UGANDAN OPENING NATIONAL SAPRI FORUM
18-19 June 1998
Civil Society Perspectives on Structural Adjustment Policies
The first Ugandan National SAPRI Forum was held on 18-19 June in Kampala. A broad-based steering committee of the local civil-society network, SAPRIN, coordinated by the lead organization in Uganda, Action for Development (ACFODE), organized the Forum. Well over 100 people participated throughout the event, including representatives of civil society, NGOs, workers' organizations, religious organizations, academia, the media, various government bodies and the World Bank, as well as Local Council officials and a fair number of parliamentarians. The Forum was officially opened by the Minister of Finance, standing in for the President.
The Forum was preceded by an extensive district-outreach exercise covering 19 of Uganda's 45 districts. The outreach exercise involved open fora involving civil-society organizations, ordinary people and government at the local level. These were, in essence, hearings' on citizens' perceptions of government policy, in general, and SAPs, in particular. In addition, three consultants were commissioned to review documents at the World Bank as part of the information-access process, and another consultant was commissioned to undertake a review of literature dealing with SAPs in Uganda. An outreach report was prepared and presented at the Forum, as was the literature review.
After Opening Statements, three issues were discussed at the SAPRI Forum over the next couple of days. They included Privatization, Public Expenditure and Social Services, and the Liberalization of Trade and Prices. The major points raised by civil-society representatives regarding the impact of these policy measures and the changes in policy that should be made follow below.
I. Privatization and its Impact on Workers and Vulnerable Groups
According to civil-society participants, the privatization process in Uganda has benefitted the government and corporate interests more than the Ugandan people. The process had provided the government with revenue it needed to help ease the fiscal burden, while its search for private investment capital had further enriched a few transnational corporations and other large companies and, it was argued, disregarded the value of employment and the rights of citizens. Privatization was expected to increase the level of efficiency, but there is no evidence, nor agreement, that this has been achieved. With a growing danger of monopoly and bankruptcy, privatization is seen by many in Uganda as "legalized robbery" that runs the risk of precipitating major problems down the road.
The privatization process was rushed and, as a result, workers suffered. Some 350,000 people were retrenched and, with the private sector not expanding fast enough, unemployment sharply increased. Those laid off were not prepared for life in the private sector, with no training being provided. Some did not even receive severance packages, and all the packages were too small, according to participants. One result has been an increase in informal-sector activity. Meanwhile, among the employed, expatriates have received the higher-level jobs, leaving Ugandans with the low-level posts.
Civil-society representatives complained that the new owners of the privatized enterprises underpaid their employees, offered no job security, and did not follow labor regulations. These participants pointed out that employers have defied the constitution by not recognizing trade unions and that any worker seen organizing a union is fired. With the Ministry of Labor reduced to the status of a department, officials have been unable to do very much, and the laws that protect the rights of workers are weak or non-existent.
As public divestiture of enterprises is a political activity, there have been expectations that it would be conducted transparently. This, however, has not been the case, it was contended, and the contraction of the state through the privatization process has been met with public demonstrations. This contraction has been quite apparent in the area of service delivery and availability, as the privatization of education, it was argued, has led to the exclusion of the poor and there has also been a reduction in rural access to banking, health and other services.
Hence, citizen recommendations started with a proposal that there be more information (on labor and other matters) and transparency throughout the privatization process and that the government give a public accounting of how much money is raised from selling off public enterprises and what happens to the funds. Other suggestions included a better screening of prospective investments and investors, positive employment conditionality attached to adjustment loans, and a gender-differentiated analysis of the effects of privatization.
II. Public Expenditure and its Impact on Social Service Delivery
The central question raised in this area was whether public-expenditure control under adjustment has hurt or enhanced social-service delivery. A number of concerns were expressed. It was pointed out, for example, that, because of the absence of a living wage, freezes on salaries and wages and job insecurity, low morale exists among civil servants. The nature of the retrenchment process has not only been demoralizing but also contrary to the government's stated commitment to poverty reduction, according to a participant. Meanwhile, those still working now devote more time to second jobs that are needed to survive.
Current budget ceilings also constrain the ability to respond to the need to improve poor quality services. There has been foot dragging with regard to the decentralization of the development budget, it was pointed out, with only 20 percent of the recurrent budget decentralized. There is an insufficiency of revenue and other resources at the district level and a need for closer supervision at the sub-district level, as the get-rich-quick culture has negatively affected service delivery.
A major problem area has been cost-sharing, according to civil-society participants. It has made hospitals and institutes of higher education too costly for the poor. People testified that those who cannot pay for critical health care simply die. Cost-sharing is also poorly administrated in the hospitals, and it was pointed out that, in areas where people have been unable to pay, the local hospital has simply been closed down. Citizen representatives reported that, in villages where the people themselves decide on how much to pay, access to care is much better, so it is best to scrap cost-sharing, which does not benefit the poor.
Finally, corruption has lead to a massive diversion of resources, and it was explained that the government has largely ignored the problem. According to statistics presented at the Forum, only four percent of drugs actually reach the intended beneficiary, while only one out of every three shillings collected from school kids actually reaches the education ministry.
