Neo-liberalism: Taking stock of how we got here

The current national debate on under employment and under employment must be situated within the economic policy regime of the past two decades. 

This is important because understanding how we got here, might aid us in imagining a future that captures the lessons of the past in the most effective way to avoid reproducing failures going forward. 

A good place to start would be 1994 when the thinking and policy debate for the economic recovery coalesced around the hegemonic World Bank/IMF view that government intervention in the economy was bad and was responsible for the growth failures of the past. 

Basically, the neo-liberal moniker of “getting the price right” held sway, postulating that if we get prices right, then we would automatically witness improved efficiency and unleash the innovative capacity of Ugandan producers, growth and prosperity would follow. 

So, economic policy makers that run Ministry of Finance and Bank of Uganda, began implementing a set of policies presumably to “get prices right”.

The financial sector was liberalised on the assumption that it would address systemic problems within the sector and eventually compel the flow of capital from capital rich countries to boost private investment. 

However, capital did not flow in, at least not in the context of spurring productive growth of the economy; what instead we have witnessed over time is the influx of speculative finance to cash in on the high rates on government securities.

 We privatised state enterprises, presumably to reduce the fiscal burden on government resources, corruption, and inefficiency. This would ultimately, so went the argument, open competition which would spur innovations, promote the growth of a vibrant private sector that would drive economic growth, spur job creation, and deliver prosperity. Instead, we saw a complete collapse of economy’s manufacturing capacity in place of the rise of informal activities majorly in trade and services. 

As the early signs of these policy failures started to bite through the manifestation of high poverty levels, we launched successive serialised poverty reduction programmes focusing on expanded provision of education, health  and water and sanitation. Some of these social policy efforts such as immunisation programmes have been instrumental in improving survival of Ugandans and should therefore be commended. But the thinking that underpinned the provision of education was flawed and largely explains the frustrations that both parents  and the government have with our education system. 

The defunding of high education led to the flight of capable academic scholars and forced others into consulting roles for local nongovernmental organisations to make ends meet. 

Prof Mahmood  Mamdani eloquently writes about negative consequences of defunding higher education on academic scholarship in his famous book, scholars in the marketplace. Consequently, the reduction of academic scholarship has deprived the country of a group of thinkers capable of providing constructive feedback towards the national development policies through rigorous research and debate. 

Secondly, the focus on provision of education as a social safety net misreads the central importance of education to country’s development agenda. And by doing so, has failed to think critically about the education reforms required to align our education system as an instrument for building capability to support the realisation of the country development goals. 

We, must, therefore admit that the policies of the last nearly three decades have not performed as we expected. This will help us reflect deeply on how we seek to introduce an alternative policy agenda. But the alternative should be evaluated based on its ability to deliver industrialisation and structural change. 

It commendable that government has articulated industrialisation as essential to Uganda’s economic transformation but this is not enough. 

Serious analytical work needs to be done focusing on answering questions such as, how can we industrialise? What policy tools are available at our disposal to facilitate the process? Engaging with these questions is both a matter of development concern and national building if we are to turn around the fortunes and fate of the future generation.

The writer is a lecturer at Makerere University and PhD candidate at the London School of Economics and Political Science.