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TRADE AND ECONOMIC DEVELOPMENT IN UGANDA
Issue No.19 - October/November 2012
Special Edition on
SOCIAL MARKET ECONOMY
AND SUSTAINABLE DEVELOPMENT
1
2 FOREWORD
ARTICLES
3 ECONOMIC PERFORMANCE IN
UGANDA SINCE 1997
7 THE CONCEPT OF SOCIAL MARKET
ECONOMY – AN INSPIRATION FOR
UGANDA?
14 INCLUSIVE GROWTH FOR
SUSTAINABLE DEVELOPMENT
19 THE IMPACT OF NATIONAL
BUDGETING ON TRADE AND
WEALTH-CREATION
23 WHY CITIZENS’ PARTICIPATION IN
THE BUDGET PROCESS IS CRITICAL
27 THE ROLE OF NDP IN THE
SOCIAL MARKET ECONOMY AND
SUSTAINABLE DEVELOPMENT
30 THE ROLE OF THE PRIVATE SECTOR
IN DEVELOPMENT
32 THE WAR WITHIN
35 UGANDA’S ECONOMIC CHALLENGES
– A YOUTH PERSPECTIVE
CONTENTS
Publisher:
African Centre for Trade and
Development (ACTADE)
P.O. Box 16452, Kampala
Plot 474 Gaba Road, 3rd
Floor Pension
House, Kabalagala
Tel: +256 414 664 616
Email: actade@actade.org
Website: www.actade.org
Project Coordinator:
Aine Gloria
Ag. Programme Officer, ACTADE
Tel: +256 783 134 404
Email: gloshy2007@yahoo.com
Design & print:
Media PH Ltd.
Email: mediaph@gmail.com,
Tel: +256 312 371 217
Photo credit:
All photos courtesy of the New Vision
Group, ACTADE and Konrad-Adenauer-
Stiftung.
Funding:
Konrad-Adenauer-Stiftung Uganda
P.O. Box 647, Kampala
Plot 51a Prince Charles Drive, Kololo
Tel: +256 414 259 611
Copyright:
© ACTADE 2011
All rights reserved. Reproduction
of all or parts of this publication for
educational or other noncommercial
purposes is authorised without prior
written permission from the copyright
holder provided the source is fully
acknowledged and any alterations to its
integrity are indicated.
Reproduction of this publication for
sale or other commercial purposes is
prohibited without prior written consent
of the copyright holder.
The opinions expressed in this
publication do not necessarily reflect
the views of ACTADE or the Konrad-
Adenauer-Stiftung but rather those of
the authors.
THE GUIDE
2
FOREWORD
Elly Twineyo Kamugisha
is the Executive Director
at the African Centre for
Trade and Development
(ACTADE). He is a senior
public policy analyst and
has worked as a senior
professional at Uganda
Export Promotion Board/
GoU and with UNDP
projects on promotion of
external trade. He has
worked as a part time
lecturer of Makerere
University Business
School (MUBS) and as
an Associate Consultant
at Uganda Management
Institute (UMI). He is the
author of the book “Why
Africa Fails” (2012).
3
ECONOMIC PERFORMANCE IN
UGANDA SINCE 1997
By Fred Muhumza
Fred Kakongoro
Muhumuza holds a
PhD in Development
Economics from the
University of Manchester
and is endowed with vast
experience in the areas
of research and policy
analysis. In the last fifteen
years, he has taught
economics in various
Universities in Uganda,
worked at the Economic
Policy Research Centre at
Makerere and is currently
an Economic Advisor in
the Ministry of Finance
Planning and Economic
Development. He has
carried out considerable
analysis of various aspects
of the socio economic
development policies
and outcomes in Uganda
leading to a number of
publications and public
discussions on the subject.
