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Uganda’s strategic dilemma

Why Uganda’s economy is dominated by multinational capital and what cannot be done about it

THE LAST WORD | Andrew M. Mwenda | Uganda is facing a dilemma. The country is investing tens of billions of dollars in huge infrastructure projects – dams, airports, highways, bridges, railways, water systems etc. Many Ugandans are complaining that all the big contracts are won by foreign firms especially Chinese, who even bring their own workers and materials. They argue therefore that these investments bring little value to the citizens as local manufacturing and construction firms get little or nothing. Consequently, the debate on and demands for local content have become loud.

Many are calling on government to adopt and enforce local content laws to give domestic/indigenous/local/nationals a piece of the pie. However, government has made half-hearted efforts in this direction. Whatever local content rules it has designed have not been implemented to the satisfaction of anyone. Why is it that the problem is known, the solution (or at least a part of it) has been designed but the implementation has remained elusive? This article attempts to provide an answer or at least a slice of it to this vexing problem.

There is an implicit assumption in most debate on development that public policy is made through some optimisation process i.e. that decision makers meet, and based on sound economic policy principles and seeking to do what is good for the country, carefully craft a policy strategy. This religious assumption about how government works is, to say the least, utopian. This article shifts the debate on policy making from economic theorising and political moralising to the field of political economy.

First, no society can be governed based on technical considerations of economic theories derived from a textbook or classroom. Indeed, no theory can capture the multitudinous complexity of social life. At best a theory can only represent the experience of a given society at a given period in time. But even here, it would only be a small part of a complex social reality. Therefore any attempt to govern society based solely on technical considerations would destroy the meaning of human life.

Second, government is not a single reified actor working for the “common good.” It is a collection of self-interested individuals and groups armed with particular ideological convictions. These come together seeking to advance the interests of the social groups that constitute the political supportbase of the ruling power. Therefore, public policy making, especially economic policy, is primarily a political, not a technical process.

I am not suggesting that public officials lack public spiritedness i.e. a commitment to serve the “common good.” Rather, public policies are based on ideological convictions; and ideologies are interest-begotten. Therefore, to understand the public policies a country pursues, one has to look at the interests that stand to benefit from those policies. The army of intellectuals who defend such policies need not be selfinterested individuals consciously seeking personal gain. Rather, they often advance the interests of particular social groups subconsciously in the often honest and genuine belief that it is what is good for the country.

15 comments

  1. Yet another attempt at explaining a Ugandan problem in solely quasi-academic terms. While it may make interesting reading it is only a small part of the big dilemma that Uganda faces. Frankly speaking, there is no qualitative or quantitative local content to speak of regarding these major projects or contracts. Ugandans companies have no financial capacity, no technical capacity, no skills, most Ugandans are outright thieves/con people, no work ethics. At the bigger level the Ugandan government itself is a mirror image of its people and worse. Mr. Mwenda the government of Uganda has both knowingly and unknowingly pursued policies that ignore or at best prevent the growth of viable local capacity – deferred payments to local companies(many die off from the fatigue of waiting for years to be paid for goods and services supplies to government), rent seeking by government official on contracts awarded to local contractors, cronyism in awarding contracts in many cases to unqualified contractors (Andrew you can get the contract to service those new Uganda airline planes the issue of competence or lack of it not with standing! ). Do you know that Ugandans in the diaspora who have tried to return to Uganda with their acquired skills and technical capacity are being discouraged by unimaginable tax levels on equipment bought from their savings while working outside of Uganda? Why tax wealth and equipment being brought into the country even when Uganda has never invested even a cent on them? Rich countries like America and those in Europe are offering huge tax waivers so that their nationals bring home all wealth and technical skills they may otherwise be holding in foreign lands. By the way, many skilled Ugandans seeking to return home to invest are not asking for land or a government kiss like the ‘foreign’ investors our policy makers are obsessed with.

  2. I am employed in the coffee industry,and often times i hear president M7 speaking about processing our raw materials,e.g coffee.

