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TRANSCRIPT
THE PROBLEMS OF THE ECONOMIC DEVELOPMENT OF UGANDA
APPROVED:
JL Major Professor
Minor Professor
Chairman of the Department of Econonu."cs~
Deanvof the Graduate Rnhonl
,4 /yv~
Ebangit., Zerubbabel 0. , The Problems of Economic
Development of Uganda. Master of Arts (Economics) , May,
1373, 100 pp.? 6 tables, 2 figures, bibliography 67 titles.
The issue of economic development is a subject which
in recent years has attracted the attention of many academicians
throughout the world. However, the subject itself is far wider
and more complex than it would appear at first sight since
the human, social, and political elements of economic development
should not be forgotten. In light of this, academicians
throughout the world are unable to devise what one may label
"uniform economic models" that could be applicable to all
situations in the world,
Given the problems of economic development, tne purpose
of this thesis is to examine, analyze, and reevaluate the
impact of human, social, economic, and political problems on
the economic development of Uganda. The strategy adopted in
the study of the problems involved in the economic development:
of Uganda is historical. In short, the study examines past,
recent, and present literature* on economic development of
Uganda. The preface to the body of the thesis presents a
general format of the study—the approach, the methodology,
the delimitations- and the significance,
The first chapter in general considers the topographic
features of Uganda, the heterogeneous groups', of people that
reside in Uganda, historical perspective of Uganda' from the
invasion of its culture in the 18701s to the attainment of
complete independence on October 9, 1962,
The second chapter focuses attention mainly on the
economy and its problems. It examines, analyzes, and
reevaluates the impact of agriculture on Uganda's economy,
the dependence upon exports, unfavorable natural resources
position, the role of the Uganda Electricity Board in the
economic development of Uganda, the importance of the basic
transport network and market facilities in development, and
the historical perspective of the banking system in Uganda
and its failure in the past to stimulate economic development,
and its role now in the economic development of Uganda.
The third chapter, like the second one, considers the
economy and its problems. It discusses the problems of
human resources in economic development, with emphasis on
the shortage of manpower with critical skills, political
instability and near economic stagnation, Uganda's external
and inter-territorial trade, sources of public revenues and
expenditures, the role of public and private investment in
economic development.
The fourth chapter is concerned with development
planning. It examines the three 5-year development plans
instituted immediately after independence» their financing,
implementation, and problems encountered, in executing the
plans.
The fifth ana the final chapter sets out some brief
conclusions and presents recommendations. It argues
candidly that the agriculture sector will continue to over-
shadow the economy of Uganda for some time to come, unless
radical changes are instituted.
THE PPOBLEMS OF ECONOMIC DLI\TELOPMENT OF UGANDA
THESIS
Presented to the Graduate Council of the
North Texas State University in Partial
Fulfillment of the Requirements
For the Degree of
MASTER OF ARTS
By
Z&rubbabel Oj imam Ebangit, B. Sc,
Denton, Texas
May, 1973
TABLE OF CONTENTS
Page
jRjj*' ACE . . » • » . • « . » » • » » » . * j.X.X
LIST OF TABLES . . . . iX
LIST OF FIGURES . x
Chapter
I. INTRODUCTION . * * *
The Country The People Historical Background and Government Structure
II. THE ECONOMY AND ITS PROBLEMS . . . . . . . . . . 23
Structure of Economy Dominance of Agriculture Agricultural Prices and Marketing Industry, Power and Mining Tourism. Transportation Money and Banking
III. THE ECONOMY AND ITS PROBLEMS (Continued) . . . . 54
Human Resources Education Health Services
Recent Developments and Current Position of the Economy
Total and Per Capita Incomes .Exports, Imports and Inter territorial Trade • Private and Public Investxasnt
IV. DEVELOPMENT PLANNING . . . 79
First Five-Year Development Second Five-Year Development Plar The Outlined Third rive-Year Development Plan
V. CONCLUSIONS . . 91
T5 V-N /-+ * - S . ^ —l 4— 4 j". Srt
LIST OF TABLES
Table Page
I. Uganda: Gross Domestic Product at Factor Cost, 1960 Prices . . 29
II. Uganda: Agriculture Production, 1968-70 . . . . 3
III. Uganda: Production and Sales of Electricity,
1958-1967 . . . . . . . . . . . . . 42
IV. The Health Personnel in Uganda, 1969 62
V. Uganda: Principal Domestic Exports, 1967-1968 . 68
VI. Uganda: Foreign Trade by Principal Country • (Excluding East African Trade), 1966-1968 . . 71
IX
LIST OF FIGURES
Figure Page
1. The Republic of Uganda 3
2. Average Annual Rainfall of Uganda by Climatic Zones 5
x
PREFACE *
According to Pinto and Santos (64, p. 198) , the problems
stemming from economic development are obviously among the
most important topics of discussion in the world today. This
subject leads to the issue of economic challenge, a problem
which dees not confine its impact to solely underdeveloped
or developing countries of the world, but rather extends its
• tentacles to all countries regardless of their economic
development- However, the degree of challenge varies from
country to country.
While the developed nations of the world are faced
with the problems of unchecked inflation, fluctuating economic
growth and unemployment, the underdeveloped countries, on the
contrary, are in acute predicament. These countries are
faced first with the problem cf raising the standards of
living of their peoples, but in the meantime, they are
ambushed by a host of other economic problems that plague all
economies of the world. In this connection, all developing
nations do experience recurrent deficits, sluggish economic
growth, underemployment, maldistribution of National Domestic
Product, soaring inflation, and sometimes near economic
stagnation.
Uganda, in this respect, finds itself in the orbit of
developing nations of the world. For this reason, it is
iii
IV
stained with all the problems already indicated above. In
fact when it emerged as a sovereign nation on October 9r
1962, some authors have observed that it entered into a
decisive moment in its economic history {29- p. 1). The
same authors furthermore have remarked that the obvious task
that confronted the nation and its people was to make
rational economic choices. Thus, the immediate task that
faced the government was "to determine whether a basis for
a rising standard of living is established or whether per
capita incomes under the pressure of increasing population
actually decline" (29, p. 1).
Given the problems of economic development, the primary
purpose of this study is to examine, analyze and evaluate
the effects of these problems on the economic development
of Uganda. The magnitude of this topic has made it imperative
to limit the scope of this work to selected aspects of the
economy. Even with this cautious selection, the topic,
nonetheless, defies any resolute attempt to examine it in
depth. From a research point of view, it is almost impossible
to acquire adequate and reliable information on the current
structure of the economy. It is equally difficult to find
data about the role of various institutions in the country
and their auxiliaries. For this reason it was necessary to
limit comments on the important aspects of the topic to a
few general statements based on very few examples. The main
emphasis is placed on the problems the country has encountered
V
in its endeavoxir to raise the standard of living of its
people, and eventually generate rapid economic development.
This thesis is divided into five chapters. The first
chapter presents a general background of the country, the
people and its governmental structure. It describes briefly
the topography of the country and its heterogeneous people.
It also gives a short historical perspec Live of the country
from the period of British rule to Independence. Chapters
Two and Three focus on the economy and its problems. Both
chapters demonstrate, using a number of concrete examples,
how Uganda's economy is plagued by many problems; for example,
dominance of agriculture, lack of vital mineral deposits,
the paucity of savings, the undeveloped human resources,
political instability, ignorance, poverty, and diseases.
While the first chapter intends to be as general as possible,
the emohasis in Chapters Two and Three is on detailed,
descriptive, analysis and comprehensive presentation of
available data. In Chapter Four, an examination of planned
development programs is explored. It points, however, the
inevitable consequences the government and the people have
to meet in order to realize the benefits of a rising
standard of living. Chapter Five concludes the thesis and
also presents some recommendations the government could
adopt in order to mitigate the rampant economic ills that
have retarded economic advancement in the country.
VI
The methodological basis of this thesis is an examination
of the past and recent literature on political and economic
trends in the country. Towards this end, it was necessary
to collect information and data from diversified sources.
American, East African and British textbooks and periodicals,
newspapers, and statistical abstracts served as major sources
of information. *As any work of this nature, this study is
strained by numerous difficulties arising from the question
of reliability of source material. To skirt and minimize
any inevitable flaws resulting from divergent presentation
of fact, a number of sources were often consulted and
compared, and the most accurate version selected for
presentation. It should be noted, however, that almost all
tables in the thesis are adapted from primary or secondary
sources. The availability of material and information on
the topic varies considerably. Data on the American source
material is relatively accessible, but that on British
sources is scarce. Similarly, data on Kenya and Tanzania
was difficult to get. These limitations have, of course,
influenced the conception of this study, and to some extent
handicapped its exploration in depth.
This thesis has been written at a time when Uganda is
in political turmoil. The prospects ox: a stable government
to emerge within a short time are very remote. But, it can
only be hoped that those in authority now will allow true
democratic processes to determine the fate of the country.
ViX
Yet, if they assume that only "their coverranent can resolve
all the economic ills in the country, they, too, will
commit political heresy•
CHAPTER I
INTRODUCTION
The Country
Uganda is a country of fascinating contrasts. The late
Sir Winston Churchill aptly described it. in these words:
Uganda is a fairy tale. You climb up a railway instead of a beanstalk, and at the end there is a wonderful new world. The scenery is different, and, most of all, the people are different from elsewhere to be seen in the whole range of Africa. . . (8, p. 86).
To Churchill, Uganda was a "fairy tale/' But, Uganda today
is the basis for a thriving tourist industry. And for people
from all over the world (who may be relieved to find that
they need to travel by neither railway nor beanstalk, but
rather by a jet airliner)—it is a holiday paradise.
Furthermore, had Churchill described the scenery from the
air, probably he would have described it differently. In
this connection, a visiting Mission from the World Bank had
this impression about Uganda's scenic view from the air,
"strangers approaching Uganda by air usually feel a lift of
the spirit when they catch a glimpse for the first time of
the rich greenness of the fertile north shore of Lake
Victoria" (29, p. 5). J*
More prosaically, Uganda is a country of about the size
of Oregon or Ghana, with the area of S3,381 square miles.
It lies astride the Equator on the great central African
plateau nearly 300 miles from the east coast, and it rises
from 3,000 feet to 5,000 feet above sea level (24, p. 7).
Uganda is unfortunate because it has no outlet to the sear
it is landlocked. Of its total area, about 16,000 square
miles are open water. This is mainly its share of Lake
Victoria. Uganda is bisected diagonally by River Nile and
lakes and waters of the Lake Kioga system (see Figure 1).
Lake Victoria, together with the northern tip of Tanzania
and the independent Republic of Rwanda forms the country's
southern boundary. Uganda's northern frontier is with the
Republic of Sudan, which stretches across a belt of wild and
sparsely populated area. To the west lies the Congo and
here the boundary runs northwards from the Bufumbiro Volcanoes
in extreme southwest, through Lake Edward, soaring over the
snow peaks of the Ruwenzori Mountains and down again through
the centre of Lake Albert. The principal feature of the
eastern border with Kenya is the vast whale-backed mass of
Mount Elgon, an extinct volcano (16, p. 1). Few of these
boundaries are natural ones. Most of them are merely lines
drawn on the map long ago by the country's former colonial
rulers, in seme cases with the unfortunate result of having
separated ethnic groups.
The Climate
Despite its location in the tropics, Uganda's climate
is tempered by an average altitude of over 3,000 feet. Thus
3
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much of the country enjoys a mean annual temperature of
71°F., and good prospects of obtaining about 50 inches of
rainfall a year. In this direction, the World Bank Mission
to Uganda once remarked:
The altitude provides much of the country, despite its location astride the equator, with a generally pleasant climate. This has aptly been described as like a perpetual European summer with a hot sun, cool breezes and showers of rain (29, p. 5).
While rainfall does at times occur at all seasons of
the year, especially in the Lake Victoria zone and the
mountainous regions of the west, the climate pattern, however,
does not vary greatly. In actual fact, there is a dry
period between the end of November and the middle of March
in the north, and June to August in the south. Most of the
rain in this case falls between March and November, although
a short break occurs in June and July, particularly in the
rather dry belt which stretches across the country from
Ankole and Karamoja (16, p. 1). However, as some authors
have put it:
Only 22 percent of the land gets less than 30 inches of rainfall a year, the minimum required for productive agriculture. Seventy-two percent of the country obtains between 30-50 inches of rain per year and six percent over 50 inches (see figure 2). Thus, whereas rainfall ranges from an annual 'minimum of about 15 inches in the extreme north-east to over 80 inches on Sesse Islands, most of the country can rely on 30 inches or more in an average year (24, p. .14).
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Figure 2, Average Annugl. Rainfall-'of Uganda
by Climatic Zones
The scarcity of rain in the northeastern part of the
country has sometimes plunged that region into serious
droughts, and it has often deprived it of beneficial
harvests. While the northeastern region is an exception,
the rest of the country usually expects rain in the last
weeks of the main dry season—which coincides with spring
in the temperate zone of the northern hemisphere.
Vegetation
Uganda is covered with wooded savannah, in which trees
and shrubs are scattered through short and tall grass
dominated by "hyparrhenia" species. These species are
typically centered in the midlands and the northern region
of the country. Hence, it is not surprising that the first
impression of the visitor to Uganda is one of greenness.
The presence of Lake Victoria in the southern region
has a marked effect on the climate of southern Uganda. As
usual, a belt of generous rainfall stretches from some depth
along the northern shores of Lake Victoria. In the past, this
area, as one author has put it, supported tropical rain forest
where broad leafy canopies shut out the sun and giant trees
soared 150 feet in the air (16, p. 2). It should be stated,
however, that the original vegetation has been drastically
modified by cutting, burning, cultivation and grazing.
Elsewhere in the country, original forests still maintain
their features. A recent study undertaken by Herrick's
team (24, p. 15), revealed that about 8 percent or 5,770
square miles of Uganda's land is under forest reserves. This
study noted that this portion of the country includes all
the chief timber producing forests and the catchment hills.
The same study mentioned above (24, pp. 15-16), went
on to point out how forest distribution varies throughout
the country. For instance, it noted that areas around the
lakes are always infested by enormous tracts of swamp forests.
In this direction, the area around Lake Kioga is a case in
point. Furthermore, the study indicated how forest distribution
on the highlands is markedly different. For example, Mount
Elgon in the east is forested, whereas the highlands in the
west and southwest support a luxuriant grassy growth with
the exception of the partly jungle area of Bunyoro plateau,
located east of Lake Albert, Extending also from Lake
Victoria to the Ruwenzori range, the study showed, are.
rolling meadows and with decreasing rainfall towards the
northeast, savannah grass lands become poorer.
