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Government now plans to intervene in the economy

By Dicta Asiimwe

Says new challenges call for stronger state leadership in the economy

President Museveni this week launched the National Development Plan (NDP) whose drafters say is meant to transform Uganda from a peasant to a prosperous country within the next 30 years.

They say government will achieve this through growth, employment and socio-economic transformation. Uganda has one of the youngest populations in the world and most of them are either unemployed or under-employed.

The new plan is major shift from the laissez-faire liberalism propagated in the 1980.

In 1987 the National Resistance Movement (NRM) government, with advice from the World Bank and the International Monetary Fund (IMF), decided to carry out macroeconomic and structural adjustment that saw the government sell most of the government-owned enterprises to the private sector.  As a result the government continually left the development of the country in the hands of the private sector.  The argument at the time was that government is a poor businessman.

However, the new plan now says development of the country cannot be achieved by leaving everything in the hands of the private sector. ‘Unlike the challenges we have so far overcome, these ones specifically call for stronger state leadership in guiding and setting pace for economic transformation,’ a text in the plan says.

The first of the six five- year plans says the government needs to move from a market economy to a quasi- market economy where both the government and private sector are involved in production.

Lack of infrastructure is currently one of the biggest hindrances to the development of different sectors in the economy. However, as a result of the 1987 adjustments, the government no longer has control over the transport sector since it sold the national airline; the government-owned bus transportation and the railway were also privatised.

The new plan says intervention in the transport sector will see improvement of the stock and quality of roads in Uganda, improve traffic flow in Kampala metropolitan, develop and maintain strategic roads for tourism, increase the volume of passenger and freight cargo conveyed on the rail network and increase the volume of passenger and cargo traffic by air transport.

The structural adjustments also saw the collapse of cooperatives which were a big source of support of the agricultural sector through provision of the funds to farmers from the cooperative bank, provision of extension workers, farm equipment and effective marketing of farm produce.

As a result of all this the agricultural sector which still employs 73 percent has been continuously declining.  It grew by only 0.1 percent in 2006/2007 from 7.9 percent in 2000/2001.  The drafters of the new plan realised that agriculture needed more attention from the government if the welfare of the population was to be improved. The sector contributed only 24 percent of the total Gross Domestic Product (GDP) in 2008. This emphasises the inequality in both income and production for Ugandans.

The National Planning Authority (NPA) which drafted the report said government needed to focus more resources on agriculture as improvement of the agriculture sector would significantly reduce the number of people below the poverty line to 17.9 percent by 2015.  Currently, 31 percent of Ugandans live under the poverty line.

According to the NPA, the poor performance of the agricultural sector has been as a result of a weak policy, legal and regulatory framework.  It says policies have been developed for the sector but the implementation has not been consistent with specific government programs which they say has led to uncoordinated intervention.

They added that the sector faces high risks and the cost of investment necessary to cause transformation of agriculture into commercial production requires significant capital which is beyond the capacity of the communities involved in agriculture.

The NPA also blamed the lack of enough human resource, extension staff and the limited availability of improved seeds, fertilizers, irrigation equipment and machines for planting and harvesting.  The plan proposed to increase production in agriculture by improving technology in the sector, ensuring delivery of advisory services, controlling diseases and increase of water supply for irrigation, livestock and aquaculture and encouraging effective land use.

As a result of rapid population growth, the country is quickly urbanising without proper planning. The towns are turning into slums. The plan is asks the government to provide appropriate policy, legal and regulatory framework since the sector is largely in the hands of the private sector.

The NPA has also set a target to combat the rapidly increasing effects of environmental degradation. The NPA said if this report’s objectives, strategies and interventions were followed; the forest cover in Uganda would increase from the current 3,604 hectares to 4,933,746 by 2015. The interventions they said are reforestation and afforestation, having well maintained plants along and around public infrastructure, promotion of commercial tree planting on private land, restoration of degraded natural forests and protection of permanent forest estates.

The plan proposed to increase the oil and gas exploration so that the reserves in the country would be 2 billion barrels of oil. The plan looked at the sector to contribute to the Shs 54 trillion required to implement the new development plan.

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