Steep price of democracy: How its politics is ruining Uganda’s economy

For years, pundits have argued for the deregulation of business. Compared with Rwanda, which runs a one-stop investment centre, in Uganda, an investor has to navigate through 13 different institutions.

Currently, Uganda’s economic performance is assessed on its macroeconomic status, chiefly the government’s achievements in controlling levels of inflation to single-digit figures, and maintaining the fiscal balance within 10 per cent.

“The question people ask is if at the macroeconomic level the country is performing well, how come incomes have not improved?” Dr Matovu partly attributes this to the widening gap between the rich and the poor — the little the country achieved, has gone into the hands of a few.

The sector that would make the most differences to most people, agriculture, remains hamstrung by the lack of a fertiliser policy, while financial support was axed under the IMF and World Bank-sponsored structural adjustment programme.

The key problem for the economy is that it is not making headway at two consequential extremes; agriculture has been in decline, but manufacturing has not picked up.

A reduction in the costs of production would have to entail a reduction in interest rates, which is where politics meets economics most crucially: “The cost of government is very high,” Dr Matovu says. “If you transferred the cost of government to other areas, you could raise the GDP by 1 per cent.”