Pre-colonial communities that later formed Uganda produced and traded in local and regional markets and consumed a wide range of products based on local endowments. Economic activities included a variety of crop cultivation, herding livestock, fishing, salt extraction and manufacturing enterprises especially those producing iron, wooden, skin and bark products.
Besides a strategic motive to control the source of the Nile, Uganda was colonized to produce raw materials for British industries and a market for British manufactured products. Lord Lugard stated clearly that the growing population in Europe and industrial expansion led to a desire for new markets for manufactured products, tropical raw materials for British industry and foodstuffs to supplement decreased home production and feed increasing British population (A. Seidman 1972). Consequently, Uganda was reduced to a producer and exporter of raw materials and an importer of manufactured products.
Economic discussions by Ugandans before independence emphasized manufacturing enterprises to transform a colonial economy and society, create jobs and add value to exports. However, the British had a different plan. As independence became inevitable, the British government invited the World Bank to evaluate development possibilities for Uganda. The World Bank’s principal recommendation was that Uganda should accelerate and diversify agricultural production primarily for export purposes (A. Seidman 1972).
While introducing the first five-year development plan (from 1961-62 to 1965-66) Prime Minister Obote who was also Chairman of the Planning Commission observed in his statement titled This Is Your Plan that the plan was based fundamentally on the recommendations of the World Bank Economic Survey Mission. Uganda therefore continued to produce and to export low unit value raw materials and to import and to consume high unit value imports with serious adverse terms of trade.
Following the fall of Amin regime in 1979, the president of Uganda asked the Secretary-General of the Commonwealth to send a team of experts to study Uganda’s rehabilitation requirements and development possibilities and advise the government on the way forward. The team led by Dudley Seers a British Professor noted that foreign exchange was the real constraint to Uganda’s rehabilitation program. It recommended that export bottlenecks should be removed quickly so that Uganda resumes export of traditional commodities (Commonwealth Report Volume One June 1979).
When the Uganda Peoples Congress (UPC) government came to power again in 1980, it placed industry at the centre of its development program. The government was determined to create ideal conditions for industrial rehabilitation and recovery because the sector has economic forward and backward linkages. However, the government needed $800 million in foreign currency urgently. To obtain these funds and more later, the government negotiated and obtained a loan from the IMF with some conditions. One of them was to increase and diversify export commodities at the expense of industries.
The National Resistance Movement (NRM) government, like the UPC government before it, launched a ten-point program in 1986 based on a mixed economy model. It resisted negotiating with the World Bank and IMF because of their stiff conditionality. The government commissioned a report on the economy with recommendations on the way forward from a Canadian team of experts. It was however made clear that Uganda would not obtain donor funds until it had reached an agreement with the IMF first (New African 1988).
Thus after agreement with IMF and the World Bank, the government announced its Rehabilitation and Development Program for 1987-90 in May 1987 (Europa Publications Limited 1988) and signed an agreement with IMF in July of that year. The agreement changed drastically the ten-point program with a new focus on revival of traditional exports and a boost to non-traditional commodity exports at the expense of food production for domestic consumption and domestic industries.
Thus, throughout Uganda’s independence since 1962, economic and social development priorities have been determined by donors based on reports drawn up by experts from the donor countries. Consequently, Uganda has continued to produce and export raw materials and foodstuffs in exchange for manufactured products as Lord Lugard stated at the start of Uganda’s colonization in 1894.
Given that no country in the world has developed without a vibrant manufacturing sector, Uganda is advised to reconsider its development priorities with help of the donors.