Advancing the Ugandan Economy: A Personal Account

by Ezra Sabiti Suruma

Overview

Internal conflicts, dictatorship, and economic disintegration characterized the first twenty-five years of Uganda's independence from British colonial rule, which culminated in the reign of Idi Amin and a violent civil war. The country has since achieved an astounding turnaround of stability and growth. Advancing the Ugandan Economy is a first-hand look at the remarkable policy changes that took place from 1986 to 2012 and their effect in contrast with the turbulent events after independence.

Ezra Suruma held several key positions in the Ugandan government during the nation's transition period, including minister of finance. His insightful recounting of those times demonstrates that African countries can achieve economic stability and sustain rapid growth when they meet at least two interdependent conditions: establishing a stable and secure political framework and unleashing entrepreneurialism. Suruma also highlights the strategic areas that still require fundamental reform if Uganda is to become a modern state and shares his vision for the future of his country.

Rarely in African history has so much positive political and economic transformation of a country been achieved in such a short time. Suruma's account of the commitment, determination, vision, and dexterity of the Ugandan government holds invaluable lessons in managing the still complex policy challenges facing the African continent.

Product Details

ISBN-13:	9780815725909
Publisher:	Rowman & Littlefield Publishers, Inc.
Publication date:	04/30/2014
Sold by:	Barnes & Noble
Format:	eBook
Pages:	213
File size:	1 MB

About the Author

Ezra Sabiti Surma is a senior presidential adviser on finance and planning in Uganda. Previously, he served as the country's minister of finance (2005–09). He was a visiting fellow at Brookings with the Africa Growth Initiative from 2010 to 2011.

Read an Excerpt

Advancing the Ugandan Economy

A Personal Account

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By EZRA SABITI SURUMA

Brookings Institution Press

Copyright © 2014 THE BROOKINGS INSTITUTION
All rights reserved.
ISBN: 978-0-8157-2589-3

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CHAPTER 1

Introduction: A Journey through Uganda's Turbulent Times

In 1973, when I returned from a seven-year tour of study in the United States to take up a teaching job at Makerere University (Kampala, Uganda), General Idi Amin was the president of Uganda and political parties were banned. There was no opportunity for anyone, including a young academic returning from study abroad, to participate in shaping the country's political economy. The economy was starting to fail, and fear was spreading among the population because of the constant disappearance of people, especially those considered by the ruling regime to be intellectuals and hence a threat to its survival. In 1975, as Uganda's economy continued to deteriorate, and extremely high levels of material deprivation had become a way life for most of the population, I was one of only a few individuals lucky enough to be allowed to leave the country to study abroad. This time, I would return to the United States to complete my doctoral thesis in economics. After obtaining a Ph.D. in economics from the University of Connecticut in 1976, I took a job teaching economics at Florida A&M University (Tallahassee, Florida), hoping to gain some teaching experience before returning to Uganda. I was also uncertain about my reception in Uganda, given the fact that the Amin regime had intensified its hunt for, and brutal disposal of, intellectuals, especially those, like economists, who were considered a threat to the government's greatly expanded economic plundering activities. However, in 1979, when Idi Amin and his regime were overthrown, I returned to Uganda to take a teaching position at Makerere University. Unfortunately, the university was not the same institution that I had left behind in 1975. Many years of neglect, especially the denial of funding by the military government, as well as the ill treatment and brutalization of its faculty and staff arising from Amin's misguided and ill-conceived policies, had reduced the once proud university to a skeleton of its former self.

The destruction of what had been a world-class university by the Amin government was part of an overall policy by the regime and its benefactors to generally treat Ugandans with contempt. That policy had an especially devastating impact on the country's intellectual capital and as a consequence, dealt a terrible blow to the university's fortunes. In general, Amin's policies destroyed the basic foundations of the Ugandan economy, significantly increased hardship for virtually all Ugandans, and granted the army the power to engage in an orgy of plunder that by 1979, when Amin was overthrown, had reduced most of the country's national output to a paltry percentage of what it was in the early 1970s before Amin seized power.

