* Nipissing University, North Bay, Ontario. The author thanks Vali Jamal for extensive editorial assistance on an earlier draft.

• 1. Introduction *

• 2. The economic recovery programme *

• 3. Agriculture under structural adjustment in Uganda *

• 4. Recommendations and conclusion *

• Bibliography *

• 1. Selected economic indicators, 1960-80
• 2. Selected economic indicators, 1980-84
• 3. Selected key economic indicators, 1987-96
• 4. Selected agricultural indicators, 1970-85
• 5. Yields of selected crops, 1991 v. potential (tons/ha)
• 6. Real prices of selected agricultural commodities, selected years between 1990 and 1997 (Ush per kg)
• 7. Selected agricultural indicators, 1990-96
• 8. Yields of selected crops, 1994 and 1997 v. potential yields (tons/ha)

A. 1960-70 and 1970-80	1960-70	1970-80
Real GDP growth (%)	5.2	-1.64
Inflation (%)	3.0	30.0
Budget deficit (million USh)	–	14.4
Growth in exports (%)	5.0	-8.5
Growth in imports (%)	6.2	-9.8
B. 1970 and 1980	1970	1980
Broad money supply (million USh)	16.7	185.0
Current account balance (million US$)	20.0	-18.0
External debt (million US$)	128.0	669.0
External debt servicing as a % of exports	3.4	11.9
Gross international reserves (million US$)	57.0	17.0
Real producer price of coffee (1972=100)	97.0	48.0
Nominal exchange rate (USh per US$1)	0.0714	0.0757
Sources: World Bank: World Development Report, 1982; World Bank: World Tables, 1993; IMF: International Financial Statistics, 1993; Loxley, 1989.

	1980	1981	1982	1983	1984
Real GDP growth (%)	-3.4	3.9	7.4	5.4	-3.6
Inflation (%)	–	111.1	47.0	25.0	42.9
Growth in broad money supply (%)	34.6	87.3	11.43	41.3	113.7
Budget deficit (million USh)	26.9	75.1	69.1	36.2	79.2
Current account balance (million US$)	-83.2	31.9	-15.9	10.3	-10.0
Exports (million US$)	330.7	274.4	382.1	384.4	406.0
Imports (million US$)	449.8	391.9	524.3	543.3	517.0
Total external debt (million US$)	695.4	728.9	892.5	1 011.6	1 065.0
Debt servicing as a % of exports	13.0	39.8	37.1	23.7	40.6
Coffee producer price (USh per kilo)	–	35.0	50.0	70.8	130.8
Coffee exports (‘000 tons)	110.1	128.3	174.7	144.3	133.2
Cotton exports (‘000 tons)	2.3	1.2	1.8	7.0	6.7
Index of food production per capita (1987=100)	105.2	109.9	114.4	116.4	105.2
Sources: World Bank: World Tables, 1993; World Bank: Uganda: Agriculture, 1993; IMF: International Financial Statistics Yearbook, 1993; Loxley,1989.

Despite its apparent success the programme collapsed in mid-1984 as a result of inherent weaknesses, plunging the economy into crisis again. First, the foreign exchange auction was dominated by large traders who had access to bank credits for local cover. Second, importers took advantage of the depreciation of the Ugandan shilling by making huge profits on the lag between paying for imports and selling them on the local market at higher prices. Third, the programme had an adverse impact on the living standards of the urban working class, since wages were not adjusted upward. The growing dissatisfaction over eroding living standards forced the government to introduce a sixfold salary increase in 1984 on top of a major increase in producer prices of export crops. The fiscal deficit ballooned to 119 per cent of GDP and the broad money supply to 113 per cent (table 2). Such increases constituted violations of the conditionality of the programme and, coupled with a mismanagement in the auction system, caused the IMF to cancel the programme.