    The dilemma comes in when our biggest consumers (Europeans) are more interested in raw beans than roasted or processed ones,and are ready to look else where to countries such as Brazil,Vietnam,Columbia,Ethiopia,e.t.c which leaves us with no choice but to sell our raw beans to make ends meet.

    In conclusion,in support of the article,i largely agree that multinational capital will continue to dominate our economy especially in fields that we dont have monopoly over which largely define our economy.

    Nice piece #Andrew.

  3. Good creative article one reason I will never begrudge my ears to A.M. The catch in the whole discourse lies in the last paragraphs. Actually the often repeated phrase that by 1986 the economy was on its knees and the coffers empty serves only one purpose . to prepare the readers for the subsequent misdeeds of the stewards that took over the affairs of the state. It did not help matters then that the looters of the state coffers were Anyanya from the north and now that sane people one of our own were the stewards. the euphoria was palpable! Today 33 years latter the picture is not different . the taxes on basic items like salt , water and electricity all serve to sanitize the non productive expenditure that characterize government spending and corruption is the icing on it all .If you recall Frank mwine and his reckless tenure of former UCB ,it gets clearer when you find out who his relatives are and the loan interest rates of the early 1990s. The late Cheye Teddy Sezi in his newsletter used to make half hearted attempts to expose the woes in the financial sector by then the Surumas had the last word . unfortunately as it later emerged his hands were itching for the same action [a place among the thieves]. Unfortunately the woes in the financial sector have come to stay COCASE proved this. This infrastructural paradox can best be explained by what takes place in the treasury. As a citizen I be happy to see functioning infrastructure but thes guys are poor at hiding their misdeed. If you ever traveled the new Kyenjojo -Fortportal – Kasese highway there are some sections that were done by a chinese company with hand held hoes , spades and brooms I admit afeat of ingenuity. yet another by SBI, with modern earth-moving equipment . Today the road is getting remade . who foots the biill? Ironically the journalists would have had a field day poking fun at the hand held tools if the contractor was say Mukalazi technical works.Yet for the stewards at the top, easy names like Roko ,Stirling, Dragados and many others that would have imparted the much needed ethical and technical standards to our engineers are glossed over in favour of cheaper alternatives fron the orient and ofcourse with a few kickbacks in the pockets of the political elite the story becomes another puzzle to us ordinary folks.

  4. The greatest sin the state commits by commission or omission is EVICTION of people from their land of birth, giving land to foreigners to hoard,permitting some people to occupy more than they use and failure to settle people in the country yet animals have gazetted areas and are protected. Such an occurrence was inconceivable during Amin tenure. How can a(ny) leader explain to how and why any person in Uganda(citizen or resident) is landless?
    As for any local entrepreneur being offered a contract, it is a pipe dream because it require that you pledge to give a kick-back to the offerer and local entrepreneurs are rumourmongers…..reason they are reserved for foreigners.

  5. ejakait engoraton

    “Museveni took power ahead of the National Resistance Movement (NRM), an organisation that was largely left wing and Marxist”

    M7 was not a Marxist, communist or whatever one wants to call it, out of ideology or conviction as you had with the likes of NYERERE or FIDEL CASTRO.

    M7 hated life presidents, he hated land owners, he hated those he considered to be well off, he hated monarchs.

    BUT , he did not hate the life presidency, he did not hate land ownership, he did not hate the crude accumulation of wealth, he did not hate the monarchy or hereditary rule. IT is just that it is HE , M7 who wanted to be the land owner, or to determine who the land owners are, it is HE who wanted to be the life president, the monarch, the hereditary ruler; the reason he refused to restore the OMUGABE, because in his twisted mind he wanted to be the Omugabe and felt that HE is the Omugabe or Sabagabe as he calls himself.

    THIS is where all the dilemma comes from in that M 7 does not want alternative centres of power especially if they are created as a result of one having wealth. This is the reason cooperative unions, the engine of wealth creation for the rural folk, were destroyed and still being fought as we see with the case of Bugisu Cooperative Union. This is because the person at the head of such an organisation wields a lot of power.