In addition to the wanton economic plundering, the army treated its fellow citizens like trash or refuse, to be disposed of in the most contemptible manner possible. Soldiers regularly shot and killed innocent people without any fear of retribution. There were roadblocks everywhere, erected by soldiers supposedly to control criminal activities; but as the general population knew well, these roadblocks were designed to allow the army to extort money and other benefits for themselves from citizens. In Kampala, the country's most important political, economic, and financial center, gunshots rang out at all times of the day and night as the army continued a process of mass executions that was specifically designed to reinforce the regime's reign of terror. The uncertainties and fear created by the military regime's unquenchable thirst for murder and economic plundering terrorized citizens on a daily basis and completely stripped them of their humanity. Under these conditions, most people occupied themselves only with thoughts of survival—it was virtually impossible for anyone to think of investment in economic activities or human capital development.

I had resolved to concentrate on my lectures at Makerere University and devote all my efforts to training the next generation of Uganda's skilled labor force, and leave politics to politicians. However, a fellow academic's timely lecture forced me to rethink my position on and view of Ugandan politics. During a lecture at Makerere University, Professor Musa Mwene Mushanga quoted Plato to an auditorium full of students and faculty and reminded all of us that "if intelligent men refuse to join politics, they must accept to be ruled by fools." Following Mushanga's lecture, I was exposed to several other discussions on politics, in general, and the political situation in post-Amin Uganda, in particular. In fact, one evening in 1979, a fellow colleague at Makerere asked me if I was going to participate in a political lecture and discussion that was scheduled to take place at one of the university's auditoriums later that day. Although I did not specifically commit to do so, I nevertheless went to the proceedings. When I arrived, I was surprised to discover that the hall was packed full of both students and faculty. A young man, whom I later learned was a political science lecturer by the name of Joshua Mugenyi, mesmerized the academic crowd with his talk of the need for "a third force." He argued that most of Uganda's postindependence political organizations were sectarian parties formed around either religion or ethnicity. There was a need, Mugenyi continued, for a third force that united people rather than dividing them. I was instantly mesmerized by this young political firebrand, and although politics was not something that I was particularly interested in, I soon found myself actively participating in the discussion. I recall, clearly, quoting China's Chairman Mao that "power comes out of the barrel of a gun." This initial foray into politics earned me instant applause from the young crowd. Little did I know at the time how prophetic those words were and how they would significantly shape Uganda's fortune in the months and years to come.

Thereafter, Joshua Mugenyi, I, and a few of our friends resolved to form a political party, the Uganda National Movement (UNM), and within a few weeks we launched it. Weeks later I was surprised when Joshua told me that Yoweri Kaguta Museveni, who was then a minister in the ruling coalition, the Uganda National Liberation Front (UNLF), wanted to meet the UNM. Mugenyi and I went to Museveni's house in Kololo where we found some of Uganda's leading politicians. Among them were Jaberi Bidandi Ssali, Ruhakana Rugunda, Eli Rwakakoko, Eriya Kategaya, and many other eminent personalities whom I did not know. After negotiations with Museveni and the UNLF, the UNM agreed to merge with the UNLF to form the Uganda Patriotic Movement (UPM). The new political organization adopted as its motto "Clean Leadership, Unity and Peace."

As we launched the party to contest the general elections that were slated for December 10, 1980, we struggled to persuade prominent personalities in the old preindependence parties, namely, the Uganda People's Congress (UPC) and the Democratic Party—well-established but ethnically and faith-based political organizations—to join us. Despite long and hard negotiations, mostly at the Kampala City Council Hall, most of these political leaders abandoned us and gave their allegiance and support to their traditional parties.

The unwillingness of these important political personalities to join us severely constrained our efforts at national integration and weakened our plan to swiftly rid the country of the seeds of divisiveness sown by colonialism and reinforced by General Amin's brutal reign of terror. It would take many years—often characterized by violent struggles by various ethnically based political organizations to capture the apparatus of government—before some of these elites could realize that the "third force of unity" was much stronger than the ethnically based political mobilization that had dominated the postindependence political economy of Uganda. Indeed, following such a realization, many of these individuals eventually joined in the effort to reconstruct and reconstitute the post-Amin state and set the country on the road to genuine political and economic development.