Some noticeable features of the surviving blocks of
the former forests still exist in the west, and, moreover,
innumerable patches of small forests can be seen all over
Buganda and parts of the eastern region. To the extreme
west, on Mount Ruwenzori,. a blanket of an immense forest
is preserved to protect river catchments? others, more
accessible in Toro, Bunyoro, Ankole, and Buganda are sources
of valuable timber. Besides this, there is also an untapped
8
forest reserve on Mount Elgon? however, its inaccessibility,
makes it difficult to exploit its resources (24, p. 16).
Soil
In his book, Higgins (19, p. 209) argues that economic
development depends on what he calls "environmental determinism."
According to this theory, one of the factors that determines
economic development in a particular country, is the nature
of soil that country has been endowed with by Nature. For
example, he contends, "tropical soils are poorer and more
fragile than those of temperate regions, and hence, apt to
give low yields per acre" (19, p. 210). This would imply
that Higgins assumes that this kind of soils do not. provide
the basis for productive agriculture in the tropics.
Certainly, his contention, nonetheless, does reveal some
substance of truth, but his argument cannot be accepted to
be valid in every respect. For there are some countries
within the tropics that have fertile soils. Uganda is a case
in point. In this direction, Herrick writes:
Compared with those of most tropical areas the soils are, on the whole, fertile, Those of Mobira forests and Lake Victoria zone are among the most productive in the world, yielding two economic crops a year. Yet there are many contrasting soils in the country (24, p. 15).
Similarly, Sir Churchill (8, p. 89) noted, "The planter
from the best islands in the West. Indies is astonished at
the richness of the soil. . . . As for our English garden
products, brought in contact with the surface of Uganda
they simply give one wild bound of efflorescence or fruition
and break their hearts for joy." As Herrick remarks in the
above passage, some parts in Uganda do have poorer soils
than the rest of the country; nevertheless, the significance
of this soil is relatively small, and hence would not retard
economic development throughout the country.
Another noticeable feature of soils in Uganda is that
ironstone is widely distributed through all types of soil.
This ironstone is usually called "murrain," and it makes
excellent gravel roads. It is also found at different
levels in the ground and in different forms. The loose
murrain, for example, may be found from one to forty inches
beneath the earth. Besides this, the solid ironstone, too,
is usually found close to the surface of the earth. Further-
more, this ironstone may extend many yards below the earth,
and it is useful for building purposes (24, p. 15).
It should be pointed out, however, that some parts of
the country do suffer from soil erosion. The active agents
responsible for it are: storms, overcropping and overgrazing,
but since the land is mostly a plateau, erosion from runoff
is minimal. However, the abundance of heavy rainfall always
keeps the growth of the protective vegetation cover,
particularly elephant grass which covers most the south and
builds and restores soil fertility and structure. Another
equally effective device that has stemmed down soil erosion
is shifting cultivation and intensive terrace cultivation
10
that has been adopted by many farmers (24, pp. 15-16), While
still on the same subject, Hickman and Dickins (23, p. 30)
report similar conclusions.
The People
The population of Uganda is estimated at about 9.5
million people, of whom all except about 10,000 Europeans
and about .100,000 Asians (Indians, Pakistanis, and Goans),
are Africans (20, p. 2). At this juncture, it must be
pointed out that the Asian population has been almost halved
by a recent government order to expel nearly 50,000 Asians
holding British passports. These Asians are alleged to have
been engaged in what the government calls "economic sabotage."
However, the charge remains to be substantiated by concrete
evidence, or else the whole issue is nothing but a
political smoke screen, designed to conceal government1s
mismanagement of the economy (54, p. 1).
After the census of 1969, Uganda's population showed an
increase of 47.7 percent in the ten year period from the
1953 census figure of 6,500,000 (20, p. 2). Although
Uganda is not overcrowded, the average density is about 109
people to the square mile. Since overcrowding is influenced
by a variety of geographical and economic conditions in the
country, it follows that population distribution varies
throughout the country. For example, Kigezi District has
average density of 260 people to the square mile, while
11
Karamoja District has the lowest average density of 16
people to the square mile (20, p. 2). Other studies have
shown similar conclusions (24, pp. 67-68). Hickman and
Dickins (23, pp. 212-213) argue that climatical and soil
conditions are responsible for this wide variation in
population distribution throughout the country.
Although it is not immediately apparent, the observant
visitor quickly becomes aware of the diversity of tribes
and languages which make up this progressive nation.
According to the census of 1959, there are ten tribes with
populations in excess of 200,000 people. Besides, there are
six other tribes which number more than 100,000 people, and
there are many other small tribes with distinct traditions.
It is estimated that there are altogether forty tribes in
this emerging nation. The major tribes include the Acholi,
Baganda, Basoga, Iteso, Langi, Lugbara, Banyankole, Batoro,
Kakwa, and Madi {16, pp. 9-10).
Uganda, like many other emerging nations in the world,
is plagued with the problem of language. The nation has no
common language of its own; instead, English has been adopted
as the official language throughout the country. Besides
this, there are six major languages that are recognized;
namely, Luganda, Ateso, Basoga, Lungoro-Lutoro, Luo, and
Akaramojcng. In addition to this, there are many others
that are not recognized (24, pp. 77-92).
12
p
Historical Development
It was over one hundred years ago that the first
British explorers, Speke and Grant, reached Uganda and paid
their respects to Kabaka Mutesa I at his court at Rubaga.
Eighteen years earlier the first Arab trader, Anted bin
Ibrahim, had visited Kabaka Suna's court; and, according to
Sir Apolo Kagwa, it was in the reign of Semakokiro who died
in 1815, that manufactured goods, blue cotton cloth,and wire,
were first seen in Buganda (31, pp. 116-117).
These events marked the tentative beginning of the era
which has now concluded with Uganda's emergence as a sovereign
state. But for centuries before this, a series of tribal
immigrations, spreading mainly from the north, had established
two widely differing political or social structures in what
is now Uganda. In the north and east, restricted from, easy
movement by the Nile, the Lake Kyoga waterways, the Nilotic
and Nilo-IIamitic peoples were organized in small village
and clan communities with no great overlords. In the west
and south the Bantu peoples formed a number of Kingdoms or
chiefdoms, each with a strongly centralised form of administration
and a paramount rule of aristocratic caste. According to strong
traditions in Bunyoro at least, the ancestors of these rulers
also came down from the north (16, p. 3}.
The Kingdoms were abolished in 1967, but the last
Kabaka of Buganda was the thirty-sixth in dynasty. The
Babito dynasty which ruled in Bunyoro and Toro went to the
13
fifteenth century and was in turn preceded by the mystical
Bacwezi. In this connection, Banyoro traditions name two
Bacwezi kings, and, even before them, eighteen kings of the
shadowy Batemuzi dynasty. After some two centuries of
leadership by Kitara (as Banyoro was then called), Buganda
attained a position of pre-eminence during the nineteenth
century and it was the strength and orderliness of its
government which led to that state becoming the base of
operation for Arabs and the European missionaries, traders
and administrators (39, pp. 110-112).
The inevitable incursion of British influence in Uganda
was the result of exploration prompted by two entirely
different motives. In one case, it was the purely inquisitive
quest for the source of the Nile by Speke and Grant, which
eventually led to the visit of Stanley to Kabaka Mutesa's
court. In the other, it was the humanitarian desire of Sir
Samuel Baker to put down the Arab slave trade to the south
of the Egyptian provinces in the Sudan, and the need to
establish some military authority to prevent its revival
(30, pp. 117-119).
The third motive, it may be said, was dictated by what
Hughes calls:
The mixture of jingoism, philanthropy, and greed which led to British ventures in East Africa is revealed in a typical letter from Johnston to another Empire builder, Cecil Rhodes. He wrote of the 'necessity of extending the British Empire within reasonable limits over countries not yet taken up by European powers to provide new outlets for our manufactures and to afford further scope for British enterprises® (26, p. 25).
.14
This passage clearly does reveal that the spirit of
mercantilism evidently was behind all exploration ventures
and the need for the sphere of influence in East Africa.
In November, 1875, two dispatches from H. M. Stanley
were printed in the Daily Telegraph in which he drew attention
to Uganda as a fertile field for Christian effort (1, p. 67).
As a result, the first Protestant missionaries arrived in
Buganda in 1877, and were followed two years later by Roman
Catholic missionaries (26? 35, pp. 147; 10-121). However,
Mutesa's early friendship, which was based on the hope of
support against expansionist's aims of Egypt, rapidly cooled
when he saw that military activities formed no part of the
missionaries' aims. Subsequently, under the rule of Mwanga,
the Christians and also Muslims converts were persecuted;
later still there was grave strife between the Catholics and
Protestants which culminated in the Battle of Mengo in 1892
(39, pp. 121-138).
Meanwhile, control of the British sphere of influence
in East Africa had been assigned to the Imperial British
East Africa Company in 1888. However, in Uganda, the pioneer-
soldier and empire-builder (Lord Lugard) was made responsible
for establishing the Company's influence in the region. His
appointment to assume the Company's interests in Buganda
was acknowledged by Mwanga in 1890 (26; 28, p. 149; 23).
Unfortunately, the widespread civil wars that left an unstable
situation in Buganda, prompted the Company to evacuate from
the country. It considered the situation too explosive to
15
cope with. However, in 1393, Sir Gerald Portal assumed the
obligations and responsibilities of the Company on the behalf
of an extremely reluctant British Government (39, pp. 139-
140). Following the takeover of the Company by Sir Gerald
Portal, Britain officially established a Protectorate over
Buganda in 1894 and this was extended to Bunyoro, Toro,
Ankole and Busoga two years later (26; 39, p. 149; 140)•
In the early 1890's, the old animosity between Bunyoro
and Buganda revived and it was particularly charged by
Kabarega's violent hostility against foreign influence in
Buganda. For example, he exploited the religious rivalry
that was ripe in Buganda. He went ahead and supported the•
Muslim faction that mounted an offensive against Buganda.
His partial act led to military campaigns against Bunyoro,
and as a result, its territory south of the Kafu river and
Nkusi rivers was ceded to Buganda and the transfer, despite
his intense opposition, was confirmed by subsequent Buganda
Agreements. Thus began the "Lost Counties" issue between
Buganda and Bunyoro, and it persisted until after independence
(24; 39, pp. 40-41; 197-198).
Meanwhile in 1897, serious troubles ensued in Buganda
and Bunyoro. In Buganda, Mwar.ga with the help of some of
the chiefs, rose against the British, but he was defeated,
and the infant Daudi Chwa became Kabaka under a Regency
headed by Kagwa. However, Mwanga and his old enemy Kabarega
joined forces to harry the British; for the time being, both
16
were supported by Sudanese troops which had mutinied against
their authorities (26, p. 149). But the mutiny was instigated
by, as Johnston puts it:
These companies had just returned from the pursuit of the runaway Mwanga in Budau, for Mwanga, after ineffectually plotting for the overthrow of the British authority, had fled into German territory.
Exasperated with fatigue and wiih continual severance from their wives, to whom they are much attached; doubtful of the honesty of the Administration, owing to the delayed payment of their wages; scared at the possibility of being lost in unknown lands far beyond their ken; they determined they would not form part of the escort of Colonel McDonald's expedition. They decided to put their grievances before an English officer at Kampala. He refused to listen to them. . . (26, pp. 236-241).
The mutiny would have been probably averted had the officer
in charge of the companies at least met some of the grievances
put before him. However, the officer may have been under
strict orders not to show any partiality with the troops;
nevertheless, their grievances were real.
Mwanga"s rebellion and the mutiny of the Sudanese
troops led to the reorganization of the Protectorate under
Sir Johnston Harry in 18S9. Agreements were made with
Buganda, Toro, Ankole, in 1900 and 1901, and the rest of the
Protectorate was firmly consolidated by 1919 (24, pp. 42-44).
Recent Political Developments
Although until 1967 the traditional native authorities
enjoyed considerable measures of autonomy, Uganda had to some
extent been developed as a unified country with the organs
of the central government geared towards becoming progressively
more representative of the people.
Thus, the Executive and Legislative Councils were first
established in 1921 to assist the Governor. However,.as
David Apter observes, such action was long overdue (1, p. 162)-.
At any rate, it was a welcome move and step in the right
direction. The Executive Council was composed of ex officio
and official members of the government. At the time of its
inception, there were no unofficial members who were appointed
to sit in the Council. But, its two most important figures,
besides the Chief Secretary, were the Chief Medical Officer
and the Financial Secretary. For the Legislative Council,
it consisted of four officials and two Europeans and one
Asian. But the Asians declined to cooperate with the
Governor because they wanted parity representation in the
Council; for this reason, there was no Asian when the Council
first met. It should be noted here that there was no
African who was appointed to sit in the Legislative Council
(1, p. 163). The introduction of parliamentary mechanics in
1921, did not open the door for African participation in
Legislative meetings. As a matter of convenience this
arrangement never materialized until 1945.
From 1921 until 1945 the Legislative Council underwent
few major changes. For example,, the first Africans entered
the Legislative Council in 1945, when membership was increased
to fourteen—seven government officials and seven non-officials
(two Europeans, two Asians and three Africans). Henceforth,
the Council experienced constant modification (1; 39, p. 167?
18 •
206). As time passed, membership of the Council was
increased again in 1947, and in 1959, when Africans were
given parity with combined European and Asian unofficial
members. Political strife which had persisted between the
Buganda government and the British government was evidenced
by the Buganda Lukiko1s (parliament of the former Kabaka's
^Government) refusal to put forward names for nomination to
the Legislative Council; thus they maintained their reluctance
to accept one form of close association with the central
government institution of the Protectorate (26, p. 179).
Throughout, the 1950's constitutional advance was swift.
However, in the latter part of 1953, a major constitutional
crisis developed in Buganda which led to the withdrawal of
recognition from Kabaka by the British Government, and
consequently, led to his deportation to Britain. But the
.impasse was ended when a new Buganda Agreement was drawn upf
inter' alia, it redefined Buganda's status as a Province of
Uganda, and it cleared the way for Kabaka's return in 1955
(26; 39, pp. 167-171; 208-209).
After 1955, rapid constitutional changes followed which
paved the way for Uganda's eventual complete Independence
on October 9, 1962 (24; 26, pp. 60-63? 174-193). Under the
leadership of Dr. A. Obote, an energetic and uncompromising
nationalist, Uganda entered into a period of sudden political
changes. For instance, on the First Independence Anniversary
13
President, and Sir Edward Mutesa was appointed to the
Presidency (39, p. 211).
