By Katrina Manson in Kampala
Published: June 13 2011 23:06 | Last updated: June 13 2011 23:06
twin architects of Uganda’s quarter-century economic revival – Yoweri
Museveni, president, and Emmanuel Tumusiime-Mutebile, central bank
governor – are increasingly at loggerheads as erratic policy undermines
the discipline on which the country’s return from war and turmoil has
“There will be no inflation. Inflation is indiscipline,” Mr
Museveni declared in 1992 as Uganda embarked on two decades of growth
averaging 6.9 per cent a year. The country’s relative economic success
after years of conflict won it plaudits from donors and so much aid that
it sometimes struggled to spend the cash.
Yet today as inflation has
ramped up – Uganda has the highest rates in east Africa, with food crop
inflation reaching 44 per cent in the year to May – donors, economists
and the thousands of citizens protesting the cost of living wonder
whether discipline remains.
Mr Tumusiime-Mutebile is credited with
having persuaded Mr Museveni to abandon Marxism and its price and
currency controls, and in the process reduce annual inflation from 240
per cent to single-digits.
In a rare critique of the increasingly
autocratic president who took power in 1986, the central bank governor
told the Financial Times that, despite being “very courageous”, Mr
Museveni’s continued embrace of “elements of Marxism” was undermining
He cited several factors that were causing problems
between him and the former guerrilla leader, including a planned $2.2bn
hydropower plant, a policy to spur population growth, a swath of
questionable tax exemptions and woeful agricultural performance.
gave me some promises which he has not kept – like a way to redress the
reserves. I’m still fighting with him,” he said of the government’s
controversial decision to turn to the central bank to help finance $720m
for fighter jets. This sent reserves down from six months’ worth of
imports to four.
Donors including the World Bank, UK and Ireland have
reduced or withheld direct support, which makes up 26 per cent of this
year’s budget, down from a high of 50 per cent, and the Netherlands will
cut it altogether next year, citing a failure to fight corruption,
threats to fiscal credibility and a waning commitment to poverty
Despite a rapid drop in the poverty rate – from 56 per
cent in 1992 to 24.5 per cent today – there are more poor Ugandans now
than when Mr Museveni took power, because of policies aimed at
increasing the labour force and market.
“The extremely high
population...growth is one of the major things I oppose him about,” said
Mr Tumusiime-Mutebile, who was also dismayed by an unexplained collapse
in fuel reserves and a lack of progress in modernising agriculture.
“Our output is heaven-made, but it should be man-made,” he said.
is set to become a significant oil producer in the coming years but has
fallen foul of its one-time champion, the International Monetary Fund.
Mr Tumusiime-Mutebile found it “very, very humiliating” that it failed
an IMF programme review for the first time this year.
“They passed a
supplementary budget which was not consistent with the programme that we
had just agreed, right before the election,” Thomas Richardson, IMF
representative in Uganda, said of the last-minute $250m allotment, much
of it for the presidency, before February’s election returned Mr
Museveni to power with 68 per cent of the vote. European Union observers
noted widespread distribution of money and gifts by the ruling party
during the polls.
Despite his concerns, the central bank governor
said Mr Museveni had shown courage in choosing not to introduce export
controls, adding that there was “no alternative” to Mr Museveni in “this
Africa Great Lakes Democracy Watch
Welcome to Africa Great Lakes Democracy Watch Blog. Our objective is to promote the institutions of democracy,social justice,Human Rights,Peace, Freedom of Expression, and Respect to humanity in Rwanda,Uganda,DR Congo, Burundi,Sudan, Tanzania, Kenya,Ethiopia, and Somalia. We strongly believe that Africa will develop if only our presidents stop being rulers of men and become leaders of citizens. We support Breaking the Silence Campaign for DR Congo since we believe the democracy in Rwanda means peace in DRC. Follow this link to learn more about the origin of the war in both Rwanda and DR Congo:http://www.rwandadocumentsproject.net/gsdl/cgi-bin/library