Fourth, there were some inconsistencies in the programme. The high rate of depreciation of the Ugandan shilling and the tight domestic credit ceilings resulted in many factories being denied the local cover to finance imports. Fifth, import rationing for key sectors of the economy was abolished, leading to a surge in the imports of luxury goods and goods which could have been produced locally at a time when the capacity utilization of local industries averaged under 20 per cent (IDRC, 1986; Loxley, 1989). The general observation was that whereas local industries were being deprived of imported raw materials, spare parts and machinery, merchants were profiting from imports of consumer goods and exporting their capital gains. Sixth, hardly any measures were taken to reform the food crops sector. The index of food production per capita which had improved from 105.2 in 1980 to 116.4 in 1983, fell back to its 1980 level in 1984 (see table 2). Seventh, the programme relied heavily on expensive short-term IMF credits, resulting in total external debt increasing from US$695.4 million in 1980 to US$1.065 billion in 1984, pushing up debt servicing as a percentage of exports to 40.6 per cent in 1984 from 13 per cent in 1980 (table 2). Eighth, Uganda lacked the technocrats, managers and skilled personnel to run the programme. The economic crisis, together with a strong political opposition, led to the removal of the second Obote Government in a military coup in 1984. The military coup led to further repression and economic chaos.

1.3. NRM economic policy pre-ERP

Eighteen months after the collapse of the IMF programme and the subsequent military coup, the National Resistance Army (NRA), which had been involved in a civil war, took over control of the Ugandan capital, and its political wing, the National Resistance Movement (NRM) established a government over a platform of national unity and broad-based economic reform (National Resistance Movement, 1985). The magnitude of the economic problem facing the NRM was staggering. Production was low, the transportation system was in disarray, the social infrastructure had collapsed, inflation was over 150 per cent, foreign exchange was limited, the budget was out of control, corruption and black marketeering were widespread, and skilled personnel had migrated. The immediate task was to establish short-term objectives, as a prelude to more long-term measures. These interim measures were prepared in mid-1986 with the help of personnel from the two main political parties, the Democratic Party (DP) and the Uganda People’s Congress (UPC). These included a dual exchange rate, with its official rate at USh1,400 to US$1 and a market rate at USh5,000; significant increases in producer prices and interest rates; privatization of some parastatals; and the curtailing of government spending. Such measures fell short of policies needed to achieve long-term goals. There were no measures to increase revenue, address foreign exchange needs, or rehabilitate the infrastructure. Neither were there measures to redress the decline in the major sectors or the high rate of inflation. The interim measures in fact destabilized the budget. First, the increase in the producer price of coffee, from USh470 per kilo in December 1985 to USh850 in May 1986 (World Bank, 1993A, page 175) increased the expenditure side of the budget without a corresponding increase on the revenue side. Second, the conversion of proceeds from exports at the overvalued official exchange rate reduced the revenue side of the budget.

The NRM Government, sensing the need for new initiatives, invited a joint international/Uganda team of experts, under the sponsorship of the International Development and Research Centre (IDRC) in Canada, to recommend the best course of action. Differences emerged. NRM policy-makers saw infrastructure-induced bottlenecks and lack of incentive goods as the major obstacles to economic recovery. They opposed devaluation on the grounds that it would trigger a devaluation-price increases-devaluation spiral and hinder recovery by raising the cost of imported inputs. These arguments prevailed and found expression in the unification of the exchange rate at the lower level of USh1,400 in spite of massive inflation. A majority of the team of experts opposed this remedy. The consequences of the course followed were economically devastating. The budget remained in serious deficit, export duties eroded, producer prices and export revenue fell in real terms, the balance of payments worsened, reserves were depleted and arrears accumulated. Underground market activities flourished, inflation rose to over 200 per cent, and the underground exchange rate rocketed to several times the official rate (Loxley, 1989).