    IT is no secret for instance that when they came into power, they tried to destroy all business people who were deemed to be associated to the previous regimes, unless they were in some way allied to them. Efforts were made to destroy people like Wavamunno and his SPEARS empire,because of his association with the likes of CHRIS RWAKASISI and RURANGARANGA, the reason they tried to change flagship cars to the NISSAN LAUREL at the time, a move meant to deny SPEAR Motors government business. IT is claimed they even tried to go and buy the cars directly from Germany , only to be told, regardless, a commission would still be paid to SPEAR Motors by virtue of being the SOLE dealer/agent and for purposes of effecting the warranty and servicing of the vehicles.

  6. And by the way Ejakait, what does Sabalwanyi say when he is politely asked about a functioning railway he found,used and uprooted to sell as scrap?

    • ejakait engoraton

      “We will also re-establish the old train transport system and construct a new one. Train transport is more cost effective compared to road transport,” Museveni said during the commissioning ceremony.”

      My dear brother, there is the answer to your question.

  7. Questions to ask about the status of the economy;
    1.Is Government preoccupied with collecting taxes only?
    2.Was privatization a hoax?
    3.Did we rush into privatization?
    4.Has govt failed to negotiate for good deals?
    5.The issue of local content is not a right.
    6. Technology seems to be the “New Cash Crop”but we are not aware.
    7.Have we invested in many white elephants?
    8. Have we exhausted our intellectual capacity as Ugandans, we r not using it or it its not there?
    9. There so many alternatives in the world market for example people can drink tea,cocoa instead of coffee.
    9.Are our expectations too low or High?

    • Questions to ask about the status of the economy;
      1.Is Government preoccupied with collecting taxes only?….. YES, AND WHAT THEY COLLECT, THEY MISAPPROPRIATE,MISSALLOCATE,MISUSE,MISPLACE AND TO THOSE WHO SHOULD PAY, THEY GIVE TAX HOLIDAY SO THE POOR MAINTAIN THE RICH. IT IS TRAGIC
      2.Was privatization a hoax? IT WAS REAL AND IT WAS EFFECTIVE BUT FOR THOSE OF US WHO WERE MATURE IN 1972 WHEN UGANDANS’ PROPERTY (I SAY SO INTENTIONALLY BECAUSE AMIN HAD PAID FOR IT FULLY IN CASH) WAS ALLOCATED TO INDIGENOUS, SPENDTHRIFT CHAOS REIGNED, people partied and most businesses went under but they were not loans,they were handouts……some monies accruing are still productive to date. PRIVATISATION WAS DIFFERENT. GOVERNMENT PARASTATALS WERE SOLD AT KAMANUKO RATE (dead cow’s meat price) and then the monies embezzled and then the buyers (preferentials) ran them down by vandalising and reselling to others etc….so it was a triple loss. TAMALE MIRUNDI WOULD COMPARE IT AS ” RAIDING A BANK BY GOVERNMENT SOLDIERS USING TAXPAYER BOUGHT AMMUNITION, KILL SOME STAFF AND TAKE THE MONEY THEN GO ON RAMPAGE PROSTITUTING AND DRINKING, SPREADING AIDS TO SCHOOLGIRLS WHILE ORPHANS OF DEAD KILLED BANK STAFF DIE OFF SLOWLY DUE TO STARVATION…..EVEN IN UK YOU CANNNOT CALCULATE THAT LOSS WINNIE…THAT WAS YOUR PRIVATISATION.

