By Enock Bulime and Ezra Munyambonera

It is common to attribute the increasing borrowing to easily noticeable causes such as the implementation of mega infrastructure projects and the low revenue collection. However, the impact of the changing social norms of actors (citizens, policymakers and technocrats) on economic and fiscal outcomes (such as growing budget deficits and debt) is usually overlooked.

Uganda is taking steps to improve its economic performance and constrain its spending behaviour by developing and strengthening the existing formal rules. Formal rules are established through official channels such as statutory rules, laws and constitutional constraints that are enforced through official channels like courts of law. On the other hand, the norms of behaviour or culture or self-imposed codes of conduct are established through social interactions and are mainly enforced through unofficial channels such as social stigma and exclusion.

The government tends to emphasise the role of formal rules to ensure good fiscal outcomes such as the timely implementation of the budget, reductions in wasteful spending, reductions in deficits and debts, accountability and transparency in use of public resources and reductions in domestic expenditure arrears. However, the social norms that determine individuals’ choices, and eventually shape fiscal outcomes are often ignored.

For example, the government has established formal rules to signal her commitment to fiscal discipline through reductions in excessive budget deficits and debt. These include numerical fiscal rules (debt and budget deficit rules), procedural fiscal rules (such as details on the budget processes concerning budget proposal formulation and approval), medium-term expenditure frameworks (to provide systematic projections on government expenditure) and the fiscal responsibility laws (like the Charter for Fiscal Responsibility). Despite these efforts, the formal rules have not been very effective in curtailing the deterioration of public finances.

Whereas the deterioration in public finances may easily be attributed to weaknesses in the existing rules, the social norms could also explain the poor performance. The social norms seem to be deteriorating yet these promote the acceptability of the formal rules and guarantee that they are followed. For example, declining norms are characterised by the acceptance of corruption, toleration of increasing deficits (or debt), lack of respect for the rule of law, mistrust, individualism in the conduct of official duties and careerism by some politicians and technocrats. These tend to limit the effectiveness of formal rules.

The government has tried to counter the deteriorating social norms (especially in the public sector) by establishing good forms of behaviour in the (i) Code of conduct and Ethics for Uganda’s Public Service and (ii) the Uganda Public Service Standing Orders. However, these standards of behaviour for public officers in the Uganda Public Service seem to be ignored.

Unlike the formal rules that can be changed immediately, the social norms usually change gradually. This is because the norms and values of different individuals and groups are learnt and cultivated through time. For instance, it is easier to adopt the good fiscal rules of other countries but it is not easy to adopt their good social norms at the same pace as the rules (it takes time). In other words, it is possible to adopt rules that are exogenous (or alien) to the socially accepted norms.

The adoption of formal rules that have been successful elsewhere does not guarantee good economic (fiscal) performance especially when the social norms and enforcement procedures are still weak. Therefore, for formal rules to be effective, there is a need to develop social norms (or belief systems) that will support and legitimise the formal rules. The current generation should then pass on the good norms of behaviour to the next generation to ensure continuity of good and sound decision making in conduct of official and non-official duties.

In conclusion, both formal rules and social norms complement each other to ensure that good economic (fiscal) outcomes are realised. The current emphasis of formal rules may not achieve lasting effects if the underlying belief systems (norms) of the actors (citizens, policymakers and technocrats) remain unchanged.