It is leadership that counts

In search for solutions to Uganda’s daunting development challenges, I have studied, read and consulted widely in time and space to draw some lessons. I have examined the role of politics and economics, the role of ideologies (capitalism and socialism), the role of democratic and authoritarian leaders and the role of civilian and military leaders etc in the development process.

In economics we were taught that a country’s development would depend on the abundance of the factors of production – abundant labor, abundant fertile land and abundant capital in the form of roads, railways, harbors, machines, telephones and computers etc. Countries that were well endowed would do better than those that were less endowed.

On this basis alone, Uganda being more endowed than Kenya, Ugandans would be ahead of Kenyans in economic growth, transformation and social development. We know this is not the case, at least in terms of life expectancy and trade benefits within East Africa.

North Korea took more natural resources and industries than South Korea at the time of partition but see where South Korea is compared to North in levels of economic growth, transformation and standard of living.

NRM economics has failed to create jobs and distribute income

Uganda’s NRM government adopted stabilization and structural adjustment program (SAP) in 1987 under the assumption that after a short period (three to five years) of austerity and debt repayment, the economy under the guidance of market forces would begin rapid and sustained growth, create jobs and distribute income to all Ugandans through a trickle down mechanism. The government estimated that by 2017 poverty would be history in the Republic.

To lay the ground work for eventual sustained growth and equity, the government focused on monetary and fiscal policy to balance the budget, control inflation, establish a realistic exchange rate; privatize public enterprises and promote exports to earn foreign currency, pay external debt and use surplus for investment in productive sectors. Government participation in the economy and funds for social sectors would be reduced significantly.

Mindful that inflation was indiscipline, NRM government worked hard to bring it down to a low and stable rate of five percent per annum. This required drastic reduction of money supply in the economy and increased interest rate to encourage savings. However, high interest rates of some thirty percent discouraged borrowing by small and medium enterprises that create most jobs and spread income.