On Monday April 19, 2010 President Museveni launched Uganda’s five-year development plan. During the ceremony, he stated that at the beginning of his administration in 1986, NRM had plans to introduce a development plan but it was told that planning was out of date. Instead NRM was told to control inflation, ensure macro stability and leave the rest to the private sector. He did not specify who gave this advice.
When NRM came to power, it soon realized that unless it entered into an agreement with the International Monetary Fund (IMF) first, external funding would be withheld. For almost a year and a half, the government debated various options of engagement with the IMF under Washington Consensus or stabilization and structural adjustment conditions. The debates chaired or attended by the president were dominated by two schools of thought represented by the Ministry of Finance, and the Ministry of Planning and Economic Development. The Ministry of Finance and possibly Central Bank opted for a gradual and sequenced approach to minimize the costs of adjustment drawing lessons from Obote II government’s experience with structural adjustment began in 1981. The Ministry of Planning and Economic Development supported a ‘shock therapy’ alternative that required implementation of all adjustment conditions at once. Finally, the President endorsed the shock therapy alternative.
A conference of Parliamentarians and other invited participants was held in Kampala in December 1989 to endorse government decision. All the papers at the conference were prepared and/or presented by Ugandans. The conference which was closed by the President endorsed the shock therapy approach to structural adjustment in Uganda.
There were subsequent major changes in ministries and personnel. The Minister of Finance and Governor of the Central Bank lost their jobs as well as other senior staff. The experienced staff that stayed was marginalized. The Ministry of Finance and the Ministry of Planning and Economic Development were merged into the Ministry of Finance, Planning and Economic Development with staff from the latter ministry taking charge of the restructured ministry ready to implement shock therapy economic reform.
The shock therapy policy implementation focused on macroeconomic stability including inflation control, privatization and liberalization of the economy, and diversification of exports etc.
When asked whether there was external pressure in any form, government representatives stated categorically that structural adjustment in Uganda was home grown. In confirming country ownership of the economic reform, a senior government official stated that “After the government had completed the internal debate, however, its reform program swiftly overtook the reform agenda of the IFIs [International Financial Institutions], e.g. the decision to tackle the overvaluation of the exchange rate and the legalization of the forex bureau market [and the 30 percent charge to convert the old Uganda currency into the new one] far exceeded the requirements of IFI conditionality” (P. Langseth et al 1995).
In the process of implementing economic reforms, the government made the following illustrative mistakes and it should take full responsibility for what has happened.
First, as aptly observed by Sebastian Mallaby (2004) the government allowed development experts of all types from all over: “aid missions from rich northern governments, big NGOs like the World Vision and Oxfam, development professors from the famous universities, not to mention the UN agencies and the Bretton Woods [World Bank and IMF] sisters. Each visitor brought a flagon of his own potion [idea] … If there is one thing that the development experts love more than a success, it is a success that reflects their own brilliant advice”. Uganda therefore became a perfect laboratory for experimenting these ideas.
Second, the government relied on NRM cadres who had to be given jobs for supporting the Movement many without experience and possibly not well qualified. Experienced Ugandans were pushed aside and some of them left government or the country altogether. Justice George Kanyeihamba (2002) has elaborated how lack of experience disadvantaged his ministry when he was negotiating barter trade.
To make matters worse, the Ministry of Finance, Planning and Economic Development relied on expatriates many of them young (Sebastian Mallaby 2004). This choice was not imposed by outsiders, it was government’s decision. Choosing not to provide school lunches when NEPAD has endorsed it or failing to start public works to absorb the unemployed youth when other African governments are doing so has not been imposed by foreigners. These are decisions that the government has taken, perhaps with some advice, but not under pressure to the best of my knowledge.
Third, the government relied too heavily on economic growth rates, market forces and statistics whose accuracy was questionable especially on poverty levels. When the diseases of poverty hit news headlines, the government finally realized that all along it had hid its head in the sand. With elections approaching, some one had to be blamed for what has gone wrong. The President was, however, very careful. He did not name names for fear there might be a rebuttal.
Fourth, given the above illustrations, the NRM government should begin to take responsibility for its commissions and omissions.