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Uganda HISTORICAL BACKGROUND
Peasant agricultural production has been the
predominant
economic activity since precolonial times. Despite an
active
trade in ivory and animal hides linking Uganda with the
east
coast of Africa long before the arrival of Europeans, most
Ugandans were subsistence farmers. After declaring Uganda
a
protectorate in 1893, Britain pursued economic policies
that drew
Uganda into the world economy primarily to serve Britain's
latenineteenth -century textile industry. Cotton cultivation
increased
in importance after 1904, and once it became clear that
cotton
plantations would be too difficult and expensive to
maintain,
official policy encouraged smallholder farmers to produce
and
market their cotton through local cooperative
associations.
By 1910 cotton had become Uganda's leading export. In
the
following decades, the government encouraged the growth of
sugar
and tea plantations. Following World War II, officials
introduced
coffee cultivation to bolster declining export revenues,
and
coffee soon earned more than half of Uganda's export
earnings.
Uganda enjoyed a strong and stable economy in the years
approaching independence. Agriculture was the dominant
activity,
but the expanding manufacturing sector appeared capable of
increasing its contribution to GDP, especially through the
production of foodstuffs and textiles. Some valuable
minerals,
notably copper, had been discovered, and water power
resources
were substantial. In 1967 Uganda and the neighboring
countries of
Kenya and Tanzania joined together to form the East
African
Community (EAC), hoping to create a common market and
share the
cost of transport and banking facilities, and Uganda
registered
impressive growth rates for the first eight years after
independence.
The economy deteriorated under the rule of President
Idi Amin
Dada from 1971 to 1979. Amin used nationalist, militarist
rhetoric and ill-chosen economic policies to eliminate
foreign
economic interests and build up the military
establishment. In
1972 he expelled holders of British passports, including
approximately 70,000 Asians of Indian and Pakistani
descent. Many
Asians had been active in agribusiness, manufacturing, and
commerce. Their mass expulsion and Amin's efforts to
expropriate
foreign businesses undermined investor confidence in
Uganda. Amin
also increased public expenditures on military goods, a
practice
that contributed to escalating foreign and domestic debt
during
the 1970s. Relations with Uganda's neighbors soured, the
EAC
disbanded in 1977, and Tanzanian troops finally led a
joint
effort to overthrow the unpopular Amin regime in 1979. By
1980
the economy was nearly destroyed.
Following Amin's departure, successive governments
attempted
to restore international confidence in the economy through
a
mixture of development plans and austere government
budgets.
Beginning in 1980, the second government of Milton Obote
obtained
foreign donor support, primarily from the International
Monetary
Fund
(
IMF--see Glossary), by floating the Uganda shilling
(USh; for value of the
Uganda shilling--see Glossary), removing price
controls, increasing agricultural producer prices, and
setting
strict limits on government expenditures. In addition,
Obote
tried to persuade foreign companies to return to their
former
premises, which had been nationalized under Amin. These
recovery
initiatives created real growth in agriculture between
1980 and
1983. The lack of foreign exchange was a major constraint
on
government efforts, however, and it became a critical
problem in
1984 when the IMF ended its support following a
disagreement over
budget policy. During the brief regime of Tito Lutwa
Okello in
1985, the economy slipped almost out of control as civil
war
extended across the country.
After seizing power in January 1986, the new NRM
government
published a political manifesto that had been drawn up
when the
NRM was an army of antigovernment rebels
(see The Ten-Point Program
, ch. 4). Several points in the Ten-Point Program
emphasized the importance of economic development,
declaring that
an independent, self-sustaining national economy was vital
to
protect Uganda's interests. The manifesto also set out
specific
goals for achieving this self-sufficiency: diversifying
agricultural exports and developing industries that used
local
raw materials to manufacture products necessary for
development.
The Ten-Point Program also set out other economic goals:
to
improve basic social services, such as water, health care,
and
housing; to improve literacy skills nationwide; to
eliminate
corruption, especially in government; to return
expropriated land
to its rightful Ugandan owners; to raise public-sector
salaries;
to strengthen regional ties and develop markets among East
African nations; and to maintain a mixed economy combining
private ownership with an active government sector.
The NRM government proposed a major Rehabilitation and
Development Plan (RDP) for fiscal years
(
FY--see Glossary) 1987-88 through 1990-91, with IMF
support; it then devalued the
shilling and committed itself to budgetary restraint. The
fouryear plan set out primarily to stabilize the economy and
promote
economic growth. More specific goals were to reduce
Uganda's
dependence on external assistance, diversify agricultural
exports, and encourage the growth of the private sector
through
new credit policies. Setting these priorities helped
improve
Uganda's credentials with international aid organizations
and
donor countries of the West, but in the first three years
of
Museveni's rule, coffee production remained the only
economic
activity inside Uganda to display consistent growth and
resilience. When coffee-producing nations failed to reach
an
agreement on prices for coffee exports in 1989, Uganda
faced
devastating losses in export earnings and sought increased
international assistance to stave off economic collapse.
Data as of December 1990
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