (1964) notes human capital as the stock of knowledge, habits, social and personality attributes, including creativity, embodied in the ability to perform labour so as to produce economic value while N. Bontis, N. C. Dragonetti, K. Jacobsen a G. Roos (1999) defined human capital as the human factor in the organization; the combined intelligence, skills and expertise that gives the organization its distinctive character.

Human capital is characterised by the skills the labour force possesses and is regarded as a resource or asset. It encompasses the notion that there are investments in people (e.g., education, training, health and that these investments increase an individual’s productivity (Claude & Micheal, 2014). The first characteristic is to utilise human as labour force related to economic added value that is generated by the input of labour force as other production factors such as financial capital, land, machinery, and labour hours. The other is that human capital can be viewed as the target of investment through education and training.

Kampala city is still faced with challenges of inadequate education structures such as schools and scholastic materials. The city also faces problems of poor and unqualified teachers who have poor teaching methods that are old fashioned. This leaves students poorly trained and lack adequate skills at the end of their courses and training. ILO (2014) notes that every year, more than 40,000 young people graduate from Ugandan universities and compete for only 8,000 formal jobs. The formal job market remains small, and most young people end up in the informal sector. For example, over half of young workers are engaged in the agricultural sector where 95.5 % do not have a written contract and most are temporary jobs, which last less than a year. There have not really been conscious human capital development programmes or efforts in Kampala city.

If Kampala city is to attain sustainable development it should be taken into account that the most important investments in human capital are education, training, and health. Under the sustainable development goals, the world has committed to providing young people with unprecedented access to quality primary and secondary education and ensuring they acquire the skills for business, employment and decent jobs. However, the task of Kampala city is the following: creating opportunities for the people, and not just the welfare of already vulnerable people. This means that communities need to create opportunities for education, qualification and retraining, productive employment for all people while every individual should have concern to use this chance to train himself and to look forward for an existing way out; to achieve progress, to improve personal standard of living and to solve forthcoming life problems (Jorde Jakimovski, 2011).

Social capital

Social capital definition depends on the discipline and level of investigation (Robison et al. 2002). However, we can think of social capital as: the links, shared values and understandings in society that enable individuals and groups to trust each other and so work together. Social capital is also needed to ensure the sustainability of the development process.

The Organization for Economic Co-operation and Development (OECD, 2001), defines social capital as networks together with shared norms, values and understandings that facilitate co-operation within or among groups. In relation to this definition, this study will look at network links in Kampala city between groups or individuals such as community organizations and associations. Our shared norms, values and understandings are less concreted and lack trust, this greatly damages our social networks henceforth a challenge in the social capital of Kampala city.

To understand the channels and characteristics through which social capital operates, we follow a framework suggested by Collier (2002). Collier classifies social capital on the basis of economically beneficial results from three types of externalities it generates. First, social capital facilitates the transmission of knowledge about the behavior of others, reducing the problem of opportunism through repeat transactions that establish trustworthiness and reputations. Secondly, it facilitates the transmission of knowledge about technology and markets, reducing market failures in information. Lastly, by relying on norms and rules, social capital reduces the problem of free riding, thereby facilitating cooperative action. Thus, Kampala will need to employ this framework if the citizens are to attain their goals of sustainable development through social capital.

Relational capital

Capello and Faggian (2005) define relational capital as all relationships; market relationships, power relationships and cooperation established between firms, institutions and people, which stem from a strong sense of belonging and a highly developed capacity of cooperation typical of culturally similar people and institutions.

Relational capital is characterized by the individual knowledge of the channels, clients and suppliers, or the knowledge impact of the governmental or industrial associations (Bontis, 1999). Kampala city faces the challenge of deriving process innovations from the knowledge of its people and industrial associations. This can be seen in Tumwine’s (2011) study on the relational capital and firm performance in Uganda. The study shows that many private firms in Kampala and in Uganda at large have failed to perform above average in terms of profitability in order to sustain their stay in business.

