Tag Archives: economic

Who is in charge of Uganda’s economy?

The struggle for decolonization focused on political independence, hoping that economic sovereignty would automatically follow. But it did not. Post-independence economic challenges were thus attributed to inherited colonial economic structures. African governments were forced to find a solution and attain economic independence. In 1979 African leaders adopted the Monrovia Declaration of Commitment on guidelines and measures for national and collective self-reliance. In 1980 African leaders once again adopted the Lagos Plan of Action to attain self-reliance with support of the international community. At the United Nations General Assembly Special Session on Africa in 1986, it was resolved that Africans have primary responsibility for the development of Africa. In theory, Africans became economically independent to determine the continent’s course of economic and social development.

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A social and economic agenda for Uganda in the next five years

Whichever party wins next year’s (2011) elections, it will need to form a government that will revise the agenda the NRM has governed on since 1987 if it wants to avoid criticism as a government that has lost touch with reality.

The development plan launched a few months ago is a repeat of structural adjustment. That is why it has not been heard of since its launch. It was arranged to silence disgruntled citizens and buy time for 2011 elections. Commentaries from nationals and foreigners are all in agreement in private and/or public that things have not gone well for the majority of Ugandans under the NRM regime. Between 1990 and 2001 Uganda’s population living below $1 a day was 82.2 percent (A. K. Chowdhury and S. Erdenbileg 2006).

The first government act after 2011 elections is to make fundamental changes in the Ministry of Finance and Central Bank that have driven Uganda’s economy on a ‘bad road and in the wrong direction’. Their focus on market forces and individual effort hoping that the sum total of those efforts would benefit all Ugandans equitably has been an inappropriate policy. While reliance on foreign experts may continue to be necessary, this should be limited to specific cases for short-term assistance only. Uganda has a reservoir of well trained and experienced people who are not being used or used properly because loyalty has replaced competence. Most well-educated and qualified Ugandans are scattered around the world or hibernating at home because they are not wanted for fear they might replace incompetent relatives and friends of those in power.

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The difficulty of applying Malthus essay to Uganda’s population

Uganda’s population challenges enter the development discourse when there are serious economic and social problems. Amin condemned population growth when the economy turned sour and ordered doctors to deal with it through contraception which he had banned a few years earlier. Currently (in 2010) Uganda’s population ‘explosion’ is again at the center of the development debate, invoking Malthus’ idea of population racing ahead of food production.

Malthus stated that population was growing geometrically (1,2,4,8,16 etc) while food production was growing arithmetically (1,2,3,4,5 etc), implying that all the food produced would be consumed in the same country. He concluded that if not checked, the least able to procure food would starve to death. Those able would survive – hence the survival of the fittest concept developed by Charles Darwin based on Malthus’ essay. The essay was written for Europe and North America. He used statistics compiled by Benjamin Franklin whose figures had included migration into America where it has had no application. During the 18th century agricultural productivity had doubled which Malthus ignored when he published his essay on population in 1798. One of the principle recommendations to check population growth was delayed marriage.

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Uganda’s economic growth alone is insufficient for poverty eradication

In May 1987, the National Resistance Movement (NRM) government under the leadership of President Museveni signed an agreement with the International Monetary Fund (IMF) for assistance. The government opted for the ‘shock therapy’ or extreme version of structural adjustment or Washington Consensus. The agreement called for the abandonment of employment policy in favor of disciplining inflation, promotion of economic growth and export-orientation, privatization of state corporations, retrenchment of public servants, and significant state withdrawal from the economy and virtual abandonment of social policy especially in education and health sectors.

Investments in infrastructure and the economy generally declined considerably. For example in 2008 budget allocation to agriculture, Uganda’s economic mainstay, declined from 4.2 percent in 2007 to 3.8 percent against African Union’s 1993 decision to allocate at least ten percent of national budget to the sector.

The government handed over responsibility for economic management to the invisible hand of market forces and laissez faire (let alone) capitalism as required under the neo-liberal economic ideology. A trickle down mechanism was expected to distribute the benefits of economic growth through employment creation in the private sector. As expected under the Washington Consensus the government focused on law and order by investing heavily in the armed forces, police and intelligence sectors to contain any resistance against the harmful effects of structural adjustment. To mobilize resources for this effort, the government had earlier imposed a 30 percent charge for converting old currency into the new notes against the advice of the IMF.

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The second African star has fallen

On April 19, 2010, President Museveni launched a five-year development plan in Uganda with a focus, inter alia, on full employment and state intervention, reminiscent of Keynesian economic model which drove the post world war economic boom until the second half of the 1970s when a combination of stagnant economic growth, rising unemployment and inflation (stagflation) rendered the model irrelevant. It was replaced by the Washington Consensus or stabilization and structural adjustment programs (SAPs). Unlike the Keynesian model which focused on creating jobs and promoting state participation in the economy, the Washington Consensus focused, inter alia, on macroeconomic stability through inflation control and private sector participation in the economy as the engine of growth under the guidance of the invisible hand of the market forces and a trickle down mechanism.

In Africa Ghana was among the first countries to embrace the Washington Consensus. A combination of factors which included excess capacity, the return of Ghanaians from Nigeria that boosted the numbers of cheap labor, generous donations, good weather including adequate rainfall, favorable trade conditions, guidance from the IMF, the World Bank and prominent international development economists as well as a committed government under the leadership of Jerry Rawlings, Ghana registered rapid economic growth and per capita GDP. It became a “star performer and success story” to be emulated by other developing countries.

