A political economy originally was the term for studying production, buying, selling and
their relations with law, custom and governments as well as with the distribution of
national income and wealth including through the budget process. It most commonly refers to the interdisciplinary study drawing upon economics, law and political science in explaining how political institutions, the political environment and the economic systems influence each other.

This paper seeks to explore the relationship between the political economy and the
incidence of poverty in Uganda and also reviewing what is known about how the economy works in relation to the poor and how the government might behave to enhance poverty, reducing public economic policy. The analysis of the historical process of Uganda shows how the economic policies have effected market terms and conditions and thereby affecting the common man whether directly or indirectly. The paper will examine the diverse transitional processes Uganda has been through from the colonial era to date and how these transitional processes have, influenced economic development policy and contributed to increasing poverty in the Uganda.
The pre-colonial, colonial and post-colonial era
By the time the explorers and the Imperial British East Africa (IBEA) Company sent in Captain Lugard to colonize the great lakes (Lake Vitoria basin) region, there were kingdoms borne out of the collapse of the Bunyoro-Kitara Empire. These kingdoms
provided the starting points of modern state infrastructure that with emerging
rudimentary class differentiations, (Balangira- Royals, Bakopi-ordinary citizens in
Buganda), strong specialized armies (Abarusura in Bunyoro), and local government
structures run by chiefs (Saza-County, Gombolola- Sub County, Muluka-Parish, and CaloVillage). These infrastructures of the state became the machinery for establishing state authority and exploitation of the largely peasant. Trade included export of Ivory and slaves to the east coast and from northern Uganda to Sudan. Arab traders from the north came as far along the river Nile as Got Okuturia (Equatorial Hills) present day Kitgum in Acholi land in search of slaves and Ivory. In this context the middle north of Uganda was still in medieval stages of slave raids and trade. Many warrior peoples of the region especially Acholi and Lango peoples supported the Kingdom of Bunyoro with mercenary warriors against Buganda which had by this time increased her economic and military might in the region annexing parts of Bunyoro. These warriors were paid with virgin Girls for marriage, slaves and ivory that they sold to Sudan Arab traders, millet and sorghum seeds, potatoes vines and the ambitions of Khedive Ismail of Egypt to control the river Nile to lake Vitoria had recruited a mercenary force in the expeditions of Emin Pasha, Sir Samuel Baker and had by that time settled in Patiko Fort in Acholi land.
By the time of final establishment of the Uganda protectorate, the great lakes regions had
been brought to its knees by wars between the kingdoms and religious wars especially in
Buganda that left the kingdoms unable to face the power of Capt Lugard. Wars destroyed
productive labor force and destroyed production chains and trading routes potentially
accelerating the rate at which poverty levels started to grow. Bunyoro was particularly left destroyed and depopulated to date it is still having to recover from the blow. This context was to provide very good grounds for the setting up of the British colonial rule which came with a clear and typical colonial economic exploitation strategy to make
money for its imperial empire. The foundation of Uganda’s modern political economy can be traced as far back to the British colonial era. Uganda was and still is an agro based
economy, well endowed with fertile soils favorable for farming and it is no wonder
therefore that to date 82% of the population still depend on agriculture. Land was
communally owned and everyone worked together to produce a good harvest in order to
survive. Even in Buganda Kingdom where the Kabaka’s main political power came from his authority over land economics (Sabataka) and the strong brotherhood (Obuganda)
authority, the King and the Clan heads actually held land in Trust on behalf of his people.
In signing the 1900 agreement, this complex power of land economics that served very well the productive people of Buganda was negatively affected and the Land Tenure system of Buganda and later Uganda was never to be the same again. This 1900 agreement was the first time that the state (foreign power) took over land without the Kabaka consulting with his Lukiiko. The 1900 agreement reduced the Kings and Chiefs and cultural heads clout across Uganda deeming them powerless and ceremonial. The boundaries of Buganda and Uganda were redefined on the British grounds without consultations. Set the administrative units of Uganda under the queen, and equal to other colonies, it introduced an exploitative tax system where all revenues collected by cultural leaders were to benefit the administrative (central) government. Uganda and Buganda were to be subjected to the laws of the queen.
The Kings and Chiefs of Uganda were to be submissive to the queen in order to keep their positions, and the elected Kabaka was to be approved by the queen. The Kabaka was restricted to the appointment of only 3 officials under the approval of the Queen and their salary predetermined at £300 a year. The 1900 agreement set conditions for the operations of the Lukiko and other cultural councils. The Kings army was to be for the
administration and the king was not to be allowed to possess or mobilize any men for the
army, unless the administrators needed men for the army. This agreement set a precedent for state arrogance and looting wealth of ordinary citizens with impunity. But one cannot blame Buganda’s Katikiro, Sir Apollo Kagwa for signing such a pact as he was signing on behalf of defeated kingdoms which were in effected defeated rudiments of the once vast and powerful but now collapsed, Bunyoro -Kitara Empire. The 1900 agreement was the best anyone could get under the circumstances of a crushing defeat in the hands of Captain Lugard.
Once they had settled down to their exploitation process the British colonialists, set about dividing the country into specific economic reserves tasked with the performance of different and specialized roles. The geo-political division by the British placed Buganda under the administrative and commercial reserve, the middle north and parts of eastern Uganda as a military reserve used by the colonial power to control Buganda nationalism, the West Nile became a labor reserve to serve the commercial plantations in Buganda and Karamoja became the cattle beef reserve to supply cheap beef to the Kings East African rifle the colonial army. The colonial government introduced forced labor across the country especially in the north and east adopting from and modifying the “Bulungi bwa nsi and Gwanga muje” (mobilization for public good) tradition in Buganda into a ruthless exploitative forced labor for road construction and colonial local farms. It grabbed land and took over the best land without any consultation. Many young men run away from this forced labor in the north only to end up as forced laborers in plantations in central Uganda.