The NRM Government turned to the IMF and the World Bank in early 1987 for financial assistance. Critics questioned this, arguing that the attaching conditionalities would undermine the NRM’s long-term economic strategy. However, the contextual situation afforded no viable alternatives. Foreign exchange was indeed the main constraint facing the government and this was not going to be forthcoming from bilateral donors without the approval of the multilateral financial institutions. Borrowing from the world financial market was precluded by Uganda’s creditworthiness.

	1987	1988	1989	1990	1991	1992	1993	1994	1995	1996
Growth indicators (% p.a.)
GDP	6.7	7.0	6.3	5.5	5.1	4.5	6.3	10.0	8.4	5.0
Per capita GDP	3.8	4.1	3.4	2.6	2.2	0.9	3.0	6.8	5.2	2.1
Agriculture	4.7	5.4	6.3	5.4	2.8	4.7	9.5	7.8	3.8	1.2
Industry	13.3	18.8	4.1	6.6	10.1	11.2	7.5	12.9	11.5	12.5
Services	3.8	7.2	6.6	6.7	7.8	7.9	7.7	6.9	5.9	3.1
Monetary policy indicators
Broad money supply (bil. USh)	8.6	26.8	60.2	94.4	138.6	222.3	301.8	402.6	504.4	609.0
Growth in money supply (%)		212.0	125.0	57.0	47.0	60.0	36.0	33.0	25.0	21.0
Inflation (%)	199.8	196.3	61.4	33.2	27.7	54.5	5.1	10.0	6.6	7.1
Lending rate (Agric.) (%)	22-25	32-35	25-40	36.0	35.0	37.3	24.6	19.8	19.5	20.8
Lending rate (Commerce) (%)	30.0	40.0	50.0	45.0	40.0	44.0	27.0	21.0	20.0	21.0
Public finance
Total revenue (mil. USh)	5 811	22 548	47 854	94 525	136 808	185 995	281 428	363 881	531 194	622 790
Total expenditure (mil. USh)	11 042	44 300	91 596	174 928	269 168	581 495	718 342	816 772	916 624	1 060 685
Overall deficit (mil. USh)	5 231	21 752	43 742	80 403	132 360	395 500	436 914	452 891	385 430	437 895
Deficit as a % of GDP (%)	4.1	5.5	4.9	5.8	7.2	14.2	11.1	10.2	8.1	7.9
Investment
Fixed private (mil. USh)	8 434	25 530	71 303	108 637	162 013	230 002	252 299	250 008	na	na
Fixed public (mil. Ush)	3 107	14 700	23 526	57 474	105 064	195 983	296 467	320 354	na	na
Gross domestic (mil. USh)	11 540	40 230	94 829	166 111	267 077	425 985	548 766	570 362	na	na
Gross domestic (% of GDP) (%)	9.1	10.2	10.5	12.0	14.5	15.3	13.9	12.8	na	na
External trade
Exports (mil. US$)	406	324	304	246	200	172.1	169.2	253.9	577.3	555.3
Imports (mil. US$)	600	682	712	676	658	450.6	522.4	671.9	1 085.5	1 179.8
Trade balance (mil. US$)	-194	-378	-408	-430	-458	-278.5	-353.1	-418.0	-508.2	-624.5
Current a/c bal. (mil. US$)	-101	-203	-230	-276	-239	-131.6	-141.7	-88.9	-164.3	-114.0
Terms of trade (1991=100)	144.1	144.1	152.4	116.9	104.2	93.8	93.3	84.3	na	na
External debt
Total ext. Debt (mil. US$)	1 916	1 946	2 231	2 638	2 832	2 647.5	2 637.2	2 999.3	3 387.1	3 443.3
Debt servicing as a % of exports (%)	43.8	64.0	67.7	63.6	69.5	53.0	121.3	66.0	27.2	18.7
Exchange rate (USh/US$)	164	414	569	698	935	1 237	1 217	1 004	977.5	1054.3
Sources: World Bank: World Debt Tables, 1994-95; World Bank: World Tables, 1993; World Bank: Uganda: Agriculture, 1993; World Bank: Challenge of Growth and Poverty Reduction, 1996; IMF: International Financial Statistics Yearbook, 1998; Statistics Department, Ministry of Finance and Economic Planning: Key Economic Indicators, 1996; Ministry of Planning and Economic Development: Background to the Budget, 1997-98.

