The
National Resistance Movement (NRM) government came to power in 1986 with a
mixed economy agenda of public and private partnership with a view to unifying and
transforming the country and her people. However, within a year, it became
clear that conditions on the ground did not permit the implementation of that
model. Since the 1980s, the world had shifted from a Keynesian model of demand
management in which the state was a key player to a neo-liberal one driven by
market mechanism and the private sector. With strong advice from the development
partners, major policy and institutional changes were introduced in 1987. The
state was relegated to the back burner. The new ministry of finance and
economic development together with the central bank assumed responsibility for
determining policy with a focus on controlling inflation and promoting exports.
Government spending was controlled in order to achieve balanced budgets. The
money in circulation was also curtailed through high interest rates. It was
hoped that financial stability would result in attracting private sector as an
engine of economic growth and create jobs for all who wished to work.
In
order to earn sufficient foreign exchange and repay external debts with surplus
for development purposes including purchasing technology, exports were
diversified by adding non-traditional commodities including foodstuffs and
expanding traditional ones of coffee, cotton, tea and tobacco. It was hoped
that rapid economic growth would benefit all classes and regions through a
trickle down mechanism. Subsistence agriculture would disappear, a vibrant
manufacturing sector would be developed and
be transformed from medieval conditions of poor feeding, poor housing and poor
clothing as well as low technology and low productivity, to a modern industrial
economy and a middle class society.
Because
it started from a low level with excess capacity in human and natural resources
and with generous development partner support and sizeable remittances from
Ugandans living abroad, the economy grew very fast reaching 10 percent by
mid-1990s. The
Washington Consensus lines. The international community called on other
developing countries that had not done so to emulate
invited to many meetings organized by the United Nations to demonstrate how it
had managed to adjust her economy in such a short time with stunning results.
And United Nations sent missions to
information about best practices for the General Assembly reports. No report
would be presented on the HIV and AIDS without reference to
success story. Those of us working at the United Nations in
take place were very proud of our country and leadership.
However,
as time passed, the limitations of a market mechanism began to show. Income distribution became skewed in favor of
a few families, the southern region performed better than the northern and the
urban areas with 10 percent of the total population performed and lived better
than the 90 percent of the population in rural
that 20 percent of the population had not benefitted from economic growth
meaning that
1970 after which economic deterioration was order of the day until the NRM came
to power.
Conditions
in the social sectors experienced severe strain. Un-employment and
under-employment increased especially among school graduates, the imposition of
user charges on education and healthcare in particular reduced household income
as adjustment in wages did not take place or was not commensurate with the
level of expenditure. The standard of living began to deteriorate. Many
consumers switched from new to imported second hand products such as clothing.
The frequency, quantity and quality of meals declined. Some households resorted
to one meal a day of cassava or maize resulting in high levels of
under-nutrition especially among children. The World Health Organization
statistics for 2007 show that stunting among Uganda children under the age of
five is about 40 percent in a country that claims to be a surplus food producer
and is a major exporter of food. Twelve percent of infants are born with low
birth weight, an indication that their mothers are under-nourished. Children
born with low birth weight develop permanent disabilities and face the prospect
of early death.
Deteriorating
conditions forced many households to switch from using electricity for cooking
to charcoal which has contributed to deforestation. This, together with increased
timber exports and clearing more land to grow export crops, has seriously
damaged the environment. Paul Samuelson, the first economist to win the Nobel
Prize, observed that “There is no substitute for the market mechanism – but the
market mechanism has no brain, it has no heart. Without political programs it
will inevitably breed inequality”. This is what has happened in
And
yet
taken – and taken quickly. The government continues to insist that controlling
inflation through high interest rates and balanced budgets will remain in
force. It insists that Uganda will continue to export foodstuffs to earn
foreign exchange even when Uganda children are suffering severe
under-nutrition; it insists that Uganda will continue to export fish even when
the signs of overfishing are everywhere to be seen; it insists that jobs will continue
to be created by the private sector even when we know that the creation of
local private sector has been suffocated by high interest rates; it insists on
allocating chunks of Uganda’s tropical forests to developers even when we know
that continued deforestation will be detrimental to our and future generations
and it insists that market forces and trade liberalization will continue to
operate even when we know that these arrangements have undermined manufacturing
activities with serious adverse consequences including workers losing their
jobs.
What
we are witnessing is a rise in crime and violence. Families are storing food in
their living quarters because of theft, overcrowding particularly in urban
areas is on the rise, alcoholism has become a serious problem and people are no
longer ashamed of swindling their relatives or employers. And the authorities continue to think that
these problems which are essentially economic will be solved by increasing
police, prisons and court services.
Ugandans
and their leaders will need to develop political and economic programs to check
the spiraling inequality and prepare a new roadmap that will ensure equitable
development conducted in a sustainable environment. A stimulus package that
will promote equitable growth without causing runaway inflation is in order
right now. If we do not act quickly the consequences of inaction in a country
that is becoming democratic could be too much to handle.
{mxc}