4
3
2.5
2
1.5
1
0.5
0
Coffee Price (US$/Kilo)
1994/95 1995/96 1996/97 1997/98 1998/99 1999/00 2000/01 2001/02 2002/03 2003/04
5
8000
7000
6000
5000
400
3000
2000
1000
0
Credit to Private Sector
lendingrates
30
25
20
15
10
5
0
CredittoPrivateSector
6
2000
1500
1000
500
0
-500
-1000
-1500
-2000
Current account balance
Reserves and related items
Capital & financial account balance
08/09
09/10
92/93
93/94
94/95
95/96
96/97
97/98
98/99
99/00
00/01
01/02
02/03
03/04
04/05
05/06
06/07
07/08
7
THE CONCEPT OF SOCIAL MARKET
ECONOMY – AN INSPIRATION FOR
UGANDA?
By Mathias Kamp
Mathias Kamp is a German
political scientist with
expertise in the areas of
development cooperation,
democratisation,
governance and civic
education. He holds
bachelor degrees in
Public Administration
and European Studies
and a master degree in
International Relations
and Development Policy.
Currently he works as
Programme Officer in
the office of the Konrad-
Adenauer-Stiftung for
Uganda and South Sudan,
based in Kampala.
8
9
10
11
12
13
14
INCLUSIVE GROWTH FOR
SUSTAINABLE DEVELOPMENT
By Annette Were Munabi
Annette Were Munabi
holds an M.A. in
Economics from
Makerere University
in collaboration with
the African Economic
Research Consortium
(AERC) and a B.Sc.
in Economics and
Statistics from Makerere
University. Currently
she works as a Policy
Analyst for Economic
Policy and Livelihoods at
Development Research
and Training (DRT).
15
Bank of Uganda (December 2011). State of the Economy Report .
Ministry of Finance, Planning and Economic Development. Budget
speech, FY 2012/13 delivered at the meeting of the second session of
the 9th
Parliament of Uganda
12
10
8
6
4
2
0
10.8
8.5 8.7
7.2 7.3
6.7
5.9
5.1 5
3.5
2.62.8
2.1
1.7
GDP
growth
rate
Per
capita
GDP
growth
rate
2001/200
2002/200
2003/200
2004/200
2005/200
2006/200
2007/200
2008/200
2009/201
2010/201
6.86.5 6.3
4.8
8.4
3.6
Agriculture
forestry and
fishing
Industry
Services
2008/09
2009/10
2010/11
2011/12
10
9
8
7
6
5
4
3
2
1
0
16
Ministry of Finance, Planning and Economic Development.
Annual Budget Performance Report, FY 2010/11
Lukwago, D., (2010). Increasing Agricultural Sector Financ-
ing. ACODE Policy Research Series No. 40,2010
17
18
19
THE IMPACT OF NATIONAL BUDGETING ON
TRADE AND WEALTH-CREATION
By Charles Mulozi Olweny
Charles M. Olweny holds
a degree in Human
Resource Management
and a Masters degree
in Human Rights from
Makerere University.
He holds numerous
certificates in human
rights and humanitarian
law. He worked with
Foundation for Human
Rights Initiative (FHRI)
as Research Monitor and
documentation officer
for two years and is now
working with Volunteer
Efforts for Development
Concerns (VEDCO) as
advocacy officer.
20
Sectoral Shares in FY 2012/13
Agriculture, 3.4%
Health, 7.6%Water &
Environment, 3.0%
Justice/ Law &
Order, 5.6%
Accountabilty, 5.2%
Tourism, Trade and
Industry, 0.7%
Land Housing and
Urban Dev, 0.2%
Social Dev, 0.8%
ICT, 0.1%
Public Sector Mgt, 9,7%
Legislature, 1.7%
Interest Payment, 7.7%
Security, 7.3%
Works &
Transport, 14.8%
Education, 15.7%
Energy,13.9%
21
22
US$inmillions
2000
2002
2004
2005
2003
2000
2002
2004
2005
2003
2000
2002
2004
2005
2003
2000
2002
2004
2005
2003
2000
2002
2004
2005
2003
Tanzania Rwanda Burundi China
600
400
200
(400)
(600)
(200)
Trade Balance
Imports
Exports
Kenya
23
WHY CITIZENS’ PARTICIPATION IN THE
BUDGET PROCESS IS CRITICAL
by Julius Mukunda
Julius Mugisha Mukunda
is an economist from
Makerere University
and currently a Senior
Programme Director
at Forum for Women in
Democracy (FOWODE).
