Change and continuity in the politics of government-business relations in Museveni’s Uganda

ABSTRACT

Since the 1990s, the National Resistance Movement (NRM) government has undertaken market-based reforms which have sought to reduce the economic role of the state while promoting the private sector to become the prime motor of development. The reforms have promised to transform relations between government and business. We argue, however, that the government has maintained much discretionary authority over the distribution of public resources affecting the fortunes of larger businesses. In particular, the political executive has continued to use state resources in favour of select foreign and Ugandan entrepreneurs, primarily for important political and economic reasons. Conversely, the executive has denied public resources to entrepreneurs deemed too close to political opponents as well as used preferential resource allocations to weaken collective action by organised business. Secondly, we consider the concerns being voiced over (a) growing foreign economic dominance, including the economic limitations of foreign investment, and (b) limited government assistance for developing local private enterprise. In response to these concerns, the government has recognised the need for greater state ownership and state interventions in the market, which, we conclude, will continue to maintain the patrimonial character of government-business relations.

KEYWORDS:

• Government-business relations
• patronage politics
• foreign business
• citizen business
• presidential interventions

Acknowledgements

We wish to thank Michaela Collard and Fred Golooba-Mutebi as well as two anonymous referees for many helpful comments on earlier versions of this paper.

Disclosure statement

No potential conflict of interest was reported by the authors.

Notes

1. See Jorgensen, Uganda, 248–252; and Bukenya and Hickey, “How Politics Shapes Uganda’s Transition,” 185–192.

2. Arriola, “Capital and Opposition in Africa,” 238.

3. See Kuteesa et al., Uganda’s Economic Reforms.

4. Arriola, Multiethnic Coalitions in Africa.

5. See Arriola, Multiethnic Coalitions in Africa; and Handley, Business and the State in Africa.

6. See Kragelund, “Bringing ‘Indigenous’ Ownership Back.”

7. See Grabowski, “Economic Growth.”

8. For Ugandan economic data, see the World Bank’s bi-annual Uganda Economic Update.

9. See Kjaer and Katusiimeh, “Growing but Not Transforming”; Bukenya and Hickey, “How Politics Shapes Uganda’s Transition”; Golooba-Mutebi, “Uganda”; and Golooba-Mutebi and Hickey, “The Master of Institutional Duplicity.”

10. See Golooba-Mutebi and Hickey, “The Master of Institutional Multiplicity”; Mwenda, “Personalising Power in Uganda”; and Tripp, Museveni’s Uganda.

11. See Tangri and Mwenda, Politics of Elite Corruption, 109–113.

12. See Robinson, “The Political Economy of Governance Reforms.”

13. See Andrew M. Mwenda, “Why Museveni Never Bailed Out Kiggundu, Katto, and Sembule,” Daily Monitor (Kampala), 10 October 2005.

14. See also Golooba-Mutebi and Hickey, “The Master of Institutional Duplicity.”

15. See Golooba-Mutebi, “Uganda”; and Tangri and Mwenda, Politics of Elite Corruption.

16. Quoted in Isaac Mufumba, “My Promises Dependant on Asian wealth – Museveni,” Daily Monitor, 28 June 1996.

17. Andrew M. Mwenda, “Museveni Hates Local Business,” The Independent (Kampala), 29 November 2008.

18. Ibid.

19. Tangri and Mwenda, Politics of Elite Corruption, 110–112, 115.

20. See the editorial, “Business incentives,” New Vision (Kampala), 17 February 2005.

21. Emmanuel Gyezaho, “State House Offers Karim $4 Million Bailout,” Daily Monitor, 23 March 2007.

22. Tangri and Mwenda, Politics of Elite Corruption, 110, 111, 115.

23. See Child, “Civil Society in Uganda.”

24. Interview with Sudhir Ruparelia, Kampala, January 2013.

25. Tangri and Mwenda, Politics of Elite Corruption, 117.

26. See Aminzade, Race, Nation, and Citizenship.

27. See Tangri and Mwenda, Politics of Elite Corruption, 26.

28. Quoted in Felix Osike and Mary Karugaba, “Revisit Bidco Deal,” New Vision, 15 March 2004.

29. Information based on interviews with finance ministry officials between 2008 and 2012.

30. Information based on conversations with Haggai Matsiko, senior journalist at The Independent, especially since 2013.

31. Conversations with Haggai Matsiko of The Independent.

32. See Africa Confidential (London). “Uganda/China. Loans for Oil,” 21 November 2014.

33. Interviews with U.S. diplomatic sources in Kampala in 2011 and 2016.

34. Andrew M. Mwenda, “Uganda’s $200Million Electricity Subsidy Gravy Train,” East African (Nairobi), 15 January 2012.

35. Edward Ssekika, “Who Gets More Benefits from Uganda-China Trade Dealings?” The Observer (Kampala), 6 July 2016.

36. Information based on interviews with committee members in 2001.

37. John Aglionby, “BAT Faces More Bribery Claims in Africa,” Financial Times (London), 7 December 2015; and Tangri and Mwenda, Politics of Elite Corruption. Chapter 7.

