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Uganda, Economy

The Ugandan economy has been based on small, African-owned farms since precolonial days. Uganda’s economy collapsed during the Idi Amin regime in the 1970s. In 1972 Amin expelled the country’s Asian population, which controlled most of the commerce, and distributed their businesses and property to corrupt and incompetent managers. From 1972 to 1988 the economy declined about 33 percent. The economy rebounded under President Yoweri Museveni, growing an average of 7 percent annually between 1990 and 1998. But it took until the late 1990s for the country to recover the production levels achieved before Amin seized power. In 1987 Museveni adopted reforms designed to reduce the size of the state and privatize many economic activities, and in return Uganda has received large loans from the World Bank and the International Monetary Fund (IMF). Under the reforms the government eliminated state regulations over the exchange rate and state control over prices for export crops. More importantly, the government succeeded in diversifying its foreign exchange base by steadily reducing its reliance on coffee exports. Excellent macroeconomic management enabled the government to reduce inflation from 200 percent annually in the late 1980s to an annual average of 10 percent between 1990 and 1998. Recent reconstruction of Uganda’s main roads has been an important factor in its economic recovery. In 2000 Uganda’s gross domestic product (GDP) was $10.9 billion, or $280 per capita. In 1994, 90 percent were engaged in agriculture, 6 percent in industry, and 4 percent in services. Women made up 48 percent of the labor force in 2000. Only a small fraction of the workforce is engaged in paid employment. The largest wage employer was the government, which employed 164,632 in 1998. Since the 1970s wages have failed to keep up with the cost of living, forcing those receiving salaries to supplement their income through farming or business. In addition, inadequate wages have led to widespread corruption in almost all government services. Trade unions have a history of government control and enroll an insignificant percentage of the workforce. A survey of private manufacturing plants recorded fewer than 14,000 employees in 1996. Of the population aged ten and older, the 1991 census found 59 percent working, 40 percent economically inactive, and 0.6 percent looking for work.

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