2.2.5. Poverty and income distribution

An analysis of two household surveys, 1989-90 and 1992-93, did not reveal any changes in absolute poverty between 1989 and 1993 (World Bank, 1996, page 88). Small changes were, however, observed in relative poverty. Using a poverty line at two-thirds of the mean household consumption expenditure (USh5,008 per month in 1989-90, equivalent to US$8; and USh36,000 per month in 1992-93, equivalent to US$29) (World Bank, 1993b, page xii), 39 per cent of the population were defined as poor in 1989-90 and 44 per cent in 1992-93 (World Bank, 1996, page 88).  However, when data from seven districts which were not surveyed in 1989-90 were included in the 1992-93 survey, 40 per cent of the population were counted as poor in 1992-93. Hence, virtually no change was recorded in absolute poverty. At the poverty line of one-third of the mean household consumption expenditure per month (USh2,504 per month in 1989-90, equivalent to US$4; and USh18,000 in 1992-93, equivalent to US$14.5), hard core poverty declined from 11.6 per cent in 1989-90 to 9.4 per cent in 1992-93. The national poverty gap – i.e. the sum of the differences between the expenditures of households below the poverty line and the poverty line – remained the same using two-thirds of the mean household consumption expenditure, but declined when one-third of the mean household consumption expenditure was used (World Bank, 1996, page 89). Regarding income distribution, estimates of the Gini coefficient indicated that inequality rose slightly between 1989-90 and 1992-93 – from 0.38 to 0.41, mostly because of urban areas, where the Gini coefficient increased from 0.37 to 0.44; in the rural areas the Gini declined from 0.36 to 0.35 (World Bank, 1996, page 89).

2.3. Uniqueness of the Uganda programme

Though very similar in many respects to various IMF/World Bank structural adjustment programmes, Uganda’s programme has some superior features, which contributed to the positive changes described above. First, the Government built an initial consensus for the programme by organizing a national forum of all stakeholders – trade unions, commercial farmers, manufacturers, importers and exporters, intellectuals, and parliamentarians. Annual negotiations on the budget and economic policies furthered the consensus.

Second, the terms of the initial financial assistance were much softer than elsewhere. The loans were long term, repayable between five to ten years, and the interest rate was only one-half per cent (Loxley, 1989). Most of the balance-of-payments support was on concessional terms. Furthermore, the Government had a strategy for debt relief which reduced the debt burden. The granting of debt relief to Uganda under the Heavily Indebted Poor Countries (HIPC) initiative also helped to reduce the debt burden.

Third, in its quest to revitalize the industrial base and rehabilitate the economic, social and institutional infrastructure, the Government took steps to ensure the allocation of foreign exchange according to need. Enterprises that produced consumer goods and construction were preferred. A foreign-financed revolving credit fund was established to provide local cover to ensure credit for industries. The Government increased its fixed investment expenditures to rehabilitate rural infrastructure, roads, health services, and education.

Fourth, measures were taken to improve tax administration and collection. The tax base was widened to enhance tax revenue. Subsidies to inefficient parastatals were cut drastically and unproductive appointments in the civil service reduced, with a gain in terms of higher salaries for the remaining employees. Financement of expenditures with domestic revenue and foreign aid, rather than domestic borrowing, kept inflation under control.

Fifth, the introduction or retention of subsidies on school fees, the reduction in the rates of sales tax, excise tax, and custom duty on a wide range of necessities, and the abolition of taxes on intermediate and capital goods, contributed to the rehabilitation of the economic and social infrastructure.

