WORKING PAPER 05

This paper critically examines the International Monetary Fund’s (IMF) Structural Adjustment Programme (SAP) in Uganda, arguing that its assumptions and policy prescriptions are fundamentally flawed and socially injurious. Mamdani contends that the IMF programme reinforces existing inequalities, undermines democratic reform, and fails to address the structural roots of Uganda’s economic crisis.

IMF Assumptions and Policy Orientation

The IMF attributes Uganda’s crisis to internal mismanagement, ignoring external factors like deteriorating terms of trade and rising debt costs. Its programme emphasizes demand reduction, market liberalization, and empowering a narrow entrepreneurial class through privatization and budget cuts. These policies aim to shift resources from the state and popular classes to private capital, assuming this will stimulate investment and growth.

Uganda’s Crisis: Historical and Structural Roots

Mamdani traces Uganda’s fiscal and productivity crises to the 1972 “Economic War” under Amin, which dismantled efficient state enterprises and created a corrupt class of big proprietors—the “mafutamingi.” This class evaded taxation, shifting the burden to peasants and workers. The state’s revenue base collapsed, leading to chronic deficit financing and inflation. The crisis is rooted not just in technical mismanagement but in social and institutional distortions.

Contradictions of the IMF Programme

1. Social Burden of Adjustment: Wage freezes and cuts in social spending disproportionately hurt the working class, whose real incomes have plummeted. The IMF’s assumption of a pampered urban workforce is contradicted by data showing extreme wage erosion.
2. Differentiation Without Accumulation: Devaluation and credit liberalization favor speculative investments over productive ones. The mafutamingi benefit from increased access to credit but channel it into luxury consumption and trade, not industrial development.
3. Liberalisation and Industrial Crisis: The Open General License (OGL) system prioritizes market forces over strategic planning. Uganda’s industries are highly import-dependent, and liberalisation without industrial policy leads to increased foreign reliance and undermines local production.
4. Inflation Control and Foreign Dependence: Inflation has been curbed by cutting domestic demand, shrinking local markets, and increasing reliance on foreign capital. Uganda’s debt service ratio has worsened, deepening its dependency and threatening economic sovereignty.

Call for an Alternative Strategy

Mamdani argues for a development strategy rooted in Uganda’s historical experience. Peasant agriculture and state-guided industrialization were once the backbone of growth. Lessons from East Asia show that land reform, institutional transformation, and state-directed investment can create equitable development. Uganda must prioritize domestic markets, democratize cooperatives, and secure land tenure to stimulate production and accumulation.

Transformational Imperatives

The IMF’s market-centric view ignores the partial and coercive nature of Uganda’s economy. Real development requires transforming institutions—chiefship, land tenure, and cooperatives—that currently exploit peasants through extra-economic coercion. Resistance Committees (RCs) offer a democratic alternative but need consolidation through broader reforms.

Conclusion: Politics vs. Economics

The IMF programme strengthens the mafutamingi and undermines democratic reforms. Without institutional transformation, Uganda risks entrenching inequality and reversing gains made by the NRM government. Mamdani calls for a public, democratic dialogue to formulate an alternative development path that aligns economic policy with the aspirations of the majority.