THE UGANDAN ECONOMY AMIN’S PREOCCUPATION WITH ARMY THREAT TO VIABILITY

Press, Volume CXII, Issue 33062, 1 November 1972, Page 16

THE UGANDAN ECONOMY AMIN’S PREOCCUPATION WITH ARMY THREAT TO VIABILITY

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BRIDGET BLOOM,

Africa correspondent of the ' Financial Times. London,

(Reprinted from the "Financial Times" by arrangement) A war of economic independence—that is how General .Amin launched his campaign against the Asians, and that is hoiv he coir to describe it still, feigning to be puzzled by accusations of r;u n levelled against him. For Amin the deadline for Asian withdrawal i A a simple explanation and is expected to have beneficial results: Asians i ; e sabotaged the Ugandan economy for 70 years; they must go, and t u Africans can inherit their economic birthright.

While the desire to have the economy controlled by Ugandans is understandable, General Amin's methods are dubious, to say the least. It is obviously too early to predict how Ugandans will rise to the task set them. But with over two of the three months towards the deadline gone, his actions are already having economic effects. Very little has actually happened to transfer assets held by- Asians to Africans. The I first list of businesses for i sale was published only recently but as far is known, [none of the 42 establishments, i which ranged from a bicycle I shop valued at £lOOO to an insurance agency for nearly £200,000, has yet changed hands. Neither has anything more been heard of the loan fund which (in view of the understandably cautious attitude of the normal lending institutions) is to provide credit for African would-be entrepreneurs. Officials overworked This delay is hardly surprising—apart from anything else, the Ugandan administration, already debilitated by selective sackings, has enough > to do trying to give the* departing Asians the neces-[ sary tax and exchange con-I trol clearances. For the time ( being, the main economic! effects have been a marked! turn down in business and commerce in which the Asians have had such a predominant share- The most obvious signs are the increasing numbers of shuttered shops in Uganda’s main towns. Jinja, the main industrial town east of Kampala is, according to eyewitnesses, most affected, but none has escaped.

With the locked shops have come shortages, particularly of imported goods. This is partly due to the Asian exodus, and partly to the clamp down on imports introduced several months ago in order to conserve foreign! exchange. Motor spare parts.

'are increasingly difficult to! find, but the most severe i shortages are of building materials, electrical and other • fittings, and drugs. It is significant that President Amin recently complained about having to fly drtigs into .Uganda: the main whole-i Isalers were Asians. Greater; shortages will inevitably follow since Asian traders have] mot been replenishing stocks.;

| The same does not apply |for the time being, to locally (produced goods. Foodstuffs, largely grown and distributed [by Africans, are still plentiiful, as are most locally manufactured goods. The problem here is distribution, in which ,Asians played an important j role. Bearable troubles For the time being, these are bearable troubles. The average African can still buy more or less what he wants; a large slice of the more sophisticated market, with the withdrawal of so many Asians, has anyway been taken away and while the 9000-odd Europeans are no idoubt suffering, they hardly count.

I Indeed, in one very limited [way the cutback in imports is having a beneficial effect in that international pay[ments, in deficit for the last year or two. are showing 'signs of improvement. Figures have not been published for some time but recorded imports are undoubtedly falling, and the country’s effective foreign exchange reserves, which were believed to have sunk as low as £2m to £3m. are now thought to be around £sm (certainly not the £22m which General Amin announced the other day). This is of course pitifully small—enough to cover only a month’s imports even at probable current rates—and there are many other factors which will cause a further drain. One is the airlift of. Asians. which observers! believe may cost £3m in [foreign exchange: another is!

[the amount, though very small (some £6O per family), which Asians are being allowed to take with them |lf they are allowed, over the next few years to repatriate the profits from sales of property and other [assets, this drain will con tinue. A very great deal will [depend on the performance [of Uganda’s exports. For the 'time being no foreign loans are forthcoming: Britain's promised £lom has been suspended; as far as is known [Libya has not spent a penny lof its promised aid; and aid already authorised and in the (pipeline is miniscule. Tourism killed [ Tourism, which earlier this [ year looked as though it might bring the magic 100.000 [visitors and provide net earnings of some £5-£7m, has been | virtually killed by the crisis. (Bookings have been cancelled months ahead and even if the situation were to prove calm from now on it would take at least a year for the industry to return to pre-crisis levels. I Last year Uganda earned [some £96m from exports, Icoffee accounting for about half. Full figures are only [available for 1970. when exports totalled £loBm, of [which coffee was £s4m, cot [ton £l9m, copper £9m, tea i£sm, and tobacco about £lm Coffee and cotton may be the country’s salvation, for markets are reasonably assured, and production, being in the hands of thousands of African farmers, is unlikely to be affected by the Asian withdrawal. There may be a problem with ginning cotton, if spare parts become short or Ugandans are unable to replace Asians as mechanics and fitters. Likewise maintenance of processing machinery for tea on the plantations may become difficult. The Canadian-owned Kilembe copper mines may be more [seriously affected. Already a high-cost producer, it relies heavily on white mining experts who are increasingly difficult to recruit or retain Question of skills If exports can be kept up Uganda’s economy may stagnate but it will not crumble, even though other debilitating factors must also be taken into consideration. Some of these are a direct result of the Asian exodus, and some the result of 18 months of General Amin’s most unorthodox and unpredictable rule. Throughout the economy there is the question of skills: skilled Asians are going; even those under exemption will go as soon as they can. Some Europeans are going too; new expert personnel of whatever nationality or race (Africans or other nationalities, for example, have been jailed or victimised) will not choose to go to Uganda Then there is the unemployment problem. With the departure of the Asians, many Africans have been thrown out of work—most families would have had African house servants as well as employing Africans in their businesses. With general economic depression, unemployment is likely to increase; and it seems improbable that Africans who take over from Asians will be able to mop up the surplus. And hovering over all this, is General Amin, who does not listen to his demoralised civil servants and whose main preoccupation is to keep his army happy by spending lavishly on it. The late Kabaka, King Mutesa. had one interesting comment on Amin in his memoir*, written after he left Uganda. “Amin was a comparatively simple, tough character—his view of finance was straightforward If you have money, spend it.” Military imports are not recorded by customs and excise, but it is a fair bet that a goodly proportion of the earnings from coffee and cotton have been spent on the army, and will continue to be. Whatever else Amin’s war of economic independence may bring, it will not be meaningful development for the country as a whole.