The UPM's performance in the 1980 elections was extremely poor. In fact, only Crispus Kiyonga, from Kasese District in Western Uganda, won a seat to parliament. We were, of course, aware of the fact that these were not open and fair elections. They were marred by high levels of corruption, including vote rigging and other political machinations that made it virtually impossible for new political parties such as ours to make a good showing in national elections.

I will never forget the evening when the chairman of the ruling military council, Paulo Muwanga, declared in a televised speech to the nation that he was assuming the authority to announce the outcome of the election in every constituency and that he could not be challenged in any court of law in Uganda or anywhere else. He effectively (albeit, illegally) assumed the powers of the electoral commission and, in effect, decided who the winner in each constituency was, totally ignoring the results produced by the electoral commission. In fact, evidence that the Democratic Party was winning the elections was ignored, and the Uganda People's Congress was publicly declared the winner.

A few days after the elections, Joshua Mugenyi took me with him to see Museveni at our party offices on Kampala Road. The place was deserted except for Museveni seated alone at a desk. We exchanged a few words and then left in Joshua's little green Fiat to return to Makerere. Little did I know that Museveni would launch a war on the new government of Milton Obote in just a few days' time. Within hours of our leaving him, rumors of military detentions and murders of civilians spread rapidly throughout the country's major metropolitan areas. We, the supporters of the UPM, stopped sleeping at our houses for fear of being captured and subsequently tortured or murdered by government soldiers. In early February 1981, we heard that war had broken out and that Museveni and his National Resistance Army (NRA) had attacked the Kabamba Military Barracks. The UPM leadership had warned the world throughout the election campaign that the party would take up arms and go to war if the elections were rigged. Now it had become apparent that Museveni had kept the promise made by the party during the campaigns leading to the 1980 elections.

Mugenyi and I panicked. On the day the government soldiers came for us, he had spent the previous night at my flat in Mitchell Hall at Makerere University, where both of us were resident tutors. He managed to leave just a few minutes before the soldiers arrived at his flat on the third floor of Mitchell Hall. When the soldiers arrived on campus, they asked students where Mugenyi was. The students showed them a building called Mugenyi Flats. They went there and started breaking doors. By the time they realized that they were at the wrong place, Joshua Mugenyi had escaped. When they failed to find him, they came to my flat on the ground floor of Mitchell Hall. They banged on the door several times. I prepared for death. Then I heard a young man's voice in the outside corridor calling to the soldiers, "He is not there; he has gone to the office." The soldiers left and went to search for me in my office. Of course, I was not there and they never found me. I waited for the night to come, and when it was dark, I hurried to a friend's house where I hid until a UPC party stalwart on campus assured me that it was safe for me to resurface. When I went to conduct examinations, one of the UPC students stared at me with such horror that I knew that I was in trouble. I persevered for some days until a friend and fellow lecturer, James Katorobo, came at midnight and told me that it had become unsafe for me to remain at the university and that it was time for me to leave the country.

"Don't panic," he said, "but accelerate your plans to get out. You were a member of Museveni's cabinet, and Museveni has declared war on this government. So how can you stay?" I shook to the marrow and prayed for rescue.

Claver Matovu, who later became a bishop of the Orthodox Church, happened to be staying with me while on a visit to the United Nations High Commission for Refugees (UNHCR) offices in Kampala. He was then an employee of the UNHCR station in Fort Portal,Western Uganda, and had come to requisition an official vehicle for that station, where my late brother, Livingstone Byarugaba, was offering him temporary accommodation. On the same night that my friend Katorobo advised me to exit Uganda at the earliest opportunity, Matovu managed to get a Land Rover. He arrived shortly after James had told me to leave Kampala. Very early in the morning, Matovu drove me from Kampala to Mbarara and then to Kabale. We went through nine roadblocks, and at each roadblock my heart was in my mouth. Yet, through all this turmoil and several near-death incidents, Matovu remained courageous. For example, at the roadblock at Mbarara Simba Barracks, where we arrived at dusk, a Uganda National Liberation Army soldier wanted us to offload all our belongings from the car and place them on the roadside. Matovu calmly refused to do so. The soldier then threatened to shoot us and still the would-be bishop refused to comply. Fortunately for us, a Tanzanian military officer intervened. Matovu told the military officer that he was a UNHCR staff member, upon which the officer told us that we could go. Thank God, another brush with death was averted.