In 1966, serious misunderstandings developed within
Obote's Government. The schism led to the arrest of five of
Obote's Cabinet members on February 22, 1966. As one might
expect, the crisis offered Obote an opportunity to assume
all powers of the Government in Uganda. Without delay, he
announced that he had assumed the full powers of the
Government. To this effect, he followed two days later by
suspending the Constitution of 1962 (24; 37, p. 181? 83).
When the dust of the crisis had settled down, Obote,
once again having plotted his political graph, introduced
an intermim constitution which was approved by the National
Assembly. As the rules of the game go, Obote was immediately
sworn in as executive President of Uganda, replacing Sir
Edward Mutesa (24, p. 181).
At this juncture, it should be stated that the Baganda,
who had viewed Obote's politicking with cynicism, rejected
the interim constitution. To reciprocate the ouster of Sir
Edward Mutesa as the President of Uganda, the Buganda Lukiko
passed a resolution in which it demanded the withdrawal of
the Uganda Government from the territory of Buganda by
May 30 (24, p. 196).
The decision by the Lukiko to expel the National
Government from its territory raised the fever of tension
between Buganda and the Central Government. Consequently,
2 0
sporadic rioting and fighting in many rural areas of Buganda
erupted. These riots were directed purposely against Central
Government installations ana police outposts. Accordingly,,
on May 24, 1966, the Central Government forces seized
Mutesa's palace at Mengo. Mutesa, now deposed from his
throne, fled to London,where he died in November, 1969 (24,
p. 196).
After acting as a watchdog for it, Obote apparently had
designed to make the nation a Republic within a short time.
History provides a documented record for this assertion.
For example, the 1966 Constitution was replaced in 1967.
Under the 1967 Constitution, which came into being after
acrimonious debates in the National Assembly, on September 8,
1967, Uganda became a Republic. Hence, it abolished all
tribal kings. Under this Constitution, the Republic was
vested with a strong central administration under a powerful
presidency (3; 24, p. 3; 181).
Whatever may be said, none can deny the fact that
Obote's handling of the 1966 crisis and the ouster of Sir
Edward Mutesa placed Obote into an implacable situation
with the Baganda. To the Baganda, Obote was their archenemy,
but to the rest of Uganda, he was considered as a true
nationalist, who was determined to see Uganda run on democratic
principles and not on feudal and separatists' dreams. At
this point, one may wonder whether Obote utilized dictatorial
mechanics to achieve his goals. Meanwhile, one analyst has
noted :
In the midst forest of Uganda tribal politics, however, Obote, has proven himself to be a maneuverer whose foresight and cunning have invariably overturned the most ingenious strategems of his enemies. When his political fortunes were at their lowest ebb, and just as he appeared to be losing his grip, not only did he surprise his opponents by creating the Commission of Inquiry, but he took the brilliant gamble of assuring that its composition was beyond his political control, free to scrutinize his personal probity as it pleased, Then he turned the attention of the country from the debate over his honesty to the controversy over his new constitution (37, p. 85).
Obote may have not been a true dictator, yet, the ghost of
a dictator seems to have haunted him as this passage
reflects. For example, he outwitted his enemies in his
own Cabinet and arrested them, as mentioned before. And on
certain occasions he consistently outwitted the Kabaka,
who had never really had the stamina for the power game in
the first place.
Although Obote may have thought he was now able to
outwit his enemies, he, nevertheless, did become a victim
of plots and tricks similar to those he had used before. In
this direction, the military overthrew his Government after
a bloody conflict on January 13, 1971. As always is the case,
the Military accused the civilian government of corruption
and nepotism (16, p. 8).
Upon assuming the government, the Military Government
declared that it would not turn the government into the
civilian hands until it had put the affairs of the country
in order. But experience has shown that the Military
Government will not be able to achieve this goal. Already,
22
it has plunged the country into fear and insecurity,
particularly as a result of its expulsion of Asians from the
country. Under these conditions, the country has been
placed into a precarious situation from which it. may not be
able to recover soon. In view of this, economic development
has almost been brought to a halt. Indeed, economic development
is closely linked with political stability and the ethos
within which it operates, as Bhagwati notes (6, p. 202).
But currently, Uganda is engulfed with fear and insecurity.
In such a case, the government is the only force capable to
create stable conditions under which fear and insecurity
could be reduced. Adopting a similar tone, Curie wrote,
"What we would wish for all people is first and foremost
the diminution of pain, suffering, fear and insecurity" ( 8,
p. 2). It follows then that whatever government is in- power,
has the responsibility to eliminate or diminish all these
components. One may argue whether the present government
of Uganda is in a position to create a climate in which it
is possible to diminish this ill-fare, evidence has shown
that it has increased ill-fare instead of reducing it.
CHAPTER II
THE ECONOMY AND ITS PROBLEMS
The Structure of the Economy
Uganda's economy has been and still is marked by the
presence of two distinct sections, the modern market
economy and traditional African (5, p. 4). The traditional
economy, which is mainly peasant agriculture, is the back-
bone of the national economy. A quick glance at the statistics
clearly testifies to the accuracy of this statement. In
this direction, agricultural products earn 80 to 90 percent
of Uganda's foreign exchange and 90 percent of the population
works on land (17, p. 5). In view of these statistics, it
is not surprising to note that even the World Bank Mission
to Uganda commented:
Uganda remains an agricultural country; two-thirds of gross domestic product is derived from farming and over 90 percent of all exports are produced from land. Agriculture is still in large part subsistence farming (mostly done by women with hoes) with a growing, but as yet smaller, prooortion of total output for the market. . . "(29", p. 15).
Although agriculture does overwhelmingly dominate the
economy, Uganda is not designed to remain an agricultural
country as this passage infers. On the contrary, it was
the colonial power which had shaped the country to remain
predominantly agricultural. The British authorities who had
24
ruled the country for almost seventy years were not interested
in developing the economy beyond a subsistence level. Instead,
as Seidman puts it, "The British were eager to encourage •
production of raw materials in Uganda for their home industries"
(51, p. 7). Similarly, Mukherjee bitterly contends that the
British intentionally subjugated the economy to serve their
interests (42, pp. 166-184).
Moreover, like any other country in Africa, Uganda was
tailored to furnish the metropolitan country with its raw
materials and to serve as a new market for its manufactures. .
In this connection, Woolf succinctly notes:
Their writings and speeches show that they conceived of an African 'colony' as a source of wealth to the 'mother-country,' because it furnished a new market for the European industries, and a place where European capital could be lucratively invested (66, p. 53).
In line with such objectives, Uganda was destined to
concentrate on agricultural production of raw materials and
foodstuffs which could not be grown in the temperate zones,
and besides, it acted as a dumping market for unwanted wares
from the mother-country.
In addition, since the ruling power had conceived of
Uganda as a potentially expanding market for its home
industries, the administration tended to pursue policies
which discouraged competing industrial growth in the
Protectorate. For this reason, a very small share of the
Gross Domestic Product of Uganda was, by the time of
25
Independence, produced by this sector, viz., 3.2 percent
was the only contribution which this sector added to the
economy (51, p. 11).
It is worth noting that similar policies were implemented
throughout the continent by imperial powers. In view of
this, foreign companies and their interests operated under
the umbrella of the public objectives. To this end, Hunton
wrote: ". . . have had an ever increasing incentive to
employ the public policy, the public purse and the public
force to extend their field of private investments, and to
safeguard and improve their existing investments" (27, p. 80).
Such was the drama of the exploitation of the continent.
The drama which went on unchecked until the pendulum for
Independence swung, only then were the interests of the
colonial powers modified in the end. Along with such .
development the economies as a whole were restructured to
serve all the people.
Meanwhile in Uganda, the limited industrial sector (the
modern market economy) was at the time of Independence
largely run by non-indigenous groups—Asians and British
companies monopolized this sector. In this view, the
indigenous people always benefited from this sector through
employment. However, as Kamarck has well described:
In their attempt to make a profit or get their capital back, some companies and concessionaries indulged in activites that resembled plundering of the territory under their control more than it did economic development (34, p. 13).
*> 6
The point to be stressed here is that none of the
foreign companies which operated in Uganda or elsewhere on
the continent were interested in developing the country
or the continent per se. But rather, these companies v/ere
only interested in appropriating Uganda's wealth without
ploughing back any profits for its development.
While Kamarck has presented an accurate documentation
of the deleterious acts committed by some companies, he,
nonetheless, has omitted some pertinent information pertaining
to the amount of wealth which these companies removed from
Africa. In this line, Hunton estimates that almost twenty
billion dollars worth of mineral deposit, besides other
products were extracted from Africa without injecting back
any profits for its development (27, pp. 68-72). Thus he
wrote:
Twenty billion dollars worth of minerals, more or less, from sub-equatorial Africa and additional massive quantities from other areas—and yet they say Africa is poor. If by that is meant the mass of the population, it is certainly true. But why should the people be poverty-stricken when the continent's sub-soil yields such wealth? The answer is obvious: the mineral riches and the profits therefrom are taken by non-Africans (27, p. 73).
Hunton has hit the nail on its head. Without intellectual
snobbery, he has negated the usual assertion that Africa is
a poor continent. But, poor, in what manner? Is the poverty
of the continent the result of its own fate or what?
Certainly, had colonial powers planned to develop Africa
27
today would be a different Africa. Besides, had such sums
drawn away from the continent, and especially, from Uganda,
been at the disposal of a responsible Government of
Ugandans, such sums would have transformed the face of the .
country in a decade. The country would have had those things
which it is now critically seeking for, viz., schools,
factories and hospitals.
As indicated earlier that agriculture is the backbone
of Uganda's economy, it follows that its impact in the
economy is reflected by the growth or deterioration of the
economy (20, p. 5). In fact, between 1946 and 1952 the
economy enjoyed a healthy rate of grov?th under the stimulus
of export earnings, resulting mainly from large rises in
the prices of two major exports, cotton and coffee. But
the rate of growth declined drastically in the mid-1950's,
and the national output was virtually halted between 1957
and 1962. The stagnation of the economy was due to sluggish
export earnings, which in turn depressed investment in the
economy. However, the adverse effect which the economy
felt was offset by Government's increased expenditure during
this period (24, p. 221).
Accordingly, the impact of the agricultural sector, is
further reflected in the national gross domestic product
(GDP). For example, as Table I presents the accurate
picture of economic growth during 1966 and 1969, the
agricultural sector as may be seen, played a key role in
28
this steady growth. According to Table I, the average
growth rate of the economy over the period 1966 to 1969 was
6,3 percent per year in real terras (21, p. 11). However,
in 1969 the economy realized a healthy growth of U Sh 7329
million at constant prices, an 11 percent increase from the
previous year's levels. The expansion in 1969 mainly came
from agriculture as a result of a record coffee crop and L
sizable increases in the output of cotton, tea, sugar, and
tobacco (21, p. 1.1) . It should be noted that commercial
agriculture is the largest contributor to the economy,
accounting for 45 percent of the monetary gross domestic
product at constant prices in 1966-1969 period. Services
(transport and communications, rents, and miscellaneous
services), the second largest sector, fluctuated at 15 to
19 percent of monetary gross domestic product, while whole-
sale and retail trade declined its share from 18.6 percent,
accounts for 5 percent of GDP, And about 25 percent of
overall GDP is generated by the subsistence sector.
The general pattern in developing nations today is
that the Government should always play a significant role
in the economy of its country (24, p. 223). The Government
of Uganda's participation ir. the economy of its country is
channeled principally through its statutory corporation, the
Uganda Development Corporation (UDC). UDC was established
in 1952 with the objective of promoting the economic and
industrial development of Uganda (20, p. 6). This organ was
2 9
TABLE I
UGANDA: GROSS DOMESTIC PRODtfOT AT FACTOR COST, 1960 PRICES (In Million U Sh1)/
Industry 1 9 6 6
—
1967 1 9 6 8 1969
Monetary Economy: Estimate Forecast
Agriculture 1,222 1,268 1,278 1,440.
Cotton ginning, coffee curing and sugar manufacture 139 142 131 156
Forestry, fishing and hunting . 55 63 70 79
60 63 63 64
Manufacture of food products .. 28 32 34 37
Miscellaneous manufacturing ... 126 136 148 163
65 67 69 | 64
Construction 74 80 103 116
Commerce 434 419 419 197
Transport and communications .. 167 182 190 197
Government 1 3 1 1.24 137 141
Miscellaneous 303 335 335 366
83 85 90 94
Total 2,887 2 , 9 9 0 3 , 0 8 8 [3,376
Nonmonetary Economy:
Agriculture- 846 878 911 950
Forestry and fishing 116 1 1 9 . 1 2 4 128
Total 9 6 2 i 9 9 7 1 , 0 3 5 Ii/oTF
Gross Domestic Product 3 , 8 4 9 3 / 9 8 8 4 , 1 2 3 4 , 4 5 4 '
U Sh 1 = $0.14
Source: Adapted from Overseas Business Report, June 1970, p, 5,
30
empowered to undertake investment in areas of production
into which private enterprise was unwilling to venture its
resources. Another Government agency is the Uganda Export*
and Import Corporation. This agency is principally concerned
with the import of essential food, clothing, and other
qualified supplies. However, the Uganda organization rules
on the importation of all products into the country, for
which it collects a commission (21, p. 11).
The Dominance of Agriculture
Uganda is a "nation cf farmers," one author has remarked.
(67, p. 19). The importance of agriculture to Uganda is
quickly brought home by a glance at the statistics of the
industry. It accounts for more than half the gross domestic
product, and for between 80 and 90 percent of overseas
earnings. And approximately 90 percent of the population,
including one-fifth, of wage earners derive their livelihood
from the land (21; 24, pp. 11-12; 235).
Just as statistics impress the casual observer with
the overwhelming importance of agriculture on Uganda's
economy, equally important to note is the fact that this
sector is more or less plagued by a host of problems. In
this context, the sector, though beyond its control, is
often harassed by vagaries of weather and fluctuations in
world markets (21, p. 9). Hence, Uganda's dependence on
export oriented agricultural products deprives the country
31
of its ability to control the destiny of its economy. In
this connection, Mukherjee once bitterly notedt
Her one-sided economy, dictated primarily by the inner-imperialist rivalry between the British and American monopolists over the demand and supply of cotton, decided her unstable position and her chronic dependence on the metropolitan country (42, pp. 173-174).
