New Vision (Kampala)

30 January 2013

Uganda: NRM Anniversary

Reforms behind Uganda's economy:

When the National Resistance Movement (NRM) captured power on January 26, 1986, Uganda's economy was in shambles. It was hanging on the cliff. There was scarcity of essential commodities.

The NRM had come with economic ideas to change the world; but faced the jealous west who venomously opposed the barter trade, which intended to revamp the ailing economy and alleviate the masses from dire poverty.

Like Europe after World War II, Uganda needed a marshal plan to revive the economy. As early as February 1986, the donors knocked on the door with political and economic plans for the country.

The International Monetary Fund (IMF) and World Bank were ready with loans, which the NRM government was rather reluctant to accept. In 1986, Uganda needed to pay £200m per annum to service the loans acquired by the previous regimes, which was a concern to the new government.

President Yoweri Museveni said that Uganda wanted direct trade and not loans from the Western world. This was, however, a contentious issue.

Uganda was not an industrial economy and was recovering from war; so it had no valuable goods to export other than coffee, as the donors claimed.

Uganda insisted and wanted the European countries to buy its traditional food crops such as millet, sorghum, sim-sim, sunflower, maize if possible directly from farmers.

This was a revolutionary plan to bring money into the economy directly and expeditiously. All these happened as Uganda preached to the world the need for barter trade between poor and rich countries. By mid 1986, Uganda had won a number of countries who wanted barter trade. It became a concern to the Western world.

In early December 1986, British minister of state for foreign and common wealth, Linda Chalker, visited Uganda on the same issue.

President Museveni hosted her at Magherita Hotel in Kasese. While addressing the press she said: "I had come to help Uganda reach an agreement with the IMF.

A beautiful view of Kasese town:

Her remarks attracted criticism from the press and the public all venting their opposition to the World Bank and IMF policies of giving loans instead of trading with Uganda.

From Bank of Uganda (BOU) records, on December 11, 1986, the newly appointed governor, Dr. Suleiman Kiggundu during his first meeting with his staff in Kampala said:

"The solution to the current economic quagmire in Uganda would require an innovative approach and a significant departure from the normal economic policies of marginal policy adjustments advocated by the donor countries".

He added: "Donor countries had failed to recognise the abnormalities afflicting Uganda's economy before they prescribe cures to this ailing economy".

Because of the dire poverty and scarcity of essential goods, commodities like soap and salt were a novelty. For instance, people in western Uganda were using unpurified Kashinya salt from Lake Katwe, which did not only stink, but changed the smell and colour of food.

Many people developed stomach complications as a result of consuming it. In Rukungiri district, due to scarcity of women's underwear, women who could afford wore mens' underwear imported from Rwanda and Congo.

Local leaders quoting traders, while commenting about the acute shortage of goods in the country told President Museveni when he visited Rukungiri in November 1986 on his way from Rwanda.

Dr. Kiggundu who had been working with the World Bank thus added that Uganda's economy was not a normal economy. It was a war economy comparable to that of post-war Europe and Korea.

He said Uganda faced a situation of distortions and dislocations in the economic system and the entire industrial sector operated at levels below 15% capacity, due to wars and economic neglect.

Meanwhile President Museveni in December appointed the Presidential Economic Commission chaired by Prime Minister Samsom Kisekka comprised of key economists and the Governor of BOU to formulate policies for the Government.

In 1986, the total government revenue was sh6b and in April 1987, Uganda's debt stood at $1.4b. However, in 1981, it was at $400m. But in 1985, it stood at $1b.

Economic recovery programme:

With a heavily indebted economy and a weak currency and less foreign exchange, the Government needed marshal economic reforms, which begun with the May 15, 1987 currency reform.

On the same day, President Yoweri Museveni/speaker of the National Resistance Council (NRC) told Parliament about the economic recovery programme reached at between World Bank/IMF and Uganda, which included currency reform among others.

In September 1987, Uganda secured a loan from the World Bank worth $105m to kick start the recovery programme. The EEC and IMF also gave loans and grants.

The Government established a Special Imports Programme (SIP), which commenced on December 5, 1988. Under the scheme, the Government arranged with the private sector to import specific consumer goods using the loan from the World Bank.

This was a boost to the economy, but many people in Uganda and abroad remained sceptical of the Government policies.

While debating in the NRC about the Finance Bill 1989, which included also the legalisation of private forex bureax, which many opposed, Miria Matembe, woman representative Mbarara district said: "Uganda is lucky to have a President who is not pessimistic.