      3.Did we rush into privatization? NO IT WAS A DELIBERATE CALCULATION TO FLEECE THE PEOPLE AND THEY WERE HELPLESS TO DO ANYTHING. TO HELP YOU UNDERSTAND. ONE TIME WE WERE WATCHING A MOTORCYCLE RACE IN TORORO STADIUM. THEN A SHORT MAN STOOD ON THE POLICE LANDROVER IN ORDER TO SEE WELL, THE REAR LIGHT FELL OFF. SO POLICE ARRESTED HIM. WE WERE STILL YOUNG ENERGETIC AND BRAVE SO WE ENGAGED THE POLICE, “GENTLEMEN, YOU ALL SAY WE ARE ALL THE GOVERNMENT, THIS MAN IS INCLUDED, THIS VEHICLE IS FOR GOVERNMENT WE ALL, WHY DON’T YOU TAKE THIS AND REPAIR IT WITH GOVERNMENT(OUR) MONEY?” THE POLICEMAN TOLD US THAT THAT MAN WAS ONE GRASS ON A HOUSE, IF HE IS TAKEN TO MORUKATIPE, THE HOUSE WILL NOT LEAK. SO WE CONCLUDED IN TORORO COLLEGE THAT EVENING THAT ” A GOVERNMENT IS A GROUP OF PEOPLE WHO GOVERN A NATION” A GOVERNMENT IS A GROUP, NOT ALL OF US.
      4.Has govt failed to negotiate for good deals? IT GETS GOOD DEALS BUT EVEN IF IT RAINS DOLLARS AND GOLD NUGGETS, THE COMMON MAN CANNOT GET ANYTHING UNLESS HE STEALS IT. YOU REMEMBER AN AIRCRAFT THAT TOOK MONEY TO KALANGALA BANK AND DROPPED A CARTON. THE WIND TOOK SOME OF THE MONEY BUT THE PEOPLE WHO HAVE NEVER, WILL NEVER ENTER A BANK WERE RANSACKED AND THEIR SAVINGS TAKEN AS IF IT WAS THE STOLEN MONEY. YOU KNOW THE TRICK….TAKE 50m BUT WRITE THAT IT WAS 10bn THEN DROP IT AND LET IT SCATTER THEN BLAME THE PEOPLE AND THE PILOT AND THE WIND AND THE PLANNER BUT SOMEONEs WILL HAVE POCKETED IT.
      5.The issue of local content is not a right. WHAT DO YOU MEAN BY THIS?
      6. Technology seems to be the “New Cash Crop”but we are not aware. WHO IS NOT AWARE? you?
      7.Have we invested in many white elephants?VERY MANY STARTING WITH MISS CURVY PEGEANT AND INFLATED PROJECTS LIKE ENTEBBE HIGHWAY, JINJA HIGHWAY, OIL ROADS (WHERE THERE IS NO OIL) THE REST YOU CAN YOURSELF ADD.
      8. Have we exhausted our intellectual capacity as Ugandans, we r not using it or it its not there? UGANDA’S INTELLECT AND INTELLECTUALS ARE INTACT AND SOBER BUT MORE POWERFUL FORCES HAVE OVERRULED THEM AND THEY ARE NOT CONSULTED.
      9. There so many alternatives in the world market for example people can drink tea,cocoa instead of coffee. AND SO?
      9.Are our expectations too low or High? NOONE EXPECTS ANYTHING FROM ANY OTHER PERSON, PEOPLE WANT THEIR DUES AND TO BE LEFT IN PEACE SO THEY DO THEIR ASSIGNMENTS LIKE THEIR FOREFATHERS.
      I HOPE i HAVE ANSWERED YOUR QUESTIONS SATISFACTORILY

      • ejakait engoraton

        Thanks my dear brother, I had every intention of answering our British sister, but you have done a better job than I would have done.

  8. @ Ejakait and Rwasubutare i have always had very opinion of you guys and and you never disappoint me.

    1 I speak with a very very heavy British accent and i am of course a lawyer this simply means i expect you to raise the level of discussion not just answering me in a daft manner and flashing your teeth like apes for example; is it too late for government to revert to nationalization of sectors like the Bank and Telecommunication since we have learnt a lot from the foreign companies?
    2What i meant by local content not being a right is simple to click; we should improve our negotiation skills when sealing business deals.
    3 So your idea of technology is receiving mobile money?My idea of Technology being a ‘CASH CROP”is companies like NCR servicing and maintaining ATM machines,Mantrac servicing heavy duty machinery,Medcon servicing medical equipment,Boeing servicing and manufacturing most planes.
    4.On HIV bambi advise your stupid daughters to stop opening their legs widely for any man on heat..