38. Bernard Busuulwa, “Trade Fraud Sucks the Lifeblood from Uganda’s Already Struggling Economy,” East African, 12 March 2019.

39. See Jeff Mbanga, “How MTN Uganda’s Offshore Stash Sent URA on the Hunt,” The Observer, 9 October 2015.

40. Information based on interviews with Godber Tumushabe, executive director of Advocates Coalition for Development and Environment (ACODE) in Kampala, November 2017.

41. Author’s recollections.

42. See Haggai Matsiko, “Unwanted Investors,” The Independent, 7 June 2013.

43. See, for instance, Milton Olupot, “Museveni Warns Economic Saboteurs,” New Vision, 1 May 2006.

44. Interview with Sikander Lalani, the chairman and managing director of Roofings in 2016.

45. Quoted in Charles Kazooba, “Roofings Ltd to Get Uganda Government Projects,” East African, 10 September 2016.

46. See East African Business Week (Kampala), “Uganda Plans Transforming Housing Agency,” 2 September 2016.

47. See Tangri and Mwenda, Politics of Elite Corruption, Chapter 5 for details.

48. Andrew M. Mwenda, “Why Museveni Helped Bassajjabalaba,” Daily Monitor, 3 October 2005.

49. Andrew M. Mwenda and Alex B. Atuhaire, “Museveni Gives Bassajjabalaba Another 13 Billion in Taxes,” Daily Monitor, 14 June 2006.

50. This section is based largely on discussions with finance ministry officials in 2011 and 2012.

51. Information based on conversations with Amos Nzeyi, chairman of Crown Beverages, in Kampala, over many years.

52. Information based on conversations with journalists at The Independent in recent years.

53. Jorgensen, Uganda.

54. See interview with executive director of Uganda Manufacturers Association in The Independent, 20 April 2017.

55. Quoted in New Vision, “Government Asked to Cut Spending,” 21 October 2011.

56. World Bank, Uganda Economic Update, 4, 7.

57. Bernard Busuulwa, “Uganda Roads Budget Growing but Local Contractors Feel Left Out,” East African, 28 September 2013.

58. This section is based mainly on discussions with senior finance ministry officials in 2016 and 2017.

59. See Andrew M. Mwenda, “Why Museveni Never Bailed Out Kiggundu, Katto, and Sembule,” Daily Monitor, 10 October 2005.

60. Ibid.

61. Andrew M. Mwenda, “An Inside Account of the War Between Museveni and Mbabazi,” The Independent, 6 December 2013.

62. See Haggai Matsiko, “Sudhir, BOU Fallout,” The Independent, 25 August 2017.

63. See Joseph Kato, “Local Manufacturers Ask Government to Explain Role of Foreign Investors,” Daily Monitor, 14 December 2016.

64. See interview with executive director of Uganda Manufacturers Association in The Independent, 20 April 2017.

65. Joseph Kato, “Local Manufacturers Ask Government to Explain Role of Foreign Investors,” Daily Monitor, 14 December 2016.

66. Quoted in Mark Muhumuza and Jonathan Adengo, “Does Uganda Need to Rethink the Liberalisation Policy?” Daily Monitor, 7 July 2015.

67. State House of Uganda, “State of the Nation Address June 4, 2015.”

68. Y.K. Museveni, “Strategic Guidelines and Directives for the Term 2016–2021”, paper delivered at the inaugural cabinet meeting 23 June 2016.

69. Ibid.

70. Statement from the Gender, Labour and Social Development Ministry on “NSSF” dated 27 February 2018.

71. Mark Muhumuza and Jonathan Adengo, “Is IMF in Uganda’s Economy a Friend or Just a Necessary Evil?” The Monitor, 25 January 2017.

72. See, for instance, The Independent, “Museveni Hopes to Seal SGR Plans at China-Africa Summit,” 31 August 2018.

73. Daily Monitor, “President Tells All Telecoms to List on Stock Exchange,” 10 April 2019.

74. Confidential interview, September 2018.

75. The Independent, “Museveni Warns Telecoms on Milking the Economy,” 24 January 2019.

76. Elias Biryabarema, “Uganda to Telecoms Firms: You Need to List to Get a Licence,” Reuters, 18 September 2018.

77. Daily Monitor, “Museveni Writes to Kagina Over Dott Services. ‘We Need to Create a Base for Our Children,’” 8 November 2017.

78. Phone interview with Dr Samuel Sejaaka, the outgoing chairman of UDB, October 2018.