Once in Kabale, I walked to my village and then to Rwanda where I reported to the UNHCR. They put me up in a convent until I was able to secure a one-way ticket to Nairobi. The authorities in Rwanda refused to stamp my passport. "You have not been here," the officer told me. "So you cannot come back here. If the authorities in Kenya refuse you, you cannot come back here." I arrived at Nairobi Airport expecting anything to happen. What would I do if the Kenyan authorities refused to allow me into their country?

Would they deport me back to Uganda since I had no exit stamp in my Ugandan passport? When I handed my passport to the immigration officer, he glanced at me, stamped the passport, and I was free to enter. I moved cautiously from him, not sure of my freedom. Only when I arrived in my hotel room did I burst into tears as I sang the American spiritual:

Oh freedom, oh freedom,
Oh freedom over me.
And before I'd be a slave,
I'll be buried in my grave,
And go home to my Lord
And be free.

I very soon discovered that most of my UPM colleagues were already in Nairobi and especially Joshua Mugyenyi, Ruhakana Rugunda, Crispus Kiyonga, and many others. By the end of March 1981, I was able to travel to Europe and then on July 4, 1981, to the United States. On arrival at Dulles International Airport near Washington, D.C., I was so visibly tense that the immigration officer felt compelled to advise me to "relax!"

In August 1981, I landed a job as an associate professor and head of the Management Science Department at Coppin State College in Baltimore, Maryland, a position I held for the next six years until the National Resistance Movement administration invited me to join them in the effort to rebuild Uganda's shattered economy. I returned to Uganda in 1987 and joined the Bank of Uganda as the director of research. I also doubled as the main advisor to the then minister of finance, Crispus Kiyonga, the single successful parliamentary candidate for the Uganda Patriotic Movement in the botched elections of 1980. That is when we started the incredible struggle to transform Uganda's economy and politics from unbelievable chaos to a semblance of stability and growth.

CHAPTER 2

A New Paradigm for Governance

The possibility of hope that the National Resistance Movement (NRM or the Movement) brought to the people of Uganda was perhaps most effectively communicated to them in the Movement's Ten-Point Program. The coming of the Ten-Point Program to Uganda was like the falling of rain in a parched and thirsty desert.

A once proud and majestic people were in state of despair as a result of their brutalization at the hands of Amin's and Obote's henchmen. Their souls had been deeply desecrated and wounded; they had been exploited thoroughly and mercilessly by the Amin and Obote regimes, and had been abandoned and left to suffer in silence.

(Continues...)

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Excerpted from Advancing the Ugandan Economy by EZRA SABITI SURUMA. Copyright © 2014 THE BROOKINGS INSTITUTION. Excerpted by permission of Brookings Institution Press.
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Table of Contents

Foreword Henry Krabbendam ix

Acknowledgments xv

1 Introduction: A Journey through Uganda's Turbulent Times 1

2 A New Paradigm for Governance 7

3 The Transformation of Politics: Beyond the Ruling Party 12

4 A Historical Overview of the Ugandan State and Economy, 1950-2010 18

5 Ideological Uncertainty and Economic Reform 26

6 Reforming Foreign Exchange Management 35

7 Transforming the Bank of Uganda 45

8 Reform of the Export Sector: Coffee 55

9 Financial Sector Reform: Negotiating with the Bretton Woods Institutions 62

10 The Struggle for Uganda Commercial Bank 67

11 The Issue of Rural Banking and Microfinance Institutions 76

12 Pension Reform and Social Security 83

13 The Rural Development Strategy 98

14 Reform and Revitalization of Productivity in the Agricultural Sector 106

15 Improving Africa's Agricultural Infrastructure 122

16 The Introduction of Tea Production in Southwestern Uganda: A Case Study in Community Development 127

17 Oil: Blessing or Curse? 135

18 Private Enterprise in Uganda: Challenges and Opportunities 147

19 Observations and Comments on Aid 165

20 Fast-Tracking East African Integration 174

21 Job Creation and Housing Demand in Uganda: An Innovative Synergy 180

22 Summary: Uganda's Past and Future 186

Appendixes

A The Parish Model Operational Plan 199

B An Innovative Approach to Job Creation: Estimates as a Basis for Discussion 201

Index 205