Mukherjee's charge was valid, say, ten or more years
ago, but the position of cotton today has changed. For
this reason, to label a similar charge on either the British
or American will have no foundation upon which to base such
allegation.
However, Uganda:s dependence on agricultural export
earnings has made the country susceptible to adverse effects.
For instance, sharp shifts in coffee prices over the years
have strongly affected the economy. Furthermore, cotton
output is prone to drastic changes resulting from climatic
factors. Therefore, rampant, unpredictable fluctuations do
make direct impact on disposable private incomes, but in
the meantime such shifts also extend their effects on
available public finance, and further influence fluctuations
in Government expenditure (47, pp. 320-323). Similarly
Bhagwati. has concluded that instability in export earnings
"poses problems of domestic and international adjustment
which few economic administrations in the underdeveloped
countries are either trained or equipped to solve" (6, p. 61).
At this point, it should be noted that the Uganda
Government is therefore, attempting to increase diversification
of its economic structure through expanding manufacturing
and other industrial activities. In addition, the Government
is also trying to strengthen and broaden the rural sector
to withstand periodic market, weather and price shifts
(21, p. 9). While the agricultural sector is declining in
importance, its overall production yields per acre are not
encouraging. This low yield per acre, one could attribute
to the poor quality of soil; on the contrary, low yields in
this industry are the result of poor farming practices
emanating from archaic methods used by peasants (40, pp. 78-
79) .
To increase efficiency and productivity in this sector,
one author has noted that favourable conditions should be
available to stimulate such performance. In this instance,
he cites: "farmers increase their performance when prices
increase," they also should have access to the factors of
production, they should be exposed to fresh techniques of
production and farmers should have unrestricted access to
markets for their goods and their consumer goods (32, p. 26).
Adopting a similar line of argument, Kamarck contends:
"Rapid progress in agriculture can be achieved only by
moving ahead on many fronts" (34, p. 90).
At this juncture, it is worth noting how the Uganda
Government is overcoming some of the problems cited above.
High on the list of Government's priorities, for example,
is the promotion of other cash crops besides cotton and
33
coffee. Table II shows the contribution that cash crops
are putting into the economy. Moreover, the Government has
planned to accelerate the mechanization of the agricultural
sector. At the time of Independence there were only thirty-
nine tractors in the country, but by 1968 there were 878
and the number today is certainly much greater. In addition,
a variety of other modern agricultural equipment is also at
the disposal of Uganda farmers (67, p. 19). At this point,
it may be added however, that the archaic farming methods
in Uganda are undergoing a revolution today.
TABLE II
UGANDA: AGRICULTURE PRODUCTION 1968-70
(In metric tons)1 1968 1969 1970
Coffee 133,000 247,000 170,000* Cotton 345,000 423,000 468,000' Tea 15,000 17,000 18,000 Sugar 152,000 138,000 140,000 Tobacco n. a. n. a. n. a.
•Provisional
'In 480 lb. bales
n.a. Not available
Source: Adapted from Overseas Business Report, June, 1972, As reported in Statist Teal Abstract,- 1970.
34
As Table II discloses, coffee is Uganda's leading crop,
accounting for one-fourth of the total value of the cash
crops and providing the largest source of foreign exchange
(21, p. 13). Trailing behind in importance is cotton.
Cotton was once Uganda's leading crop, but its leadership was
overtaken by coffee. Since then, cotton has declined in
importance. However, it provides about 30 percent of Uganda's
export earnings (21, p. 14), and about 60 percent of the
country's population derives some income from cotton (20,
p. 7). The crop is widely grown all over the country, on
small peasant "shambas." The imporance of these two cash
crops to the economic development of Uganda is very immense.
For example, Livingstone and Ord have noted:
The economic history of Uganda, therefore, is very largely one of the development of peasant agriculture, and this as we saw in chapter 3 is based on cotton and coffee (36, p. 113).
Galloping behind .coffee and cotton is tea. Tea is
Uganda's third most important crop and fourth largest export.
For instance, it accounted for 6.1 percent of total exports
in 1968, when compared with 3.2 percent in 1962 (20, p. 7),
It is estimated by 1975 tea output will reach 45,000 metric
tons (21, p. 15). Sugar is Uganda's fourth largest cash
crop. It is predominantly grown on estates. There were
approximately 46,000 acres devoted to sugar cane production
in 1968. But the Uganda Government is considering plans to
establish at least two more estates (21, pp. 7-8). Although
OS
most of the sugar produced in Uganda is traditionally for
domestic consumption, a substantial portion is exported to
Kenya. While four major crops have been emphasized in this
section, it must be pointed out that other crops still
provide minimal incomes to Uganda farmers, viz., tobacco
and ground nuts (20, p. 8).
r
Agricultural Prices and Marketing
The story of export agriculture is simple. Two crops
dominate the scene. As noted before in the preceding lines,
both cotton and coffee are entirely grown on peasant "shambas."
But the export of these crops is particularly vulnerable to
fluctuations in world market prices (47, p. 338). Given
these circumstances, the Uganda Government could not just
sit idly by without rallying to the cause of its peasants.
In this connection, the precarious world fluctuating prices
also prompted the World Bank Mission to Uganda to comment:
. . . it is not at all surprising that the Government has had to concern itself with the impact of the fluctuations in the world market prices of these crops on the growers and the economy generally (29, p. 17).
The importance of agriculture in the economy, as had
already been stressed, was a matter that the Government
could not leave to the gymnastics of the market forces.
For this reason, the Lint Marketing Board and Coffee Marketing
Board were created by an Act of Parliament. These organs
were empowered to administer the bulk purchases and marketing
of these crops during World War II (30, p. 304).
36
The decision by the Government to subsidize coffee and
cotton prices was borne on the conviction that without
inducement, the production of these vital crops might decline,
and further, the Government realized that variations in
domestic incomes resulting from shifts in world prices had
to be mitigated (30, p. 304), as such variations may be
felt in public finance.
Since their establishment, the boards have done their
job extraordinarily well; however, they have also encountered
numerous problems. For example, the Coffee Marketing Board
k
has faced the problem of finding markets for the increasing v
coffee output. Uganda as a member of International Coffee
Agreement is allotted its quota, but Uganda's output has
exceeded its export quota (30, p. 308).
Similarly, the Line Marketing Board has encountered
recurrent losses ever since 1961 and 1962, but the considerable
resources of the Fund were exhausted in 1965 and 1966. Since
then the price paid to cotton growers went down (from U sh
0.60 to U sh 0.40 per pound) at the beginning of 1966/67
year crop (30, p. 307).
In light of the continued uncertainty in market conditions
throughout the world, Uganda's economy, for that matter, will
for some time to come continue to be harrassed by forces beyond
its control. Nevertheless, government's decision to steer
away the economy from over dependence on agriculture, will
in the long run save the country from frequent economic
stagnation.
3?
Industry
Many theorists would argue tenaciously that low-income
nations would maximize the potential of their economies,
if such countries would adopt the doctrine of comparative
advantage and specialization. In short, low-income countries
should particularly concentrate their economic activity on
the production for export of commodities whose production
involves relatively low intensities of capital and skill
(45, p. 41).
The curious irony about such argument, the low-income
countries might say, is that many of the theories in currency
today have been invented or proposed by economists from the
industrialized nations. In view of this, developing countries !•
always view with suspicion such theories, regarding them as
a plot designed to keep them under the thumb of industrialized
nations. For that matter, economic planners from developing
countries often disregard the. persuasiveness of such theories,
and see their mission as being dictated by economic as well
as political motives (6, pp. 165-166).
Given such argument, Uganda sees industrialization as
a key to economic progress. In this instance, it sees
manufacturing in national output as an element that would
increase productivity per workers, along with this,
manufacturing increases rapidly the economies of scale, and
further, the manufacturing industry does interact with agri-
cultural industry (15, p. 10).
33
As noted earlier, Uganda's industrial capacity at the
time of Independence was quite minimal; however, this
situation has been altered. For example, industrial activity-
manufacturing and processing, mining, construction, and power-
contributed in 1969 an estimate of Shs. 661 million (1 Uganda
shilling equals approximately US $0.14) to the national
income, compared with Shs- 498 million in 1966 (21; 24, p.
10; 261).
In its rapidly expanding Industrial sector, Uganda is
fortunate in having either natural or specially created
conditions which are ideal for the establishment of new
business and the growth of existing ones. With a fertile
soil, good climate, as already noted in Chapter I, and a
policy of greatly increased agricultural production, the
country is well equipped to cater for the needs of a growing
industrial population. Additionally, and aided by farm
mechanization already mentioned, there is a ready supply of
labour, and a labour force which increasingly has a growing
content of skilled workers (67, p. 27).
Like the agricultural sector, the industrial sector,
has also many problems to wrestle with. The small nature
of the home market, for example, has beer? a major limiting
factor in restricting the expansion of industry (29, p. 20).
Herrick, on the other hand believes that any future expansion
of the industry will be limited by, besides the small size
of the market, the absence of a class of African industrial
39
entrepreneurs, the shortage cf domestic capital and its
inaccessibility tc the sea (24, p. 262). Likewise, Seidman
contends that Uganda's industrial sector is confronted with
significant problems, viz., the rate of capital formation in
manufacturing has appeared to be declining, as forecasted
in the Development Plan in 1967-68. Moreover, he continued,
industry has remained highly dependent on imported raw
materials, which are mainly composed of last state assembly.
The continued importation of such goods, Seidman argues,
will constitute a drain on the balance of payment (52, p. 28).
At this point, it is important to- note that expulsion
of almost 50,000 Asians from Uganda (many of whom were badiy
needed skilled and professional workers in the country), has
left the industry as a whole in bleak picture (55? 60, p. 1,3?
48).
Power
The raw'material of any industrial revolution is a
ready source of fuel, but Uganda, as Herrick has. well
couched it: "With no local sources of fossil fuel, the
country depends on hydroelectric power? imported oil, and
firewood for its energy requirements" (24, p. 281). The
most important measure in this connection has been the
establishment by the Government of Uganda Electricity Board.
This body is charged with the sole responsibility for
generating and supplying electricity throughout the country
40
(67, p. 36). At present the major hydroelectric.power plant
is located at Owen Falls Dam on the Victoria Nile at Jinja
(20, p. 11).
The construction of the Owen Falls hydroelectric
scheme, which is capable of producing 150,000 kilowatts,
has enabled Uganda to have one of the most extensive trans-
mission networks of any developing country in the world
(67, p. 36). However, the potential of the scheme is not
fully utilized. Furthermore, in order to supply electricity
to rural areas, smaller plants with a capacity of 3,300
kilowatts each have been built at Arua, Kabale and Moroto
(30, p. 311).
When the Owen Falls power plant was first built, it
was expected to provide inducement to the development of
industry. The government, for example, had hoped the
availability of ample energy at a reasonable price would
attract foreign investors, and eventually lead to the rapid
establishment of secondary industries. Even though several
important industries mushroomed around Jinja, such as the
copper smelter, steel works, and textile mills, the
anticipated industrial development did not materialize as
envisaged (24, p. 282).
However, the building of the power plant in Jinja was
not a complete failure. On the contrary, the scheme has
had its tangible successes. For instance, in the two
decades of its establishment, the Uganda Electricity Board
41
has managed to reach all the major towns in the country,
while at the same time exporting power to Kenya (67, p. 36).
Further, it can be noted that the Board is now embarking on
a realistic programme of rural development..
Another noticeable success of the power industry can
be ascertained from the volume of its output. For instance,
as Table III clearly shows, total output has increased from
278.4 million kilowatts in 1950 to 735.4 in 1970. As shown
in Table III, exports to Kenya accounted for approximately
34 percent of Uganda's sales. Moreover, domestic consumption
of electricity has increased significantly, rising by 46.7
percent between 1963 and 1967.
Because of the increased consumption of electricity at
home, the Uganda government has planned to construct a 600
megawatt hydroelectric station at Murchison Falls on the
Nile. It is estimated that this new plant, if built, would
produce about four times the capacity of the Owen Fails
generators (20; 21, p. 11; 28).
The concluding note about this industry is that it
has made impressive contributions to the development of the
industrial sector; furthermore, this contribution is
matched by the aid electricity has given in raising the
standard of living of ordinary people.
42
TABLE III
UGANDA: PRODUCTION AND SALES OF ELECTRICITY
1958-1967 (Millions of Kilowatts)
Year Sales
Power Station Use and Trans-mission Losses
Total I Generated Year Local To Kenya
Power Station Use and Trans-mission Losses
Total I Generated
1958 162.73 89.95 25.76 278.44 1958 185.45 129.39 31.04 345.88 1960 202.43 160.09 33.94 396.46 1961 209.17 191.29 34.38 434.84 1962 228.79 188.90 35.45 453.14 1963 270.62 189.91 36.47 497.00 1964 293.23 177.63 50.14 521.00 1965 332.09 190.48 49.44 572.01 1966 375.64 203.04 56.25 624.94 1967 397.08 241.98 65.04 704.10
Source: Adapted from Overseas Business Report, June 1970 as reported in Uganda Statistica1" Abs t r a c t, 1968, Ministry of Planning and Economic Development, Entebbe.
Mining
From our review of industry as a whole it can easily be seen that one of the greatest areas of potential industrial exploitation is mining (67, p. 31).
Evidence has shown that Uganda is meagerly endowed
with minerals. However, mineral exploitation, though a
limited source of foreign exchange earnings, does not play
a key role in the economy. Moreover, the proportion of
gross domestic product that comes from this industry is
minimal (24, p. 279). In view of this, a quick glance at
the statistics accurately tells the story as it is.
43
In this context, as Hansen has well recorded, "minerals
are of relatively minor importance in Uganda's economy,,
contributing less than two percent of gross domestic
product" (21, p. 21). Extending this analysis, it should be
noted that the only consolation the Uganda government gets
from this industry is that, in 1969, blister copper accounted
for 12.3 percent of export earnings. And happily, copper
makes up almost 90 percent of the value of total mineral
production and is the source of all foreign exchange earnings
from the mineral exports (20, p. 9).
While a wide range of minerals are known to exist in
Uganda, so far only a few have been exploited besides copper;
namely, gold, beryl, tin, phosphates, limestone, tungsten
and salts (67, p. 31), are being exploited.
For some time to come, it could be concluded that.
