Uganda’s economy arguably registered its best all-around growth and development from 1962 to 1972 – i.e. during the first 10 years of independence, which encompassed the eight years of Obote I administration and the first two years of Idi Amin’s rule. It could be said that Amin benefitted from the momentum set by Obote I but blew it in 1972 when he expelled the Asian community, who were the main industrial and commercial drivers of the economy and due to his irrational policies.
This is the period when Uganda was known for its 3Cs and 3Ts i.e. coffee, cotton, copper, and tea, tobacco, and tourism. More than 20 hospitals were built in the first eight years of independence and were evenly spread across the country. New secondary schools were established in all districts to augment the existing missionary-founded schools. There were vibrant cooperatives as well as government-run industries and commercial banks. Jinja, the industrial capital of Uganda, had a whole range of industries employing thousands of workers, both skilled and unskilled.
The Uganda Shilling was at par with the Kenya and Tanzania shillings and all were freely interchangeable and the exchange rate with the US dollar was fixed at Shs7 per 1$ in all three countries that enjoyed almost equal standards of living, with Kenya slightly ahead of the other two because of economic muscle of the ‘white settlers’. All this may sound ‘fiction’ to those who were either too young or unborn then but it is still vivid to some of us.
Fast forward to 2015. The school system has gone to the dogs, especially in the countryside government hospitals are in dire need of health personnel, repair, equipment and medicine. While the economy has now expanded manyfold, wealth distribution is far more distorted leaving the majority of the people in the country much poorer in real terms than they were in the period 1962-72.
Kenya took full advantage of the chaos in Uganda encouraging smuggling of Uganda coffee and other products for re-export, supplying nearly all consumer goods to the country and providing – at a price – the vital link to the outside world through Mombasa port. Uganda is still one of Kenya’s biggest markets in Africa and probably the world, supplying it with goods worth over $700 million per annum while importing from Uganda a mere $150 million worth of Ugandan goods, as President Uhuru Kenyatta recently acknowledged while castigating opposition Leader Raila Odinga over his criticism of importation of Ugandan sugar.
It is in Kenya’s long-term interest that it increases its imports of Ugandan goods and the trade agreements recently signed by Presidents Museveni and Kenyatta are a step in the right direction. Unfortunately, soon after the signing of the agreements, we learnt in the press that Kenya had decided to reduce purchase of hydro power from Uganda by almost $10 million per annum, following Kenya’s increased domestic production of thermal energy.
Besides, in the agreements referred to above, Uganda made significant concessions which allowed Kenya to export to Uganda (duty free) goods which originate from other countries but to which Kenya has added “local content” and thus qualifying them to be “made in Kenya”, in accordance with relevant EAC trade protocols. Also, the Kenyan supermarket giant, Nakumatt, recently bought some South African Shoprite outlets in Uganda, thus effectively affirming Kenya’s dominance of the supermarket outlets in Uganda, (given that two other Kenyan supermarket chains Uchumi and Tuskys are already here). All this translates into more Kenyan exports to Uganda and further worsening the trade imbalance. So when Raila Odinga complains of Uganda sugar invading Kenya, he is not looking at the total picture.
All said, it is time government and Ugandans quit talking and start producing goods that are marketable not only in Kenya but in the neighbouring countries of South Sudan, DRC and Rwanda. Uganda’s enormous comparative advantage in agriculture and agro- based industries has unfortunately not been exploited by the policy makers. It is a shame that a country so well endowed with fertile agricultural land, good climate and other natural resources should continue languishing in poverty and underdevelopment.
Mr Naggaga is an economist, administrator and retired ambassador.