Sixth, and most importantly, the Government recognized the need to incorporate agricultural development and poverty eradication in the objectives of the Economic Recovery Programme. This said, much still remains to be done in these areas to translate the positive gains of the ERP into an improvement in the standard of living of the average Ugandan. The remaining sections of the paper are devoted to this question.

3. Agriculture under structural
adjustment in Uganda

With the agricultural sector contributing over 50 per cent to the GDP and providing a source of income for over three-quarters of the population, sustainable agricultural development is imperative in Uganda’s quest for economic development. Furthermore, with a majority of the poor residing in rural areas and depending on the agricultural sector for their livelihood, a comprehensive agricultural strategy is called for to address the problem of food security and poverty alleviation. This section evaluates the impact of the agricultural reforms under the ERP on the agricultural sector. It looks at the structure of agriculture in Uganda, the various policy measures introduced under the ERP and the impact on agricultural performance.

3.1. Agriculture in Uganda

The agricultural sector plays a pivotal role in Uganda’s economy, accounting for 50 per cent of the GDP, over 90 per cent of exports, and 80 per cent of employment (World Bank, 1993A, page 1). The sector also provides the foundation for a number of agro-based industries. The fact that three-fifths of the poor in Uganda still reside in the rural areas (World Bank, 1993B, page 6) provides the rationale for an agriculture-centred development strategy for Uganda.

3.1.1. Structure of agriculture

Five main subsectors can be identified: food crops, cash crops, fishing, livestock and forestry. The food crops subsector basically carries the agricultural sector contributing 71 per cent of the agricultural GDP. The rest of the subsectors contribute as follows: livestock 17 per cent; cash crops (exports) 5 per cent; fisheries 4 per cent; and forestry 3 per cent (MAAIF, 1998, page 3). Total cultivable land amounts to 16.7 million hectares, of which 32 per cent is actually cultivated (MAAIF, 1998, page 7), one-third of it under perennial crops and the rest under annuals. Among the perennials, bananas dominate, followed by coffee, sugar cane and tea. Food crops (cereals, root crops, pulses, and oilseed) also dominate the annuals, followed by cotton and tobacco. Agricultural output comes almost exclusively from smallholders, most (80 per cent) with less than 2 hectares of land (World Bank, 1993A, page 1).

• Five distinct farming systems/areas exist defined by the rainfall pattern and soil characteristics (World Bank, 1993A, page 13):

Primary agricultural commodities, mainly coffee, cotton and tea are the traditional export crops accounting for three-quarters of total exports. Non-traditional exports (15 per cent of the total) include cereals, fish, hides/skins, cut flowers, fruits, and vegetables; non-factor services account for the remaining 10 per cent.

3.1.2. Agriculture before ERP

Various structural constraints hampered agriculture before the ERP: low productivity; inadequate transportation infrastructure and shortage of vehicles; lack of agricultural research and inefficient extension services; lack of credit; non-incentive pricing policies; inefficient markets for capital and agricultural inputs; shortages of foreign exchange for the importation of agricultural inputs; government monopoly over food and export markets. Annual agricultural growth averaged 1.2 per cent between 1965 and 1980 and 2.3 per cent between 1980 and 1985 (table 4).

