The Economy

The Economy

UGANDA WAS ONCE RICH in human and natural resources and possessed a favorable climate for economic development, but in the late 1980s it was still struggling to end a period of political and economic chaos that had destroyed the country's reputation as the "pearl" of Africa. Most of the economic infrastructure, including the power supply system, the transportation system, and industry, operated only at only a fraction of capacity. Other than limited segments of the agricultural sector--notably coffee and subsistence production-- cultivation was almost at a standstill. And in the wake of the much publicized atrocities of the Idi Amin Dada regime from 1971 to 1979 and the civil war that continued into the 1980s, Uganda's once flourishing tourist industry faced the challenges of reconstruction and restoring international confidence. Successive governments had proclaimed their intention to salvage the economy and attract the foreign assistance necessary for recovery, but none had remained in power long enough to succeed.

Agricultural production based primarily on peasant cultivation has been the mainstay of the economy. In the 1950s, coffee replaced cotton as the primary cash crop. Some plantations produced tea and sugar, but these exports did not alter the importance of coffee in the economy. Similarly, some industries developed before 1970, but most were adjuncts to cotton or sugar production, and they were not major contributors to gross domestic product ( GDP). Moreover, Uganda did not possess significant quantities of valuable minerals, such as oil or gold. In sum, although the economy provided a livelihood for the population, it was based largely on agricultural commodities with fluctuating international values. This dependence forced Uganda to import vehicles, machinery, and other major industrial equipment, and it limited development choices. The economy seemed to have the potential to stabilize, but throughout the decade of the 1980s its capacity to generate growth, especially industrial growth, was small.

After 1986 the National Resistance Movement (NRM) succeeded in stabilizing most of the nation and began to diversify agricultural exports away from the near-total dependence on coffee. By 1988 Western donors were beginning to offer cautious support for the three-year-old regime of Yoweri Kaguta Museveni. But in 1989, just as the hard work of economic recovery was beginning to pay off, world coffee prices plummeted, and Uganda's scarce foreign exchange dwindled further. Despite the country's record of economic resilience, it still faced serious obstacles to the goal of economic self-sufficiency.


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