Knowledge derived from employees, customers, suppliers and other business agents may result in process innovations that increase output and reduce variations; moreover, the higher level of relational capital, the better planning, problem solving and trouble shooting, all of which most likely increase production and service delivery efficiencies (Youndt et al, 2004).

Cultural capital

Cultural capital is a community’s embodied cultural skills and values, in all their community; defined forms, inherited from the community’s previous generation, undergoing adaptation and extension by current members of the community, and desired by the community to be passed on to its next generation (Paul and caroline, 2009).

Bourdieu (1985) identifies individuals as possessing cultural capital if they have acquired competence in society’s high-status culture (Mahar et al., 1990). Uganda’s culture is comprised of a range of ethnic groups such as the Nilotic and Bantu who are farmers and traders. These groups have a wide range of tribes which feature diverse practices, customs, languages, norms and values that keep them unique to one another. And so to note, Kampala and its citizens are characterized by set of ideas, practices, beliefs, traditions and values, which serve to identify and bind them together with the stock of assets existing in the public domain as public goods. Cultural assets also give rise to a flow of services, which may form part of private final consumption and or may contribute to the production of future cultural goods (David, 1999).

Emily (2017) notes that for the first time, the international development agenda referred to culture within the framework of Sustainable Development Goals related to education, sustainable cities, food security, the environment, economic growth, sustainable consumption and production patterns, peaceful and inclusive societies. She adds that, this “U-turn” in development thinking, would reflect the growing international recognition of the nexus between culture and human development, which would influence development thinking across the globe as member states seek to comply and achieve their goals for 2030 thus promoting sustainable development in Kampala city.

Economic capital

Economic capital can be defined as the methods or practices that allow banks to consistently assess risk and attribute capital to cover the economic effects of risk taking activities (BIS, 2009). Uganda’s banks such as Centenary rural development bank whose mission is to provide appropriate financial services, especially microfinance, to all people in Uganda, particularly in rural areas, in a sustainable manner and in accordance with the law have come up to see Ugandans attain sustainability. Angie and Julie (2016) note that in 2013, Centenary Bank established its agricultural finance department, which provides financial services to different actors involved in agricultural value chains. In 2015, agricultural finance represented about 12% of the bank’s lending portfolio (Centenary Bank, 2016). In addition, the bank provides credit and savings services for actors involved in processing, transport and marketing of agricultural products.

The role of financial services in facilitating adaptation to climate change is receiving increasing attention (Haworth, Frandon-Martinez, Fayolle & Simonet, 2016; Agrawala & Carraro, 2010; Dowla, 2009; Hammill, Matthew & McCarthy, 2008). Analysis by IISD has also found that financial services are a key enabler for climate risk management along agricultural value chains (Dekens & Bingi, 2014), providing value chain actors with a range of options to absorb shocks and adapt to changes over time.

Infrastructure capital

Torrisi (2009) defines infrastructure as a “capital good (provided in large units) in the sense that it is originated by investment expenditure and characterized by long duration, technical indivisibility and a high capital-output ratio;” he proceeds further and assumes that infrastructure is also a public good in terms of the “proper economic sense, that it fulfills the criteria of being not excludable and not rival in consumption.”

Infrastructure is essential for increasing economic progress and reducing poverty in Kampala city however, limited progress has been made in expanding and developing of infrastructure in the city. Kampala city still faces considerable deficits in transport and electricity infrastructure. Uganda’s infrastructural gaps have been extensively analysed by Ranganathan and Foster (2012), who provided a continental perspective on Uganda’s infrastructure gaps. Weitzman (1970), p. 556) states that Infrastructure capital is complementary to productive capital so that more productive capital only yields higher outcomes with more infrastructure capital investments and that once invested, cannot be changed to productive capital and vice versa.

