Why Uganda’s economy is dominated by multinational capital and what cannot be done about it
THE LAST WORD | Andrew M. Mwenda | Uganda is facing a dilemma. The country is investing tens of billions of dollars in huge infrastructure projects – dams, airports, highways, bridges, railways, water systems etc. Many Ugandans are complaining that all the big contracts are won by foreign firms especially Chinese, who even bring their own workers and materials. They argue therefore that these investments bring little value to the citizens as local manufacturing and construction firms get little or nothing. Consequently, the debate on and demands for local content have become loud.
Many are calling on government to adopt and enforce local content laws to give domestic/indigenous/local/nationals a piece of the pie. However, government has made half-hearted efforts in this direction. Whatever local content rules it has designed have not been implemented to the satisfaction of anyone. Why is it that the problem is known, the solution (or at least a part of it) has been designed but the implementation has remained elusive? This article attempts to provide an answer or at least a slice of it to this vexing problem.
There is an implicit assumption in most debate on development that public policy is made through some optimisation process i.e. that decision makers meet, and based on sound economic policy principles and seeking to do what is good for the country, carefully craft a policy strategy. This religious assumption about how government works is, to say the least, utopian. This article shifts the debate on policy making from economic theorising and political moralising to the field of political economy.
First, no society can be governed based on technical considerations of economic theories derived from a textbook or classroom. Indeed, no theory can capture the multitudinous complexity of social life. At best a theory can only represent the experience of a given society at a given period in time. But even here, it would only be a small part of a complex social reality. Therefore any attempt to govern society based solely on technical considerations would destroy the meaning of human life.
Second, government is not a single reified actor working for the “common good.” It is a collection of self-interested individuals and groups armed with particular ideological convictions. These come together seeking to advance the interests of the social groups that constitute the political supportbase of the ruling power. Therefore, public policy making, especially economic policy, is primarily a political, not a technical process.
I am not suggesting that public officials lack public spiritedness i.e. a commitment to serve the “common good.” Rather, public policies are based on ideological convictions; and ideologies are interest-begotten. Therefore, to understand the public policies a country pursues, one has to look at the interests that stand to benefit from those policies. The army of intellectuals who defend such policies need not be selfinterested individuals consciously seeking personal gain. Rather, they often advance the interests of particular social groups subconsciously in the often honest and genuine belief that it is what is good for the country.
To understand the dominance of foreign firms in Uganda’s economy, one has to look at the nature of the reconstruction our country has pursued under President Yoweri Museveni since 1986. How did Uganda come to adopt the political institutions and public policies it did? What groups – both domestic and international – stood to benefit from these economic reforms and were thus cultivated and strengthened? Which groups were marginalized, displaced and/or stifled? Finally what are the implications of this on the politics of economic policy making today?
Museveni took power ahead of the National Resistance Movement (NRM), an organisation that was largely left wing and Marxist. However, and ironically, to capture power the NRM had allied itself with conservative interests nationally and internationally. Domestically it had allied with Mengo and Rubaga, the seats of the Buganda monarchy and the Roman Catholic Church respectively alongside Southern business interests. Internationally he allied with some right wing groups in the Western World closely tied to the administrations of Ronald Reagan in the United States (the first country to recognise Museveni’s government in 1986) and Margaret Thatcher in the United Kingdom especially through Tiny Roland of Lonhro.
In 1986 the economy had virtually collapsed. Globally, NRM’s natural allies, the Soviet Union and its Eastern-bloc countries, were broke. To run government, Museveni needed money, but the treasury was empty. So he turned to the Western countries for financial assistance. Money is an important political resource. For example, Museveni needed to pay government employees to perform basic functions like keeping law and order and ensuring public services like education and health can function minimally. But he was also facing an armed insurgency in the north. Government also needed foreign exchange to import spare parts and other inputs to get industries that had shut down to re-open.
Western countries insisted that to lend Uganda any money it had to first reach an agreement with the IMF. Ezra Suruma once told me that by the time the government delegation went to Washington DC to negotiate with the IMF, the country had fuel to last it only three weeks and no foreign exchange reserves at all. The IMF insisted that to lend Uganda money, the government had to accept “stabilisation” measures: withdraw of state subsidies from education and health, liberalise foreign exchange, control inflation, etc.
Then World Bank too had its demands and these were of a medium to long-term nature. These included demands to trim the civil service, demobilise the army, return to previous owners properties of non-indigenous Ugandans confiscated by Idi Amin in 1972, privatise state owned enterprises, liberalise and deregulate the economy. Museveni’s government accepted these reforms out of desperation, not conviction. When it accepted them, aid money began flowing in and the economy began to grow.
How NRM responded to the demands and the benefits in aid it got from international institutions not only shaped the subsequent policy orientation of the government, it also helped consciously cultivate a public sector, private sector, civil society and mass media which were all ideologically committed to the neo-liberal economic agenda. Consequently, the social forces that came to dominate intellectual and political life in Uganda are hostile to the very policies that promote local ownership. I will expound on this in the next article.