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Colonization, pauperization and neo-colonization of Africa began in DRC

It has been said and written and subsequently confirmed during a recent mission to the Democratic Republic of the Congo (DRC) in January and February 2010 that the colonization, impoverishment and neo-colonization of Africa began in DRC initially through instability, disruption of economic systems, trade networks, social, cultural and political institutions, ruthless and massive exploitation of human and natural resources. Ipso facto, Africa will not stabilize and develop peacefully and sustainably while DRC remain mired in neo-colonial conditions of exploitation and destabilization by foreign interests and their neighboring and Congolese surrogates.

Before the arrival of Europeans and Arabs in the 16th and 19th centuries respectively, the Congo basin was occupied by Bantu people who had developed strong kingdoms that were engaged in production of a wide variety of agricultural, pastoral and industrial products the surplus of which were exchanged in local and regional markets. They had also as noted above developed strong and viable cultural and social systems that together with adequate and balanced diets promoted rapid and healthy population growth.

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Colonization, pauperization and neo-colonization of Africa began in DRC

It has been said and written and subsequently confirmed during a recent mission to the Democratic Republic of the Congo (DRC) in January and February 2010 that the colonization, impoverishment and neo-colonization of Africa began in DRC initially through instability, disruption of economic systems, trade networks, social, cultural and political institutions, ruthless and massive exploitation of human and natural resources. Ipso facto, Africa will not stabilize and develop peacefully and sustainably while DRC remain mired in neo-colonial conditions of exploitation and destabilization by foreign interests and their neighboring and Congolese surrogates.

Before the arrival of Europeans and Arabs in the 16th and 19th centuries respectively, the Congo basin was occupied by Bantu people who had developed strong kingdoms that were engaged in production of a wide variety of agricultural, pastoral and industrial products the surplus of which were exchanged in local and regional markets. They had also as noted above developed strong and viable cultural and social systems that together with adequate and balanced diets promoted rapid and healthy population growth.

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From Economic Reform “Success Story” to “Failure Story” in Argentina

The purpose of this story is to know from those familiar with Uganda’s economic policy whether there are parallels with the situation in Argentina between 1990 and 2003. Like Argentina, NRM government adopted and implemented religiously the Washington Consensus conditionality with strong IMF backing from 1987 to 2009 when the Consensus was abandoned. This would help to have an idea about Uganda government’s plans to deal with the IMF following the launching in September 2009 of a new development plan along Keynesian model of state active intervention in the economy.

Countries like Argentina, Ghana and Uganda that followed the Washington Consensus conditionality religiously with strong external backing performed remarkably well initially. They were graded as ‘star pupils’ or ‘success stories’ to be emulated by others and their leaders were garlanded for their boldness and consistency through thick and thin. In the end they failed. As Uganda and Ghana cases have been covered already in my book titled Uganda’s Development Agenda in the 21st Century (2008) this story will focus on Argentina beginning with the government of Carlos Menem who was elected president at the end of 1989 and ending with the government of Nestor Kirchener who was elected president in 2003 and his initial thoughts on Argentina’s economic policies and external support.

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Towards economic and social delivery for all Ugandans

The National Resistance Movement Organization (NRM) has already declared that it will win 2011 presidential and parliamentary elections not only convincingly but also with a larger majority than in 2006 because it has delivered. While hosting the Commonwealth Conference, election to the United Nations Security Council for two years, discovering oil, ending the war in northern and eastern Uganda and winning approval to hold the 2010 AU Summit in Uganda are noble deliverables, their value should be assessed in the context of meeting conditions for economic and social development for all Ugandans as called for in Chapter IX of the United Nations Charter. Chapter IX states in part that higher standards of living, full employment, conditions of economic and social progress and development are among the principal goals of the United Nations of which Uganda is a member.

On reading NRM’s economic and social criticism of Obote II government one gets the impression that the drafters were fully aware of Chapter IX. It is therefore important to remind ourselves of what the criticism was and the extent to which NRM government has implemented corrective measures to deliver the desired economic and social results since it came to power in 1986. We shall examine the criticism contained in vol. I no. 3 of October/November 1981 and vol. II no. 5 of December 1984 which were published by the NRM secretariat in 1990 in a book titled “Mission to Freedom”.

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Is Uganda’s new development plan dead on arrival?

Before we examine the emerging fear that Uganda’s new development plan may be dead on arrival, let us outline the background to, and major players in the death on arrival of NRM’s mixed economy ten-point program launched in 1986.

The serious development challenges of the 1970s marked by slow economic growth, rising inflation, unemployment and external debts undermined the Keynesian economic model based on state demand management with a focus on full employment and welfare benefits. The model was replaced by the neo-liberal economic model with inflation control as its principal goal. (It was feared that inflation rather than unemployment constituted a more serious challenge to governments).

The 1980s witnessed elections of conservative governments in developed countries including in the United States and United Kingdom. The leaders in USA and UK believed that governments were the problem and not the solution to development challenges. Consequently, they favored a return to the invisible hand of market forces and laissez faire capitalism. There was no room for mixed economy models because they contained elements of socialism and central planning.

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