Growth rates (%)				1980-85
Agriculture				[1.2 (1965-80)]
				2.28
Food crops				2.74
Cash crops				12.77
Livestock				1.77
Fishing				5.00
Forestry				-1.02
	1970	1975	1980	1985
Share of agriculture in GDP (%)	49	67	70	61
Share of agriculture in exports (%)	74	92	99	98
Area planted to food crops (‘000 hec.)	3 805	4 460	2 946	3 357
Food production (‘000 tons)	14 076	16 294	10 490	12 643
Output (‘000 tons) Food per capita (kg)	1 439	1 466	830	884
Coffee	191.2	176.6	110.1	151.5
Cotton	78.1	25.6	2.3	9.6
Tea	15.0	17.1	0.5	1.2
Beans	388.0	326.0	133.0	267.0
Groundnuts	244.0	194.0	70.0	93.0
Soya beans	5.0	4.0	3.0	8.0
Sesame	–	–	20.0	33.0
Maize	389.0	570.0	286.0	354.0
Millet	783.0	682.0	459.0	480.0
Sorghum	462.0	467.0	299.0	310.0
Sources: World Bank: Uganda: Agriculture, 1993; World Bank: Uganda: Growing out of poverty, 1993; World Bank: Uganda: The challenge of growth and poverty reduction, 1996; Ministry of Planning and Economic Development: Background on the Budget 1997-98, 1997; Ministry of Planning and Economic Development: Economics of Crop and Livestock Production, 1997; Ministry of Finance and Economic Planning: Key Economic Indicators, 1996; Rhonda PAGEB, Tumusiime: The impact of agricultural parastatal reform on agricultural development and food security in Uganda, 1998.

Growth between 1980 and 1985 was spearheaded by cash crops, with 12.77 per cent, compared to 2.74 per cent for food crops, 5 per cent for fishing, 1.77 for livestock, and -1.02 for forestry (see table 4). Even though food crop production improved between 1980 and 1985, the output in 1985 was lower than in 1975. Food production declined from over 16.3 million tons in 1975 to 12.6 million tons in 1985, representing a drop in per capita terms from 1,466 kg to 884. A decrease in the total area planted to food crops (from 446 million hectares in 1975 to 336 million in 1985), resulted in an across-the-board reduction in pulses/oil crops and cereal outputs, and to the overall decline in food production. The 2.28 per cent growth in agricultural output between 1980 and 1985 could not match the population growth of 2.6 per cent. Shortfalls in food requirements were met through imports.

Coffee, the main export, contributed 50-95 per cent of export revenue prior to the ERP. Production of coffee is based mainly on family labour and a simple manufacturing process. Two other important export crops are tea and cotton. Tea is grown mostly on large estates because of its more rigorous processing requirements. Cotton is an annual crop and as such competes with most food crops. It requires capital-intensive ginning and marketing but processing constraints are minimal and cultivation can take place on a smallholder basis. Production of all three export crops declined between 1970 and 1985 (table 4).

Before the ERP, marketing of the traditional export crops was under the complete control of parastatals – Coffee Marketing Board for coffee, Lint Marketing Board (LMB) for cotton and Uganda Tea Authority (UTA) for tea. Producer prices for these traditional exports were determined by the Government and almost all exports were sold after minimal processing. The marketing and pricing of major food crops was under the control of the Produce Marketing Board (PMB). However, the controls were generally ineffective because the prices did not even cover production costs, forcing the farmers to sell outside the formal channels. When competitive prices could not be obtained in the informal channels farmers simply diversified into commodities that were more competitive. Government agencies had a virtual monopoly on the marketing of agricultural inputs. They provided different levels of price subsidies for inputs based on the exchange rate margins between the official and underground market rates.

Crop yields were low – for example, in 1991 coffee was at 0.6 tons per hectare compared to a potential of 1.5 tons; maize, 1.5 tons compared to 2.0 tons; cassava, 9 tons compared to 12 tons; sweet potatoes, 5 tons compared to 20 tons (table 5). The low yields were mainly due to the lack of modernization of production techniques and an inefficient extension service unable to educate farmers on even those techniques which were known. Lack of credit for the purchase of modern implements by farmers and the lack of foreign exchange curtailed the importation of modern implements contributing to the stagnation in production techniques and productivity.

Crop	Yield in 1991	Potential yield
Coffee (robusta)	0.6	1.5
Cotton	0.3	0.8
Maize	1.5	2.0
Beans	0.8	1.2
Groundnuts	0.8	2.0
Cassava	9.0	12.0
Sweet potatoes	5.0	20.0
Simsim	0.4	0.8
Source: World Bank: Growing out of poverty, 1993, p. 70.

