Was Obote’s nationalisation drive in 1970 a necessary evil?

The restrictions imposed on the Indian commercial bourgeoisie inspired economic sabotage through hoarding, leading to shortages of basic foodstuffs. As seen last week, this had led to an upsurge in crime, especially in urban areas.

In an attempt to seize more control over the economy, Apollo Milton Obote had developed a socialist manifesto, the so-called Move to the Left, which envisaged a more robust participation in the economy by the state.

This effort was made more urgent by the need to accumulate economic means to reward supporters after the 1966-67 political crisis in which UPC and Obote had taken on Buganda and the Kabaka and emerged powerful but vulnerable.

As Mahmood Mamdani notes, “The crisis of accumulation necessitated that the state take a more active part in the productive process, increasing its control over the nationally retained economic surplus and its role in determining the level of investment in the economy.

“Such an expansion was only possible if the public sector was expanded and if some degree of state control over monetary institutions, such as banks, was established.”

The banking sector was firmly in the hands of foreign players with three British banks – Barclays, National and Grindlays as well as Standard Bank of South Africa – controlling 80 per cent of commercial bank assets in Uganda. Other foreign banks held another 10 per cent, while the Central Bank of Uganda and the Uganda Commercial Bank controlled the remaining 10 per cent.

In May 1970, the Obote government passed decrees nationalising 85 private enterprises that were operating in Uganda. Some historians remain critical of the basis and the practice of this ideological and economic shift.

“The Move to the Left was received with considerable cynicism by a large section of the population, especially those who had been squeezed out of commercial enterprises and the ordinary workers and peasants who were struggling to cope with the ever-increasing economic difficulties,” notes Phares Mutibwa in Uganda Since Independence.

“Also it was clear that those who were preaching socialism were far from being socialists themselves: ministers, party functionaries and top civil servants were enjoying a lifestyle that could only be attained by corruption. The class of Wamabenzi (‘Mercedes Benz owners’) had emerged and the gap between the rulers and the common man, in whose name socialism was being introduced, was widening every month.”

Other historical accounts suggest that nationalism was, if not inevitable, then probably necessary on account of the structure of the post-independence economy.

“In practise, nationalisations are not necessarily antithetical to the interests of capital,” Mamdani argued in Politics and State Formation in Uganda, pointing out that before the Nakivubo Pronouncement, the oil companies operating in the country had approached the government offering it the chance to take up up-to 50 per cent interest.

Mamdani adds, “A year earlier, the most important Uganda Indian industrial capitalist, Madhvani, had offered the government 50 per cent participation in all his holdings”.

Benefits of nationalisation
While conventional history paints the nationalisation of private enterprises as a flawed, predatory exercise, it is illuminating and insightful to note that some of the major private players at the time acknowledged the inevitability and the usefulness of at least partial nationalisation.

While history has painted the nationalised firms as victims, evidence suggests that their private owners actually stood to benefit to some degree from the exercise.

“Nationalisation,” notes Mamdani, “would give the corporation access to state capital (since it would be ‘compensated’ for the assets nationalised), keep all management in its own hands, and give it the political advantage of being known as a national company. The state, on the other hand, gained little more than formal ownership. But while its control over the process of accumulation would be marginal, it too would reap political support for having nationalised…”

As it turned out, the nationalisation drive was executed improperly.

“The government entered into negotiations with individual corporations, not on the process of transfer to the state, but on the terms on which international capital would permit the governing bureaucracy the role of a junior partner,” notes Mamdani.

Some of the firms that were nationalised received sweetheart deals: a Canadian company which was running the copper mine at Kilembe turned over 60 per cent at a time when the known copper reserves were expected to be running out; while a tea company allowed the government to take over 60 per cent of its packing and distribution but not of its all-important manufacturing arm.

Disruptions
In any case, the events of 1966-67 and the ensuing economic crisis left citizens with a bitter taste in the mouth and contributed to political change that interrupted the nationalisation drive.

Mutibwa argues that the Move to the Left and the Nakivubo Pronouncements “were received with alarm by commercial circles in the country; the whole strategy was vague and people interpreted it in different ways, to the detriment of the ruling group which, as already noted, lacked any political mass base and at the same time enjoyed the distinction of being widely hated in Buganda, the country’s most populous region.”

Obote had spent considerable effort in trying to consolidate his power at home politically and economically but his Move to the Left now made him vulnerable in the wider cold-war politics that was sweeping over Africa.

“The Move to the Left strategy was intended as the culmination of Obote’s philosophy of socialism, which he hoped would place him on the same socialist platform as his friends Julius Nyerere of Tanzania and, to a certain extent, Kenneth Kaunda of Zambia,” writes Mutibwa witheringly.

“But Obote’s commitment to socialism remained questionable, and the coup coming as it did soon after the socialist strategy was launched, spared Obote the ordeal of having to demonstrate it.”

Amin emerges
In his attempt to use the military to shore up his political support, he had left the door open to the rise of a distinctly tribal blend of politics and, in particular, the rise to the top of a one Idi Amin Dada.

Obote might not have known it at the time but the seeds of his destruction had long been planted, were now beginning to germinate, and would soon bloom in the full light of blood and violence.

Continues Tomorrow.

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