When the National Resistance Army (NRA) captured power in 1986, one of the things they promised was to build an independent, integrated and self-sustaining and economy.
This later turned into fiction. Why? Dr Ha-Joon Chang, an academic at Cambridge University, UK, attempts to answer this puzzle in his paper: “Ambition, pragmatism, and imagination: Rethinking the role of the state on economic development”.
Dr Chang delivered this paper last week during Bank of Uganda’s 25th Joseph Mubiru memorial lecture at Serena hotel.
The NRA/M was swayed by the wave propagated by the World Bank and International Monetary Fund, through their failed policies of Structural Adjustment Programmes (SAPs).
These institutions preached privatisation. They discouraged any state subsidies. President Museveni, who was hitherto perceived as socialist, embraced liberalisation. Many state enterprises were privatized and, to date, nobody knows how much was fetched from such sales.
For instance, Coffee Marketing Board (CMB), which had controlled the marketing of Uganda’s coffee, had its wings clipped and the marketing of coffee was left to private entrepreneurs. The cooperatives for coffee and cotton growers collapsed too.
The president was often heard saying state enterprises had become parasitic on taxpayers. The industrial hub in Jinja collapsed and many enterprises which had given jobs and money to farmers closed. The country surrendered to the free trade imperialists.
Dr Chang then asks: “Which of the developed countries practiced free trade in their developing stage? Is free trade a tried and tested recipe for economic development? The answer is no.
All the developed countries, right from United Kingdom, United States of America, Germany and Japan, among others, pursued protectionist policies until they reached the summit of development. Dr Chang attempts to explain why developed countries later adopted and preached free trade policies by making reference to the 19th century German economist, Friedrich List.
Friedrich List wrote: “It is a very common clever device that when anyone has attained the summit of greatness, he kicks away the ladder by which he has climbed up, in order to deprive others of the means of climbing up after him...”
This precisely means developed countries reached the summit of development and they had to look for alternative means of venting their surplus, and the trick was to advise free trade to the developing countries.
Dr Chang, provocative as he was, believes that using the historical perspective to debunk the myths of free trade demonstrates that there is an urgent need for thorough rethinking of some key conventional wisdom in the debate on trade policy and, more broadly, on globalization.
Former Tanzanian president Julius Nyerere, who was a socialist at heart, once highlighted what Dr Chang addressed during the lecture.
Nyerere once told the world conference of development partners that preaching and insisting on minimal state intervention in developing countries was like conducting a boxing competition between pugilists of incomparable weights.
“Don’t listen to this nonsense that the state should give up the direction of the economy. It is nonsensical and we have so many stupid leaders who think that the economy can develop without state direction. That somehow you can hand over the development of your country to something called private enterprise unregulated!
Who has done it? The Japanese have not done it; the British have not done it. The Germans have not done it. And these ignorant Africans have been deceived, ‘don’t interfere with the economy, leave it to the private sector’; where is the private sector?” he questioned.
Ironically, Dr Chang seems to hold that the developing countries grew much faster when they used “bad” trade and industrial policies during 1960s to 1980s than when they used “good” (IMF-advised) policies in the last two decades.
Dr Chang advised that developing countries must accept that the supposedly good policies are actually not good for them.
So, what does Dr Chang advise a country like Uganda to do? Uganda should devise ambitious development strategies.
But being ambitious does not mean being megalomaniac. Uganda needs to be realistic about what they can achieve in the short to medium term. Most importantly, implementers need to be very pragmatic about the policy tools they use.
The author is the business development director at Observer Media Limited.