Uganda`s First Futile Attempts at Trade and Economic recovery: 1980 – 1985

Amin was overthrown in 1979 by a coalition of domestic forces under the banner of the Uganda National Liberation Front (UNLF) with strong support of the neighbouring Tanzanian army. Following Amin’s departure, successive governments attempted to restore international confidence in the economy through a mixture of development plans and austere government budgets. Beginning in 1980, the second government of Milton Obote obtained foreign donor support, primarily from the International Monetary Fund (IMF), by floating the Uganda shilling (USh), removing price controls, increasing agricultural producer prices, and setting strict limits on government expenditures.

In addition, Obote tried to persuade foreign companies to return to their former premises, which had been nationalized under Amin. These recovery initiatives created real growth in agriculture between 1980 and 1983. After the turmoil of the Amin period, the country began a program of economic recovery in 1981 that received considerable foreign assistance in aid. The aid was meant to facilitate the country`s trade and economic recovery. This aid was dependent upon Uganda liberalizing the economy with the hope that free market forces would make it more competitive in the world economy. Funds from the Bretton Woods institutions to boost production and exports began to increase, while political goodwill from the international community and willingness to trade with, and to invest in the country also rose considerably.

From mid-1984 onward, overly expansionist fiscal and monetary policies and the renewed outbreak of civil strife led to a setback in economic performance. With the increase in rebel activities of the National Resistance Movement, state resources were diverted to fighting rebels and many economic programs meant to help Uganda`s state of trade and economy were greatly disrupted. The IMF and World Bank reforms had to be abandoned in 1983 due to the civil war and were only reintroduced in 1988 by the new regime of President Yoweri. The lack of foreign exchange was a major constraint on government efforts, however, and it became a critical problem in 1984 when the IMF ended its support following a disagreement over budget policy.

Milton Obote was overthrown in 1985 by his military commander Tito Okello Lutwa whose regime lasted from May 1985 to January 1986, when he was overthrown by Yoweri Museveni. During the brief regime of Tito Lutwa Okello in 1985, the economy slipped almost out of control as civil war extended across the country. By the time Dr. Milton Obote was over thrown, his Presidency had started taking steps to grow Uganda but had not yet achieved resoundingly significant/ recorded positive achievements for Uganda`s trade and economic state.