    • Winnie you are very narrow-minded like your mentor the only-visionary. Your neighbours are all low on food due to one reason or other or a combination of all. In Congo you can grow any food crop and the land is very fertile and mostly virgin but you cannot harvest it, if you do, no roads so the labour just rots when you are looking…..Rwanda is densely populated and the soils are depleted of nutrients, Kenya is 75% desert and the population is high…..Tanzania is just complacent; growing just enough for their own consumption and mostly resting and talking politics like ancient greeks of Athens and Sparta. So who will feed who if you go into polluting industries at expense of agriculture? will you eat plastic? or roads? I hear you whisper mbu EXIM……Winnie, are you related to visionary?

  9. @Rwasubutare IF ALL THE MATURE PEOPLE IN 1972 THINK LIKE YOU THEN THERE IS A PROBLEM, have you ever heard of food processing plants?vaule addition to agricultural products if you have never heard of those terms then industralization will not bother you.

    Just be lie low like Rajab who only knows Kayibanda .

    • I have not only heard of ‘food processing and value addition’ but have also witnessed it first-hand as a beneficiary.
      Ejakait is my witness that long before your generation (that misspells basic English words despite living in UK)was born, we grew cotton, sold to cooperatives that took the said cotton to ginnery plants and the cotton separated from seed; seed going to oil plants and the cotton taken to NYTIL Jinja to be made into yarn and cloth. Uganda made the best mercerized khaki the colour of stainless steel and nearly as durable(we called it American) the world has ever known. Eversince the system was run down by saboteurs, the fabric has never been seen again. Back to the oil, we fried with it and the residue was made into animal feed cake. Though I cannot bet my life on it, there was no chinese except maybe the embassy. But personally I had not seen one though we heard stories of their expulsion from Olympic games because of their sorcery practices and other crooked habits.
      Food was processed and preserved well but no poisonous additives were added….KOB maize meal was one such plant and it sufficed the local and foreign market.
      Tororo alone (small as it was then) had 5 factories (UCI, Pen Factory, Jute factory,UMA and EATRO)
      Nobody slept hungry(not even beggars) food was abundant and affordable for both cash and kind. You were allowed (by tradition) to enter any homestead and request to be fed and you were; that is abundance mentality that sired generosity. In school, when we came from holidays, everyone would give friends what they produced in his home area (g-nuts from Pallissa, simsim from Gulu, catfish from Arua, dried jack-fruit from Buganda) and it was like one huge informal feast.
      When Congolese, Kenyans, Rwandans and distant Burundi reached Uganda, it was like the kyeyos who reach Europe; none returned to their homes. Ugandans benefited from their labour and they benefitted from everything because the Uganda of then (pre 1973) had everything(trains,ship, airplanes,buses,cars,trucks) and was DEBT-FREE(internal and external). Everyone ate what and when they wanted.
      And education was best on earth(no joking)proof being that a Ugandan O’level was employable anywhere and everywhere on earth as a teacher albeit called UNTRAINED teacher. And to cap it, the government paid bursaries for secondary students who applied for them………..Karimojong studied free of charge, were given pocket money and travelled on warrants paid for by government. I saw that with own eyes. Winnie, the visionary and his group have vandalised a grounded vehicle.

  10. @ Rwasubutare:In your previous post its you who exposed your ignorance about the lack of linkage between Agriculture and industrialization as usual i had to give you a brief.

    This is just food for thought:Paying Tax is all companies contribute towards the development of the country cant they do more than just paying taxes?

    All those who were mature in 1972 love food so much your latest post is all about eating may be that’s all you did.

    You think we did not hear of stories of people digging in peoples’gardens in exchange for salt and sugar?

    These days we take selfies near bridges and Dams built by M7but you guys would take photos with even empty bottles of soda.

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