He is also a coordinator
of the Civil Society
Budget Advocacy
Group (CSBAG), a
coalition of individuals
and organisations
interested in influencing
the national budget
processes and
specialised in the area
of Economic Policy
Advocacy.
24
Parliament
Cabinet
MFPED
Line Ministries/
Spending Agencies/
SWGs/Donors
National Budget Workshop
-Indicative Sector Ceilings
-Budget & SWG Guidelines
Proparation of Sector
BFP and Revised
MTEF Allocations
within the ceiling
Oct- Dec Jan-Mar Apr-June
The Consultative Budget Process
Budget
Speech
Submission of Indicative
Plan MTEF
Cabinate approval
of BFP/MTEF
Compilation of National BFP
And Upated MTEF
Finalisation of Budget
Allocation MTEF
FER
Preparation of Detailed
Buget Estimation
Final Budget
Approval
April 1 May15 June15
Interministerial
Consultations
25
26
100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
Central Govenment Local Governement
2012/132011/12 2013/14 2014/15
7,633.807,693.507,693.506,218.70
2,483.502,106.102,106.101,671.40
27
THE ROLE OF NDP IN THE
SOCIAL MARKET ECONOMY AND
SUSTAINABLE DEVELOPMENT
By Richard Mugisha
Richard Mugisha holds
a degree (Hons) in
Business Administration
majoring in management
from Nkumba University,
Uganda. He also holds
a Diploma in Secondary
Education obtained from
Nkozi National Teacher’s
College. He has ten
years professional
working experience and
three years experience
in policy and advocacy
related work. Since 2010
he has been working
with PELUM Uganda
as Program Officer for
Policy and Advocacy.
28
29
30
THE ROLE OF THE PRIVATE SECTOR IN
DEVELOPMENT
By Paul Busharizi
Paul Busharizi
is currently the
contributing editor –
Business & Politics
at the Vision Group.
Prior to his current
appointment he was the
Business Editor at the
New Vision for seven
years. Previously he was
a Reuters Correspondent
for Uganda, a stint which
took him to various parts
of the country and to
the DR Congo. He is a
graduate of psychology at
Makerere University.
31
32
THE WAR WITHIN
By Angelo Izama
Angelo Izama is an
investigative reporter
and blogger at Monitor
Publications. He is an
Open Society Fellow.
He was a 2011 Knight
Fellow at Stanford
University working on
journalist security.
He previously held a
NED Reagan-Fascell
Democracy fellowship
and has founded a
human security think
tank in Kampala. He was
a special projects writer
at Monitor Publications
and obtained a law
degree from Makerere
University in Kampala.
33
34
35
UGANDA’S ECONOMIC CHALLENGES –
A YOUTH PERSPECTIVE
By Bernard Mukhone
Bernard Mukhone is
the Coordinator of
the „Young Leaders
Think Tank for Policy
Alternatives“, an
initiative supported by
the Konrad-Adenauer-
Stiftung. He is an
entrepreneur and the
CEO of Elegant Group
of Companies and also
works as a freelance
consultant specialised in
project implementation
and events coordination
and management.
Currently he is pursuing
a master degree in
„Local Governance
and Human Rights“
at Uganda Martyrs
University.