In Karamoja, the Oliliim grassland corridor west of Karamoja was declared a game reserve blocking the Karamojong overnight from grazing land. Large chunks of grass land and forest land were all of a sudden declared reserve land and property of British Crown. To reinforce the efficiency of capitalist economic system built to serve their master the colonial government imported Indian workers to build the Uganda railway. The Indians came with strange diseases such as, measles, flue, and jiggers, cattle diseases such as rinderpest and Contagious Bovine Pluro-pneumonia that was unknown in East Africa. Once the Uganda railway was completed the Indians took on commercial farming (cotton, tea,coffee, sugar) supported by cheap labor from Rwanda, Burundi, and eastern Congo, northern and north western Uganda. Indian companies also dominated the marketing infrastructure such as cotton stores and ginneries, stores and coffee haulers, transport sector and whole sale and retail businesses. Cash crops were not allowed for a long time.

In northern Uganda, young people left to come and work in plantations in central Uganda. Progressively, some local people started becoming out growers and later formed the cooperative societies that became Uganda’s best structure for anti-colonial movement
including becoming the foundation for the new ruling party of independent Uganda in
1962. The colonial government adopted the Buganda Kingdom governance structure (SazaCounty, Gombolola- sub county, Muluka-Parish, Calo-Village) to the rest of Uganda and recruited only Buganda chiefs to rule in the rest of the country setting them out as agents of colonial oppression and exploitation. This was to set the foundation for the post
independence conflict in Uganda.

