20 years of a privatised Uganda

Saturday August 20 2011
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President Museveni and Minister of Defence Crispus Kiyonga (L) are guided on a tour of the new Hima Cement plant by Mr Hussein Mansi (R), the Chairman Hima Cement, at the opening of the new plant on January 7. Hima Cemeny is one of the numerous firms that were sold off by the government in 1994. PHOTO BY ISAAC KASAMANI.

Starting in June 1990 and gaining pace in 1991, the Ugandan economy underwent the most radical change since the 1972 expulsion of non-citizen Asians by the Idi Amin government.

In June 1990, for the first time since independence the foreign exchange market was taken out of government control. The official and black market currency markets fused into one. Foreign exchange bureaus started to open for business in Kampala.

Then 20 years ago in 1991, the NRM government embarked on a large-scale selling off of previously state-owned (parastatal) companies. The general reason given for this privatising of the economy was that Ugandans had failed to manage their own national assets, and so it was better to sell them off.

This article explains how a privatised Ugandan economy, while at first seeming to unleash the potential of Ugandans, actually ended up binding them in chains and making Uganda a much more incompetent and stifled state than it had Trading experience been before 1990.

It will prove to be one of the bitterest ironies of Ugandan history that the net result of opening up the economy to private services and competition, as promising as it seemed at the beginning, was to damage Uganda and lead to the gridlock and dysfunctional state that it has become today. There are many interesting things to note about this change in society. One of them is how little things have actually changed.

There is still such a dependence and looking to government for everything.
Over 20 years since the Uganda government divested itself of its pool houses for civil servants, sold off virtually all enterprises it once owned, the public and most of the news media still routinely “calls upon” the government to do this or that.

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Even when it should long have become abundantly clear that government will not deliver on the public’s hopes, the habit of starting the day by looking to that entity called government refuses to die. The second result is that privatisation has made Uganda not a more competitive but a less competitive economy.

On the outside, the constant competition, promotions and advertising campaigns by the major companies, each offering new services and discounts can seem like the fierce competition healthy for a market economy. However, a question presents itself: if Uganda’s economy has indeed become this competitive, how come with all the regional markets and virgin territory opening up in East Africa and the Great Lakes region, Ugandan companies are not leaping for these opportunities in large numbers?

Trading experience
One of the best ways of seeing this lack of competitiveness is in Uganda’s trading experience in the countries that it borders, especially those in which it is supposed to have political influence like South Sudan, Rwanda and the Democratic Republic of Congo.

Media reports often draw attention to the fact that while Kenyan companies have moved into the new South Sudan market since 2005 as corporate entities, establishing bank, transport, hotel chain and other branches, Uganda’s presence is largely that of individual businessmen and small-time traders and transporters.

Since the early 1990s, a middle class that appears vibrant and confident has arisen in Uganda. It seems competitive on the outside and awards for small- and medium-sized companies regularly hosted.

It now turns out that this middle class and corporate establishment has been created largely around political patronage and illegal business practices.
Many of the most prominent businessmen in Uganda can only operate and appear to succeed in this environment where a phone call or directive from State House can free up impounded goods at the border or get the Treasury to extend them a line of credit.

Such political cover is unavailable in Kenya, Tanzania, South Sudan, Rwanda and Congo and they know it, which is why they prefer to remain big fish in a small Kampala. Those companies that don’t enjoy political protection often get by through tax evasion, irregular hiring practices and other methods that, for example, would get them nowhere in Kenya.

Uganda is, in general, a quite disappointing society. It had seemed to hold much promise in the early to mid-1990s but this now appears to have been a case of an overrated student. Uganda as a corporate entity ceased to exist in the 1990s. This by itself suggests that it was expecting too much for the late 1990s AGOA project to ever become a success.

If Uganda could not establish a solid foothold in markets where it enjoys distinct advantages like Congo and Sudan, how did it expect to make waves in the United States market? Another feature of the Uganda of the last 20 years has been the emergence of the law and litigation as oppressors of the political and thinking class.

Newspapers have to walk a fine line between stating the facts as they are and holding back critical information lest they are slapped with a law suit. The law, whose spirit and philosophy was originally intended to maintain social order and cohesion, has now become the choice weapon of both the state and, most ironically, of criminals.

Most editors and reporters at Uganda’s radio and TV stations and newspapers know the basics of the corruption and abuse of office that goes on in the government and business community but are held back by the threat of litigation.

In the old order, the state, and to a certain extent the customer, were king. The Milton Obote and Idi Amin governments were generally suspicious of foreign economic interests and usually came down on the side of Ugandan citizens.
Under a privatised economy, the state and the advertiser-corporate entity have become king. Corporate Uganda is afraid of and beholden to the state and the state is largely indifferent to the ordinary Ugandan.

Because the media must now compete for advertising business in this environment, it too has had to take a cautious approach of not provoking the government which can punish it politically and legally, and the major corporations-advertisers who can punish the media by boycotting them.

The re-launched Daily, Saturday and Sunday Monitor should start doing more reporting on the structural breakdown of Uganda as a major explanation to the endless corruption, falling standards, indifference to the public good, waste and mismanagement in the country.

Privatised firms

Uganda Spinning Mills
Nile Breweries Ltd
East African Distilleries
Uganda American Insurance
Shell (U) Ltd
Lake Victoria Bottling Co. Ltd
Uganda Securiko Ltd
Agricultural Enterprises Ltd
Uganda Tea Corporation Ltd
TUMPECO
White Horse Inn
Blenders (U) Ltd
Hotel Margherita
Mt. Moroto Hotel
Rock Hotel
Uganda Cement Ind. -Hima
Lira Hotel
Soroti Hotel
Hilltop Hotel
Uganda Fisheries Enterprises
Mt. Elgon Hotel
White Rhino Hotel
Uganda Leather and Tanning
Uganda Meat Packers Ltd
Lake Victoria Hotel Ltd
Uganda Hardwares Ltd
Winits (U) Ltd
Uganda Cement Ind.- Tororo
Mweya Safari Lodge
Uganda Motors Ltd
Kampala Auto Centre
Uganda Hire Purchase Co.
Republic Motors 100 100
African Textile Mills
Total (U) Ltd
NYTIL
Fresh Foods Ltd
Agip (U) Ltd
Foods & Beverages Ltd
African Ceramics Co.
Uganda Pharmaceuticals Ltd.
Motorcraft and Sales Ltd.
Stanbic Bank (U) Ltd.
Kibimba Rice Co. Ltd.
Uganda Grain Milling
Comrade Cycles (U) Ltd.
Uganda Meat Packers Ltd
Uganda Crane Estates Ltd.
Uganda Ind. Machinery Ltd.
Second National Operator
Entebbe Handling Services
Barclays Bank of Uganda Ltd
Lango Dev. Co.
PAPCO Industries Ltd.
Ug. Consolidated Properties
Bank of Baroda
BAT Uganda
Uganda Clays Ltd.
NEC Pharmaceuticals Ltd.
Masindi Hotel
BAT Uganda
Uganda Telecom Ltd
Central Purchasing Company
Kakira Sugar Works
Steel Corporation of EA
Uganda Garment Industries
Apollo Hotel Corporation Ltd.
Transocen 1998 (U) Ltd
Associated Match company
Uganda Commercial Bank
Rwenzori Highland Tea Co
Uganda Electricity Generation Co
Nile Hotel International Ltd
Uganda Electricity Distribution
DFCU
New Vision
National Insurance Corp.
National Housing
Uganda Railways Corp
Dairy Corporation
Kinyara Sugar

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