About me.

Andrew M. Mwenda is the founding Managing Editor of The Independent, Uganda’s premier current affairs newsmagazine. One of Foreign Policy magazine 's top 100 Global Thinkers, TED Speaker and Foreign aid Critic

Monday, March 25, 2019

Uganda’s strategic dilemma Part2

Why Uganda’s economy is dominated by multinational capital and what cannot be done about it

We begin from where we stopped last week. Uganda’s growing economy served three critical purposes: It increased government revenues, gave greater confidence to donors to give more aid, and increased resources available to government to pay for patronage, provide basic public goods and services and fight armed insurgency thereby aiding legitimacy and political consolidation. Consequently, Museveni gradually shifted from implementing these reforms as an opportunistic beneficiary and became a believer in their efficacy.

The donors also were keen to cultivate political support among Uganda’s elite class – politicians, the civil service, the mass media, academia, private sector and “civil society” (a motley collection of NGOs).
To understand the trajectory Uganda took from the late 1980s, one has to first understand how the donors shaped our post conflict recovery by building the ideological base for these policies among key individuals and groups. We shall see the interests that consolidated during this period.

Every reform benefits some and disadvantages others. The losers become militants determined to resist it. The beneficiaries form the cadre of individuals and groups to defend the new order. These reforms generated resistance, most especially from Makerere University students whose allowances were removed. But resistance was limited because economic collapse had discredited the beneficiaries of the old order. 

For example, it was not difficult to return businesses, properties and industries confiscated by Amin in 1972 to their previous owners because those who had taken them over had run them down. Failure had discredited their cause and their resistance to reform did not attract much public sympathy. Equally, the corruption, favouritism and incompetence in public enterprises had discredited them as vehicles for serving the common good. And most importantly the NRM had been a largely rural based movement and these institutions and their office holders did not form its core political base. So there were hardly any bureaucratic and political insiders to sabotage reform from within as happened to many other African countries. Besides, Museveni enjoyed such widespread dominance inside the NRM that his left-wing allies simply deferred to him on these reforms.

Most of Uganda’s reform was carried out by civil servants led by Tumusiime Mutebile in the Ministry of Planning which later merged with the Ministry of Finance. Around him was a group of officials like Chris Kasami, Keith Muhakanizi, Lawrence Kiiza, Damon Kitabire (left for ADB, later to IMF), Mary Muduli (left for ADB) and Mary Kutesa (left for IMF) etc. This group was inherited from the Milton Obote II administration where they had tried to reform Uganda’s economy to a more liberal dispensation. They were convinced that liberal reforms are necessary for Uganda’s economy to recover. 

Donors proved adept at patronage. They pampered them, supplemented their salaries with dollar stipends, organised trips abroad for conferences and workshops for them. They took them to do fellowships at prestigious universities in America and Britain. They also gave them internships at the head offices of IMF and World Bank in Washington DC. 

Donors made these civil servants their internal surrogates within the state by actively and deliberately bolstering their influence inside government. Whenever government sent these particular civil servants abroad to negotiate for aid money, they came back with signed loans and grants –with generous terms. Since government of Uganda relied heavily on donors’ funding for its fiscal survival, Museveni was quick to see where his bread was being buttered. 

Increasingly, if the president needed to promote anyone to a strategic office in the civil service, he picked one who had good relations with donors. Consequently, in all strategic ministries, Museveni began to sideline those of his colleagues who retained their Marxist/leftist leanings in favour of those who embraced the free market ideology. Over time all strategic positions in both the civil service and cabinet were filled with persons with donor promoters. 

It is in this context that the local/domestic/national/indigenous business class – in manufacturing, banking, construction etc. – lost out. They had little or no say in policy formulation. Influence favoured international donors with their local allies in the bureaucracy. While local and international bureaucrats who work in the public sector and international organisations may be ideologically convinced about the soundness of these policies, these policies represent the interests of multinational capital; especially finance capital.

Donors began integrating leading voices in the media into this process. These were given scholarships and fellowships at Harvard, Stanford, Oxford and Cambridge where they were indoctrinated into the free market ideology. For always articulating these policies in the press and liberalised airwaves, they were feted at international conferences organised by the IFIs as speakers, invited to dinners and luncheons at local embassies and at IMF and World Bank conferences. This author is one of those Ugandans. 

Privatisation and liberalisation progressively displaced and/or stifled the growth of local/domestic/national/indigenous capital. As multinational corporations took over the commanding heights of the economy, they recruited those Ugandans who had graduated from Western universities. Well paid by multinational firms, these also became defenders of multinational capital in the private sector. Here ideological conviction and self-interest merged.

At Makerere University, the World Bank financed the creation of the Economic Policy Research Centre (EPRC) to train a cadre of economists of the type they needed to promote its particular policy preferences. They funded NGOs that articulated the policy preferences international donors wanted. Even in politics, being identified with a donor project was a sure ticket to being elected a Member of Parliament (MP), and being in their good books landed you a strategic cabinet post. 

Henceforth, from within the state, mass media, academia and “civil society” there were consistent and vitriolic attacks on local capital. Thus, when a local bank got into trouble, there was unanimity of opinion both within the state and in the civic sphere of public debate that such outcomes were because of “bad practices typical of Africans.” The conclusion was inescapable: we should let multinational banks take over. Mutebile once told me point blank in a radio show that he would never licence any Ugandan to own a bank, regardless of the capital they had. Why? They cannot be trusted to behave well with depositors’ money. Colonial prejudices had been recreated in Uganda. We shall finish this next week.



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