Uganda's economy will continue to be overshadowed by agri-
cultural sector as it has done in the past. This belief
rests on the evidence that Uganda is ill-endowed with vital
mineral deposits, which from practical purposes sometimes
provide a basis for rapid industrialization when carefully
used.
However, recent United Nations aerial geophysical
surveys over 12,000 square miles of Uganda have shown the
existence of promising mineral deposits—manganese, lead,
and additional copper (20; 57, p. 9; 18). Sven with these
latest discoveries, the prospects for Uganda's economy
44 9
transforming into an industrial economy within a short time
are remote. This assertion stems from the fact that the
existence of such minerals beneath the earth, does not
guarantee that their exploitation will eventually change
the picture of Uganda's economy overnight. However, the
exploitation of these minerals will certainly generate some
industrial activity in the country»
Tourism
As indicated in Chapter I, Uganda is the basis of a
thriving tourist industry today. Again statistical evidence
attests the accuracy of this assertion. In 1969, for
instance, visitors to Uganda totalled 73,980, of whom 70,359
declared themselves to be on holiday. While the tourist
industry in Uganda cannot match that of Kenya or Tanzania,
it nevertheless generates.an estimated U Shs. 160 million
foreign earnings (21, p. 26).
The growing importance of this industry adds another
chapter to the economic development of Uganda. Already it
has become the fifth largest foreign exchange earner. To
some extent, its continued expansion is dependent upon the
provision of better and large facilities (24, p. 297). In
light of this, drastic steps have been taken to not only
better and enlarge the present facilities, but also new
lodges have been built on areas of scenic attraction. For
example, better lodge accommodations have been built in
45
Kidepo National Park, Murchison National Park and Queen
Elizabeth National Park (24, p. 297).
Transport and Communications
In any developing country, internal and external
communications are obviously matters of vital importance to
a country (67, p. 34). Uganda, for this matter, realizes
that its economic development depends on its fairly well-
developed transport and communications system (30, p. 312).
The main arteries of Uganda's transport and communications
system are, in order of importance, railways, roads, inland
waterways, and airlines. To date, the railway network
opened the landlocked borders of Uganda to the outside
world in 1902. Indeed, this year also marked the beginnings
of the commercial life of Uganda (44, pp. 180-188). Since
1902 the railway system has furnished the major transportation
between Uganda and its other East African countries. Besides
linking Uganda to other parts of East Africa, the railway
system is Uganda's outlet to the seaport of Mombasa in
Kenya. It is through this outlet that Uganda's foreign
trade passes (30, p. 312).
Internally, the railway system provides transportation
services to the copper mines at Kilembe, and to the important
cotton growing areas of the northern part of the country
(20, p. 11).
Akin to the railway system is the road network of
Uganda. One author has noted: "Indeed, without a good road
46
system, the economy wcnild have to remain very largely at
subsistence level, little hope for either industrial or
agricultural advance" (67, p. 34). This quotation clearly
describes what Uganda looked like almost seventy years ago.
It was the coming of the modern market economy, and the
establishment of a good road network that facilitated the
development of Uganda.
It can be argued that Uganda1s economic development
would be impossible without some kind of good roads. For
example, with more than one million separate agricultural
holdings spread throughout Uganda roads are essential for
the marketing of crops, whether for home consumption or
for export. In addition, roads play a major part in public
service, viz., as a factor in the development of tourist
industry, and for national security (67, p. 34).
Happily, Uganda has a road system which is generally
accepted as being the best in East Africa. However, these
roads are good by African standards, but uneconomical in
the long run from the standpoint of road and vehicle main-
tenance. It follows that the resulting increased
transportation costs adversely affect the prices of commodities
and produce for exports. Similarly, these roads also suffer
from inadequate bridging (24, p. 276).
Under its Second Five Year Plan 1966-71, Uganda had
planned to improve and upgrade its road system. In fact,
by 1971 the road programme consisted of the improvement of
47
many miles of main roads ana the construction of feeder
roads, in light of industrial and agricultural development
(67, p. 34).
The road and railway system, it should be pointed out*
is supplemented by inland water transport on Lake Victoria,
Lake Albert, and the Albert and Victoria Nile, and by air
transport providing both domestic and .international services.
In recent years, the volume of lake transport has diminished,
resulting from the extension of the railway system to the
northern region of the country. However, internal air
traffic has increased considerably. As may be expected, the
increased internal air traffic has been stimulated by
increased tourist traffic to the parks and game reserves
(30, p. 313).
In Uganda, the main channels of communication between
the government and the people are through the media—Radio
and Television. But all Radio and Television services are
operated by the government (21, p. 32). The complete
ownership of all radio and television services gives the
government advantage over the people. It can use these
tools as a means for promoting its policies, but also such
tools can be used for propaganda purposes—an inevitable
ideal. Besides this, the press supplements radio and
television functions.
48
Money and Banking
Before independence, the Banking system in East Africa
served the interests of its colonial master. The banking
industry, so to speak, was in the hands of expatriate banks.
But. political independence which was achieved in East Africa
in early 1960*3, fundamentally altered the needs and the
position of the dependent economies of East Africa (19, '
p. 504). However, during the period of political
independence, as Gershenberg well describes it;
Commercial banking in Uganda, as throughout most of Africa, can be criticized for not having made a greater contribution towards indigenous economic development. The Banks that operated in the colonies were branches of foreign banks established to facilitate the development of exports desired by colonial power and only incidentally to development of an indigenous economy. Financing was mainly limited to providing short term self-liquidating loans to exporters of raw materials and to importers of consumer goods (19, p. 505).
As this passage describes, policies adopted by foreign
banks within Uganda, were policies that were in tune with
the imperial desires. Moreover, it was inevitable that
the Uganda government could not tolerate the control of its
financial interests by foreign elements operating within its
sphere of sovereignty.
Before independence Uganda's monetary interests were
regulated by East African Currency Board—a tool of imperial
power. This organ was empowered to provide for and control
the supply of money within Uganda, Kenya and Tanzania. The
main weaknesses of this Board were that: it was not equipped
49
with principal powers by which a central bank could usually
influence a country's monetary mechanism. Moreover, it did
not function as a banker to four East African Governments;
instead, commercial banks performed this role. Furthermore,
it had no jurisdiction over the commercial banking system.
In addition, it did not set reserve requirements or lend to
commercial banks. Under such conditions, the Board could
not influence the credit policies of commercial banks
pertaining to the terms of the nature or quantities of
loans made (24, p. 350).
Thus, the limited powers of the Board placed complication
on the general effort to mobilize East African credit
resources for economic development. In light of this, three
East African Governments decided separately to establish
national central banks. Accordingly, the Bank of Uganda
was established by an act of National Assembly in May 1966,
and on August 13, 1966, it became operational. The Bank,
by the Act of Parliament was empowered to perform all the
duties that a central bank usually does. In short, it had
to issue legal tender currency, maintain external reserves
to protect the internal value of that currency, and promote
stability and a sound financial base conducive to balanced
and sustained rates of economic growth. Further the Bank
acts as a banker to the government and to the commercial
banks. Additionally, it regulates monetary and credit
50
processes to ensure whether they are in tune with government
economic policy (24, pp. 350-351).
While the central bank acts as a banker to the government
and to the commercial banks, the commercial banks act as
custodians to the general public. In 1968 there were nine
commercial banks that conducted services in the country.
Seven of these banks were branches of the foreign institutionss
Earclays Bank D. C. 0.; National and Gindlays Bank, Ltd.y
The Standard Bank, Ltd.? all British, the Bank of India and
the Bank of Baroda, both Indian? Ottaman Bank, Turkish?
and the General Bank of Netherlands, and Uganda Commercial
Bank (20, p. 15).
Since the attainment of independence, the banking
system has witnessed a period of unprecedented changes.
For instance, the Uganda Government by an Act of Farliament
turned the Uganda Credit and Savings Bank into a full-service
Commercial bank. The act was prompted by several reasons.
First, it was designed to reflect the symbol of independence,
as a witness to Uganda's sovereignty. Second, it was
designed to provide added competition to already existing
expatriate banks. Third, it was to provide loans to small
businesses run by Africans under less stringent terms (19,
p. 506).
It is doubtful whether the bank has been successful in
carrying out these objectives. It is not clear, for instance,
if it has generated a competitive spur to the other commercial
banks, or in providing loanable funds for small African
businessmen. However, the bank has obviously served as a
mirror of Uganda's sovereignty (19, p. 506).
Another change that the banking system witnessed since
independence, was the creation of a central bank for Uganda
in 1966. Prior to this date, Uganda's monetary affairs were
regulated by the East African Currency Board (19, p. 510),
as already noted.
The creation of a central bank, as pointed out before,
did mean a fresh look at the entire commercial banking
practices in the country. In this respect, another more
radical change since independence occurred in 1969.
Accordingly, by an Act of Parliament of 1969, all expatriate
banks incorporated in Uganda were required to have a paid
up capital in cash of at least two million shillings. . But
banks which were incorporated outside Uganda were prescribed
a minimum capital of ten million shillings, and these liquid
assets had to be held permanently in Uganda (19, p. 512).
The Act was further amended to provide for local incorporation
of all banking and credit institutions operating in Uganda
(21, p. 38) .
However, in Obote's slouching towards socialism program,
as Gershenberg coins it, a 60 percent nationalization of
banking functions were announced in May 1970. But later,
when Obote's regime was ousted by the army in January 1971,
the public sector holding in commercial banks was reduced to
49 percent (19; 21, p. 79? 38).
52
In conclusion, one wonders if the enactments of various
legislative acts, or the creation of new institutions has
made any significant impact on both the operation of commercial
banks and the economy as a whole.
Certainly, the impact of the regulation of the operations
of commercial banks has been, as Gershenberg observes,
"surprisingly effective." Fcr example, the same author notes
that the reduction of bank credit to non-essential categories
was much greater than what the government had envisaged
before (19, p. 521). Furthermore, as already noted, the
expatriate banks tended to invest their accumulated capital
in Europe rather than in Uganda. However, the regulation
of their operations meant that they could not commit their
funds outside the country freely as they had done in the
past. As a result of these changes, the expatriate banks
are now committed to develop Uganda economically, though
with reservations (19, p. 513).
In all the above discussion, one thing can be said to
be missing in commercial banking and that is—"dynamism."
In short, the commercial banks have continued to operate
in conformity with what has gone in the past. For example,
expatriate banks still make relatively short term loans and
make advances to commercial sector for export-import
purposes (19, p. 520) . With such a conservative approach
to lending, it is equally true to say that a new generation
of bankers is needed to man commercial banks. Bankers,
53
especially with great insight are needed to replace those
elements in banking system who subscribe to the view that
a "banker ought to sit in his office and be available to
customers on demand" (19, p. 520). Unless bankers in Uganda
see themselves as catalysts, the role of the commercial
banks in Uganda's economic development will continue to be
channelled through narrow participation. In noting the
missing elements in commercial banking in Uganda, one is
reminded of Cairncross1 observation of the general practices
of British banks, when he said:
Banks often reared in Anglo-Saxon tradition are usually chary of taking an active part in industrial development and have sometimes expressed rather doctrinaire views about the wisdom of using their depositors' money for long-term investment in industry (7, p. 169).
Certainly the attitude adopted by all the commercial
banks in Uganda is that of the typical British banks.
However justifiable the British case may be, Ugandan banks,
it may be argued, should not marry to practices which do
not promote the best interests of the economy of the country.
CHAPTER III
THE ECONOMY AND ITS PROBLEMS (Continued)
Human Resources
When the World Bank mission to Uganda handed down its
report to the world organization, it noted that the growth
in the stock of useful skills and knowledge possessed by
the people of a country shared equal importance with a rise
in the standard of living and growth in the stock of plant
and machinery (29, p. 113). Adopting a similar line,
Professor Harbison wrote:
The wealth of a country is dependent upon more than its natural resources and material capital; it is determined in significant degree by the knowledge, skills, and motivation of its people—i.e., its stock of human capital (32,
p. 71).
The crucial problem facing Uganda today in its economic
development is the shortage of skilled manpower. In view of
this, the above passage, for that matter, demonstrates in
vivid terms why more or less economic development depends
on the stock of human capital. Thus, the implication here
is that a nation should be concerned about the stock of its
human resources, just as it is concerned about its capital
accumulation.
Unfortunately, Uganda with a population of about 9.5
million has approximately 312,000 wage earners. This is
54
55
about 2 percent of the total population, while 90 percent
of the population works on "shambas" {21, p» 35). Evidently
Uganda is confronted simultaneously with two persistent
manpower problems. First, it is faced with the shortage of
persons with critical skills, viz., engineers, technicians,
scientists, teachers, doctors, managers, nurses, craftsmen
and many others (11; 22, p. 12; 45). Second, it is
confronted with the issue of unemployment, though at this
juncture, it is a minor issue; however, Uganda has the
problem of underemployment.
The evidence of underemployment in the country has
been, for example, noted by Seidman. To this end, he noted?
Underemployment is, however, common. It has been estimated that the average working day is about 5-6 hours during the season; only in peak working periods is available labour fully occupied (51, p. 13).
The urgent task before Uganda in this case is to produce
an army of skilled workers and to utilize the available
manpower to its capacity, But in the meantime, the Uganda
government should encourage and assist the limited class of
indigenecus entrepreneurs with some form of financial aid.
Of course, this aid will depend upon the potential ability
of each entrepreneur in question. It follows that the
limited size of this innovative element in the country
reaches to the core of McClelland's hypothesis. McClelland,
for instance, hypothesises that a society with a generally
high level of "n" Achievement will produce more enercretic
56
entrepreneurs who, in turn, produce more rapid economic
development (41, p. 205).
Precisely at this stage of economic development,
Uganda should not wait until it has reached "n" Achievement
stage hypothesised by McClelland. Moreover, if the Uganda
Government is to spur vigorous economic development, it
should certainly embark upon heavy investment in human
resources; as indicated before, the Uganda government should
particularly invest in human resources, whose critical
skills are in dire need at this moment of Uganda's development.
In essence, the government should invest, in the education
and training of personnel, viz., teachers, doctors, scientists,
managers, technicians, and many other professionals; however,
the road to an early realization of the returns on such
investment, always looks remote and unpromising, yet returns
are inevitable in the long run.
It is encouraging, though, to cite that the Uganda
Government has already launched ambitious programmes designed
to produce the urgently needed skills and personnel in the
country. In this direction, it has extended and restructured
the educational system it had inherited from colonial past
(24, p. 113).
