Privatization of Uganda’s public enterprises was Thatcher’s idea


In her article dated December 7, 2010 on Uganda parastatals, Kesaasi wrote that privatization of Uganda public enterprises was not Museveni’s idea. It was Margaret Thatcher’s! This reminded me of work I did a few years ago about similarities between UK’s and Uganda’s development programs.

While researching and writing about structural adjustment programs (SAPs) or Washington Consensus around the world (Chile, Bolivia, Poland, Russia, New Zealand, United Kingdom, Uganda, Ghana, Tanzania and Zambia etc), I found that the similarities between Thatcher’s and Museveni’s structural adjustment programs were very striking. It was as though Uganda was a part of Britain run by British officials and institutions under Margaret Thatcher as prime minister. I decided to study it in a historical perspective and to identify which areas were similar and with what impact on the people in the two countries. I compressed the findings into chapter three on ‘Structural Adjustment in the UK and Uganda: Are there Similarities?’ in my book titled “Uganda’s Development Agenda in the 21st Century and Related Regional Issues (2008)” available at http://www.jonesharvest.com.

I found that in their structural adjustment programs (SAPs) Thatcher and Museveni focused on inflation control regardless of unemployment, state exclusion from economic activities including privatization of public enterprises and promotion of the invisible hand of market forces and laissez faire capitalism as the engine of economic growth and job creation. I wondered why Museveni who had been preaching socialism could suddenly embrace the full range of capitalism by adopting the ‘shock therapy’ version of SAP like Thatcher in the UK which Ghana had just dropped because it created hardship for Ghanaians and Tanzania was resisting under Nyerere. I decided to study the relationship, if any, between Museveni and Britain going as far back as I could. What was going through my mind was whether Museveni had asked Thatcher to take charge of Uganda’s economy since it lacked qualified and experienced staff among NRM cadres. Or was there a general hidden and pre-arranged deal?

I found out that during the guerrilla war Museveni had received financial backing by capitalist Tiny Rowlands of Ronrho. Publicity support was provided by William Pike connected to BBC. Although I did not establish a direct connection between Thatcher and Museveni or her government during the guerrilla war, Linda Chalker former and Thatcher’s trusted minister was the first foreign dignitary to meet with Museveni as president of Uganda and their relationship has remained close since then. It was also Linda Chalker who finally prevailed on Museveni to enter into a structural adjustment agreement with the IMF and subsequently the World Bank before he could obtain foreign assistance from western donors. IMF and World Bank represented the ideological and capitalist views of Margaret Thatcher. Among others, Thatcher did not want to hear anything connected with socialism, hence the abandonment of a mixed economy model and eventually the whole ten-point program because there were traces of socialism in it.

In late 1986, the minister of finance and governor of central bank were relieved of their duties signaling that major changes in ideology were on the way. Staff in the ministry of planning and economic development that went along with IMF thinking was promoted to lead the new and strong ministry of finance, planning and economic development.

Since Museveni and his NRM cadres did not have governing experience especially at a difficult time of structural adjustment and globalization that was increasingly becoming knowledge-based, one would have thought that he would retain senior staff from Obote regime that had formulated and implemented structural adjustment from 1981 to 1984. Instead, they were either retrenched or marginalized. Secondly, Museveni refused to invite well educated and experienced Uganda economists and others living abroad to come home and help with managing Uganda’s economy. Instead, he advised them to stay there, accumulate foreign currency and remit some to Uganda as their contribution to national recovery and development.

Museveni then proceeded to fill the skills gap in the ministry of finance and central bank with foreigners especially from Britain either directly or through the World Bank or IMF. Paul Collier, British economist, was hired either directly from Oxford University where he teaches or through the World Bank. He came to Uganda and championed preparation and implementation of Uganda’s structural adjustment or economic recovery program. Collier like Thatcher believes in macroeconomic stability and government non-intervention in the economy. Young British economists who were familiar with Thatcher’s version of structural adjustment were hired to work in the ministry of finance and central bank. Senior Ugandans complained but to no avail, giving the impression it was a done deal. The ministry of finance and central bank have since then been dominated by British officials and the Department of International Development (DFID). A medical doctor replaced an economist as minister of finance, signaling loyalty rather than competence (no offence intended).