3.2. Agricultural policies under the ERP

An essential part of the ERP was the implementation of agricultural reforms to reverse the negative trends in agricultural production. The process and procedures for the agricultural reforms were associated with the Agricultural Sector Policy Agenda which was implemented in 1991. The agenda had six major objectives for the agricultural sector: intensifying agricultural production and processing; increasing agricultural producer prices; restructuring the finance of production cooperatives; liberalizing agricultural trade; reorganizing agricultural marketing institutions; and improving agricultural research and advisory services. The agenda was implemented by the Agricultural Policy Committee (APC) with financial support from the International Development Agency (IDA) and technical support from the Agricultural Secretariat, IDA missions, and Working Group Task Forces assigned to address specific issues. Increases in agricultural prices were a significant part of the ERP. These increases are shown in table 6. For example, between 1990 and 1993 the real price of robusta coffee was increased from USh90 per kg to USh196; arabica coffee from USh263 to USh504 and maize from USh23 to USh126. Reforms aimed at specific subsectors are discussed below. Such reforms were carried out in the context of improving infrastructure and liberalization of exchange markets.

	1990	1992	1994	1997
Maize	23	48	58	126
Beans	75	80	182	224
Groundnuts	188	179	255	280
Soyabeans	90	60	91	98
Matoke (USh/bunch)	413	410	910	644
Cassava	23	14	36	84
Sweet potatoes	22	16	44	112
Coffee (R)	90	84	109	196
Coffee (A)	263	187	218	504
Cotton (AR)	165	135	91	90
Tea (GL)	26	24	36	34
Note: Deflated with CPI September 1989 = 100. Sources: Ministry of Planning and Economic Development, Agricultural Policy Secretariat: Economics of Crop and Livestock Production, 1997; and Agricultural Policy Committee Report, Kampala, 1997, p. 37.

	1990	1991	1992	1993	1994	1995	1996
Growth in the agricultural sector (%)	2.92	2.40	2.80	4.90	6.40	3.60	0.70
Share of agriculture in GDP (%)	54.3	52.0	54.0	48.8	52.5	48.0	45.0
Share of agriculture in exports (%)	91.0	82.0	56.0	75.0	89.0	81.0	80.0
Percentage growth of agricultural components (monetary) (%)
Food crops	2.46	1.04	4.25	6.65	8.15	4.05	-4.0
Cash crops	-4.15	25.01	0.90	0.50	17.10	17.10	28.2
Livestock	3.86	3.77	1.98	3.89	2.57	2.41	6.34
Fishing	14.84	3.99	3.90	4.20	-3.20	6.30	4.80
Forestry	3.97	3.98	4.60	4.65	4.65	4.45	4.45
Area planted to food crops (‘000 ha)	4 271	4 421	4 554	4 668	4 819	4 879	4 950
Food production (‘000 tons)	15 517	14 968	15 357	16 304	13 452	16 697	15 409
Per capita (kg)	959	901	898	930	749	907	817
Sources: World Bank: Uganda: Agriculture, 1993; World Bank: Uganda: Growing out of poverty, 1993; World Bank: Uganda: The challenge of growth and poverty reduction, 1996; Ministry of Planning and Economic Development: Background on the Budget 1997-98, 1997; Ministry of Planning and Economic Development: Economics of Crop and Livestock Production, 1997; Ministry of Finance and Economic Planning: Key Economic Indicators, 1996.