Frankly, Uganda had at Independence an educational
system which was only inadequately developed, but it was
also wrongly oriented. It had a very small number of. local
graduates, and only 31 percent, of the established posts in
57
the civil service—and those at local level were held by
local people. Furthermore, University intake was discouragingly
low, viz., about 250 students were admitted to the University'
a year, and intake to secondary schools was no more than
2,200 per year. Moreover, only about 435,000 children were,
enrolled in aided primary schools, less than 40 percent of
the relevant age group. It was obvious that at this pace,
Uganda's hope of ever producing adequate trained manpower to
cope with rapid development was very slim indeed (24, pp. 114-
117) .
In light of this, immediately after Independence the
Government recognized that one of its highest priority aims
must be rapid expansion and reorientation of education at
all levels. With this objective in mind, the Government
gave top priority to higher and secondary education; it did
this purposely so that the immediate development of the
country would not be held up by bottlenecks, and a rapidly
increasing number of crucial posts in the public services
could be held by Ugandans. Additionally, it realized the
urgent necessity to give adequate attention to the expansion
of primary education, so that more and more children could
be given the chance to lead a more meaningful and fuller
life, and to play their part in shaping the new Uganda (67,
pp. 38-39).
So far, the discussion given in the preceding lines
has been primarily centered on the primary, higher and
58
University education. But, one should not get the impression
that Uganda is neglecting specialized training. On the
contrary, the Government has already invested enormous funds
in the training of specialists. For example, as one author
writes:
Already many departmental schools for training the fields of health, agriculture, engineering, surveying and several other areas have been opened to meet the need for middle level manpower. In addition, a number of technical and commercial colleges have established to cater for technicians and skilled manual workers (67, p. 39).
Certainly, the achievement in educational expansion at.
all levels has been enormous. This has been as a result of
the fact that Uganda has, in recent years, and is still
today, spending a greater proportion of her national income
and budget on education than almost any other developing
nation in the world. For instance, approximately 6 percent,
of the country's national income and 28 percent of total
government recurrent expenditure is allocated to this area
(16, p. 11).
In conclusion, it is no exaggeration to say that Uganda
is now reasonably optimistic that the future problems in the
field of education which are bound to crop up in a growing
system will, given the same attention and determination, be
certainly overcome (67, p. 39).
An anonymous author has remarked that, "if education is
one side of the welfare 'coin1* in all progressive countries,
then the provision of forward-looking health service is the
59
other" (67, p. 41). Similarly, Pedro Belli has quoted
Jacob Viner in these words:
The first requirement for high labor productivity under modern conditions are that the masses of the population shall be literate, healthy, and sufficiently well fed to be strong and energetic, In many countries, I feel sure, if this were achieved all else necessary for rapid economic development would come readily and easily of itself. I also feel sure that whenever this has not been accomplished . . . it is not necessary to look for other factors . . . to explain the pervasive poverty and slow economic growth (4,
p. 1) .
Although physical, and cultural factors are responsible for
the backwardness of many regions in the world, however, low
productivity in these regions, is certainly the result of
illiteracy, poor health conditions and malnutrition as noted
in the above passage.
From health point of view, Uganda is infested with
numerous diseases. Indeed, the main health problems are
communicable diseases, malnutrition and poor environmental
conditions. The obvious causes, it can be stated of health
problems in the country are: a low standard of living, a
high general and health illiteracy, inadequate nutrition,
poor housing, lack of safe water and basic sanitation,
spread of various dangerous organisms, and extremely limited
health care services. For example, one doctor renders
services for 15,000 inhabitants, and 1.8 hospital beds serve
1,000 inhabitants (24? 29, pp. 135-144; 374-377).
Uganda's most notorious, human killing disease is
malaria. Herrick and his associates, for instance, have
60
concluded that in 1967 the number of cases and deaths reported
outnumbered the combined number of cases and deaths reported
from all other diseases. As a result of poor health, the
same authors conclude that "the ability of people to perform
labor is adversely affected, and human productivity is
generally affected" (24, p. 142). Similarly, Walker (46)
arrives at similar conclusions.
Besides the notoriety of malaria fever in the country,
the presence of sleeping sickness in some areas of the
country had up to 1.940 hindered the exploitation of virgin
lands. But, as a. result of the successful war which was
waged against the villainous insects (tsetse flies) responsible
for the malady, many areas since then have become inhabitable?
a case in point, is the South Busoga Resettlement Scheme, a
subject to which Watts has given scholarly treatment in his
k00^' ?he; South Busoga Resettlement Scheme (65) .
In light of this, it was and still is imperative that
the Government cater for some health services urgently needed
for those in need of them. Given this situation, the
colonial power during its rule did organize health services
on four levels; national, regional, district and local. The
district administration for example is responsible for the
health services on the district and local levels. It should
be pointed out here that the present system of health
organization and administration has certain weaknesses and
deficiencies; for instance, there are no organized public
61
health services (Institutes of Public Health) so much needed
to cope with the health problems facing the country (16 „
p. 13).
It was indicated at the beginning of this chapter that
Uganda has a chronic shortage of trained manpower. This
shortage is particularly present in the main categories of
health personnel contributing their services for economic
development of Uganda. As Table IV reflects, the shortage
of health workers of all categories, especially those of the
professional level, constitutes a major obstacle to any
planned action in this area. Moreover, the uneven distribution
of health personnel, with a marked concentration in urban -
areas, adds to the problem (16, p. 13) . As seen from the
table, the Government is more or less the virtual employer
of most of the health personnel. However, there is a powerful
private sector, particularly in the medical field; pharmacy,
for example, accounts for 76.8 percent of the trained
personnel. Similarly, dentistry accounts for 66.7 percent,
and nursing for 49.6 percent.
Also a large portion of the professional physicians
work in the private sector, and they account for 45.7 percent
of the total number trained in this field. In view of these
facts, the question of health manpower does call for careful
consideration. It is only safe to say that the situation
has received due attention from the Government (67, pp. 41-
42).
62
TABLE IV
THE HEALTH PERSONNEL IN UGANDA—1969
Category Sector
,
Total Number
Per Inhabitant Government Private %
Physician 647 14,700 351 296 ; 45.7 Medical Assistant 368 25,800 368 - -
Dentist 42 226,200 14 28 66.7 Pharmacist 56 169,600 13 43 76.8 Nurse 1,001 9,500 927 74 7.4 Assistant Nurse 2,516 3,800 1 1,268 1,248 49.6 Midwife 715 13,300 1 715 ; -
Assistant Midwife 1,892 5,000 1,252 640 33.8 Health Inspector 154 61,700 | 150 4 2.6 Health Assistant 459 28,700 459 —
Source: Adapted from "Excerpts," as reported by Embassy of the Republic of Uganda, Washinaton, D. C., March, 1971, p. 13.
Recent Developments and the Present Position of Economy
From the political standpoint, Uganda has had no period
of political harmony since the attainment of Independence.
When the new government assumed power in 1S62, it inherited
unresolved issues. For instance, the case for the lost
counties in Bunyoro cited in Chapter I was unresolved. The
settlement of the dispute by a referendum became an emotional
issue in Buganda and consequently, it led to rioting in the
region and the downfall of Kintu's government in Buganda.
Besides the interests of traditional Buganda, other
aggressive interest have plagued the Uganda Government. In
this connection, Karamojong tribesmen have constantly carried
63
out extensive raids on neighbouring people? further,, other
ethnic elements have sought autonomy from the central
government (13, p. 331).
While tribal interests and tribal politics occupied
the Government's mind, its attempt to form a federation
between Kenya, Tanzania and Uganda was further frustrated,
by some skeptical elements within its own ranks (50, pp. 91—
105). The proposed federation (the subject which received
wide publicity within East Africa and overseas), was torpedoed
by Uganda's unwillingness to surrender its sovereignty on
the key issues of citizenship and foreign affairs in the
proposed federation (50, pp. 131-133).
The dream for an East African Federation was certainly
a step in the right direction. From economic standpoint,
had federation corne to being, it would have created a large
economic market in the region, it would have attracted
foreign capital; and it would have eliminated virtually all
the restrictions that exist today between the states (24; 35,
p. 316-13). However, the failure of the federation to
materialize plus tribal agitation within Uganda, as already
noted, did create political uncertainty in the country.
Moreover, as 1968 came to an end, Uganda entered into
a period of radical economics. For example, Obote announced
in November 1968 what he described as the "Move to the left"
(53, p. 4)» As expected, the announcement was received with
mixed emotions. To the ordinary man, the announcement did
64
not have any significance because since independence, it may
be said, he had not received an equitable share of the fruits
of independence? instead, he received a little slice of the
national income. Thus, the announcement, it can be argued.,.
was addressed to especially, the well-to-do class and a
handful of educated elite who receive a big chunk of the
national income (18, p. 83).
Further, the proposal to move to the left was seen as
a general plan by the government to eliminate the vast
inequalities which had been inherited from the colonial and
early independence periods, and to move the society in an
egalitarian direction (38, p. 29). Obote's radical shift to
socialism, in the opinion of Gershenberg (18) and Lofchie (38)
did lead to his downfall early in 1971. But, none can deny
the fact that Obote was a shrewd politician as cited earlier.
In view of what has been noted in the preceding lines,
the prospects for economic improvement throughout the country
did not look good in 1971. For example, information released
by U. S. Embassy in Kampala cited many crucial problems
the economy was confronted with. In this context, the
Embassy noted that the Government had a deficit of $20 million
for the first half of 1971. The deficit was caused by
accelerated Government expenditures, as the Embassy put it.
In addition, Uganda's foreign exchange was below the legally
required reserves. To this point the Embassy contended that
the flight of capital and Government's increased expenditures
65
were responsible for the fiscal and foreign exchange
problems (17, 1971, pp. 3-5).
Moreover, the Embassy cited many other problems which
it felt could slow down the overall economic development of
Uganda. In this respect, it noted the inflationary pressures
which were threatening to erode the buying power of the
shilling. It also cited especially that the cost of living
had gone up by 20 percent for the low-income groups and 12
percent for the middle-groups. Furthermore, the report went
on to say that domestic investment had declined in 1971 (17,
1971, p. 6), and on top of this the recent expulsion of
Asians, a point already cited, has hurt tremendously the
economy.
Total Per Capita Incomes
At Independence, Uganda's per capita gross domestic
product was estimated to be in the neighbourhood of $46 (28,
p. 25). On the other hand, O'Connor puts the estimate at
$44 (44, p. 11). In view of these facts, what can one
expect a subsistence economy to achieve? However, since
independence some progress has been achieved. For instance,
per capita gross domestic product in 1969 was up by more
than two times higher than it was at Independence. In
monetary terms, per capita income was $105 (17, 1971, p. 2)
in 1969.
What conclusion may one draw from the above figures?
Certainly, one may say that Uganda's economic performance
66
has been impressive- One author, for example, has gone to
the extent of saying: "This steady growth in revenue has
in turn permitted a similar rate of increase in Government's
budgetary allocations to a total of Shs 991 million in current
fiscal year" (67, p. 15). Additionally, it may be said,
Government's attempts to raise capital revenue and especially
to employ these funds to generate further development of
the economy has been coupled with vigorous campaigns to
contain expenditure in other areas (67, p. 16).
Exports, Imports and Interterritorial Trade-
It will be clear from what has been said earlier that.
the dynamic element in the development of Uganda has been
the production and sale of goods in the overseas market.
As it could be said, it is difficult to see how Uganda could
have developed otherwise. Moreover, it seems that the
expansion of mineral exploitation is still a prerequisite of
any attempt to increase per capita incomes (46, p. 109).
Thus far as may be seen, Uganda's economy is vitally
dependent upon returns from agricultural and mineral
commodities. Earnings received from these exports finance
the expanding import requirements for the manufacturing
sector (20, p. 18).
Despite shifts in world prices for major exports, the
value exports to countries other than Kenya and Tanzania
reflected on the whole, a steady increase between 1967 and
67
1968 (24/ p. 301}- Table V accurately shows the nature of
this growth. According to Table V, approximately 90 percent,
of the value of external exports was derived from foodstuffs "
and agricultural raw products. In spite of Government's
attempt to diversify the export base as cited earlier izi
Chapter II, coffee and cotton together persistently accounted
for over 75 percent of external trade in 1968. Coffee alone
accounted for 54.7 percent of Uganda's export earnings in
1968; in the meantime, cotton provided 22.6 percent. In all,
the value of the two major exports increased in 1968, this
situation was brought about by increased world market prices
(20, p. 18).
At this juncture, it is relevant to emphasize that
coffee and cotton are the key primary determinants of Uganda's
national income, and account for approximately one half of
the recorded cash income earned in agriculture, as already
cited in Chapter II.
Copper exports, the third largest export earner increased
in value from 109.3 million shillings to 111.5 million
shillings, and percent-wise it rose by 2.0 percent in 1968,
and its share of the domestic export remained as in the
previous year.
In contrast to the rapidly growing export volume, it
is worth noting that the values of exports are subject to
violent fluctuations. These, of course, result from massive
price shifts in the world markets for cotton and coffee
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9
(29, p. 28). Their cumulative effect produces peak exports.
F02: example, as one author notes:
Increased production of primary products in 196S points to a pick up in Uganda's economy following a two year slump. Coffee and cotton remain dominant; as go production, exports and world prices of these two crops, so goes—to a large extent—Uganda's economy (17, 1969, p. 3).
Accordingly, the exports of tea and hides and skins
expanded fairly steadily and both benefited from generally
favourable price shifts that enabled them to strengthen or
maintain their positions as export earners. It follows
that the prospects for these commodities in 1968 seemed to
be good, and, as a consequence, the reliance on earning
powers of coffee, cotton, and copper was expected to continue
to diminish gradually (24, p. 304).
While Uganda's external trade has been expanding, its
inter-territorial trade, too, has been increasing. For
instance, the value of exports to Kenya and mainland Tanzania
expanded by 83 percent between 1961 and 1969. However, this
value may be much higher by now (24, p. 304). Unlike the
predominantly agricultural external export trade, inter-
territorial trade is mainly composed of light manufactures.
The composition of Uganda's imports is in tune with its
economic development, and the picture reflects the large
imports component of development expenditure. A large bulk
of imports is comprised of machinery, transport equipment
and various manufactured products, the rest consists of
70
chemicals, fuels and certain food items (29, p. 28). The
curious irony about the nature of imports is that no price
fluctuations analogous to those on the export side usually
occurs, but rather import prices do tend to rise, thus-
volume and values move fairly parallel (24, p. 304).