Then came abrupt and massive privatization of public enterprises. Government decision was “… to begin divestments immediately, and to deal with problems as they arise, rather than to delay the privatization program until all constraints have been resolved. Privatization in Uganda has come to stay. The public sector and the private sector should get together to ensure that the whole exercise is a great success” (V.V. Ramanadham 1993). Here again, the impression is that it was a done deal. Thatcher government was putting pressure on Uganda to welcome back Asians who should repossess their properties.

Then there was the Rowlands factor. As a businessman, Tiny Rowlands did not finance Museveni’s guerrilla war and facilitate his travel for nothing. Museveni owed him something. Thus, a combination of Asians demand for their businesses, compensation for Rowlands’ help and Thatcher’s demand for elimination of socialism from the surface of the earth and Museveni’s desire for British protection led to abrupt and massive privatization of Uganda parastatals. The assessment to determine their value, which parastatals should be privatized, liquidated or retained and managed along commercial lines did not take place. There were arguments that Uganda commercial bank needed to be managed better and not privatized but that appeal fell on deaf ears.

Thus while the idea to privatize Uganda’s public enterprises may have come from Thatcher as part of her overall (global) ideology, once the idea was discussed and accepted in Uganda, it became Uganda’s or Museveni’s idea. Ugandans should therefore refrain from arguing that it was not Museveni’s but Thatcher’s idea. That being the case, Museveni should report to the nation how much revenue was collected from the divestment exercise and to what use was the money put.

From this analysis, it appears that handing over Uganda’s economic formulation and implementation to Britain and divestment of public enterprises with the largest share going to British business was pre-arranged. Since 1987 Linda Chalker, Paul Collier, William Pike, DFID and a team of British economists in finance and central bank as well as British corporations have played a decisive role in Uganda’s economy assisted by Uganda surrogates. The total switch from the ten-point program to structural adjustment surprised and even angered many Ugandans. Are there other surprises that we can speculate about?

First, as has been argued already on my blog if Museveni stays in power for another five to ten years Uganda is likely to become a kingdom with himself as the first hereditary king. What has emerged from Article 37 of the Constitution is that what began as cultural leaders and institutions has turned out into a demand for kings and kingdoms throughout Uganda. Museveni has promised to build houses for chiefs in the north. What does that tell you? There is a story that even Bakiga are demanding a cultural leader! When Museveni feels there is a critical mass he will direct NRM MPs to pass it (Uganda kingdom) into law. And he will then tell the world if there are complaints that the decision was made democratically. Since you can only have one king, the law will specify that current kings of Buganda, Bunyoro and Toro and the Kyabazinga of Busoga become senior chiefs and all other districts will be headed by chiefs.

Second, talk about moving peasants from rural areas to towns is gathering momentum. There are Ugandans and foreigners who argue that Uganda will not develop until the population has been urbanized. Urbanization in Europe and the New World which they quote as illustrations was associated with industrialization and a dynamic service sector. Uganda is de-industrializing and the service sector is becoming knowledge-based and computerized. So where are jobs going to come from? We already have over 80 percent of Uganda youth unemployed most of them if not all of them in towns. Where are the jobs? Where are the houses?

Third, the issue of urbanization is linked to the one on large-scale farming. There are foreigners and rich Ugandans that want to grab peasants land but they do not know how to do it differently. So they are urging peasants to move to towns and they take their land. For a start some rural areas are being incorporated into municipality which makes it easy to buy. That is what happened in Rukungiri municipality. Major General Jim Muhwezi urged Rukungiri district council to meet in an emergency session on a Friday afternoon and passed a resolution demanding a municipality. Jim Muhwezi presented the district resolution the following Monday morning to parliament which approved it. The consultation procedure was by-passed and the Local government that has responsibility for municipal matters was shut out. We have sought guidance from the Speaker of Parliament several times to tell us what happened but have not received a response and it is almost six months since parliament decided Rukungiri become a municipality. Now you see what happens when you are powerless. The areas incorporated into the municipality targeted Bairu people (slaves) who are being squeezed out (we gather minerals have been discovered in the area so the rich want to grab the land). This is how Bairu people have been treated in Rujumbura county of Rukungiri district since Bahororo landed in the area in 1800, ninety years after Mpororo kingdom (present day Ntungamo district part in Uganda) disintegrated.

All in all, with functional illiteracy of many Ugandans it will be very difficult to find jobs in a knowledge-based economy. You therefore need to hang onto your piece of land because that is the only asset that you have got. To protect Uganda interests no Uganda land should be sold or leased to foreigners – Africans or non-Africans because that is all we have got! This is a matter of self preservation.
Eric Kashambuzi
UAH forumist in New York

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