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Uganda’s economic progress since independence has not been even. It is imperative therefore to approach the assessment of Uganda’s economic progress, challenges and prospects basing on the political economy episodes and the economic policy evolutions under the various political regimes. Since independence Uganda has witnessed the following four broad political economy episodes: i) The period from 1962 to 1971, commonly referred to as the Obote 1 regime; ii) The Amin era from 1971 to 1979; iii) The post Amin era from 1979 to 1986 comprised mainly of the Obote 2 regime; and iv) the period from 1986 to 2012 representing President Museveni’s reign.

1962-1971 Obote 1 Regime:

The Obote 1 regime applauded for being a mixed economy at the time of independence had by 1968 changed form and characterized by domination of the state in economic growth and development. The government of the day identified poverty, ignorance and disease as the most critical development challenges that Uganda faced at that time. Emphasis was therefore put on delivery of social services across the country. Government decided to control the commanding heights of the economy, especially from 1968 with pronouncements of the "Common Man’s Charter”, which essentially represented a socialist approach to economic management. Nationalization of corporations and creation of public enterprises narrowed the scope of the private sector in the country’s economic growth process. Over 90 percent of the population lived in rural areas eking a living mainly from agriculture. However, the agriculture sector was well structured under the cooperative movement, which played an instrumental role in ensuring access to agricultural inputs and marketing of agricultural products.

During this period, the Uganda economy recorded modest growth that averaged about 5 percent per annum. With foreign aid, literacy rates began to improve and the burden of disease reduced as a result of increased access to health services. However, the benefits were short-lived partly because the regime was characterized by political and economic contradictions, which lay a foundation for a military take-over led by Idi Amin in 1971. The military coup of 1971 marked the end of the largely socialist growth and development path that was championed by the Obote 1 regime.

1971-1979 Amin Era:

The second political economy and economic policy evolution episode run from 1971 to 1979 and was characterized by negative economic growth for several reasons. Expulsion by Amin of Ugandans of Asian origin that comprised almost the entire Uganda’s budding private sector spelt doom to the Uganda economy. Yet, the state lacked the technical capacity and resources to sustain the implementation of the state-led economic growth and development policies of the Obote 1 regime. Financing of publicly provided social services became a big challenge, with adverse consequences on the quality of publicly provided social services. State enterprises that the Obote 1 regime had created continued to operate but with high inefficiency. Self-help increasingly became the order of the day; for example, Parents’/Teachers’ Associations (PTAs) were created to try and salvage the quality of education that was deteriorating due to inadequate funding. From 1971 to 1979 Uganda’s economy is estimated to have shrunk by 25 percentage points.

1979-1986 Post Amin Era:

The post Amin era from 1979 to 1986 is mainly known for political chaos, which made economic stability, growth, and development difficult to realize. From 1979 to 1986 Uganda recorded six political regimes under the following leaders i) Yusuf Lule; ii) Godfrey Kukongwa Binaisa; iii) Paul Mwanga; iv) Appolo Milton Obote (2nd regime); v) Tito Okello Lutwa; and vi) Yoweri Kaguta Museveni in 1986. The Obote 2 regime (1980 to 1985), took power through largely flawed election the aftermath of which was sustained resistance against the regime both internally and externally. Economic policies during the Obote 2 regime were completely different from the socialist policies that Obote implemented in the late 1960s, suggesting a realization by the regime that the socialist policies were wrong policies for the growth and development of the Uganda economy. With support of the World Bank and the IMF, Uganda tried to implemented market oriented economic reforms in the early 1980s, albeit with little success due to the unfavourable political situation of the day. Scarcity of commodities and bad monetary policies saw inflation sky rocket to three digit level by 1986. The economy continued to shrink.

1986- to date:

The National Resistance Movement (NRM) government on assuming power in 1986 vividly reversed the economic management of the economy through a number of reforms: i) liberalization across all sectors; ii) simplification of administrative procedures applicable to investors; iii) implementation of the Economic Recovery Programme (ERP) from 1987 to 1992; iv) implementation of the Structural Adjustment Programmes (SAPs) to orient the economy towards private sector-led growth and mobilize domestic and foreign resources for development; and v) privatization of public enterprises. The policies Uganda implemented especially from 1992 led to economic stability and significant achievements in growth and poverty reduction. Real GDP growth from 1992 to 2012 averaged about 7.5 percent per annum, and during that period GDP quadrupled. The proportion of Ugandans living below the minimum income to meet the cost of basic needs that stood at 56 percent in 1992/1993 fell to 24.5 percent in 2009/2010 (Figure 1).

Figure. 1: Uganda Trends in income poverty, 1992/93-2009/2010

Exports of goods and services as shown in Figure 2, increased from below US$500 million in 1994 to US$4.5 billion in 2012. The increase in export earnings was accompanied by significant export diversification that saw the contribution of coffee in total exports falling from over 90 percent in 1990 to less than 25 per cent in 2012.

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