In considering Uganda's foreign trade, it will be
recalled that trade is divided into two segments: (1) trade
with countries outside East Africa, and (2) inter-territorial
trade with Kenya and Tanzania. In 19 67, Kenya and Tanzania's
share of Uganda's total foreign trade amounted to 40 percent.
In 1968, the position remained unchanged in the sterling
area. However, Britain purchased 20 percent of exports.
As noted in Table VI, Japan purchased 10.2 percent of
Uganda exports, which is largely copper (20, p. 19).
As Table VI reflects, the United States is the single
largest export market for Ugandan goods. Great Britain, as
may be seen, is the major supplier in the Ugandan market,
providing 26 percent of imports in 1968. During the same
year, the Kenyan share of Uganda's market provided 95 percent
of imports within the East African community. Other active
exporters to Uganda were West Germany with 8.2 percent of
the market share in 1968, Japan's share was 8.1 percent,
and Italy 4.1 percent (20, p. 20).
The East European share of Uganda's market was and is
still negligent compared to the western share. For instance,
i n 1 Q & K fVifi r* ^ 4- TT~ ^ ~ ^ .L, ~ X. ~ 1 JT ~ J •** -
TABLE VI
UGANDA: FOREIGN TRADE BY PRINCIPAL COUNTRY (EXCLUDING EAST AFRICAN TRADE), 1966-1968
(in 000's U-*-)
Country Exports
1966 1967 1968
United States 17,039 14,086 16,382 United Kingdom 12,271 12,322 15,117 India 1,817 2,742 3,176 Germany 2,543 2,332 2,789 China (Mainland and Taiwan) 1,334 1,509 1,841 Netherlands 1,817 2,164 1,806 Hong Kong 1,674 1,400 1,097 Japan 3,265 5,810 7,826 Other foreign Countries 24,176 19,271 15,437
Total 65,936 64,636 65,471
Country Imports
United Kingdom 15,488 14,243 14,633 Japan 2,314 2,657 4,720 West Germany 4,803 5,250 4,751 United States 1,963 1,357 1,656 France 1,650 2,784 1,934 Italy 1,900 1,562 1,572 Other foreign Countries 2,194 1,903 2,361 Unallocated transactions 12,635 11,512 12,361
Total 42,947 41,328 43,813
U = U. S. $2.80 .
Source: Adapted from Overseas Business , June, 1970.
72
was 6,6 percent; however, in 1967 this share declined to
approximately 5 percent (63, p. 156).
While a common market exists between Uganda, Kenya and
Tanzania, the share of each member in this pool is unequal.
For example, in Arowoyolo's own words, "Kenya has generally
dominated xntraterritorial trade; its share of intraterritorial
exports amounted to 65.7 percent" (2, p. 7).
For this reason, it is important to note that the
imbalance of trade between Kenya and her partners in the
common market has for many years caused friction between the
states (46, pp. 119-121), In fact, the subject has always
stimulated rancorous debates among member states (24, D. 314).
Despite its imperfection, as one author has put it (14, p. 79),
the common market arrangement between the three states has
demonstrated its advantage by promoting development and
industrialization within the region (24, p. 314).
Government Revenues and Expenditure
The size and the composition of Government's expenditures
to a large extent, form indeed, two main determinants of
the speed and the direction of Uganda's economic development
(24, p. J65). Thus, the combined local and central government's
budgets in x969, amounted to 616 million shillings (21, p. 10).
ThiS amount, it should be stated, amounted to about one
quarter oi monetary domestic product at current prices. The
blue print so to speak of Government's expenditures is usually
73
embodied in two budgets which are cire.wn annually, vis.,
recurrent budget and capital budget (24, p. 365).
The recurrent budget as may be shown, reflects routine
functions, such as administration, law, order, defense, and
economic and social services. On the other hand, the capital
budget "outlines the annual phasing and implementation of
the country's current development plan" (24, p. 365).
Like any nation emerging from colonial tutelage, Uganda
is confronted with a financial dilemma. To this end, the
World Bank mission to Uganda once commented: "The relation-
ship between the domestic product and the level of government
expenditures is not a one-way street" (29, p. 31). Thus,
the crucial problem which evidently has faced the Uganda
Government since independence has been the inadequacy of
revenues with which to finance rising levels of recurrent
and capital budgets (24, p. 365).
Currently, Uganda's internal resources are insufficient
to generate adequate funds to meet a satisfactory rate of
economic growth (64, p. 54). For this reason, the Government
relies on external resources as well for economic development
of the country. Briefly, there are several avenues through
which the Government raises public revenues internally.
Internally, public revenues emanate from taxes, creation or
borrowing from the central bank, and domestic borrowing
from the public (24, p. 35). External avenues are in form
of foreign loans and grants. At the time of writing this
74
thesis, Uganda's external debt amounted to $12S million
(17, 1971, p. 2), and this vras approximately 58 percent, of
the total public debt.
Even though the tax structure in Uganda has been
reformed, it is still inadequately .responsive and not
sensitive to increases in national income to enable public
revenues to expand in the usual manner (24, p. 365)•
Uganda's tax system is handicapped by its overreliance
on export and import duties; for this reason, it has failed
to generate sufficient revenues to finance rising levels of
recurrent and capital expenditures (29, pp. 31-32). Besides
export and import duties, Uganda's other sources of public
revenues are: income tax, development tax, excise tax,
licenses, fees and fines (47, pp. 374-379).
In examining the features of the tax structure in.
Uganda, one finds many defects embedded in the system. For
instance, the fiscal system relies heavily on export and
import duties. The reliance on such duties, therefore, very
often contributes considerable instability into the fiscal
system because export goods are vulnerable to fluctuating
world market prices (47, pp. 378-379).
Furthermore, the tax system only draws a small portion
of the public revenues from duties levied on domestically
made consumption goods and services and from personal and
corporate taxes (24, p. 365). In addition, the tax system
penalizes the low-income group. Accordingly, Herrick and
75
others have contended that the low-income group pay higher
taxes than either the middle class or the upper urban dwellers.
Thus they wrote:
Low-income rural, residents, particularly coffee and cotton producers, generally pay higher proportion of their incomes in taxes than middle and upper income urban dwellers (24, p. 365).
Indeed the uneven taxation of the people in general has
promoted inequality in taxing practices rather than producing
an equalitarian tax system (36, p. 423). Moreover, the
uneven collection of taxes does create a situation whereby
persons subjected to higher taxes in this case evade paying
their taxes (24, p. 367).
So far the preceding discussion has mainly focused on
the sources of public revenues, and effects associated with
some of these sources. However, a brief examination on
how the Uganda Government spends its revenue follows below.
As already indicated, Government expenditures are
always reflected in its recurrent and capital budgets. In
the post independence years, government expenditures have
risen astronomically. For instance, recurrent expenditure
arose from Shs 502.6 million in 1962 to an estimated Shs
1121 million in 1970/71. Similarly, capital expenditure
arose from Shs 96 million to an estimated Shs 512 million
in fiscal 1971 {21? 24, p. 39? 372).
The general increased expenditures, it can be concluded
in recurrent and capital expenditures was and is still
76
attributed to the attainment of independence and heightened
economic development in Uganda (24, pp. 372-376).
Public and Private Investment
As noted before, government's participation in the life
of the economy is funneled through its statutory corporation.
Already the corporation has demonstrated its influence In.
the life of the economy. For example, the corporation owns
4 0 subsidiary companies throughout the country. Moreover,
Uganda Development Corporation participates heavily in
investment through equity holdings, loans and the provision
of buildings in joint enterprises with private investors
(17, 1971, p. 11). In addition to this, the UDC has interests
in diversified fields. To this end the U. S. Embassy in
Kampala noted:
The UDC1s operations extend over a wide range of activities in agriculture, agro-industry, ranching, tourism, industry and mining. It holds fixed assets valued at $85 million and employs 25,000 people. . . .
During 1970 UDC associated factories were completed for jute bag manufacturing, the first phase of a new cement complex, and extensions on shirt and cotton textile factories. The UDC's hotel corporation completed a 60-bed extension at Murchison Falls and two new hotels and commenced work on six others as a part of a $21-million program. . . (17, 1971, p. 11).
Obviously one raised in the school of orthodox economics
would vigorously argue against government's participation
in industrial investment. The point here is that people in
developing countries do look to the state and expect it to
do something to alter their situation (36, p. 393).
11
9
As may be seen in the preceding quotation, the extent,
of government's participation in industrial activities is
quite varied, and besides, it invests heavily in social
services, viz., education, law, health, defence, road
construction and maintenance, and number of other services.
In addition to direct industrial investment, the Uganda
Government in 1970 decided to acquire 60 percent share in
the equity capital of 84 major companies in the country (17,
1970, p. 6); however, this decision was reversed after Obote's
government was ousted from office in early 1971.
The role of private investment in Uganda is unquestionably
indispensable for economic development of the country. For
this reason, the Government recognizes the importance of
protecting the interests of private investors whether domestic
or foreign (67, p. 29). In order to attract foreign
investors into the country, a Foreign Investment (Protection)
act was passed in 1964 (20, p. 17).
The main features embodied in the Act included the
following incentives, the right to transfer out of Uganda,
at prevailing rates of exchange, as Hansen documents:
(1) profits after payment of relevant taxes; (2) an approved proportion of the net profit from sale of all or any part of the approved enterprise; (3) the principal and interest of loans specified in the certificate; (4) any compensation due to be paid under the provisions of the Foreign Investments Act; and (5) duty free imports of raw materials and equipment, accelerated depreciation of capital assets (20, p. 17).
s
The wording in the above passage evidently shows the
good faith the Government attaches to the role of foreign
investment in the economic development of Uganda. It.
recognizes without any shadow of doubt the vitality of
foreign capital. However, this faith has been shuttered by
recent developments in the country. A case in point is the
recent expulsion of almost 50,000 Asians from Uganda. Further-
more, government's threat to take over all the British firms
operating in the country has seriously questioned the
credibility of the military regime (55; 60, p. 48; 13).
CHAPTER IV
DEVELOPMENT PLANNING
First Five-Year Development Plan 1961-66
The terms "planning" and "plans" are alien to Uganda,
but both concepts have been in circulation for quite a long
time, "though with varying degrees of esteem" (62/ p. 20).
However, the notion of "development" with its colonial
aroma is what is important in this connection to Uganda (62,
p. 22) .
To begin with, it could be said, British authorities,
who had ruled Uganda for approximately seventy years,
initiated a 10-year development plan after World War II.
The plan which was drawn up, covered the period from 1946 to
1955 (36, p. 430). This plan was succeeded by another
extending from 1955 to 1960 (24, p. 228). As will be
explained later, both plans differed quite markedly from the
First Five-Year Development Plan, 1961 to 1966.
In essence, both plans embraced the concepts of micro-
economics and macroeconomics. In this instance, both plans
placed priority on productive sectors of the economy and
secondly, they emphasized the improvement of social services
(36, p. 431). In order to discover for instance, how money
was spent on these projects, one is invited to peruse the
79
80
¥
accounts of the. World Bank Mission to Uganda (29), Livingstone
and Ord (36) , and Herrick and Co-authors (24) to cite only
a -few. Basically as Herrick documents, "spending was
concentrated on education; later, as development spending
increased proportionally greater amounts were devoted to
roads and buildings" (24, p. 228).
What emerges out from these plans, for instance, is
the lack of comprehensiveness. Of course, such overall
development of the economy could not have been instituted
by the colonial power whose interest tended only to develop
the country at a "chameleon" speed (36, pp. 430-31).
Perhaps one may wonder why the years 1961 to 1966 are
regarded as being the First Five-Year Development Plan for
Uganda. Further, one may argue that Uganda had development
plans prior to the First Five-Year Development Plan. True,
many plans so to speak had been instituted in advance of the
1961 to 1966 plan. However, the striking difference between
this plan and those that preceded it, apparently lies not
in technique, but rather in content and authorship.
The first Five-Year Development Plan 1961-66 was an
outgrowth of the World Bank's effort. In short the plan
came into being basically upon the proposals of the World
Bank .Mission to Uganda (29, pp. 38-42). As indicated earlier,
this plan differed from all that preceded it, in that it was
produced by a neutral element (the World Bank). In its
content, it encompassed ail the major aspects of the economy,
but especially it emphasized the need to accelerate the
growth of gross domestic product, while in the meantime
diversifying the economy and ensuring a fair distribution of
the nation's cake of wealth (29, p. 37-43).
In this connection, the Mission said:
The mission's recommendations are intended to provide the basis for such a development program over the five years, 1961/62-1965/66. Even if these recommendations are followed, we cannot promise that there will be immediate spectacular results. But with reasonable luck the rate of growth should accelerate and gross domestic product should increase on the average by 3-4 percent a year. . . . If the program is carried out successfully, we would expect the rate of growth to accelerate even further. . . (29, p. 39).
As the wording expresses, a note of caution permeates
the entire Plan. As may be thought, a development plan in
this case is not a therapy which could be applied to all
the prevalent economic ills and thus produce immediate
relief. On the contrary, the Mission saw the plan as an
economic formula designed to point the course of action to
be adopted in such a way that, if implemented, it would
bring about inevitable results.
How successful was this Plan? and how was it financed,
and what problems were encountered in its implementation?
Before answering any of these questions, one is reminded,
to begin with, that any success of any plan depends on the
ability of the government "to marshall the full weight of
her human and material resources both to meet the difficult
economic problems" it faces (29, p. 37). With this view in
82
mind, it can be said in responding to the first question
that the Plan, despite the slow start did succeed beyond
what was hoped to achieve. For example, as Herrick documents,"
"the rate of growth of total output was 9.3 percent a year
in current prices compared with the Flan target of 4.5 to
5 percent (24, p. 229).
In servicing the plan, it was estimated that 35 percent
of capital formation would come from foreign contributions
(47, p. 372) and the rest from internal sources. Similarly,
in its projection, the Plan forecast a total investment of
Shs. 1,880 million over the five-year period, but at the
end of this period, gross capital formation amounted to
Shs. 2.3 billion. This was slightly higher than the plan had
projected. Further, the Plan projected Government investment
to amount to Shs. 860 million (including Shs. 120 million in
additional recurrent expenditure), semi-public sector to
amount to Shs. 580 million, and the private sector to amount
to Shs. 440 million (24, p. 229).
The answer to the third question stated above may be
put this way—four main areas of difficulty emerged from
this Plan. First", the implementation of the Plan was
constrained by lack of sufficient funds and qualified
personnel. For instance, a sizable number of foreigners who
had worked for the government left the country immediately
before and after independence. This situation created a
shortage of technical and administrative staff (24, p. 229).
