Responding to Poverty in Uganda: Structures, Policies and Prospects(*).

• Author: Brett, E. A.

Against nature man can claim no right, but once society is established poverty immediately takes the form of a wrong done to one class by another. The important question of how poverty is to be abolished is one of the most disturbing problems which agitate modem society.--Georg Hegel(1)

POVERTY: THEORY AND POLICY

Poverty, is still growing in the majority of least developed countries (LDCs). Structural adjustment programs have improved macroeconomic management in some countries, but political failures in many LDCs have led to falling per capita incomes, while war and economic collapse have reduced the weakest to near-destitution. Although in some LDCs growth has reduced poverty for many and brought luxury to some, in most others hundreds of millions still lack the security, employment, shelter, health care, education and mobility needed for a decent life. Providing the poor with opportunities for economic security and personal autonomy is surely the most important and difficult goal of development policy and practice.

Development theorists have always had to recognize the distributional implications of their policy and institutional recommendations. The dominant Marxist or neo-Marxist paradigms of the 1960s and 1970s attributed poverty and uneven development to private ownership and competitive markets, and they believed that state intervention could secure redistribution by fostering growth. The command economies tried to eliminate market competition, while structuralist and social democratic systems accepted some of the advantages of private ownership but felt that markets should be treated as servants rather than masters. They allowed the state to control foreign trade and the commanding heights of industry and to provide safety nets to build infant industries, guarantee full employment and universalize welfare services.

Poverty declined during the post-war boom in the most successful of these countries, but these gains were seriously compromised by the financial, fiscal and balance of payments crises that emerged when the boom ended in the 1970s. This restored the credibility of neoclassical economic theory, which linked state control to monopoly power and information overload, and thus to economic inefficiency and oppression. Its primary concern was growth rather than equality, but it also attributed poverty to irrational economic policies and the rents created by state monopolies, rather than private ownership and competitive markets. These views were dominant by the early 1980s and were spread across the globe in the form of the structural adjustment programs (SAPs) forced onto most LDCs by economic crises. This theoretical and policy revolution culminated with the communist collapse in 1989 and the market-driven transformations that followed. Thus, poverty is now addressed in a policy environment that rejects state controls and gives priority to economic efficiency and monetary stability over full employment and welfare rights.

Neoclassical theorists prioritize efficiency and price stability, but they also claim that competitive markets deliver equity as well as growth. They argue that liberalization will reduce the global and national inequalities created by protectionism in developed countries, as well as the rigidities, price distortions and monopoly rents stemming from state intervention in LDCs. They claim that free trade will shift industry from high- to low-wage countries, and that rational prices and free markets will increase the rate of profit and incentive to invest, thus increasing employment and, in the long run, wages. They attribute growth and poverty reduction in formerly poor Asian countries to the export opportunities created by lower global tariffs and to their emphasis on private ownership and market forces.

The World Bank and International Monetary Fund (the International Financial Institutions, or IFIs) are now taking this liberal agenda into the poorest countries, whose welfare depends greatly on their success. While they claim that they will reduce poverty; their critics contend that such a liberal approach cannot combine redistribution with stability and growth. This article evaluates these claims by considering the relatively successful Uganda program. It looks at the nature and causes of poverty in Uganda, the impact of recent policies and the implications of recent attempts to develop a focused poverty strategy.

THE NATURE AND DISTRIBUTION OF POVERTY IN UGANDA

People experience poverty in Uganda in many forms. Poverty manifests itself most obviously in low incomes and isolation, but it also exists in less obvious ways as personal and political insecurity, limited access to education, health and other services and high levels of conflict and distrust. Uganda's "poverty profile" has much in common with many other poor African countries, but some important differences give it the potential for rapid development if successful political and economic programs can be implemented and sustained.

Poverty in Uganda results from low productivity rather than inequality, since it has a relatively favorable land distribution, but few large-scale businesses and farms. Thus the poorest 20 percent earn 8.5 percent of incomes while the top 10 percent earn 27.2 percent, as opposed to 2.4 percent and 45.6 percent in Kenya.(2) Most people are small farmers using hand tools, unimproved seeds and almost no other inputs. Less than 5 percent use no land for farming, but 62 percent of households possessed less than 1 hectare of land, and a further 25 percent less than 2 hectares.(3) Population densities vary significantly, and landlessness is serious in some areas. Industrial production is concentrated in low productivity, informal sector activities, with only 201 modern industrial establishments recorded in 1994.(4)

In the early 1990s, 74.3 percent of households spent less than U.S.$10 per capita each month and only 1 percent spent more than U.S.$60.(5) Economic activity is distributed very unevenly regionally--in 1994 to 1995, per capita incomes were about 38,000 Ugandan shillings in the main urban centers, 12,500 in all rural areas, 19,000 in the central rural areas and only 9,500 in the north, close to the World Bank's poverty line.(6) Women are especially poor, with an average of 7.1 children, and often caring for others orphaned by war and disease. The maternal mortality rate is above 600, rising to as much as 1,700 per 100,000 live births in some rural areas.(7) Women's formal access to legal, political and economic mechanisms has improved since 1986, but their actual opportunities are still seriously constrained by traditional cultures. Families spend less on education, although not on health, for girls than boys.(8) However, female-headed households do not seem to be poorer than others, likely due to the fact that women work longer hours than men.(9)

In 1995, 27 percent of the rural population had no education, and only 14 percent had access to secondary schooling; the comparable figure for females were 36 percent and 11 percent.(10) Public and private per capita spending on health was then about US$6 per adult, compared with US$11 to US$19 in most African countries and an estimated US$12 needed for a package of "essential" services.(11) Poor health services and AIDS have made Uganda's health indicators "among the world's worst."(12)

Most people live in rural areas where travel is highly constrained and few have access to electricity. Both domestic and market production depends on the most elementary tools and inputs. In towns, all but a small elite live in slums where access to shelter, water and sanitation is very poor. In rural areas, most people have access to land which they use both for subsistence needs and as a source of cash income. Many also earn additional incomes by working in the "informal" economy--producing goods for local markets, trading and selling services of various kinds. While most people have their own land, many earn additional income through temporary work on larger farms. In towns, only a minority of people have regular, stable jobs in the government or in large companies. The majority is either self-employed or works in low-paid positions in small and insecure businesses.

Poverty and exclusion have intensified due to political violence and crime, with more than half the country directly affected by civil war at some point since the early 1980s. Violent conflict still continues on a limited scale in border areas in the north, northwest and west. However, the levels of crime and violence have been greatly reduced by the introduction of elected local-level committees since 1987.

Foreign exchange and private incomes depend heavily on agricultural exports--notably cash crops such as cotton and coffee. Industry makes a limited contribution, though it grew rapidly from the mid-1950s until 1972. During the 1970s, the political and economic crises induced by the government of Idi Amin greatly reduced coffee exports and virtually eliminated cotton and large scale manufacturing. However, this decline was partially compensated by food production for both domestic and regional markets. The coffee and manufacturing industries are now rapidly recovering from a very low base in response to improved security and economic liberalization.

The slow extension of the transport system meant that areas in the north of the country entered the cash economy much later than the south. They also suffered because they were remote from the major urban markets and had less access to education and other services, and because cotton was never as profitable a crop as the coffee grown in the south. The north was more severely affected by the economic crisis of the 1970s, and the region suffered an even greater setback after 1987 when its economic life was severely disrupted by civil war, even as growth resumed rapidly in the south.

To summarize, the majority of Uganda's population...