ERIC KASHAMBUZI

Written by Eric Kashambuzi, on 23-06-2008 23:15

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At the start of the twentieth century, Ugandans were growing enough food and manufacturing a wide range of products according to their comparative advantage that, barring natural disasters or temporary man-made conflicts, enabled them to trade surplus in local and regional markets and obtain what they needed. European travelers and explorers were struck by the vitality, eagerness, intelligence and the life-enhancing quality of Ugandans. They were dubbed the “Chinese” and later the “Japanese” of Africa.

Winston Churchill was not only impressed by the beauty of the land, but also by the fertility of the soils, the abundance of water and the coolness of the air. Compared to other African countries Churchill said “The scenery is different, the vegetation is different, the climate is different and, most of all, the people are different from anything elsewhere to be seen in the whole range of Africa” (Sidney Taylor, 1967). He called Uganda “the Pearl of Africa”. He added that, one day, Uganda would become the great center of tropical production and play a most important role in the economic development of the whole world.

With entry into the global economy, Uganda became a producer mostly of what it does not consume and a consumer mostly of what it does not produce as a result of Ricadian version of comparative advantage. Consequently, Uganda became a producer of cheap raw materials in exchange for expensive manufactured products. The new comparative advantage meant that Uganda ceased being a producer of manufactured products such as iron tools, cloth, salt and wooden products such as canoes, wooden spoons and combs and focused on the production of coffee, cotton, tobacco and tea for export to the metropolitan country – Britain.

Then in 1986, the National Resistance Movement (NRM) came to power with a determination to effect a fundamental change in Uganda’s economy and society. The Ten-Point Program, later expanded to fifteen, correctly called for the creation of an independent, integrated and self-sustaining (and sustainable) economy and the transformation of a peasant-based subsistence economy into a technology-based modern economy run by the middle class. Ugandans bought the program and were prepared to tighten their belts even further so that the program could be implemented and lift them out of abject poverty.

However, by the second half of 1987, the NRM government had changed course and to use Ian Leggett’s words the “NRM buried its initial economic strategy, which was designed to overcome the colonial legacy of producing what we do not consume and consuming what we do not produce, and embraced the policies of the economic orthodoxy”. Thus the NRM wedded its administration to the text book IMF-style economic stabilization and structural adjustment program based on privatization, liberalization, deregulation and export diversification. With massive support from the development partners and remittances by Ugandans as well as the excess capacity inherited by the NRM government in 1986 and the restoration of peace and security in parts of Uganda, the economy registered high growth rates at times reaching 10 percent. Uganda was graded by the international community as a “successful” adjusting country to be emulated by other African countries that wished to overcome underdevelopment. As time passed, the economic growth rate declined, inequalities widened, jobs became scarce, nutritious and adequate food became inaccessible to a large number of Ugandans and the environment in towns and countryside deteriorated.

Against this background, the Woodrow Wilson International Center for Scholars in Washington, D.C. organized a conference on Uganda on June 2, 2005 under the sub-title “Uganda: An African ‘Success’ past its Prime”. The sub-title conveyed the message that all was not well with the free-market economic reforms under the Washington Consensus terms. The title of the conference was appropriately called “Challenges and Change in Uganda”.

In his keynote address at the Public Expenditure Review Workshop in May 2005, the President observed that in spite of the achievements made, there were still challenges that must be tackled, including the need to increase the pace of industrialization and technological advancement, transformation of the agrarian economy to one based on modern technology and improvements in the human development outcomes. He regretted that “Surrendering Sovereignty over decision-making in exchange for money has, therefore, been a big mistake”. A subsequent two-day retreat of all Ministers and Permanent Secretaries presided over by the President took place in September 2006 and debated the way forward. A group of ministers was tasked to draw up a new vision and strategy to address the development challenges including poverty.

In carrying out this assignment, the Ministers should keep in mind the advice from Bruce Bartlett, a principal participant in the design of Supply-Side Economics in the United States during the Reagan Administration. He advised that: “There is no question in my mind that we never could have overcome the stagflation [high inflation, high unemployment and economic stagnation] of the 1970s as quickly or with as little pain as we did without the supply-side idea [cut taxes, reduce government size, increase savings, stimulate private investment, increase economic growth]. But supply-side economics has done its job, just as Keynesian economics did [after World War II]. Those who campaign as its champions are fighting a fight long won – and it is time for supply-side rhetoric to go, with its essential truths embodied in mainstream economics and its perversions discarded for good” (New York Times, April 6, 2007; Monthly Review, April 1983).

Similarly, Uganda has already achieved low inflation and the economy has been growing at an average of 6 percent annually since the 1990s. It is time to pay more attention to other current pressing challenges such as unemployment, energy and other infrastructural bottlenecks, income inequality, quality education and health care services, environmental degradation, food and nutrition insecurity and industrialization or value addition to Uganda’s products or skill-based industries. To address these pressing challenges adequately, the role of the state will need to be redefined to take care of market imperfections and to design new tools that are different from those the NRM government has applied at the start of its structural adjustment program in 1987.

On industrialization and transformation to a modern economy and society, it is important to note that “Without protection, many economies [including Uganda’s] would never start to develop industrially, but would remain forever specialists in primary products, their livelihood depending on uncertain market prospects and terms of trade, unable to provide the employment that they require and forever completely dependent on other economies. But at a later stage of development a more open economy may allow advantage to be taken of economies of scale, of returns to specialization and of comparative advantage… Thus the appropriate question is not free trade or protection, but free trade when or free trade and protection (G. K. Helleiner, 1976).

Uganda has human and natural resources to address adequately the challenges we face in this century. The challenges have been adequately analyzed. We therefore need less talk and conferences and more implementation of the recommendations. The state together with the private and civil society organizations need to pull their resources together to make the necessary changes and bring about the desired results that enable all Ugandans to realize their basic human rights.