When the National Resistance Movement(NRM) came to power in
1986 it had great aspirations for the run down, war scarred economy of Uganda
as outlined in its original manifesto “The Ten Point program”.
In the fifth point the NRM set as its goal the building of
an independent, integrated and self-sustaining national economy. By this the
author’s meant an economy “that can move under its own power, not just a puppet
of outside economies on which it is dependent” and where the extraction of raw
materials was directly linked to the local consumer.
In their analysis of Uganda’s economy, we were backward
because our economies were intertwined with western economies on an
exploitative rather than symbiotic basis.
But they had very little to work with. The economy’s decline
which begun in the 1970s and continued into the 1980’s meant that GDP per capita stood at $230 or about 60
percent of the level it was at in 1971, according to a 1987 World Bank report
on the country.
"With much of the formal sector grinding to a halt the economy regressed into subsistence, with primary agriculture accounting for four in every ten shillings of economic output. Agriculture both subsistence and commercial accounted for 63 percent of GDP. Of the 83 factories surveyed in 1985 only ten of them were working on higher than 30 percent capacity while another 29 were all but shut down...
While coffee production had held its own because it was
mostly grown by small holder farmers – the country was producing 160,000 tons
of the bean or 72 percent of the 1965 level, other crops which relied on estate
farming, like tea, sugar and cotton had for all practical purposes stopped
being produced.
Cotton production was at seven percent of the 1965 levels.
Whatever parameters you checked the economy was on its
knees. With this context in mind they prescribed six solutions to redress the
state of affairs.
The NRM’s thinkers identified the narrow agricultural base
as a good place to start, making diversification of the products the pillar on
which they would rebuild the economy.
While as stated above primary agriculture accounted for 40
percent of GDP, coffee alone accounted for literally all that Uganda exported
bringing in about $400m a year. It was so bad that apart for accounting for all
our export receipts, taxes on coffee exports accounted for half of all revenue
being collected at the time. Today coffee exports suffer no tax.
This was a precarious situation. While not only was it not
prudent to have all your beans in one basket, our over reliance on a primary
commodity whose price was set by the buyers meant that revenues were bound to
fluctuate wildly depending on fundamentals that were not in our control.
To illustrate, poor weather in Brazil – the world’s largest
producer of coffee, in 1994 ruined their crop sending world prices shooting up
peaking at about $4.00 a kg in September of that year. But once Brazil’s crop
had recovered and new capacity had come onto the market especially from Vietnam
prices of the bean collapsed to 47 US cents by the opening of the Uganda season
in 2001.
"Today while we still export raw commodities we have a more diversified portfolio of exports.
For starters while coffee receipts have remained about the same at $400m in 2015, the bean only accounts for less than 20 percent of our total export receipts of $2.27b. Even more interesting is that the traditional exports of coffee, cotton, tea and tobacco account for only a quarter of exports by value. Since 1986 fish, maize, cement, beans, cocoa, hides and skins among others are being sent out...
This dramatic change in our export fortunes can be
attributed to the economic reforms implemented to jump start the economy, but
two in particular stand out – the liberalisation of produce marketing and the
floating of the Uganda shilling.
Previously government had monopoly produce marketing across
the country. Usual government inefficiencies, late payment for instance, served
as a disincentive to production. With the breakup of the monopolies private
companies jumped in and production followed suit.
Their second recommendation was to build import substitution
industries, “to eliminate the import bill for especially consumer goods eg
soap, toothpaste, paper, textiles etc”. It was not enough to have the
industries here but that they must use locally produced inputs. “It is of
little value to build industries that are heavily dependents on imported inputs
if it is scientifically possible to have local alternatives thereby limiting
the outflow of resources.”
While we have a few import substitution companies now, most
have fallen short of the initial lofty goal of having all their inputs sourced
locally. Most of our manufacturing is described last-stage assembly, with the
manufacturing straight from raw materials in agro-processing, which accounts
for 39 percent of this sector.
While agro-processing dominates our processing of raw
materials, accounting for 39 percent of our manufacturing output we are still
in early days as most of exports remain primary commodities.
The value added in manufacturing as a function of GDP in
2015 was 9.2 percent compared to 6.4 percent in 1986.
The fifth point of the ten point program also called for the
building of basic industries in iron and steel, chemicals, construction and
engineering. We have managed to set up some steel factories that use everything
from scrap metal to imported billets but we only produce about 30, 000 tons of
crude steel annually versus demand of 145,000 tons.
The fifth prescription “ensure that we eventually develop the
capacity to make locally machine making machines” still seems a far off dream.
And finally the desire to acquire computer technology as a
way to keep pace with international developments must have seemed a higher
mountain to climb than building our won machines.
ICT (information & Communications Technology) is more
widely used that the authors of the Ten Point may have imagined. The use of
mobile phones introduced in the mid-1990s means we have vaulted from
connectivity of about one line per 100 Ugandans to the current approximately 57
lines for every 100 Ugandans.
Aided by mobile phones and devices the access to the
internet has followed a similar trend lowering the cost of doing business and
making the adopters of this technologies more efficient in their processes.
. The Ten Point program
offers no timelines to assess progress against.
It is safe to say that while the authors may have had a good
idea of what they wanted to achieve it is unlikely that, seating down 30 years later
to assess progress, they would have thought that so much would still remain
undone.