S3
9
The second problem arose from delays in receipt of
foreign financing. These delays were probably caused by
political changes which were, in this case, not certain
from the point of view of foreign donours {40, p. 202) • In
addition, difficulties were encountered in mobilizing local
resources, to supplement foreign aid (24, p. 229).
A third problem was that as expansion accelerated.
Herrick contends that the insufficient preparation of the
Plan created bottlenecks. Thus he noted:
In addition insufficient forward project preparation and financial planning hindered the reallocation of funds from projects stopped for some technical or administrative reason to projects delayed because of shortage of money "(24, p. 229).~
A fourth difficulty, which is linked with the third
problem, stemmed from the fact that as investment expanded
in all directions of the economy the public service under-
went radical changes. For instance, expatriates were
replaced by local personnel, and, moreover, the manning of
the service was below the established norm. Furthermore,
vacancies appeared in strategic posts which could not be
filled by reallocation of local manpower resources (40, p.
373) .
In conclusion, despite the slow start in the Plan's
execution, the problems encountered in many projects,
especially in agriculture and road construction which were
carried forward to next plan (24, p. 230), the plan did
produce impressive results, as indicated before.
84
Second Five-Year Development Plan 1966-71
In discussing the First Five-Year Plan in the preceding
pages, one is reminded of Rostcw"s pre-conditions for taks-off
which barely existed in Uganda before independent® (49/ p. 1?)»
Accordingly, the colonial power for that matter, had prepared
Uganda to a certain extent for take-off phase immediately
after independence. For example, during the colonial
The creation of the preconditions for take-off ^ was largely a matter of building social overhead capital-"-railways, ports and roads—and of finding an eeonorflie setting in which a shift from agriculture and trad© t© manufacture was profitable. . . (49, pp. 17-18)«
True, British authorities promoted these precondition!
only to meet their plans, but they promoted the infrastruetur©
unevenly. However, mention has been made in the pr@viou§
chapters about Government's decision to steer the §eon©ffly
away from overdependence on agriculture. In light of thii/
Rostow's astute observation in the above passage clearly
reflects his analytical insight into the nature of economic
growth. Moreover, the First Five-Yoar Development Plan took-off
from the economic setting the British had laid before
While the First Five-Year Development Plan was designed
and drawn up by the World Bank, the second Plan, on the Other
hand was planned and drawn up by the Central Planning Bureau,
The Planning Commission was headed then by a Prime Minister,
and aided by eight Ministers plus other influential persoftaiiti<S§
(24, p. 30). What were the main features of this flan? Or
in what way was it different from the first Plan?
85
The Second Five-Year Development Plan was different
from the first Plan in that it embraced "all sectors of the
activity—-public and private, economic and social, national
and regional" (24, p. 230). These sectors were not given
equal weight in the First Five-Year Plan. Moreover, the
Second Five-Year Plan in reality was the first of three
five-year plans designed to cover the period 1966 to 1981.
Additionally, the Plan aimed to increase the monetary output
by approximately 41 percent (a growth rate 7.2 percent per
annum, an increase of 25 percent, on per capita in monetary
incomes (67, p. 16). It might be added that studies under-
taken by Herrick and others (24) arrive at similar conclusions.
From the standpoint of a 15-year perspective, the
Second Five-Year Plan set priorities which were to echo
during this period. In this direction, the Plan envisaged
the manufacturing industry as a major spearhead for development
(17, 1970, p. 4).
In short, the Plan considered it imperative to create
a modern economy capable of self-generated and self-sustained
growth. The emphasis which the Second Five-Year Plan
placed on the modern economy was in this connection designed
to alter the economy (24, p. 231).
Structural change in the economy was to result from
decreased attention given to the production of primary
products—crop and animal husbandry, forestry, fishing, and
hunting. In contrast to a reduction in the value of primary
86
production the Plan anticipated an increase in the value of
all industrial activites—-chemical, iron and steel, cement,
and sugar processing industries, and similar increases in
the value of tertiary activities were anticipated (20, p.
21) .
At this point, it is important to note that the Plan
envisaged the achievement of social and economic justice.
To realize such justice, the distribution of the cake of
the national wealth was structured in such a way that those
who v/ere receiving less had to receive more by increased
wages. In this way, the plan hoped to create an egalitarian
society (24, p. 231).
The implementation of this Plan was more or less
similar to the execution of the First Five-Year Plan. In
actual fact, the Plan depended on two sources for its
financing--domestic and foreign funding.
In this connection, Arkadie and Ghai noted:
Whereas the Uganda Plan assumes that the foreign contribution will only be 35 percent of all capital formation, in both the Tanganyika and Kenya Plans this figure rises to just over one-half.
On the other hand, the assumptions in the Uganda Plan require much higher local savings, particularly by the Central government (47, p. 371).
It is interesting to note that although the Plan was,
in essence, not vulnerable to the vagaries of foreign private
investors or aid donours, it was nonetheless dependent upon
the ability of the Uganda government and the Uganda public
to achieve high levels of savings. And, it can be argued
87
that this Plan actually marked the take-off stage of
economic development of Uganda (48; 49, pp. 102-103; 39-40).
Although it sounds repetitive, it is relevant to -y
mention that this Plan, likewise experienced similar problems
which the first Plan encountered in its execution. In fact,
the planners of the Second Five-Year Plan did recognize that
in one way or another constraints were bound to emerge, and
for this reason, anticipated aggregate targets were not
likely to be achieved (24, p. 33) .
As indicated before, the Second Five-Year Plan depended
to a large extent on imported items for its development
expenditure. It follows that Uganda's overdependence on
foreign sources of supply, did exert strain on Uganda's
currency (67, p. 17). As a matter of fact, the crucial
problem of Foreign Exchange became critical as the Plan
entered its closing stages. In this context, the U. S.
Embassy in Kampala wrote:
Although the spectrum of problems confronting the new Government is broad, the fiscal and foreign exchange situations present the greatest cause for immediate concern. Capital flight, a reduced trade surplus and accelerated Government expenditures, especially in the military sector, had drawn down the country's foreign exchange to the point that the central bank, the Bank of Uganda, was by June unable to maintain its reserves at the legally required level and was compelled to amend its statute (17, 1971, p. 5) .
Evidently, the issue of foreign exchange did warrant
concern. Further, the inability of the central bank to
maintain its legal required reserves with the International
88
Monetary Fund, and its decision to amend its statutes,
certainly painted Uganda's foreign exchange situation woefully,
*
And, it must be added that the creation of shortages in
foreign exchange and legally required reserves, placed the
Uganda Government in an embarrassing picture before the
World, and of course, as one might say, this situation quite
certainly endorsed Government's mismanagement of the economy.
In order to mitigate potential balance of payments
difficulties, the Government instituted in this case,
stringent policies. For instance, the inflow of foreign
capital was encouraged, restrictions were imposed on certain
items, the government felt could be substituted by manu-
facturing in home industry, and promoting export earnings
(24, p. 233).
Other notable problems which affected the pace of
development were, as cited in the First Five-Year Plan:
Government's inability to mobilize internal resources because
of the paucity of domestic savings and limited investment
avenues, delay in foreign financing, and a shortage of skilled
and trained manpower. The upshot of all this is that
numerous bottlenecks emerged, which in turn affected Government
development expenditure (24, p. 233).
It is doubtful, in view of the; problems noted above,
whether the projected targets in this Plan were achieved at
the end of the Second Five-Year Plan. For example, it was
89
estimated that the monetary gross domestic product was to
increase at 7.2 percent a year from Shs. 3,954 million in
1966 to Shs. 7,070 million in 1971 (24, p. 231). The absence'
of adequate information from Uganda, as stated in the preface,
makes any appraisal of the Second Five-Year Plan difficult-
Nevertheless, it may be hoped that the projected goals in
the Plan were met.
The Outlined Third Five-Year Plan 1971-76
The Third Five-Year Plan is one of a five-part, 15 year
development program which has an overall objective of doubling
per capita income during its 1961-1981 period (21, p. 50).'
This Plan embodies what the Government hopes it will achieve
at the end of this Plan. In essence- the Plan envisages the
investment of Shs. 7 billion for the five-year period. It
hopes to generate in this respect, six percent average
annual growth rate of real gross domestic product (17, 1971,
p. 9). In addition, the Plan intends to promote economic
and social "justice" and further generate increased employment
(21, p. 50).
In examining the outlined Plan, one comes across what
the Government emphasizes as the central issues which merit
special attention in this program. In this connection, the
Plan intends to promote as Hansen documents: (1) "expanding
markets particularly for exports; (2) increasing development
spending; (3) maintaining a healthy balance of payment
9 0
position; (4) developing natural resources; (5) creating
rapid growth in manufacturing, construction, and tourism;
(6) diversifying the agricultural sector; (7) strengthening
Uganda's infrastructure; and (8) expanding training and job
opportunities" (17, p. 50).
The success of the plan depends on its implementation
rather than its consistency as noted before. For this
reason, it is therefore too early to venture to appraise the
implementation of this Plan at this time.
Nevertheless, it is expected that this Plan will
certainly be affected by numerous bottlenecks which the
previous Plans experienced. In this case delays or with- •
holding of foreign aid is likely to occur; a shortage of
technical and administrative staff will obviously continue
to harass the program; the paucity of domestic savings and
limited investments outlets will certainly frustrate Government's
attempt to mobilize domestic resources to substitute for
delayed foreign aid, and last but not least, the present
chaotic picture of the Government of Uganda will probably
affect the pace of development of the whole economy.
CHAPTER V
CONCLUSIONS AND RECOMMENDATIONS
Because this thesis is somewhat short, it has not been
possible to explore in detail all the points selected for
investigation. However some points have been treated in great
length whereas others have received passing comments.
In this respect, the study has stressed most of the key
and significant elements with the economic development of
Uganda. It has especial],y singled out what the writer thinks
are the main problems retarding the economic development of
the country.
It is appropriate to point out that Uganda's economic
development was initiated with the planting of a railway line
between Uganda and the coast in 1902. However, accelerated
development, it may be stated, began with the attainment of
independence in October 9, 1962. Since then economic progress
in the country has scored limited successes (31, p'. 531).
Nevertheless, this heightened development is but just the
beginning of Uganda's economic advancement. Yet the actual
development of the country, i|t should be said, still lies
ahead, shrouded with many problems. In this connection, the
institution of Five-Year Development Plans have very timely
set the stage for Uganda's economic transformation of its
92
In spite of the government's concerted effort to
establish an industrial base and modernize the economy,
Uganda in this respect, is not near to the point where the
increase in capital and skill becomes automatic. It is no
exaggeration therefore, to mention that the economy is still
dependent on fairly archaic peasant agriculture, although
the government has instituted diversification programmes in
the economy. Furthermore, the size of domestic product of
the nation is still overridingly determined by two factors:
the incomes of the cotton and coffee growers and the
measure of public expenditures on recurrent and capital
account.
Accordingly, other economic activities taken together,
still do not reflect any significant degree in the economy.
As a matter of fact, cotton and coffee incomes have in'fact
been the determining elements in the economy rather than the
size of public expenditures. Eoth, cotton and coffee in
this connection were responsible for a period of remarkable
economic boom in the early 1950's and similarly, they also
have determined recent recessions and economic growth.
With the institution of Five-Year Development Plans,
Uganda's economy has the potential of long-range balanced
economic growth. However, owing to the difficulties of
agricultural shortages, shifts in world prices, reduced
foreign exchange reserves, a shortage of technical and
administrative staff, and the prevailing political instability
>3
in the country, the overall economic development of Uganda
will obviously be adversely affected in the future by thesa
unpredictable factors. -
Given this picture, there are indications already at
work which show that Uganda's economic growth in the 1970*3
will not match the experienced growth in the late 1960's?
nevertheless, the country would undoubtedly benefit from
diversification into non-agricxtltural economic activities
and agricultural reorientation away from competitive
coffee, tea, and cotton, crops which are produced as Uganda's
export-earners.
At this point, it can be argued that in order to realize
greater economic development with benefits accruing to th©
masses of the populace, and further if the vicious circle r
of poverty (ignorance—low productivity—high rate of population
growth--poverty) (9, p. 247) is to be broken, it will most
certainly require not only the concerted effort of the
government, but also varying degrees of participation by
governmental and parastatal organizations in the economy.
The. role of such organizations in the economy would be
to play an increasingly important part in stimulating
economic development in the country, especially in the areas
where private interests do not exist.
Recommendations
If the economic development of Uganda is to be of any
94
9
first and foremost, the government should address itself to
the task of mitigating pain, suffering, fear and insecurity
in the country. In actual fact, the government should
create the atmosphere in which peace and order reign supreme•
However, recent developments in the country have demonstrated
the inability of the government to establish such climate.
The expulsion of nearly 50,000 Asians from the country, for
example, has only increased fear and insecurity among the
minority citizens (56? 61, p. 27i 24). Furthermore,
political uncertainty in the country has generated unfavourable
conditions which have in no small measure become limiting
factors to the economic development of Uganda.
Second, if Uganda is to accelerate its economic
development, the government should attempt to reduce or
eliminate the effects of what Davis and Blomstrom call
"the Law of Persistent Underdevelopment." In short, this
law simply states that an underdeveloped social system is
locked into self-perpetuating low development until new
social forces can be introduced to break the cultural chains
which bind it (12, p. 371). In this case, the ability of
the government to marshal1 both human and material resources
will most probably provide it with the means to reduce the
effects of this law.
Third, if Uganda is to relieve itself of foreign debt,
the government should devise measures for overcoming the
financial and monetary obstacles to development in Uganda
95
(59, p. 11). In this direction, special attention should be
given in the work programme to the mobilization of domestic »»
finance, including improvements in taxation policies,
administrative machinery, and technique, as well as
institutions for mobilization of financial resources.
Fourtht in order to overcome the critical manpower
constraints, the government should pay special attention to
the need to develop greater capability in training and
research institutions, the transfer of scientific and
technological skills and the training of personnel for various
branches of public service, including the training of manpower
planners and the training of professional instructors (59,
p. 13).
Last but; not least, efforts should be made on the part
of the government to provide adequate institutional facilities
to undertake exploration for an evaluation of natural
resources; further the government should make the best use of
United Nations expertise advice in this instance (58, p. 12).
In addition, the government should correct the ineffective
integration of natural resources development into overall
development planning.
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