Liberalisation debate highlights

Liberalisation Policy and the Growth Paradox in Uganda

13th MUBS Economic Forum

Participants were drawn from among others, academics, political leaders, policymakers, business people, civil society organisations, youth, university students, and the general public.

Agreed

Participants agreed that:

1. Although the liberalisation policy that was inevitably introduced in Uganda in the late 1980s has yielded tangible successes, there are visible challenges that call for review of the policy.

2. Although Uganda embraced free-market economics (leaving business in the hands of the private individuals and companies) in the late 1980s to address government failures, the process was badly managed, was not transparent, hurriedly implemented, and was taken too far.

3. Although the liberalisation policy has enabled Uganda to register 25 years of relatively good economic growth averaging 6.5%, and the economy has expanded nearly 10 times, through attraction of foreign direct investment (FDI) mainly in sectors such as telecommunications, banking, hotel and tourism, most of the benefits of this growth are not going to the people of Uganda. “We should not celebrate figures but the results,” participants observed.

4. Uganda’s growth profile has remained jobless. The economy is growing without creating jobs, and household incomes have remained low. They also noted that income inequality was increasing, and that the general standard of living was not rising as expected.

5. There was low competitiveness of Uganda’s economy, weak public sector management and administration, ideological disorientation, low industrialisation and value addition, high corruption and limited government investment in strategic and emerging industries.

6. There was slow accumulation of modern infrastructure, inadequate human resource development, and low level of saving, leading to inadequate revenue collection.

7. Uganda’s data, particularly on GDP, seems to be political and full of unexplainable inconsistencies. However, Dr. Chris Ndatira Mukiza, the Director of Macroeconomic Statistics at the Uganda Bureau of Statistics (UBOS) fervently defended their data saying, “Statistics is not in crisis, Ugandan data is the best in Africa. No politician has ever influenced us. We are the most patriotic Ugandans you can find”. Dr. Mukiza, however, admitted that UBOS has to strengthen its communication strategy to enhance accessibility of statistics by the general public.

8. GDP is a measure of a country’s wealth but not economic wellbeing, where as Uganda’s GDP is growing, rising inequalities are undermining the wellbeing of people. There is a need to shift to Human Development Goals as meaningful measures of development.

Recommendations

1. Regulation of the markets. For example, one panelist, a renowned lawyer who discussed the competition and regulatory laws of Uganda, observed thus, “Uganda is a country where cartels are born, roam freely and die of natural causes.”

2. Under liberalisation consumers need protection and sensitization. And that there is need to urgently enact the competition law (Uganda surprisingly doesn’t have one) to curb monopolies and other uncompetitive practices. They also warned against “regulatory capture” — a tendency where the regulator and the regulated become friends.

3. Need to change the personalities that run Uganda’s economic apparatus. “The people who managed the failed parastatals in the 1980s are still in charge of the economy. This must change,” one panelist observed.

4. Need to shift the debate from what liberalisation has achieved and where it has failed, to what needs to be done to move the economy from stabilization reforms to growth and development.

Way forward

We committed to organise a follow-up high level policy dialogue to sketch the way forward i.e. to draft policies to make liberalisation work for all Ugandans.

A Policy Paper entitled “Liberalisation Policy and Growth Paradox in Uganda” will be written by a team of experts, in consultation with the presenters, and get subjected to peer review and published.

Written by Ggoobi Ramathan

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