Uganda’s strategic dilemma

To understand the dominance of foreign firms in Uganda’s economy, one has to look at the nature of the reconstruction our country has pursued under President Yoweri Museveni since 1986. How did Uganda come to adopt the political institutions and public policies it did? What groups – both domestic and international – stood to benefit from these economic reforms and were thus cultivated and strengthened? Which groups were marginalized, displaced and/or stifled? Finally what are the implications of this on the politics of economic policy making today?

Museveni took power ahead of the National Resistance Movement (NRM), an organisation that was largely left wing and Marxist. However, and ironically, to capture power the NRM had allied itself with conservative interests nationally and internationally. Domestically it had allied with Mengo and Rubaga, the seats of the Buganda monarchy and the Roman Catholic Church respectively alongside Southern business interests. Internationally he allied with some right wing groups in the Western World closely tied to the administrations of Ronald Reagan in the United States (the first country to recognise Museveni’s government in 1986) and Margaret Thatcher in the United Kingdom especially through Tiny Roland of Lonhro.

In 1986 the economy had virtually collapsed. Globally, NRM’s natural allies, the Soviet Union and its Eastern-bloc countries, were broke. To run government, Museveni needed money, but the treasury was empty. So he turned to the Western countries for financial assistance. Money is an important political resource. For example, Museveni needed to pay government employees to perform basic functions like keeping law and order and ensuring public services like education and health can function minimally. But he was also facing an armed insurgency in the north. Government also needed foreign exchange to import spare parts and other inputs to get industries that had shut down to re-open.

Western countries insisted that to lend Uganda any money it had to first reach an agreement with the IMF. Ezra Suruma once told me that by the time the government delegation went to Washington DC to negotiate with the IMF, the country had fuel to last it only three weeks and no foreign exchange reserves at all. The IMF insisted that to lend Uganda money, the government had to accept “stabilisation” measures: withdraw of state subsidies from education and health, liberalise foreign exchange, control inflation, etc.

Then World Bank too had its demands and these were of a medium to long-term nature. These included demands to trim the civil service, demobilise the army, return to previous owners properties of non-indigenous Ugandans confiscated by Idi Amin in 1972, privatise state owned enterprises, liberalise and deregulate the economy. Museveni’s government accepted these reforms out of desperation, not conviction. When it accepted them, aid money began flowing in and the economy began to grow.

How NRM responded to the demands and the benefits in aid it got from international institutions not only shaped the subsequent policy orientation of the government, it also helped consciously cultivate a public sector, private sector, civil society and mass media which were all ideologically committed to the neo-liberal economic agenda. Consequently, the social forces that came to dominate intellectual and political life in Uganda are hostile to the very policies that promote local ownership. I will expound on this in the next article.

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amwenda@independent.co.ug