Uganda Development Corporation
Encyclopedia
The Uganda Development Corporation (UDC) is a government-controlled organisation in the East African state of Uganda
. Formed in 1952, it had some success in promoting Ugandan 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 phased out completely in 1998, before being re-introduced with similar aims in 2008.
of £5 million, which it quickly grew.
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. 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." 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. 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%.
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 Group
s (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.
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. 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. 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. The Nakivubo Pronouncement
was revoked and in some industries the UDC was instructed to refrain from own controlling stakes.
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. 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.
(UDB).
Uganda
Uganda , officially the Republic of Uganda, is a landlocked country in East Africa. Uganda is also known as the "Pearl of Africa". It is bordered on the east by Kenya, on the north by South Sudan, on the west by the Democratic Republic of the Congo, on the southwest by Rwanda, and on the south by...
. Formed in 1952, it had some success in promoting Ugandan 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 phased out completely in 1998, before being re-introduced with similar aims in 2008.
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." It was given a starting equityEquity (finance)
In accounting and finance, equity is the residual claim or interest of the most junior class of investors in assets, after all liabilities are paid. If liability exceeds assets, negative equity exists...
of £5 million, which it quickly grew.
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
World Bank
The World Bank is an international financial institution that provides loans to developing countries for capital programmes.The World Bank's official goal is the reduction of poverty...
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. 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
Entrepreneur
An entrepreneur is an owner or manager of a business enterprise who makes money through risk and initiative.The term was originally a loanword from French and was first defined by the Irish-French economist Richard Cantillon. Entrepreneur in English is a term applied to a person who is willing to...
in Uganda and a successful one in this most difficult field of fostering development." 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. 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
Nakivubo Pronouncement
The Nakivubo Pronouncement was a commitment issued by Milton Obote, of the ruling party of Uganda, the Uganda Peoples Congress, in 1970. It outlined the increased nationalisation of major industries as part of the move towards socialism described by the Common Man's Charter of 1969...
, which allowed for stakes up to 60%.
Under Amin (1971-1979)
After new President Idi AminIdi Amin
Idi Amin Dada was a military leader and President of Uganda from 1971 to 1979. Amin joined the British colonial regiment, the King's African Rifles in 1946. Eventually he held the rank of Major General in the post-colonial Ugandan Army and became its Commander before seizing power in the military...
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
Madhvani Group
The Madhvani Group of Companies commonly referred to as the Madhvani Group, is one of the largest conglomerates in Uganda, with a total asset base in excess of US$275 million, as of April 2009. The group has investments in Uganda, Rwanda, Southern Sudan, Tanzania, the Middle East, India and North...
and Mehta Group
Mehta Group
The Mehta Group of Companies commonly referred to as the Mehta Group is a conglomerate based in Mumbai, India with subsidiaries in the United States, the United Kingdom, Canada, Kenya and Uganda. The group employs in excess of 15,000 people worldwide and has an asset base in excess of US$350...
s (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
Hoe (tool)
A hoe is an ancient and versatile agricultural tool used to move small amounts of soil. Common goals include weed control by agitating the surface of the soil around plants, piling soil around the base of plants , creating narrow furrows and shallow trenches for planting seeds and bulbs, to chop...
factory.
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. Uganda's industrial development strategy had been unsuccessful in promoting human resource development
Human resource management
Human Resource Management is the management of an organization's employees. While human resource management is sometimes referred to as a "soft" management skill, effective practice within an organization requires a strategic focus to ensure that people resources can facilitate the achievement of...
as the 1962 report had suggested, and local entrepreneurial capabilities "were not promoted and nurtured"; technological capabilities were also lacking. 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. The Nakivubo Pronouncement
Nakivubo Pronouncement
The Nakivubo Pronouncement was a commitment issued by Milton Obote, of the ruling party of Uganda, the Uganda Peoples Congress, in 1970. It outlined the increased nationalisation of major industries as part of the move towards socialism described by the Common Man's Charter of 1969...
was revoked and in some industries the UDC was instructed to refrain from own controlling stakes.
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. 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.
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. Some other nationalised companies, split from the UDC in 1974, were returned to it in a futile attempt to spur innovation. 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 BankUganda Development Bank
-Overview:The bank began its operations in 1972. Uganda Development Bank is the first development finance institution established by the Government of Uganda. The main objective of UDB is to promote and finance development in various sectors of the economy with particular emphasis on agriculture,...
(UDB).