III. The Impact of Trade and Price Liberalization on Agriculture and Small Enterprises
This panel and discussion concentrated on the impact of liberalization on agriculture and to a lesser extent on the small-scale business sector. In agriculture, the World Bank and Finance Ministry representatives argued that the policy package -- which has included the elimination of price controls, the abolition of marketing boards, the reduction or removal of export taxes, the elimination of import controls, and the liberalization of interest rates and the capital account -- has led to a steady growth in agricultural output (in part through the expansion of land under cultivation), including food production, as well as crop diversification and increased food security. They acknowledged, however, that the terms of trade for food producers had fallen, that there have been negative effects at the local, or household, level, and that poor rural physical and financial infrastructure has limited the benefits of liberalization.
Civil-society representatives pointed to other problems associated with the liberalization of the sector. The government has not consulted local producers in the process of policy formulation and has instead imposed policies that do not address micro-level dynamics. With the elimination of government extension programs, farmers have been left ignorant of current world trends and prices for crops and thus are vulnerable to exploitation by these middlemen. This problem has been exacerbated by the displacement of small-scale traders, reducing competition in the sector. In addition, with the liberalization of input markets, private traders now play the role of extension workers, advising on farming methods such as the use of chemicals. There have been disastrous consequences, pointing to a need for a program to promote organic fertilizers and sustainable farming methods.
Farmer representatives also argued that increases in production may have been due less to liberalization policy than to such political factors as the establishment of peace and security between 1987 and 1995, with overall yields recently declining due to a degraded environment and the abolishing of barter trade. Liberalization, it was pointed out, has not contributed to turning the terms of trade in favor of agriculture. Relative prices have not improved for producers in spite of increases in farm-gate prices. Instead, agriculture and rural investment are heavily taxed, in effect, through high transport prices, due in turn and in good part to impassable roads. Petty trading has become a more profitable pursuit, with transport owners profiting from a retail-price markup in Kampala that can reach ten times the farm-gate price. Reduced profitability for agricultural producers contributes in large part to the very high poverty level in villages. As a result, participants said, liberalization is benefitting urban dwellers and not farmers.
The situation is distinct for different crops. The increase in coffee export volumes is not so much due to greater cropping, it was argued, but to a reduction in smuggling. Cotton farmers from outlying areas, such as Arua, either cannot find a market or have to sell their crops at give-away prices. Improved seeds on the market for sale for the production, for example, of groundnuts do not germinate, there being no control over the sale of non-productive seeds to farmers, nor a program to control diseases that have emerged with the introduction of these seeds. Meanwhile, indigenous crops, such as millet, are becoming extinct because of the desire, it was explained, to produce money-earning crops like bananas and maize. As a result, despite the government's view that there is an abundance of food, malnutrition is increasing in Uganda, according to civil-society participants. Furthermore, since women continue to produce the lower-income crops, it was argued that liberalization and privatization have benefitted men more than women.
As far as the small and medium-scale industrial sector is concerned, the idea of liberalization was acceptable to civil society, but, in practice, it was found to be problematic. It was argued that the process should be selective, done in a way that ensures the participation of local people in the acquisition of industries. It was felt that liberalization may be killing local manufacturing, textiles being a case in point. To begin with, information about the process and the policies has been limited, and, since they were pursued rapidly without broad consultation, local people are unaware of what exists and are thus unable to respond effectively; a more gradual approach was needed. Furthermore, high interest rates have discouraged small-scale enterprises, and stipulations in the investment code, it was argued, also effectively exclude local business. Finally, liberalization policies have not been supported by other necessary programs, e.g., skills training.
While many participants agreed with the World Bank and the IMF on the objectives of economic reform -- i.e., stabilization and efficiency -- there was a major concern about the performance of adjustment policies and the assessment of that performance. The Bank has been most active in making a case for the performance of the SAP, promoting Uganda as a star economic performer, and many researchers agree with this positive assessment in regard to growth and stabilization at the macro level. But policy-specific studies conducted in the areas of privatization, liberalization and public-expenditure control, cited by civil society, show something quite different in terms of the policy impact on the ground, or at the micro level.
The issue of the impact of liberalization and privatization policies -- on women, farmers, the poor -- remains contentious. A major question is why economic growth is not trickling down to ordinary people. The IMF and World Bank argue that the number of hard-core poor is going down, but participants noted that the main study cited by the Bank did not include people who lived more than a few kilometers outside urban areas. Others using participatory research methods have come to different conclusions -- primarily that poverty does not only persist, but is deepening. Research carried out based on community studies concluded that poverty is, in fact, increasing, while another study found that, where poverty reduction has occurred, it is only marginal and does not affect the hard-core poor. In fact, social indicators show Uganda performing worse than most countries in sub-Saharan Africa, according to participants.
The feeling therefore persists that the assessment of poverty is value laden, i.e., largely determined as it passes through the eyes of the researcher. Furthermore, most researchers confess to a methodological problem of how to control for non-SAP factors. And there is also a credibility problem due to the poor data in Uganda; with the statistical department having changed data collection or reporting methods several times, it was argued that the statistics are questionable.