Institutional capital

One of the factors determining “institutional capital” is “institutional equilibrium”, such equilibrium exists when informal institutions support and strengthen formal institutions and the functioning of “institutional governance” (Furubotn and Richter 1997). Implementation of Uganda’s law on access to information suffers because of weaknesses in the judiciary system and a culture of secrecy, among many other factors. Uganda’s institutions face challenges for example lack of independence and also the right to information laws accomplish little in Kampala city unless concerted efforts are made to address the broader enabling environment, and appropriate capacity building strategies are devised (Dokeniya, 2013).

A perfect institutional equilibrium, positively influencing sustainable development, can only be achieved when formal and informal institutions stimulate sustainable development, and “institutional governance” is efficient in enforcing the formal rules of the game. Such rules and “institutional governance” stimulate sustainable consumption and production behavior, and reduce opportunities for opportunistic behavior and the transaction costs of obtaining information, while informal institutions have as a consequence that people do not show opportunistic behavior and support the sustainable production and consumption patterns (Furubotn and Richter 1997).

Environmental capital

Environmental capital, also known as natural capital, is defined as indispensable resources and benefits, essential for human survival and economic activity, provided by the ecosystem (Haris, 2015). Renewable resources and non-renewable resources characterize environmental capital in Uganda. According to the U.S Energy Information Administration, renewable resources include; agricultural crops, vegetation, wild life etc. while the non-renewable resources include; fossil fuels for example oil that was discovered in 2006 and, mineral deposits. Natural resources include the atmosphere, freshwater and ground water, land, and biodiversity (Haris, 2015).

Most importantly under the environmental capital (renewable resources), agriculture has been and continues to be the most important sector in Uganda’s economy because it employs the largest proportion, 69% of the population aged 10 years and older. The sector also accounts for 26% of total GDP (Uganda Bureau of Statistics, 2012). And according to Paul (2003), Uganda has adequate land and water resources to enable it to produce enough food for domestic consumption and have excess for export. Despite the importance of agriculture in the economy, the sector’s performance has not been impressive due to factors such as climate change effects for example; droughts, floods and landslides which have had the potential to alter production patterns.

Conclusion

This study shows that Kampala’s education and training is mostly theoretical classes that lack practical training. Therefore, most people on the job market lack the required skills to work in the labour force. On the one hand, Kampala has a huge number of unemployed youth; yet on the other, the city is identified with a shortage of productive human resource.

There have been changes in the legal framework that indicate a growing recognition of the value of culture in sustainable development, as stipulated in the National Culture Policy (2006 and the Traditional Leaders Act (2011) of Uganda.

The millennium development goals helped end poverty for some countries but not for Uganda. Kampala city needs to study and learn from the cities that have managed to attain development. Sustainable development goals seem to be a way out to complete the work started by the MDGs. With more training and education that the citizens of Kampala acquire, this should be a good start to address various challenges such as climate change by providing sustainable energy for all and helping all to access clean energy. These sustainable development goals can only be achieved if territorial capital is implemented properly. Kampala city and Uganda at large must develop polices focused on economic development conducted without depletion of natural resources and this in the long run will support welfare and development of the country.

The government of Uganda needs to lead by example in implementing territorial capital (economic, social, cultural, environmental) and in return promote sustainable development. The government should be transparent as all focus is upon policy design and implementation but most importantly observe and target sustainable development.

Recommendations

If Kampala is to attain sustainable development through human capital, this success will depend largely on the people with higher level of competence. In response, the people are the valuable assets. The government needs to rise up and emphasize standard education through investing in the education sector for example building more skills training institutions, employing capable and qualified teachers, investing in education inspectors; this could see Uganda’s sustainability turn around for the better because many challenges are due to inadequate training and skills.

Also, if Kampala city is to attain sustainable development through social capital, there is need of creation of social networks. Social networks will foster cooperative behavior that promotes knowledge transmission and ease coordination of problems through collective action and also raising awareness of new technologies and provide group based training in new practices, and also maintenance of links with government agencies.

Kampala city also needs to recognise, manage and address systems of territorial assets while using its resources efficiently to meet the citizen’s needs but keeping in mind to protect these resources for future use, only and only then will Uganda attain sustainable development.

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