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The Movement’s economic revolution

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Added 21st March 2016 07:28 PM

The Movement has been unequivocal at pushing market expansion for Ugandan products. Another example of this is the total Ugandan exports to COMESA trade zone growing from $337.2 in 1998 to well over $848.79m by 2013.

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The Movement has been unequivocal at pushing market expansion for Ugandan products. Another example of this is the total Ugandan exports to COMESA trade zone growing from $337.2 in 1998 to well over $848.79m by 2013.

By Odrek Rwabwogo

If translating the gains of a political revolution can be likened to converting running water into electricity, fixing Uganda's problems was as daunting in the early years of the Movement as little transmission out of a constrained turbine.

Progress was slow and any shift needed needed much firmer hands. The government faced an uphill task to rebuild and set the economy on the right footing.

There was widespread shortages of consumer goods, hoarding and speculation was rampant, there was a treasury with no foreign exchange; little to no foreign direct investments and no tourist arrivals was the feature of the early Movement government.

The park animals had been poached by the very wardens meant to secure them, there was acute shortage of skill because many educated Ugandans had fled the country twice in the 1970s and 1980s.
 
With what material would the Movement rebuild the economy if bread, soda, beer, sugar, salt and other basic consumer goods had to be imported? Even the confidence of the world that things could be turned around in Uganda, was at its lowest ebb. But there was a strong will to fix these problems in an open and transparent manner involving all political shades and pulling in whatever technical competencies were willing to work.

The Movement leadership faced an ideological question: would you use a state intervention strategy to rebuild or would you yield to the advice then given by the Brettonwoods institutions (IMF/World Bank) to decouple the state from directly supporting the economy, remove all forms of subsidies including those with growth enhancing capability such as in agriculture?

The leadership had examples to point to. Tanzania had a fully planned economy, begun import substitution industries and its leader wanted very much to grow a home market.

This, however, hadn't brought rapid growth to lift people out poverty fast enough to catch up with the developed world. Kenya had residual growth with a symbolic export infrastructure linked to the former colonial masters because of its traditional coastal trading ports, remained stable with a good showing on industrial skills. But this didn't make it a fast world nation either.
 
"Uganda died and was buried in the 1970s and 1980s, said Yoweri Museveni'. But when we resurrected the economy and compared the journey we had made in a short time with those African nations that had neither civil war nor Amin type tyranny and state dislocation, we found them just lying outside the very grave Uganda had been in!

Not much progress had been made in both absolute and relative terms. We understood then that we all faced the same structural weakness of low technology, poor skill, small markets and a deep bias of the early leaders of Africa against the private sector".
 
On assessment, the Movement chose to adopt a Mixed Economy, a policy that was as unclear as it sounded because shortly after, there was no public sector support other than fiscal and monetary policies, security and other basic services. The rest, was a full circle turn to a market economy with many of the key proposals made by the IMF/World Bank adopted as the standard operating procedures.

The army was reduced and so were the civil servants, government assets were sold off, the foreign exchange market was fully liberalised and the Uganda shilling depreciated progressively to attract some minimum recovery of exports, then largely coffee, tea and cotton, the latter two hugely downsized by years of neglect.

There are three key reforms that explain the Movement's approach to rebuilding the economy. The most important step was the genuine appraisal and recognition of what was ailing the country so as to avoid making populist superficial solutions that would have been like a bandage on a festering wound.

The leadership clearly understood the things that harm an economy as insecurity, low investment in infrastructure, poor capabilities and skills of the people and small lack of markets. The Movement went about fixing these problems.

First, was to re-formalise the economy from speculation to normal traceable production, creating a good taxation infrastructure that allowed duties to be collected in an increasing fashion. This, over the years, has paid off with collections rising from a mere sh5b in 1986 to over sh13 trillion in 2014/2015.

To do this, there was a need to demonstrate a healthy respect for the right to ownership of private property. To show an example, the Asian properties that had been expropriated by Idi Amin were returned.

The end of this injustice demonstrated to the world the commitment of the Movement to right past wrongs. This built confidence which in turn increased foreign direct investment (FDI).

The Movement also removed the state from non-essential sectors that past governments had occupied. These included management of hotels (formerly called Uganda hotels), public transport (then Uganda Transport Company) and importation of goods and services (Uganda Foods and Beverages).

These had not been strategic areas for government but were a result of the 1970s bias against the private sector. Running hotels when you can't generate electricity to power them or manage buses when you can't build roads for them to drive on hadn't been a good way to manage affairs of state.  

The biggest contribution, however, that came from freeing the state from non-core activities was the creation of efficiencies at a firm level and a better wealth spread. This led the country into formation of a national stock market.