The Independent Uganda of the 1960’s
In 1962, Uganda was granted political independence but went through a series of political upheavals that further diminished the possibility of poverty reduction. The new
government was led by young energetic, people mainly form peasant farming backgrounds. Many of them from cooperative societies and trade union backgrounds, believers in the pan-African dream and admirers of the Maoist and Socialist revolutions in China and Russia respectively. The cooperative societies in Uganda were first formed around 1913 as a response by Buganda farmers to the monopoly of Asian and European farmers and produce marketers who were given a monopoly over all agricultural marketing and were giving racist lower prices to African farmers with impunity and full support of the colonial government policy. As they grew in strength the cooperative movements also became a central organization infrastructure for the pro-independence movement. When the Kabaka was exiled, it was the cooperative movements that organized youth to collect signatures demanding the return of the Kabaka in all parts of the country and not Buganda solely. Because of pressure both at home and in Uganda, the colonial government attempted to ban the cooperative societies at which point Musaazi formed the Africa farmers forum and even when this was just about to be banned, Musaazi formed the Uganda National Congress which later became the Uganda People’s Congress (UPC) that formed the first Independent Uganda government. The new government started straight away with a policy cry of fighting Poverty, Ignorance and Disease, driven by their social democratic ideology. In the first 5 year development plan, the party took a major decision that was to lay the foundation for fighting poverty in Uganda that included; building 22 rural hospitals to expand access to health services; expanding primary and secondary school education, by taking over church founded education institutions and abolishing admission based on religious affiliation hence opening chances to all students based on performance, instituting district higher education bursary. A law regulating the cooperative movement in Uganda (The Cooperative Societies Act) was passed in 1962 by the youthful parliament.
The government strengthened investments in the cooperative ministry hence increasing
investment in the agriculture sector. The cooperative Unions became the most efficient
and value added means by which farmers received cheap inputs and competitive market
prices for their crops. The peasants across the country joined the cooperative societies
which also provided security for paying school fees. Agricultural productivity and
marketing thoroughly increased. The cooperatives movement became the largest employer in Uganda by 1970 and up to this point it looked like Uganda was no doubt on the road to eliminating mass poverty by all counts. Driven by his, initial successes, his labor and cooperative unions background, his admiration for the Maoist movement in China, increasing Pan-Africanist ideology and his attempt to put an end to Asian dominance to agribusiness in Uganda, Dr. Obote the then Prime Minister of the newly independent Uganda started the process of nationalization of industries many of whom were agro-based industries and strengthening government control of industry and labor. This was a starting point of government over indulgence into the otherwise democratically managed cooperative and the labor movements in Uganda. To take control of the labor movement,the government went about reorganizing the labor movement through the creation of the National organization of Trade Unions (NOTU) and closed the then African Labor College (today’s Law development Center) and ideological training center for labor leaders in East-Africa that had been founded under the guidance of the late Mboya of Kenya. The Common Man’s Charter of 1970 and the Nakivubo declaration was the climax of these processes.

Some of these developments also had their background in the internal struggles in power
corridors that ended with the overthrow of the Kabaka Mutesa from his ceremonial role.
The most powerful cooperative societies were in Buganda and the fear that they could
easily shift their allegiance to the Kabaka of Buganda if not controlled was a real fact of
power politics at the time. The post independence political crises of Uganda were in our view the climax of contradictions of land economics and national geopolitics created by the 1900 agreement. On top of weakening the traditional governance institutions, the 1900 agreement also created a new class of land lords particularly in Buganda, many of them colonial chiefs who now owned large chunks of land under the newly created Mailo land tenure. These Landlords of Buganda used the old tradition of Buganda Nationalism (the need to preserve the institution the Kabaka fulcrum of the Obuganda) against any perceived increasing power of central government. The silent motivation in this power games in Uganda, that never gets discussed publicly, is control of the main instrument of production namely Land ownership, something that any objective observer can see even today. The second center of power was the question “the northern military might” by a British colonial policy (military recruits must be 6ft plus). This is important because at that time, Obote was from northern Uganda and on coming to office, increased recruitment for the north. The northern soldiers were not Landlords and generally resented the land lord concept. It was these soldiers who were at the center of monitoring the referendum on lost counties, whose main loses were absentee landlords of Buganda. The 1966 crisis was the climax of these tensions between the Prime Minister (Dr. Obote) and President (Kabaka Mutesa) in which the prime minister deposed the president sending him into exile in the United Kingdom. The result was, for the next five years “the victorious” UPC government went about consolidating its power over control of cooperatives, industry, and labor as discussed above. The 1966 crisis and increasing overindulgence of government in control of means of production was to set in motion an unending national transition process into more poverty  over the coming years. The fundamentals of the resultant 1967 constitution were to the humbling of the royals and landlords of 1900 agreement. This constitution made it illegal for anyone to be called a King, Queen, Prince or Princess. The peasants had got it their way at least for the time being. This was not to be the end of the struggles for control of resources and means of production in Uganda as we shall soon see with the emergence of Gen Idi Amin in the next section. The result continuing to be the increasing poverty as the wars dismantled means or production and wealth creation for most affected families across the country.

