Eric Kashambuzi

Uganda is not a poor country at all. It never has been. It is endowed with a wide range of natural resources and resilient people. But Uganda is an impoverished country with many impoverished people due in part to its incorporation into the global economy as a dependent member. It is among some 50 countries in the world that are categorized as least developed, meaning that the majority of the people in these countries do not meet the basic needs of food, shelter, clothing, health care and education.

Uganda has neither benefited from the globalization phase of the late 19^th century (1870-1914) nor of the late 20^th century (1970s to the present). The main pillar of globalization is openness that promotes trade, investment, financial and service flows across national borders.

Contrary to expectations, globalization has not benefited all countries or all people within countries. There have been few winners and many losers. Uganda is among countries that are losers and has many people that have lost a great deal.

Before colonial rule, Uganda produced abundant foodstuffs – crops, livestock and fisheries—as well as wild game and fruits and vegetables – which provided a balanced diet. Uganda also had developed a wide range of manufactured products using its natural resources such as iron, cloth, wooden, salt, pottery and a variety of mats and baskets. Surplus agricultural and manufactured products were traded in local and regional markets in eastern and central Africa.

European travelers, explorers and missionaries were impressed by the abundance and the quality of Uganda people. Accordingly, Churchill named Uganda the “Pearl of Africa”.

The incorporation of Uganda into the globalized market after it became a protectorate in 1894 changed all the economic activities and began the process of de-industrialization and underdevelopment.

Under comparative advantage and laissez faire (let alone) arrangements which marked the 1870 to 1914 phase of globalization, Uganda was reduced to a producer and exporter of primary commodities with low and fluctuating unit prices in exchange for manufactured products with high unit and ever increasing prices, making the terms of trade unfavorable to Uganda. Uganda had to produce more for the same unit of manufactured product. Uganda industries were outcompeted and completely wiped out.

As Uganda de-industrialized, it also became food insecure because more fertile land and economically active labor were devoted to the production of raw materials for British industries and food to feed rising British population. When globalization came to an end in 1914 because of imperfections in free market and laissez faire economics, de-industrialization and food insecurity outcomes in Uganda had already initiated the process of underdevelopment.

After the Second World War, the British administration attempted to improve the economic and living conditions in Uganda and to cater for rising labor force on several fronts including industrialization and food security. Through a number of measures such as the building of the hydroelectric dam at Jinja (the Detroit of East Africa) to provide energy and the creation of Uganda Development Corporation (UDC) to plan for economic transformation, a process of re-industrialization of Uganda was launched. Many products in the mineral, agricultural and forestry sectors were manufactured, jobs were created and incomes improved.

The development of fisheries and establishment of nutrition clinics throughout the country was initiated to provide an affordable source of protein for low income families, and to treat undernourished people especially children and to train mothers in hygiene and in the preparation and serving of balanced and safe diets. Notwithstanding these efforts, Uganda’s economy and society remained dependent, exporter of raw materials, poor and ill-fed.

When the National Resistance Movement (NRM) government came to power in 1986, it was justifiably determined to introduce fundamental changes in the economy and society. It wanted to create an independent, self-reliant and self-sustaining economy and a well-fed, healthy and active population. It produced a ten-point program which was subsequently expanded to fifteen points as a basis for this transformation – a program that received overwhelming support of Ugandans.

Unfortunately, the implementation of this program using a mixed economy model (public and private partnership) coincided with the new phase of globalization which had begun in the late 1970s. The economic challenges at that time including external debt called for the introduction of stabilization and structural adjustment programs in particular the three basic and interdependent objectives of promoting economic growth, reducing inflation and improving balance of payments through increased and diversified exports in a liberalized, deregulated and privatized atmosphere.

Under these circumstances, the NRM government abandoned its fifteen point program and a model of mixed economy in favor of a globalization agenda popularly known as the Washington Consensus which was comprehensively and quickly implemented.

The current globalization phase like the one before it, has led to uneven development. From the 1970s, the world economy has experienced a divergence in levels of income between and within countries. The gap between rich and poor countries and rich and poor within countries has widened.

In Uganda, income distribution has become skewed in favor of a few – 20 percent in the high income bracket own over 50 percent of national income whereas 40 percent in the low income bracket own a mere 15 percent of total income. Poverty levels have remained unacceptably high with serious social and environmental consequences.

Data from various and reliable sources indicate that some 30 percent of Ugandans go hungry, over 33 percent are mentally sick in part because they are eating unbalanced diets dominated by bananas, cassava and maize, 40 percent of children under the age of five are undernourished, 12 percent of infants are born underweight because their mothers are undernourished and up to 80 percent of children are dropping out of primary school largely because they are hungry – all these adverse developments are happening when Uganda is a major exporter of food including fish which the colonial administration had developed specifically to provide an affordable source of protein to low income families.

Spreading diseases such as trachoma which leads to blindness and environmental degradation that may turn Uganda into a desert within 100 years constitute serious development challenges indeed. If not checked in time these developments can degenerate into social breakdown and tensions that may spill into the political arena.

Against this background, a new development model is long overdue. When it is launched – and hopefully soon – it must include manufacturing which transforms economic structures, creates jobs and promotes equity.

As noted already, in the period 1870 through 1914 countries such as Uganda that had open economies experienced de-industrialization. Similarly countries such as Uganda that have embraced open economies under globalization that began in the 1970s have again experienced de-industrialization and the associated income inequalities and high levels of poverty.

Fortunately Uganda authorities are fully aware of the crucial role that manufacturing plays in economic transformation, job creation and poverty reduction. All they need to do is to muster courage and political will to act. No country in the world has developed without protecting its industries against unfair competition. Let us add that the Corn Laws from 1400s to 1846 in England were designed to stabilize prices and to protect British agriculture against imports.

The current global recession offers a unique opportunity to take bold steps to introduce appropriate manufacturing policies to re-industrialize Uganda’s economy with a clear strategic role for the state. Washington Consensus has outlived its usefulness and is being abandoned in many countries around the world. Uganda has no choice but to join others. Postponing action will only make matters worse and nobody surely wants that to happen.