36
37
38
39
W.Röpke
A.Rüstow
A.Müller-ArmackL.Erhard
F.Böhm
W.Eucken
W.Röpke
A.Rüstow
A.Müller-ArmackL.Erhard
F.Böhm
W.Eucken
Westriveforthegreatestpossiblefreedominforeigntradeinorderto
emphasisetheprincipleoftheinternationaldivisionoflabouranditsbenefit
forallpeoples.(LudwigErhard)
…solidpublicfinances.
…openmarketsinaglobalisedworldnot
regulatedbytariffsandtraderestrictions.
Anyexperimentinthecharacterofsupposedwelfareof
charitableattitudetospendmoremoneythanthe
Treasury’srevenues,breachesgoodandprovedprinciples.
(LudwigErhard)
…acommitmenttosocialpartnership
andcollectivebargaining.Employees
andemployerscanorganisetheirlabour
relationsbetterthanthestate.
Everythingmustbedonetorelocatethefocalpointoflife’s
responsibilityfromthegovernmentalcentretothe
position,whichreasonablethinkingandhistorical
experiencenaturallydemand,[…]tothedecentralised
non-governmentalorganisations.(WilhelmRöpke)
…anindependent
monetarypolicyfocussing
onmaintainingpricestability.
Alleffortstoachieveacompetitive
systemareinvainunlessacertain
monetarystabilityisassured.Thus,
thereisaprimacyofmonetary
policyinacompetitionorder.
(WalterEucken)
…afunctioningcompetitionbetween
companiespreferablywithoutdistortive
subsidies.Competitionisaguarantorfor
innovation.
Ifthereisnoorinsufficientcompetition,therewillbean
interferenceontheconstitutionallydesireddrivingforces
ofmarketprices.Theproductionofgoodsandthe
distributionwillbesteeredinanundesireddirection.
Thismisdirectedeconomiccooperation,however,isnot
eventhecrucialpoint.Moreimportantly,thesubstanceof
socialjusticeinthefreemarketsystemisdisrupted.
(FranzBöhm)
Astrongstateisnotoneinter-
feringinandattractingeverything.
Onthecontrary,thetrulystrong
stateisnotcharacterisedbythe
complexitybutbytheindepen-
dencyofinterestgroupsand
itisidentifiedbytherigid
enforcementofitsauthorityand
itsdignityasrepresentativeofthe
public.(WilhelmRöpke)
…a‘strong’state
providingguidelines
withoutintervening
inallareasoflife.
...equalparticipationinameritocracy.
Thisconcernstheopportunitiesonthe
labourmarket,thepossibilityforeconomic
mobilitybyeducationandsocialinte-
grationassistanceforimmigrants.
Itisanessentialpartofapositivefamilypolicytooffer
equallivingconditionsandopportunitiesforadvance-
mentbyprovidingequaleducationalopportunitiesonthe
variouslevelsaccordingtoaffinityandaptitudeofour
youthregardlesstheincomeandtheassetsoftheir
parents.(LudwigErhard)
…thesolidaryassurance
ofliferiskswhilstensuringthe
principleofsubsidiarity.
Economicfreedomandsocialcompulsory
insuranceareincompatible.Thus,itisnecessary
torecognisetheprincipleofsubsidiarityasone
ofthemostcrucialorganisingprinciplesforthe
socialassuranceandtogiveprioritytoself-help
andindividualresponsibility.Accordingly,the
governmentshallhaltprotectionwhereverthe
individualandhisfamilyarestillabletomake
independentandresponsiblepreparations.
(LudwigErhard)
…theappreciationoffamily
andcivicengagement.
Wefirmlybelievethatthereisaninfinitenumberof
thingsmoreimportantthantheeconomy:family,
community,thestate,allformsofsocialintegrationin
general[…].(AlexanderRüstow)
…theprotectionoflivelihoodsandsustainable,
resource-efficienteconomicactivity.
Theprotectionofthepeopleagainstdamages
causedtotheenvironmentrequirestheeconomy
torecogniseandrealiseitssocialresponsibilityin
takingadequatemeasuresinthedevelopmentof
technologypreventingdamagetohumanity.