The Field Marshal Idi Amin Dada and economic war of the 1970’s
General Idi Amin Dada assumed office of the president of Uganda through a military coup of January 1971. The team that took over together with Idi Amin composed of mainly semi-illiterates from north western Uganda, the last remnants of the Kings East African Rifles. Many had very limited or no experience at all on the management of public affairs. Besides they were uneducated and often very suspicious of educated people who managed the civil service and that they often referred to with a language of resentment as the “I know more”. No wander in the eight years he had in office, Amin implemented the consistent purging of any form of decent with so many middle class people (often main family bread earners) killed during his reign. This policy really destroyed the civil service and technical personnel which had been built in the first ten years of independence. Destroying the cream on human capital, the country was to have major negative impact in the economic development and increasing poverty as many of these people killed where the centre pieces of the extended family livelihood security. The new military leaders received a lot of local and international support mainly because he was seen as a liberator for the losses that Buganda had made in the 1966-67 crisis. Many landlords and royals who where bruised by the 1966 crisis saw an opportunity to regain lost glory in Amin. Amin’s accent to power was also supported by global superpowers that were not happy with Dr. Obote’s nationalization of industries and commerce in Uganda where many of their companies lost big business.
The new military leaders in Uganda soon faced a growing guerilla warfare launched in from Tanzania and at this point Amin’s true colors started showing as he worked to retain political power. After repulsing guerillas, Amin thought of a smart way to reward his soldiers and support base in Uganda against increasing opposition from Ugandan exiles and the emerging international isolation. In September 1972 in Mbale, he declared the infamous Economic War in which he sought to take nationalization of the economy beyond what Obote had attempted in 1969-70 move to the left. Amin announced to the world that he had had a vision from God to liberate Ugandan economy by expelling the non-citizen Asians from Uganda giving them only 90 days and 90 kilogrames of property to leave Uganda. The government created the Departed Asian Property Custodian Board to manage all property left behind by the departing Asians. All shops were allocated to soldiers and supporters of the Amin regime. One must know that this created a great popularity for Amin internally but this was to be short lived as the economy collapsed soon thereafter. Soldiers also took over local administration all over the country, even lower local government chiefs below the sub county had to undergo military drills to qualify for the jobs. Amin’s economic war policy totally devastated the economy by putting economic power into the hands of unskilled, unequipped people. The world reacted by slapping an economic embargo on Uganda. All exports dropped overnight and smuggling coffee to Kenya became the new booming business, inflation skyrocketed and the economy came down on its knees. Many people have viewed this reaction of Amin as the work of an erratic buffoon, we disagree with this position.

When looking at this rather chaotic situation, one should not forget to look at the fact that with the accent of Idi Amin to office, the once poor, powerless peasantry had suddenly taken over the state from the colonial collaborators (Colonial Chiefs, Asian and European traders and industrialists) whom they saw as looters of their wealth. We would argue that Amin’s Economic war was a crude version of affirmative action to address economic imbalances such as the Black Empowerment (BEE) Programme that African National Congress (ANC) was implementing in South Africa since coming to power with some remarkable results in creating a new Black middle class. Unfortunately for Uganda, Amin’s economic war was to crush our economy and contribute to increasing household poverty in the coming years. Amin saw Dr. Obote’s active presence in Tanzania and the intelligence reports of guerilla recruitment as the most important threat to his power base. To control this, he adopted a destroy the likely enemy supply route strategy and in so doing he killed the Langi and Acholi Middle class in large numbers, from Arch Bishop Jannan Lowum of the Anglican church to village chiefs and parish priests. This was another wave in which human capital in the middle north was seriously destroyed leaving many family livelihoods in tatters. Following this crush when Uganda should have been recovering from this unfortunate era, she went to war in 1979 in a bid to
overthrow Amin further dismembering the economy.

The Obote second term in office: Managing economic recovery in the midst of
internal (Luwero Triangle) civil war of the 1980 to 1985

In April 1979, Amin was defeated by a combination of Tanzanian Peoples Defence Forces
and Ugandan exiles. Uganda National Liberation Front/Army (UNLF/A) ,following a war he provoked with a military expedition into Tanzania and attempting to annex the “Kagera Salient”. The defeat of Idi Amin was followed by a period of instability with changes in government, (Prof Yusuf Lule 68 days only, Godfrey Lukongwa Binaisa 6 months only) finally the military commission headed by Paulo Muwanga took over and organized an election which was to be disputed leading to the Luwero triangle guerilla war led by Museveni formerly vice chairman of the military commission. After this election, Uganda to some extent stabilized as UPC tried to re organize the economy. It adopted a new 5 year development plan dubbed Rehabilitation and Recovery Programme which aimed at controlling inflation and rehabilitating the production sector through the resuscitating fledgling cooperative societies and Unions, the agricultural sector and all other social services. This stability however was short lived with the Luwero triangle war disrupting the efficiency and productivity of the economy and its people in the central region that had been the economic engine of Uganda for a long time. When General Tito Okello overthrew the UPC government in 1985 and was defeated by the NRM/A guerillas of Museveni, The war in Luwero Triangle and the six months military of Gen. Tito Okello dealt a crushing blow to the economy to the extent that by the time Museveni came to office in January 1986 the economy was back to the Amin days with the import export trade simply on halt. No doubt poverty continued to be the single most serious problem for the new young but inexperienced guerilla leaders.

