Ever since the negative effects of the global economic crisis began to show in 2009, countries have nearly focused on patching budget deficits and reducing debt to retain “economic health”. But recently European Union leaders have begun to acknowledge that speedy spending cuts could not be the magic solution for the continent’s debt crisis since it is “having a crippling effect on countries’ economies”.
While some governments especially in the West are insisting on fiscal discipline by cutting jobs, freezing welfare benefits and shelving expensive projects, Uganda seems blissfully unconcerned. Yet in her recent budget speech, Uganda’s Minister of Finance, Maria Kiwanuka recognized the fact that “the ongoing global economic crisis has underscored how events elsewhere can quickly have ramifications in our domestic economy”.
Yet instead of taking measures like reducing spending on public administration, Ugandan leaders seem comfortable with the present high spending. On independence Uganda had 16 local government units (districts). Today, we have 112 districts and the number is increasing. These districts and a bloated cabinet account for a major part of public expenditure. It’s high time Uganda cut its public administration costs.
Between 1962 and 1971 Uganda was one of Africa’s most better managed and fastest growing economies. Ugandan researcher Zie Gariyo notes that in that period the “country’s annual economic growth stood at 6%, domestic investment at 8% while private consumption increased to 6%.” This particular party was short-lived when Idi Amin overthrew the government in a military coup.
From February 2, 1971 and 1979, Uganda slid into a morass of political and economic disorganization with the absurd economic policies of the Amin regime. Expulsion of the Asian population and other foreign business concerns severely affected economic performance and reduced export earnings. Uganda’s economic situation was then made even worse by international economic storms such as the oil crisis of 1973/74 and the international recession that followed.
“Consequently between 1971 and 1979 Uganda’s GDP (in real terms) fell by 20%, economic growth was in negatives, and the money supply increased at a rate of 30% per annum from 1.7 billion in 1971 to 12 billion in 1979. So by 1981 economic reforms had become inevitable because the main concern was how to stabilize the economy and increase efficiency,” says Gariyo. During this time Uganda’s economy was performing badly, and some austerity measures had to be taken to redeem the situation.
The World Bank and the IMF of course were eager to advise Uganda to adopt structural adjustment programmes (SAPs). This introduced measures like like control of inflation, exchange rate re-alignment, and a liberalised market system (removal of price controls from imports and rationalization of input licensing), as well as the return of expropriated properties, the downsizing of the public service and the army and a broadening of the revenue base.
The World Bank/IMF gave soft loans to sub-Sahara African countries that implanted the SAPs and their conditions. These conditions included instituting fiscal and anti-inflationary programmes to control or eliminate government budgetary deficits, reduce spending, increase taxes, increase prices for domestically produced industrial products, and withdraw subsidies on education, health and agriculture.
Faced with a struggling cash-strapped economy, Uganda under the leadership of Yoweri Museveni adopted the World Bank’s advice on SAPs in the 1990s in exchange for loans. The government had hoped to use SAPs as austerity measures in some cases. One of the objectives was to improve the lives of rural folks who depend on hand-hoe agriculture to produce coffee and cotton, the key cash crops for Uganda’s economy.
When Uganda began reducing the size of its civil service in 1990, it had a payroll of 320,000 civil servants. By 1995, some 170,000 had been sacked to cut down government expenditure. The streamlining of the civil service was expected to pave the way for effective management structures for proper service delivery. But sadly not much has changed today. The present civil service is the most corrupt part of government in Uganda and proper service delivery simply doesn’t exist.
Studies show that improved public sector efficiency and reallocation of public expenditure away from the unproductive sectors such as public administration and security to the productive sectors like agriculture, energy, water and health leads to higher growth rates for the gross domestic product and also accelerates poverty reduction.