(LudwigErhard)
…confidenceinpeople’stalentsand
skills,i.e.theirtalentforfreedom.
Itreliesontheprinciplesofpersonal
responsibility,theprotectionofproperty,
freedomofcontractanddecentralised
decision-making.
Civicfreedomisanillusionaslongasitisnotbasedonthe
fundamentaleconomiclibertiesofthefreemovementof
capitalandlabour,therighttoprivatepropertyandthe
abilitytosecureanhonestprofit.
(AlfredMüller-Armack)
…astrongentrepreneurship
andthecommitmenttosmalland
medium-sizedbusinesses.Accepting
responsibilityandrisk-takingare
importantpillarsofsocialprogress.
Thetransferofresponsibilities[…]implyasystemin
whichtheentrepreneurfulfillsaneconomicrolein
additiontosecuringhisowneconomicexistence,
eventhoughthisisnotalwaysapparentandevident
totheindividual.Hemaynotbeawareofhis
economictask;nevertheless,heperformsthisroleifin
thissystemofamarketeconomythefreeformationof
pricesandtheengineofthecompetitionremain
protectedandvivid.
(LudwigErhard)
…afairsystemoftaxation
requiringtheindividualto
contributetothecommunity
accordingtohisability.
Forinstance,itisextremely
contradictoryifthecitizencomplains
abouttheunbearabletaxburden
and,atthesametime,expects
stateaid,which,inturn,give
thegovernmentthemoral
righttolevyevenhighertaxes.
(LudwigErhard)
Themarketeconomyisthemostdocile,digestiveandvital
economicorder,whichcanbeimagined.Aslongasonlya
minimumofcoreconditionsaremet,itisremarkablehow
longitcandealwithpoisons,contaminantsandheavy
burdens–perfectandupright.[…]AndIherebyadd:even
thisdigestivepowerofthis[…]systemisnotinfinite.The
longertheexposure,themorevisiblethedamages,the
morecriticalthetestofendurance,whichalsothissystem
couldeventuallynotwithstand.
(WilhelmRöpke)
...theacceptanceofdifferencesinincome,as
longasthegapbetweenpoorandrichisnot
toowide.Preciselyhere,governmentpolicy
ofdistributionstepsin.
Itwasdemonstratedthatthedistributionofthenational
productbythepricemechanism[…]isbetterthanthe
distributionbasedonarbitrarydecisionsbyprivateorpublic
corporations.[…]Alsowiththisdistributionmechanism,
however,questionsremainunansweredanditrequires
adjustment.[…]Theincomeinequalityleadstoasituation
wheretheproductionofluxurygoodsalreadytakesplace
althoughtheurgentneedsoflow-incomehouseholdsremain
unmet.Thus,thisis,wherethedistributioninacompetitive
orderrequiresadjustment.(WalterEucken)
Self-discipline,asenseofjustice,honesty,fairness,
chivalry,moderation,publicspirit,respectforhuman
dignityofothers,firmmoralstandards–allthesethings
peoplemustinternalisewhenenteringthemarketand
competingwitheachother.
(WilhelmRöpke)
…anethicalfoundationforthe
economicandsocialorder.
TheSocialMarketEconomyasaregulative
policyaimstocombine,onthebasisofa
competitiveeconomy,freeinitiativeand
socialprogress.
(AlfredMüller-Armack)
…coreregulatorybeliefs,
whichshouldbeenforced
onEuropeanandinternational
levelintheinterestof
economicstability.
…flexiblethinking
notinterpretingfreedom
andsocialbalanceasopponents.
40
African Centre for Trade and Development
3rd floor, Pension House, Plot 474 Gaba Road
P.O.Box 16452, Kampala Uganda
Tel:+256-414-664616
Fax: +256-414-343456
Email: actade@actade.org
Website: www.actade.org

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Actade kas study read it. see my remarks