The Yoweri Museveni economic liberalization policy and stopping the northern
military might agenda (1986 to date)

In 1986, Yoweri Museveni took over power with a team of young energetic ambitious
university graduates who had left college, joined the guerillas and found themselves
ministers within only five years. The new team, driven mainly by liberation war slogans
and ideals soon found them faced with tough economic policy decisions to make. To begin with, they attempted to introduce medieval times trade regimes such as batter trade into a modern international trade arena controlled by the WTO and the Brentton Woods institutions (the World Bank and International Monetary Fund). By the third year in office the realities of global geopolitics, international trade and finance had set up shop in Uganda with their true might. The revolutionaries stooped to accept the rules of these institutions to urgently liberalize and privatize the Uganda economy. This policy was exciting for the new team who also saw in privatization the opportunity to acquire personal wealth. This policy was also the fastest and most subtle way to defeat the Uganda People’s Congress party through closing the cooperative unions of the time and to defeat “Buganda Nationalism” without any gunshot, too main challenges that faced the new government. The new NRM government therefore went about adopting privatization at a crushing speed through:
• Closing the ministry of cooperatives, selling off all disposable property of the
cooperative Unions of Uganda without any due consultation with shareholders.
• Redistributing the governments ranches land to themselves, their close relations and
supporters through the newly formed “Ranchers Restructuring Board”
• Privatizing all government parastatals without any clear accountability of what was
then done to the money they accrued from sale of these state businesses.
• Adopting a new land policy that makes it very difficult for landlords to evict squatters,
weakening their ability to create investments using their land, yet at the same time
encouraging the commercialization of land ownership and agribusiness generally.
• Setting up the Uganda Investment Authority as a one stop investment center with the
express assignments to attract investments into the Uganda economy.
• Liberalizing the economy through the deregulation policy that made it easier for foreign
direct investments to flow in Uganda with very easy terms such as tax exemptions that
mainly favored foreign investors against local investors who never got any such tax
• And selling of the Uganda Commercial bank which had branches in all major districts
town of Uganda.
• Now the final move to privatize the National Social Security Fund (NSSF) which will
most likely make workers lose so much money.
• Major privatization of social services such as education, health, water and electricity
supplies which simply increased their costs to unacceptable levels for the average

The beneficiaries of these economic policies remain small but very powerful, the politically connected elite. Unfortunately they have not invested their ill gotten wealth into serious economic development options such as industrialization (e.g. food processing), each and every one of them is investing in little hotels with the millions of tourists to talk about and the service industry. The lack of investment in strategic industrialization has meant that the average peasant famer does not have any serious sure market to sell their produce. This was a very insensitive move by a team that had been supported to gain political power by the peasants that they now exposed to international market competition. But one that they could not easily control especially because they were all so new to international trade and economic development finance. These ambitious economic policies have resulted into increasing rural poverty in all parts of Uganda, because the cooperatives closure was a shock the average peasant was not prepared for and because it suddenly exposed the ordinary peasant to competition with other agricultural products from abroad and made farming such a non-profitable business. These policies have also increased massive rural urban migration. The result is that urban poverty is now emerging as the most serious post Museveni political economic crisis in the coming years. The ugly head of poverty is moved from the countryside to the once affluent urbanization full of hope in the first decade of our

The NRM government was also faced with a serious political crisis on coming to office
namely the need to defeat “the northern military might” that had been created by the
colonial policy. This policy, never discussed in public was implemented by the rapid, and
ruthless defeat of the retreating armies (UNLA) incorporating the young and ambitious and  crushing the old and ideologically unchangeable officers. It was also this policy that
explains the seemingly unending war in northern Uganda that took nearly a quarter of a
century. By the time this was ended the majority of the once proud Luo peoples of northern-Uganda had given in to voting Museveni. The glaring result of this war in northern Uganda is a lost generation washed in poverty, hopelessness, and bitterness.

Suggested policy options for poverty reduction and wealth creation for Uganda going forward.
1. Investment in human capital:
2. Investment in agricultural enterprise and agro-based industries:
3. Investment the strategic management of natural resources:
4. Investment in democratization and accountable governance:
5. Peace and National reconciliation process:

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