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.
The tremendous economic difficulties of the 1970s and 1980s forced African governments to borrow heavily hoping that economic growth would return to the post WWII golden days. Instead the situation got worse and borrowing countries were saddled with debt they could not service. In desperation, they turned to developed countries and institutions for help. External indebtedness gave donor countries and international financial institutions (IFIs) the opportunity to restore and tighten control and management of indebted developing countries’ economies. The Bretton Woods Institutions of World Bank and the IMF (BWIs) in particular have since then exercised tremendous management control especially of economies in desperate and powerless poor countries through imposing stiff conditionality. Conditionality has included privatization of public enterprises, management of exchange rate, lowering and stabilizing inflation to single digits, export diversification, balancing the budget and placing more emphasis on primary than on secondary and university education etc. Through this control, the BWIs have launched a kind of multilateral neo-colonialism. As Elliot Abrams observed “Once the officials of the World Bank and the Fund have made up their minds, there is usually little material contribution from the officials of the borrowing government, at least in the case of the poor, indebted countries where conditionality bites the hardest” (The National Interest Summer 1993).
The National Resistance Movement (NRM) government inherited a shattered economy and external debt of $1.2 billion. To get debt relief and development assistance the government entered into agreements with BWIs that have carried stiff conditionality including the employment of foreigners as experts, advisors and supervisors especially in the ministry of finance, planning and economic development and central bank, marginalizing Ugandans.
On average the World Bank imposes 67 conditions per loan on poor countries. However in the extreme case of Uganda the World Bank imposed 200 conditions in connection with the poverty reduction program (Africa Renewal April 2008). When countries graduate as Uganda did from Poverty Reduction and Growth Facility (PRGF) of the IMF they sign onto the Policy Support Instrument (PSI) – a non-financial monitoring mechanism to make it easy to borrow from international markets at relatively low interest rates. The conditionality under PSI is expected to be much lower than under PRGF. However, in Uganda, both PRGF and PSI set similar targets on inflation and antipoverty spending, thus making it difficult to spend sufficiently on MDGs-related programs. The IMF has continued to insist on keeping spending down to achieve the goal of low inflation which has become more or less an end in itself. Through conditionality, the World Bank and IMF have exerted tremendous influence in the management of Uganda’s economy since 1987 when NRM signed the first agreement with the IMF.
While in Washington DC for the World Bank and IMF Fall meetings (October 2010), Uganda’s central bank governor commented on Uganda’s economy echoing areas of interest to the IMF namely low inflation, economic growth and foreign reserve accumulation. He did not touch on biting unemployment, diseases of poverty, school dropout largely for lack of lunches and environmental degradation. Although the IMF Managing Director reported at the September 2010 MDG Summit that conditionality had been streamlined to reduce controversy, it appears that streamlining has not taken place at the country level in Uganda. Consequently, controlling inflation through high interest rates has continued to discourage borrowing and investment in labor-intensive ventures resulting in high unemployment or disguised employment. Government is unable to start public works to ease unemployment and to launch school lunches to reverse dropout rates and improve performance because these programs would increase money in circulation which IMF does not want.
The government has thus failed to respond to appeals for public works and school feeding programs because it is not in charge of Uganda’s economy. BWIs that are do not attach priority to these programs. Consequently, they won’t be implemented no matter how much and how long the public appeals to the government for appropriate action. The government will not admit it has no power over Uganda’s economy. Instead, it will keep giving lame excuses for its inaction.