Time to rethink Uganda’s economic path

For the last 30 years, most African economies have been run following neo liberal policies spurred on by the World Bank and Western governments a.k.a development partners or the donors. The script titled structural adjustment had the notion that the government has no business doing business. Privatize all national enterprises which were said to be serious loss makers or dens of thieves. Embark of sectoral adjustment. Retrench to reduce public servants in civil service to cut down the huge public wage bill. Move out of education and provision of health and leave it to the private sector. There would be a better service to the citizens because the prospect of profit would motivate the sectors to provide a better service. The government would limit itself as much as possible to policy formulation and regulation to ensure that the private sector delivered. 

The magic of the market was sold with gusto. The performers would survive and prosper in the environment of the free market where the democratic forces of demand and supply harshly dictate. The reverse would knock out those who did not live up. 

This period of promise coincided with the fall of the Berlin wall in 1989. There was a ‘wind of change’ in Africa that saw the advent of a multiparty dispensation and a ‘new breed’ of leaders who came by the ballot or shot out the old that had been kept in power by the bullet. This breed was held in high esteem by the West for pursuing these neo liberal economic policies even in cases where they were not popular in their own countries.  The technocrats who were handed the task in these countries became household names in Western circles as brilliant economic minds. The donors sunk in a good amount of money. Most economies grew up to the expectation, since almost all of them were moving from zero. We saw better roads, electricity, telecommunication and other infrastructure like hospitals and schools.

There were savings since most guns fell silent, reducing on military expenditure. and the wage bills lowered with the trimming of the personnel in the public sector. Same with the sale of state enterprises and the cutting back of subsidies on health, education and fuel for instance. The private sector excelled especially with the advent of information and communication technology. Most of those who lived before the coming of the mobile phone knew that telephony was a privilege of a few. The scarcity of essential commodities witnessed in the 70s where one needed an allocation to get things as basic as sugar and salt, became a thing of the past.  

The elation created by the change saw many calling for the government to ‘work like a business;’ investing where it saw profit and departing from where it experienced or even anticipated loss. In the midst of this euphoria sometimes we went overboard. For instance even very vital elements of growth that had ‘nothing’ to do with government and its failure to do business, like cooperatives societies were disbanded.  Where hitherto the individual farmer took advantage of the power of numbers to buy and sell, he was now left to his own devices. He got swallowed. Now more than 30 years later we can sit and assess how far we have come thus far. Without going into the age-old intricacies of the causes of economic malaise like corruption, nepotism leading to the wrong people mismanaging and taking advantage of proximity to power, a few things can be said about the policies we have pursued over the years.

Today many African economies are termed as debt distressed. We have borrowed so heavily that we can hardly pay back our debt and accumulated interest, and still run countries normally. So what happened to the promise of the 90s?

There has been a blind following of policies that gave an impression that everything that the government does, must either make money or at worst not lead to a loss. So you fear investing in massive transport like the railway because it would not make money and you leave private hands to do it on the road - which they can easily afford. Now we all spend on average 3 man hours in the traffic jam doing nothing, which affects our productivity. In the long run we have shorter work days and production hours. So it follows that revenue from our output will be affected.

Secondly private players have been very selective and risk averse when it comes investing in social services like health and education.  Where the government would make a loss but ensure that it has a viable  health sector and get a return on increased productivity, it is now taxing the population to treat the privileged ones abroad. There is hardly a government official who will risk seeking medical treatment in a Ugandan hospital even if they have the capacity to pay their share in the ‘cost sharing’ arrangement. Same applies to education. 

The private sector, like the government, hardly invests in rural education. There is a minimal chance of a student from a rural area bringing hope in the provinces because he cannot compete with those who have opted for expensive private schooling. Even if he scraped through university tuition kicks most of them out. So whatever little the government invests in them at the UPE and USE level where the majority study is at risk of going to waste. Interestingly many of the recent managers credited for Uganda’s economic growth had their education at the Makerere University paid for by the State yet they ended up pushing ideas that basically shut the door to the university on multitudes.   In fact there are many government officials and anyone with means who are now securing their future and that of their children abroad in countries like Canada, Australia, Germany etc which have low birth rates and are now seeking manpower. They will sing stellar economic performance and astronomical economic growth but keep a safe distance from the economy that is ‘doing well with minor shocks’.

Government has to borrow and even then cannot invest directly in manufacturing and agriculture where the people are needed or are already existing but need a push. They have put a lot into infrastructure and hope that the private sector takes advantage of roads and electricity to boost growth.

But the private sector that is supposed to lead us to the promise of economic growth is in most cases out for very quick returns.

They will not invest in sectors like manufacturing which are for the long haul but provide huge forward and backward linkages plus mass employment. They limit themselves to a little value addition and then invest their returns in the safety of real estate. The same applies to the foreign investor who will repatriate most of his profit to the safety of their home country while running their business on bank overdrafts.

In effect they may not necessarily bring in money to the economy but certainly take it out. In the end the much anticipated synergies and advantages to be reaped from the private sector have turned out to be a myth. It is time to think afresh.

Mr Sengoba is a commentator on political and social issues

Twitter: @nsengoba