The Economy Museveni Inherited

This week we celebrate Liberation Day (I believe it’s a better fit than NRM Day, because the former appeals better to the nation). Or we could call it Christmas for the colour yellow!

Constantly we are reminded of the good fortune we are enjoying as a result of the successful campaign of HE Yoweri Museveni’s rebel troops. What better day to look at evidence of what type of economy M7 inherited as he took power in 1986.

I shall refrain from using the word variable, due to its mathematical origins people easily lose interest. So, we shall opt for one of bibinjas (groups) or biteesos (discussions) or nsongas (issues) [The word variable really doesn’t have an equal in Luganda, and by extension definitely not in Lusoga]. Three nsongas – the income each person earns in a year (GDP per capita), the portion of the working force that is without work (unemployment) and the general price level (inflation) can give a broad perspective on the health of the economy. Data on GDP per capita is readily available, through the World Bank, dating as far back as 1960. Not the same can be said of inflation and unemployment; records on those two nsongas at World Bank date from around 1991, five years into Museveni’s reign.

The graph below shows the trend of GDP per capita, from 1960 to 2018.

Source: World Bank

Overtime, GDP per capita has risen tenfold, from US$ 62.50 in 1960 to US$ 642.78 in 2018. The nsonga of GDP per capita was on a steady rise between 1960 and 1977 (through the Mutesa/Obote era and the better part of the Amin regime). It was Idi Amin who gave us our first recession (1977 to 1980), not through a lack of trying. The fact that Amin’s policies were enacted in the early part of his regime yet the hit on income came much later is testament to long term effects of economic policy. However, the inflation was felt much earlier.

The economy recovered during the second Milton Obote government, rising from US$ 104.27 and hitting a peak of US$ 256.74 in 1984. The government instituted exchange rate depreciation, flexible price policies and fiscal discipline, aimed at restoring production and exports, eliminating price distortions and restricting overall demand in the economy. Unfortunately, this regime was kicked out by Tito Okello’s coup, and “the declining economic trends which had begun in 1984 continued at an accelerated rate and eroded most of the positive gains which had been achieved during the period 1982-1983.”[1]

By the time Museveni was sworn in, the GDP per capita from the previous year stood at US$ 241.75. The only period of reasonable economic gain the country had managed, since the early part of the 1970s, was during the reign of Obote II. Between 1977 to January 1986, six men had occupied the office of President of Uganda. It had become evident that security and a consistency in (educated) leadership* were the most pressing matters the country needed as a prerequisite for economic growth.

On the global stage, socialism/communism was on the wane, as the Soviet Union, the largest communist state of the day, would disband less than five years after the NRM takeover. China on the other hand was looking inwards at the time. The ideologies of these two nations were in sync with Museveni’s youthful revolutionaries. Unable to gain any assistance from a communist leaning state, he had to settle for a three-year Economic Recovery Programme with the IMF and the World Bank, with the objective of increasing industrial output, reducing inflationary impact of the budget deficit, and improving balance of payments. 

It was not until 2001 that Pax Museveni, if one might call it that, fully began.

Ceteris Paribus.

Further Reading

Mubazi, John K., “Economic Policy Experiences of Amin, Obote II, and Museveni” American Journal of Economics 2012, 2(6): 107-114.

Mubazi, John K., The Structure of the Ugandan Economy. Kampala: Makerere University, 1986.

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[1] Mubazi, John K., “Economic Policy Experiences of Amin, Obote II, and Museveni” American Journal of Economics 2012, 2(6): 107-114.
* If the Amin regime taught Ugandans anything it was the importance of a proper education as a requirement for the top leadership positions in the country.