This is some comfort because, some of us are pessimistic about the state of the economy", The Weekly Topic November 1, 1989 wrote.

As more and more traders bought foreign currencies, from the black market (Kibanda), or mobile foreign currency exchangers where it was readily available than from commercial banks.

Soon, due to competition, the foreign exchange rate lowered proving the skeptical legislators wrong. In 1990, the legalisation of private forex bureaux was enacted.

For the first time in Uganda, forex bureaux were owned by individuals and private companies. This was a new chapter in the economy though not to the Kibanda business as competition edged them off the business.

Today, private forex bureaux are in every big town in the country. In some towns they operate 24-hours.

Transport:

Transport is a cog in the chain of an economy. This is so in the movement of goods and services. By 1986, the transport sector like other sectors was not any better.

Vehicles on the Northern by-pass. The smooth road has eased tra c in Kampala

Government vehicles had been vandalised or looted and public transport companies were in a sorry state. For instance the famous Uganda Transport Company (UTC) had 48 operational buses while the People's Transport Company in mid 1986 had only eight buses plying the entire country.

However, by 1990 the situation had improved. The Peoples Transport Company' had 88 buses while UTC had a fleet of 123 buses.

Children born after January 1986 do not know that passengers used to bribe bus drivers/conductors and turn-boys to secure seats and space on the rack inside or above the bus.

And that there was always a stampede when boarding a bus in Kampala the reason many passengers lost property to thieves.

They also missed travelling with NRA soldiers in torn-attire wearing stinking gum-boots on a pick-up or bus. Because they behaved well, an NRA soldier would definitely hitchhike whenever he waved down a vehicle just as the Wananchi would do with the military vehicles.

The bond is still strong. With the improving economy and road network, private transporters joined the sector. Poorly managed UTC and Peoples' transport company shoved out of the way as a result of competition.

The common road accidents then involved vehicles tipping off in attempts to dodge pot-holes on high-ways. Today, the most cause of accidents on the high-ways is over speeding due to plain road surface.

Electricity:

Electricity is an essential generator to any economy. It runs the economy 24 hours in offices, factories, hospitals, schools and other places. In 1986 electricity was a small resource in the country.

The Uganda Electricity Board was generating a paltry 90MW although in 1962, it was producing 120MW. However, by end of 1993 with some repair, the power house was producing 190 MW. Owen Falls Dam was the only source of hydroelectricity power in the country.

The Bujagali Hydro Power Station high voltage lines

Thermal power was widely used, especially in towns far from Kampala. Today, there are more than 20 hydro power stations and more are yet to be unveiled.

By the end of 2011, the installed capacity of electricity to the national grid was 569MW according to the Uganda Bureau of Statistic (UBOS) 2011-2012 annual report.

Business:

Business investment and security are entwined. With tight security everyone feels secure to do business. No wonder, the country has over the years, been attracting foreign investors who used to go to the neighbouring countries.

Due to war, Uganda paid a hefty price. Development stunted. It is indisputable that the western Kenya town of Kisumu developed faster partly because of money Ugandans channelled there to do business.

Factories mushroomed in Kisumu to feed the Uganda market. Today, Uganda is the business hub for the region. The country attracts business from South-Sudan, Congo, Tanzania, Rwanda and Burundi.

The economic activity at Arua Park and Kikubo areas in Kampala gives a picture of what used to happen in Kisumu years ago.

Uganda is today in a steady investment competition with other countries in the region. In some sectors she leads in attracting foreign investment.

For instance, in the mobile telecommunication industry, Uganda was the fi rst in the region to attract investors.

In July 1995, Celtel now Airtel was launched in Kampala with less than 1,000 subscribers in the fi rst week. Today, Uganda leads with six operational telecom companies while two others have been registered.

When MTN launched on October 21, 1998 in Kampala, it invested $70m about sh80m. It was a scale investment considering that MTN had been established in South Africa only four years earlier. With a growing economy, more such investments are destined to come.

The telecom industry is one of the fastest growing sectors in the country. From the sole service provider Uganda Post and Telecommunications Corporation with less than 18,000 lines 1986 for a population of 14 million, today, Uganda boosts of 17,161,841 telephones lines of which 16,696,992 cellular phones for a population of 34 million people.

Gone are the days of scarcity of commodities. Essential goods can be obtained from every corner of the country.

In Kampala, there are 24-hour shopping malls. This indicates that there is growth in the economy particularly and the middle class that shop from such malls and supermarkets.

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