Economic cost of the conflict in Northern Uganda

Report
from CARE
Published on 13 Nov 2002


Civil Society Organisations for Peace in Northern Uganda
Conflict in Northern Uganda is costing the Ugandan economy at least $100 million every year, according to research conducted by civil society organisations.

Research commissioned by the coalition more than 40 local and international non-governmental organisations known as Civil Society Organisations for Peace in Northern Uganda (CSOPNU) has shown that the persistent conflict in the North has constrained economic and social development across the whole of Uganda.

CSOPNU found that the conflict has cost at least US$1.33 billion over the last 16 years - representing about 3% of Uganda’s GDP over the period. The human toll has also been profound and is very difficult to quantify. A generation of conflict-affected youngsters will grow up emotionally, physically and economically blighted in displacement camps due to this conflict.

In the past, the conflict has often been seen as a Northern problem, but the huge economic cost of the war shows that this is not the case. Not only has the conflict caused enormous human suffering in areas directly affected - it has impacted negatively on the lives and livelihoods of all Ugandans, as resources have been diverted from essential social services and support for economic development across Uganda to pay for the war.

Can Uganda afford to lose close to US$100 million a year? If the answer is - as it must be - no, then all efforts must be focused on resolving this conflict peacefully and permanently.

Impact of the conflict

The Acholi areas of Northern Uganda have suffered from persistent insecurity since the mid 1980s. For over ten years, the Lords Resistance Army (LRA) has waged a civil war against the Government of Uganda. The LRA has targeted the people of the sub-region. This has led to massive and persistent disruption, hardship, dislocation and suffering for the people within that region and far beyond.

The impact of the conflict on the lives of ordinary people has been devastating and the situation is not improving. Large parts of Northern Uganda are in turmoil due to the recent escalation of conflict between the LRA and the government.

  • Over 500,000 people are displaced, most in camps.
  • Communities are desperately food insecure. Households are unable to farm. Malnutrition, especially among children and women, is increasing.
  • Children are out of school. Adolescents and adults alike are under-employed or unemployed.
  • Rates of sexually transmitted infections and HIV are said to be the highest in the country.
  • Access by humanitarian agencies is highly restricted due to insecurity - despite the crisis, most people are not receiving any significant assistance at all.

Disruption and displacement are familiar to the people of the affected areas. Many have been in IDP camps for years; some voluntarily, seeking protection from abduction and attack; others by military command. Their assets were long since lost or used up, and they depend on handouts. The community’s culture and morality are being eroded, as an entire generation is being formed in IDP camps. Even if peace is restored, the lack of physical assets and low levels of education and health will be an obstacle to socio-economic revitalisation.

The economic cost of the conflict

It would be impossible and inappropriate to try to quantify the profound emotional and psychological impacts of the suffering of people affected by this war. You cannot put a price on the loss of a child or a lifetime of poor health and poverty. Without trying to minimise the impact of this suffering, CSOPNU believes that it is important to recognise that the economic costs have also been enormous.

The conflict has caused major economic disruption. Affected populations have suffered the loss of means of production, household assets and other investments. They have been unable to develop their livelihoods because they have been unable to invest in education and have lost productive members of the household. They have had to divert household expenditure to non-productive expenses such as additional health care, food purchase and replacement of lost assets.

At a national level, the government has had to spend more on the military, and therefore by implication less on investments for development. The recent budgetary re-allocations to defence spending are an example. The Ugandan economy has suffered through reduced ability to attract external investments and inability to take advantage of opportunities such as expansion of the tourism sector. A reduced taxation base has also affected government revenues.

The economic cost of the conflict was calculated using information including:

  • Cost of military intervention.
  • Estimated losses relating to livestock and agriculture.
  • Loss of physical assets such as health centres, schools and vehicles destroyed.
  • Loss of personal possessions & shelter.
  • Costs of conflict-related health problems and deaths among population, based on increased health costs and value of production lost.
  • Opportunity costs to the national economy, such as estimated losses in income in the tourism sector, loss of tax revenue, loss of foreign exchange due to tobacco export losses and failure to attract investment
  • Cost of the "brain drain" as the most educated leave the region and country.

The study was not able to include some costs, such as the amount of humanitarian aid made necessary by the impact of the conflict. Therefore the estimates are likely to be quite conservative.

Findings and Conclusions

The war was been found to be the single most important factor responsible for the low level of development in the sub region. Importantly, it was seen to have held back development of Uganda as a whole. The conservative calculations used in the research indicated that the war has cost over US$1.33 billion, amounting to about 3% of GDP.

To put this into perspective, The Ministry of Health - Health Financing Strategy for Uganda - March 2002 states that the annual central government contribution to this sector is 170.1 billion shillings, approximately US$95 million. The annual cost of the war in the north is at least US$100 million - more than the central government health budget for the whole country.


Breakdown of costs relating to war in Northern Uganda as percentage of total cost of war


Post-conflict prospects

Recovery will be very tough, but there is cause for optimism. Based on experience in Teso and Lango regions, which resolved a similar conflict a decade ago, self-sufficiency in food and production of surplus for sale in other parts of the country can be achieved relatively quickly in the aftermath of conflict; with fast-growing demand for tobacco and the revival of cotton, farmer income from cash crops and foreign exchange earnings would grow rapidly once this conflict is settled.

The study found that major investment projects are being held up until the conflict is resolved. There is likely to be an immediate spurt in investment when peace is established followed by a sustained period of substantial growth based on prospects for demand both domestically and abroad, including regional markets in Congo and Sudan, for the kinds of products the region can produce.

The key to these developments is an end to the war and the establishment of the kind of security that promotes investment in profitable and socially desirable enterprise.

About CSOPNU

Civil Society Organisations For Peace in Northern Uganda (CSOPNU) is a group of civil society organisations that came together in 2002, forming a coalition to campaign and advocate for a peaceful solution to the conflict in the North. The coalition is led by a steering committee that includes CARE International, Uganda Child Rights NGO Network, Save the Children Denmark, Development Network for Indigenous Voluntary Associations and Oxfam Great Britain.

CARE International in Uganda carried out the economic study on behalf of CSOPNU and can be contacted by phone (041 258 568/9) or email (cuhq@careug.org) for further information.