Uganda and indeed African countries will not transform their economies and societies without converting their abundant natural resources into manufactured products. The open secret is that they have to protect infant industries against unfair competition. Infant industries are like infant children that require extra care until they have adjusted to the environment and are able to play and compete with others.
In Europe, the first region in the world to develop, protection measures were applied at an early stage. The plague of 1347 that became endemic in Europe reduced population and threatened trade and commerce. “In the non-agricultural sector the most striking result of this crisis was the emerging strength of guilds organized to protect local artisans in response to rapidly declining markets. The strength of the guilds in preserving local monopolies against encroachment from outside competition was frequently reinforced by the coercive power of kings and great lords. On a large scale the Hansean League [a confederation of north German cities] represented such a defensive alliance of cities to protect their shrinking markets from the competition of rival cities”(D. C. North 1981).
Protection was also provided to agriculture in Europe. In Britain the Corn Laws were passed by parliament in 1815. The French wars and Britain’s rapid population growth forced food prices up, resulting in increased agricultural investments. The Corn Laws were therefore passed to prohibit the importation of wheat and other cereals in order to protect investments in British agriculture (J. Cannon 1997).
In France and Spain agriculture was protected as well from the harmful effects of inexpensive and plentiful grain. In France the importation of grain and other agricultural products was totally forbidden. Frenchmen were not allowed to import tea since “this beverage affects the national character in giving the stern outlook of those men of the north, while wine denotes a soft gaiety”. France also imposed tariffs on inexpensive iron and cloth from England and subsequently forbade any further importation (G. Roche 1993).
In order to protect the British textile industry against cheap imports from India prohibitive duties ranging between 10 and 1000 percent were imposed on these imports between 1815 and 1832. These prohibitive duties resulted in the destruction of Indian textile industry. Montgomery Martin noted that this destruction of Indian textile industry was due “to the power of the stronger exercised over the weaker”. Horace Wilson further noted that had tariffs not been imposed “the [textile] mills of Paisley and Manchester would have been stopped in their outset [infancy], and could scarcely have been again set in motion, even by the power of steam. They were created by the sacrifice of the Indian manufactures”(F. F. Clairmont 1996).
Bantu people from the Cameroon/Nigeria region settled in the areas that became Uganda 3000 years ago and brought with them the knowledge of technology. They manufactured a wide range of products especially iron using plentiful local resources and timber to fire the furnaces (R. M. A. van Zwanenberg 1975).
Britain colonized Uganda for strategic reasons to control the source of the Nile, to secure foodstuffs, raw materials and a market for her surplus manufactured products that were similar to what Uganda was producing such as cloth, hoes, ceramics etc. Therefore these Uganda industries and the jobs and incomes they created had to go and were subsequently replaced by imports from Britain. Uganda was forced to produce cotton, coffee, tea and tobacco, commodities that were not being grown when colonization began. Therefore, comparative advantage was not a factor in determining Uganda’s production and export, in raw form, of these commodities.
In the 1950s the colonial administration recognized that agriculture alone was insufficient to provide jobs for the rising labor force. It embarked on industrialization using local materials such as cotton and copper etc. It developed hydroelectric energy and set up a development corporation (UDC) to be responsible for planning and implementing the industrialization process. The government also instituted a tariff regime to protect Uganda’s infant industries from unfair competition from Britain and other sources.
Trade liberalization under the Washington Consensus opened Uganda’s markets to all sorts of cheap products especially used ones which have knocked out many Uganda industries and reduced others to produce far below their installed capacity. This policy imposed by the World Bank and the IMF in return for aid and technical assistance has undermined Uganda’s industrialization process, reduced economic growth, limited job creation and decreased household incomes. Real economic growth in 2009 is reported to have been as low as 4 percent (Uganda Monitor June 7, 2010) implying very low per capita growth given Uganda’s annual population growth of over 3 percent and thereby contributing to unacceptably high level of poverty and deprivation.
Uganda’s LDC status and rules of World Trade Organization (WTO) allow protection of infant industries from unfair competition. In the next five years, under the development plan, authorities in consultation with development partners and WTO should take steps to protect Uganda industries otherwise President Museveni’s promise that Uganda will export manufactured products in the second decade of the 21st century will not happen.