4. Recommendations and conclusion

4.1. Recommendations

Current economic indicators in Uganda clearly show some positive gains from the ERP. However, a lot has to be done to strengthen the productive base of the economy and ensure the sustainability of the gains from the ERP. With agriculture still being the mainstay of the economy, any policy to strengthen the productive base of the economy should focus on a comprehensive agricultural policy and its linkage to an agro-based industrial sector. Typical of the World Bank’s Structural Adjustment Programmes, much of the reforms in the agricultural sector were geared towards the tradable agricultural commodities subsector with major emphasis on institutional restructuring and the reorganization of market structures through liberalization. Very little attention was given to productivity improvement. The liberalization efforts led to significant increases in product prices as an incentive to increased agricultural production. However, price incentive is only one of many essentials to improve agricultural productivity. The latter requires a holistic package, including a reform of land tenure and land policy to ensure that farmers have access to land, that the land is protected, and that farmers are not forced out of their land. An increase of the cropped area by the promotion of labour-saving technology, such as ox ploughs and small tractors, should also be a part of such a package. Increasing productivity will require the adoption of high-yielding, disease- and drought-resistant varieties. A prior requirement will be agricultural research into such varieties and their applicability by extension services. Availability of credit to farmers will be an important part of the package. The subsidy removal and price liberalization policies under the ERP resulted in price increases in many agricultural inputs beyond the reach of farmers preventing them from adopting high-yielding technologies. Credit could be tied to the adoption of the technological package and offered in the form of inputs and equipment.

For the livestock subsector, the general recommendations for agriculture as a whole apply, but with efficient pasture management and disease control receiving the pride of place – as livestock–specific recommendations. Involvement of the private sector in dairy and meat processing could ensure incentive prices for the livestock farmers. Finally, the fishing subsector could benefit from more cold storage and processing facilities.

For the traditional exports subsector, the following specific recommendations arise: replacing ageing coffee trees with new high-yielding and disease-resistant varieties; improving seed production and distribution for the cotton industry; encouraging private sector involvement in coffee processing and cotton ginning.

A key parameter for increased agricultural production in all the subsectors will be improvement in the marketing infrastructure. This would require: repairing and maintaining the existing feeder road network; rehabilitating physical structures to guard against weather conditions during storage; making marketing credit available to intermediaries to sustain competitive prices to the farmers and encouraging private sector involvement in the provision of appropriate storage facilities to minimize and/or eliminate post-harvest losses and quality deterioration; encouraging private sector involvement in agro-processing facilities to extend the shelf life of perishable agricultural commodities; establishing commodity exchange markets to help farmers sell their goods in advance to be delivered at some future periods, and guaranteeing farmers a ready market at a specified price; developing internal price stablization policies for farmers; and enhancing the role of women in the production and marketing of food crops.

For commodities that have regional but no world market prospects like maize, beans and dairy products, the Government should pursue bilateral regional trade agreements within the East African Common Market (EACM), the Preferential Trade Area (PTA) and the Common Market for Eastern and Southern Africa (COMESA). Much potential remains for spices, cashew nuts, pineapples, fish and livestock products as a way of reducing the dependence on traditional exports.

The Government should also provide institutional support for organizations or associations that provide information and statistics that are important for the development of an efficient production and marketing system.

4.2. Conclusion

Given the severity of the economic and social problems facing the NRM Government, no choice remained to it but to launch the ERP as a prerequisite for obtaining financial support from multilateral and bilateral donors. The implementation of the ERP saw a major turnaround in the economy. Positive economic growth has been recorded, inflation has been tamed, the fiscal deficit has been reduced as a result of high tax revenues and rationalization of development expenditures, and current account deficits have declined along with improvements in the overall balance of payments and international reserves. However, gains have yet to percolate down to the average person. With agriculture still the dominant sector in the economy, sustainability of the initial improvements should be closely tied with and dependent on agricultural growth. Most smallholders have not benefited from the ERP in the short term. Devaluations and liberalization of the foreign exchange markets have turned the terms of trade against food crops drastically increasing the cost of inputs and labour without much institutional support for credit. On the positive side, however, liberalization has improved the availability of inputs. The need for a more comprehensive policy that places equal emphasis on both the tradables and food crops, and provides strong linkages between agriculture and agro industries cannot be overemphasized. An agricultural programme that addresses the structural constraints in the agricultural sector will certainly provide a strong base for long-term economic growth and prosperity.

Bibliography

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