Uganda Development Corporation

The Uganda Development Corporation (UDC) is a government-controlled organisation in the African Great Lakes state of Uganda. Formed in 1952, it had some success in promoting local industrial development, and was swelled with the addition of newly nationalised industries in the early 1970s. These, however, proved too much for the corporation, and it went into a slow decline before being completely phased out in 1998. The organisation was reconstituted with similar aims in 2008.

History

Before Amin (1952-1971)

The UDC was created by the British colonial administration in 1952 to "facilitate the industrial and economic development of Uganda". Under the Uganda Development Corporation Act 1952 it was to "promote and assist in the financing, management or establishment of— new undertakings; schemes for the better organisation and modernisation of and the more efficient carrying out of any undertaking; and the conduct of research into the industrial and mineral potentialities of Uganda."^[1] It was given a starting equity of £5 million, which it quickly grew.^[2]

At the time of Ugandan independence in 1962, a report commissioned by the outgoing British administration and incoming government and overseen by the World Bank commented that "the UDC has energetically explored a wide range of industrial possibilities" among a backdrop of economic pessimism over coffee prices, which Uganda was (and remains) heavily reliant on.^[3] By this time, the UDC was already one of the two largest public corporations of the Government, a "principal instrument in the country's development program." The same report was complimentary of the UDC's performance, describing it as "presently the most important entrepreneur in Uganda and a successful one in this most difficult field of fostering development."^[3] By 1965, it had turned a post-tax profit every year since its creation (albeit with some help from tariff protection) and employed (including subsidiaries) over 18,000 people, engaged in projects as diverse as cement and cotton.^[2] State control of the economy was on the increase. The UDC, which had previously provided startup equity before selling out to private investors, was now given the legal right to retain a controlling stake in companies it had been instrumental in setting up, and with the 1970 Nakivubo Pronouncement, which allowed for stakes up to 60%.^[4]

Under Amin (1971-1979)

After new President Idi Amin presided over the expulsion of Asians from Uganda in 1972, the UDC gained control over some of the largest enterprises previously controlled by those expelled, to which it added some 90 nationalised British holdings in the country later in the same year. Acquisitions from the Asians included much of the profitable Madhvani and Mehta Groups (with the exception of the sugar industry), and from the British a diverse portfolio including tea plantations, a printing firm, a cigarette factory and a hoe factory.^[5]

Together, these gains should have provided it with a possible turnover of $100 million, and doubled its assets. However, both the rapid nature of the growth and the sudden lack of experienced technicians and managers proved a challenge for the corporation.^[5] Uganda's industrial development strategy had been unsuccessful in promoting human resource development as the 1962 report had suggested, and local entrepreneurial capabilities "were not promoted and nurtured"; technological capabilities were also lacking.^[6] Indeed, by late 1973 such was the lack in management capability that the UDC was unable to obtain financial report from 14 of its 52 subsidiaries, and there were tensions in the boardroom.^[5] The Nakivubo Pronouncement was revoked and in some industries the UDC was instructed to refrain from own controlling stakes.^[4]

The UDC started to decline. It had over-extended its capacity and could not effectively control the many industries it now owned stakes in. Because of this, the public sector was re-organised again in 1974 creating nine holding companies, further weakening the UDC - some of its original profitable industries were removed, leaving it with the same liabilities but fewer assets.^[7] By the second half of the 1970s, with all viable manufacturing units reallocated, the UDC was reduced to a skeleton staff based in its headquarters.^[8]

After Amin (1979-present)

Faced with mounting economic strife, in 1982 the incoming Obote administration opted to liberalise the economy, returning some government-owned companies to former owners, including the Asian conglomerates.^[7] Some other nationalised companies, split from the UDC in 1974, were returned to it in a futile attempt to spur innovation.^[8] Due to the economic liberalisation policies implemented by the Ugandan government beginning in the late 1980s, the UDC was wound up in 1998, before being re-established in 2008. It is responsible for facilitating the industrial and economic development of Uganda and forms an investment arm of the Ugandan government, working alongside the Uganda Development Bank (UDB).

See also

• Uganda Investment Authority, a similar body

References