Last week the permanent secretary in the Office of the Prime Minister (OPM) Keith Muhakanizi passed on in Milan, Italy where he had sought treatment for a long-time ailment.
But he is better known for his time at the finance ministry,
where his role in the reconstruction of our economy since the early 1980s is
indisputable.
While work to begin economic reforms begun with the Obote II
government, the National Resistance Movement (NRM) government is the one which
really had to roll up its sleeves after 1987.
The first budget of the NRM in August 1986, painted a really
bleak picture of the economy.
"Revenues were thin as coffee exports, Uganda’s top tax
earner at the time, were largely being smuggled; money in circulation had
jumped 90 percent in the previous year, fuelling the already triple digit
inflation, a situation not helped by the floating shilling, which was
depreciating everyday for lack of foreign currency. As Uganda’s industrial base
had been gutted and most things even the bare essentials like bar soap, sugar and
cooking oil had to be imported, the depreciating shilling was a nightmare....
So, while the beginning of Structural Adjustment Programme
(SAP) had already begun, “The financial programme failed …. the government was
not particularly disciplined and therefore expansion in money supply to finance
unplanned and in many cases irregular government spending,” then finance
minister Professor Ponsiano Mulema reported in the 1986 budget speech.
It would take more than a few paragraphs to describe the
dire straits into which the economy had sunk. No less a figure than Singaporean
prime minister Lee Kuan Yew, credited with leading his island nation from “third
world to first in one generation” did not give Uganda a chance in 1988,
“When I met the leader of Uganda, I knew I was meeting a
leader whose world has collapsed and may not be put back together for another
100 years,” he said in an interview at the time....
This is the situation the young economist Muhakanizi found
himself in. There are many people who were involved on getting Uganda back on
its feet but for longevity, former Governor Emmanuel Tumusiime Mutebile, Muhakanizi’s
predecessor as finance permanent secretary and secretary to the treasury Chris
Kassami, stand out. Muhakanizi was the understudy of his predecessors, an uncharacteristically
vocal one at that.
In 2006 I interviewed Muhakanizi to commemorate the 20 years
since the currency reform. The interview was at his farm in Sembabule where I
drove for miles without seeing anyone, before getting to his door. I joked that
even the loudness of the Bakiga would do him no good here in trying to talk to
his neighbours.
He dismissed the explanation that Bakiga are loud because
they had to communicate across valleys in Kigezi, explaining that the loudness
of the Mukiga comes from confidence, which confidence comes from being the
first place that the colonialist succeeded in titling land in Uganda, after
futile attempts in Buganda and Busoga.
The psychology of a man who has his own property is very
different from another who is beholden to another, for even the land on which
he lives.
I have to admit I have never tried to verify this claim. As
far as I was concerned, it was as good an analysis as any and I was not going
to let the facts get in the way of a good story.
But this is a critical element to the turn around of Uganda’s
economy. When the NRM came to power among the things they did was to stop the
IMF program signed onto by the Obote II government. Their revolutionary fervor
could not allow them to kowtow with the Bretton Woods institutions, the symbol
of “western Imperial hegemony”.
"But President Yoweri Museveni, a quick study, soon realized that with empty coffers, no means to fill them and a political project that was about to die before it begun, later in 1986 called in then, central bank governor Leo Kibirango and Mutebile, then chief economist in the planning ministry, to chart a way forward. These two of course were already branded the “imperialist agents” whose voices had been drowned out by the “revolutionaries”....
Mutebile, a mukiga, was more forceful in his argument than
Kibirango and thankfully, Museveni saw the logic of an about turn on the course
the economic direction. The rest as they say is history.
But the devil is always in the detail. And it was left to
technocrats like Muhakanizi and others to do the “dirty” work.
This entailed the freeing up of the foreign exchange market,
the liberalization of produce marketing, the privatization of the state enterprise
and bringing much needed discipline to government spending.
There were many moments when the government wavered, seduced
by populism, and it took the combined efforts of the three – Mutebile, Kassami
and Muhaknizi to show the politicians the error of their ways and reset the
course.
The results are there for all to see in the more than three
decades of unbroken economic growth – the last time the economy contracted was
in 1985.
Muhaknizi, his strongly held convictions making him a polarizing
figure, in his later years at the helm of the finance ministry maybe run into
the limits of his own powers. The major criticism against him was that the market
friendly policies he fronted seemed unable to translate into a transformation
of the whole economy, especially the agricultural sector, in which seven in ten
Ugandans derive a livelihood. Failing health and the conservatism that comes
with age, maybe blamed for his seeming inability to embrace a new turn in the
road.
"But it would be a very hard man to disagree that the net effect of his favoured policies have been positive for the economy and have set the basis for the economy’s future take off. And as such his passing – as the last of COO of the finance ministry involved in the reconstruction of the economy, although he was not in the finance ministry at his end, may very well signal the end of an era or at least a major milestone in this country’s economic journey.
Fare thee well Keith Muhakanizi.