Several former enterprises are now listed on the Uganda stock exchange allowing many more people to participate in their ownership and control.

Away from stabilisation, the Movement needed to deal with structural reforms in order to return the economy to sustained production. The second reform, therefore, was infrastructure development.

One of the post-independence problems was government's obsessive attention to the needs of a small governing class and its fight to fill positions formerly occupied by the colonial officers in a little enclave economy. A sea of poverty thus surrounded small emerging metropolis all across Africa.

In Uganda, huge parts of the country remained with no roads, in darkness with no electricity and millions of children tending goats instead of going to school.

The small urban elite was content with this situation as long their positions in the pecking order were secured by being in government to represent one's religion or tribe or even for some, foreign interests, not the underlying economic interest of a community.

By first liberating Ugandan children from herding goats in villages through establishing UPE and USE, the Movement increased literacy (from 43% to currently 75%) numeracy and trade skills, important platforms for changing a nation for better.

This truly was the first form of conversion of the gains of the political revolution into economic gains for a majority of the population.

If one takes into account the end of the many killer disease for children under five through immunisation (now standing at about 95%) and increasing the life expectancy of Ugandans from 49 years (1986) to 58.65 (2012) years, it easy to see the underlying nature in which the Movement is building a resilient and larger market of Uganda.

Improving the road network (The Movement builds an average of 200km of new tarred roads while simultaneously it puts ferries on major water ways, repairs about 860km of the old trunk roads and puts road equipment at districts to make local feeder roads) means opening up the country to the market and putting a dent in the supply constraints that keep a majority of the rural poor out of production.

Putting over 30% of our national budget to roads and electricity, has laid great infrastructure for attracting manufacturing in all the corners of the country.

To give the reader an example of the scale of this focus, in one region of Bunyoro, three roads are simultaneously under construction today. These are Kyenjojo-Kabwoya-Masindi- Kigumba road, Mubende-Kakumiro-Ndaiga road and Hoima-Kigorobya-Biso-Wanseko road. Without adding the Hoima- Kaiso Tonya road which is complete and commissioned, the three roads will cost $428m.

This is a huge investment in one sector in one region and it will create a surge of demand for labour and in the process wages will increase and along the way, the standard of living. This is what the builds the platform for social economic transformation. The third reform was the revival of the East African Community in 1997.

This is a160 million people and an approximate $100b market. As the reader might know, intra-regional Africa trade is the lowest in the world (at less than 10% compared to 60% in North America and 48% in Europe) yet regional markets hold the secret to increasing prosperity for the nations of Africa.

The EAC market not only improves our labour, capital and goods and services capabilities; it also assures the safety of the African and his future voice in global affairs. Within a few years of its revival, Uganda was channeling 22% of all its trade (2009) to the community and overall EAC trade volumes hit the $3.54b mark up from $1.81b in 2004.

Expanding the market is a key ingredient in sustained transformation as every nation must trade its way out of poverty. The Movement has been unequivocal at pushing market expansion for Ugandan products. Another example of this is the total Ugandan exports to COMESA trade zone growing from $337.2 in 1998 to well over $848.79m by 2013.

East African unity presents a huge dilemma to those who seek to control Africa. The 18th century Prussian military strategist, Carl Von Clausewitz, said: “the aim in waging war is to locate the enemy's centre of gravity, the focal point of his strength and then devote all available means to attacking it".

Likewise the greatest asset the West has held over Africa for centuries, is the use of its economic power to achieve its strategic military, financial, diplomatic, cultural and political objectives and project these on our nations.

The most organised response to this onslaught with ability to focus our strength to deliver a punch, can only be African unity under regional blocks for it gives us economic capability and reinforces our singular voice on matters that are important to us in the world.

As the EAC keeps expanding with South Sudan recently signed on and Ethiopia in the waiting room, the threat of translating this effort into political federation, gives the enemies of Africa, shivers. This alerts them we are moving consciously and steadily further away from western control and taking command of our destiny. This scares the West to the bone. It signals a continual loss of power and influence over a billion Africans.

People with a colonial hung over in the West don't take this lightly. Unity presents by far the biggest opportunity for an ideological break with the West. It is the reason those who push for unity aren't favorites in western capitals.

Only the Movement seems to understand this fact, the reason Uganda pushes for regional unity. It is a strategic defense bulwark against those with negative intentions for Africa.

Next week, we will analyse the key things under the economic revolution that must be improved to finally bring full benefits of this stage two, in nation building to completion.

Thank you

The writer is a farmer and entrepreneur

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