The NRM government came to power in 1986 and inherited an economy that was in shambles. Uganda had an external debt of $1.2 billion, massive inflation that rose to 250 percent in 1987 and a GDP that was declining at 5.5 percent while money in circulation had increased by 90 percent. Uganda needed immediately $160 million for emergency relief and rehabilitation programs and $4 billion for rebuilding the shattered economy. The treasury was empty and the tax base almost non-existent. International support was therefore not only absolutely necessary but also needed very urgently. At the same time the government faced a very delicate security situation that needed top priority attention.
For eighteen months, NRM government avoided dealing with World Bank and IMF because it had criticized them for the harsh conditions they imposed on Uganda during Obote II regime. The government tried to bypass them and deal directly with bilateral donors to no avail. The British government representative who sounded the views of other major donors advised the government to enter into an agreement with the IMF first before donors could assist.
Uganda’s economic vulnerability, NRM’s inexperience in running a government especially with many of its cadres inadequately educated, government’s unwillingness to use experienced staff from previous regimes and the escalation of guerrilla activities left the government with no alternative but to seek the assistance of IMF, World Bank, bilateral donors and NGOs.
Sensing that the government had been pushed into a tight corner especially after its policies backfired in 1986 and Ugandans were increasing their demands for goods and services, many donors imposed stiff conditions including seconding their staff and demanded policy preferences that under normal circumstances would have been rejected or softened. Many donors saw opportunities to try new ideas.
Experience has shown that expatriate staff serving in developing countries or different systems however qualified and experienced are handicapped because of differences in cultural and development backgrounds. This was confirmed by David Gitlitz with reference to Russia. He observed that “Having learned about economics in a world of wealth and opportunity, Western journalists [and other experts] seem incapable of understanding to transform a former communist economy [developing economy] such as Russia’s. They cling to the belief that the only alternative to ‘shock therapy’ is a return to the wilderness of central planning” (Forbes MediaCritic 1993).
Expatriates that came to Uganda were equipped inter alia with the ideology of the Washington Consensus – taming inflation, ending economic imbalances, promoting exports, privatizing public enterprises quickly and hiring of expatriates.
According to Sebastian Mallaby, Uganda attracted all expert types from developed countries: NGOs, development professors, UN agencies and Bretton Woods institutions. “Each visitor brought a flagon of his own potion: Oxfam wanted to turn Uganda into a show case for debt relief; the World Bank pressed privatization; the United Nations Development Program sponsored an experiment to decentralize government. Pretty soon, everybody’s potion was mixing with everybody else’s, and Uganda became a blend of all the fashionable ideas about development. Of course, this made it [Uganda] still more fashionable. If there is one thing that the development experts love more than success, it is a success that reflects their own brilliant advice” (Mallaby 2004).
Because of capacity limitations and donors’ efforts to bypass inefficient and corrupt government bureaucrats NGOs were encouraged to manage some sectors. According to Alex de Waal (1997) NGOs took over management of primary health care in rural areas.
Regarding priority setting, pro-Washington Consensus experts accorded high priority to controlling inflation and boosting exports under free market and laissez-faire conditions at the expense of other challenges including food insecurity and unemployment. NRM government abandoned its ten-point program in favor of structural adjustment prescriptions of budget cuts to tame inflation, currency devaluation to promote exports irrespective of how these programs impacted on Ugandans. Market forces through trickle down mechanism would solve all the problems. The president was garlanded as the ‘darling of the west’ and the economy dubbed a ‘success story’ simply to allow experts to continue with their experiments even when they knew the majority of Ugandans and ecological systems were hurting very badly. The world could not have had a better guinea pig!