The 2018/19 budget is upon us. The theme of this year’s budget: ‘Industrialization for job creation and shared prosperity’ reveals the government’s intention to create decent jobs for the millions of young people through industrialization.
However, a perusal through a handful of past budget statements indicates that the government has used such glowing terms, including ‘Economic Transformation’, only to fail to achieve the goal, let alone account to the people why it did fail.
Despite its importance in transforming the economy from the subsistence to a modern economy that creates decent jobs for the millions of young people, the NRM government’s elusive quest for industrialisation has been linked to a number of factors.
Although Uganda has an industrial policy, The National Industrial Policy 2008, some economists argue that the biggest stumbling block to its realisation remains poor governance which many tend to politely refer to as the lack of political will.
In their 2017 Analysis of “Existing Industrial Policies and State of Implementation’ study,” MUBS Lecturers Ramathan Ggoobi, Benard Musekese and Joseph Ntayi cited five major bottlenecks as factors that are undermining domestic manufacturing.
They identified limited access to affordable credit, infrastructure bottlenecks especially in the high cost of electricity and bad roads as key obstacles. They added the low skills-gap in certain key areas of manufacturing and competition from low-cost producer countries and production of sub-standard products.
However, the authors pinned poor governance as the root cause of most of the above constraints. Ggoobi and others argued that: “Industrial policy has been successful when those with political power who have implemented the policy have either themselves directly wished for industrialisation to succeed, or been forced to act in this way by the incentives generated by political institutions. Uganda seems to lack both the effective broad political will and strong institutions to back up its industrial policy.”
They cite President Museveni’s systematic use of presidential directives to undermine institutions and end up effectively frustrating the implementation of policies.
The authors noted: “Our interviews established that over three quarters of what is being implemented in government today constitutes Presidential dictates which offer political advantage over his opponents as opposed to the official industrial policy and the national development plan.”
And whereas the government has introduced a myriad policies including the agricultural modernisation strategy that envisioned the establishment of processing industries, these policies were rendered futile by interventionist tendencies as the use of soldiers under Operation Wealth Creation.
The view that the government does not respect its own policies has had a hangover effect on technocrats who view their own efforts as a waste of time.
As Ggoobi and others pointed out, most public servants feel that politicians are much more interested in the implementation of the policies in their electoral manifestos, and issuing unilateral political directives than implementing the NDP.
“When we have the NDP II, why does the President come up with the so-called 23 strategic directives, yet he is the one who launched NDP?” One NRM party Member of Parliament told the MUBS researchers.
Advice from global experts on industrialization
Uganda’s quest for industrialisation, it emerges, is not an isolated struggle. The African Development Bank recently released a report titled “Industrialise Africa; Strategies, Policies, Institutions and Financing,” in which it attempts to rally countries to take decisive steps to industrialise.
AfDB President Dr. Akinwumi Adesina said: “The secret of the wealth of nations is clear: developed nations add value to everything they produce, while poor nations export raw materials.”
He warns that Africa must quit being at the bottom of the global value chains and move to rapidly industrialize, with value addition to everything that it produces.
“Africa must work for itself, its people, not exporting wealth to others,” he said.
Professor Joseph Stiglitz, the Nobel winning economist from Columbia University blamed multilateral financing institutions such as the World Bank and the IMF for pushing poor countries to expose the nascent factories to superior competition from the established industrialised states.
Stiglitz said: “In reality, these structural adjustment policies foisted on developing countries have actually discouraged industrial development and stifled growth, and the result is that, over the past 30 years, Africa has suffered from de-industrialization.”
Stiglitz and the MUBS lecturers agree that poor countries like Uganda need to be as committed to effective implementation of industrialisation policies as they must be on addressing governance challenges.