Pockets of Effectiveness: Why the Rationalization of Uganda's Coffee Authority Should Be Reconsidered

By Sebaggala Richard

 

As part of Uganda's ongoing efforts to streamline public institutions, the National Coffee Amendment Bill 2024 has sparked a fierce debate, particularly over the proposed dissolution of the Uganda Coffee Development Authority (UCDA). This proposed legislation raises critical questions about the timing and rationale for rationalizing institutions, especially in sectors that are central to Uganda’s economic performance. The case of UCDA provides a unique opportunity to examine the "pockets of effectiveness" within Uganda's broader quest for institutional reforms. These are public organizations that are performing exceptionally well despite the prevailing inefficiencies in the broader institutional landscape. Given UCDA’s success in supporting Uganda’s coffee industry — a sector that is critical to both the economy and the livelihoods of millionsof people — its possible dissolution deserves close scrutiny.

The concept of "pockets of effectiveness" refers to public organizations that function exceptionally well even in an environment where inefficiency is a norm. These institutions are successful because they have a clear mandate, strong leadership and operational autonomy that enable them to deliver important public goods and services, often exceeding expectations in key areas. UCDA is widely recognized as one of these rare pockets of efficiency and plays a critical role in Uganda’s coffee sector, the country’s most important export commodity. UCDA’s successes in promoting quality control, supporting farmers and expanding market access have contributed to significant growth in coffee production and export earnings, making UCDA an invaluable asset not only to the coffee industry, but also to the overall economic health of Uganda.

To understand the potential impact of disbanding the UCDA, it is important to look at its historical role in shaping the coffee industry. The roots of Ugandan coffee cultivation date back to the 19th century when coffee was introduced as a cash crop. Since then, coffee has developed into an important economic cash crop, contributing significantly to the country’s gross domestic product and providing a livelihood for millions of people. The establishment of the UCDA in 1991 was a pivotal moment for the industry to overcome challenges such as price volatility, quality control issues and inadequate support for farmers. The UCDA was tasked with overseeing production, processing and marketing, ensuring quality standards and driving research and innovation. Its establishment was not only institutional but also transformative, laying the foundation for Uganda’s growth as a competitive coffee exporter.

Over the years, UCDA’s leadership has focused on transparency, accountability and stakeholder engagement. By fostering collaboration between farmers, exporters and researchers, it has created a strong, innovation-oriented environment within the Ugandan coffee value chain. Its quality assurance programs and promotion of specialty coffee have not only improved the quality of coffee, but also increased Uganda’s competitiveness in global markets. As a result, the country's coffee production and export earnings have steadily increased, making Uganda one of Africa’s leading coffee producers.  However, the proposed dissolution of the UCDA raises critical questions about the future of the coffee sector and the potential loss of an institution that has underpinned its success. The National Coffee Amendment Bill 2024 appears to be driven by a broader agenda of institutional rationalization aimed at reducing bureaucracy and increasing efficiency. While these objectives are laudable, the risks associated with breaking up effective institutions should be carefully weighed against the potential benefits. The UCDA case illustrates the unintended consequences that can result from such restructuring, especially in sectors that are critical to national economic stability.

Rationalization, i.e. the merging and dissolving of public agencies, can actually improve the efficiency of the public sector. From an economic perspective, rationalization is often justified if it leads to cost savings, reduces redundancies or eliminates underperforming agencies. For agencies that are duplicating services or not meeting their goals, rationalization can free up resources and improve service delivery. But if an agency is high-performing and contributes significantly to economic growth, the logic of dissolving it is questionable.

At this point, the insights of Yuen Yuen Ang from her book ; How China Escaped the Poverty Trap offer important lessons. Ang (2018) argues that development is not a linear process of first fixing institutions and then growing the economy, as traditional economic thinking suggests. Instead, development is a co-evolutionary process in which local entrepreneurial activity and institutional growth occur simultaneously. Effective institutions do not have to fully emerge before economic progress occurs. Rather, local actors often use existing resources to spur growth so that economic and institutional development can unfold together.

Applying Ang’s framework to Uganda’s coffee sector, we can see that UCDA has driven both institutional and economic progress simultaneously. Rather than waiting for "perfect" institutions, Uganda has relied on UCDA to drive the coffee sector forward. This co-evolutionary approach suggests that dismantling the UCDA could disrupt the balance between institutional growth and economic expansion in this sub-sector. Ugandan policy makers should be aware that dismantling a well-functioning authority in the name of rationalization could undo the gains made in the coffee industry. Instead of dissolving UCDA, Uganda could consider nurturing such pockets of effectiveness to further strengthen the coffee sector.

Against this backdrop, Ang’s perspective challenges the notion that all institutions need to be perfected or made more efficient before they can contribute to economic progress. The UCDA is an example of an imperfect but effective institution that has adapted to local realities and played an important role in Uganda’s economic development. Its dissolution could do more harm than good and destabilize a system that has proven successful in a critical sector.

The debate over UCDA illustrates a broader lesson about rationalization. While rationalization efforts can be beneficial in certain areas, UCDA is an example of a high impact institution that has earned trust and expertise in the Ugandan coffee industry. Dismantling such an agency risks destabilizing an important economic pillar. UCDA’s specialized knowledge in managing the Ugandan coffee value chain cannot easily be replicated in a larger, more general ministry.  Moreover, UCDA’s autonomy has enabled it to avoid political interference, which has been key to its success. Incorporating UCDA into a larger bureaucracy could introduce political pressures that would compromise UCDA's effectiveness and jeopardize the future growth of the sector.

There are also significant concerns about the impact on public confidence. Farmers and industry stakeholders rely on the UCDA for technical support, advocacy and market facilitation. The dissolution of the UCDA could send a troubling signal and undermine confidence in the government’s commitment to supporting the coffee sector. Diminishing confidence could ultimately slow down productivity and investment, which would have negative consequences for Uganda’s development.

When thinking about rationalization, it is important to ask whether an organization like UCDA provides unique value that others cannot replicate. If an organization is demonstrably very effective, dissolving it would be counterproductive and could harm the people and sectors that depend on its services. UCDA’s contributions to coffee production, quality assurance and export growth make it an indispensable asset in Uganda’s agricultural landscape. While rationalization may be necessary to eliminate inefficiencies in some areas of government, it should not come at the expense of effective institutions that drive economic growth.

In conclusion, the National Coffee Amendment Bill 2024 provides an opportunity to reflect on the role of pockets of effectiveness in Uganda’s institutional landscape. Rationalization is a valuable tool for improving government performance, but it must be applied selectively and thoughtfully. In the case of UCDA, the benefits of maintaining an effective institution far outweigh the benefits of dissolving it. Uganda’s rationalization efforts should focus on underperforming agencies and not on dismantling institutions that promote growth and deliver tangible results.

Uganda’s policy makers must also consider the isomorphic constraints that influence their decisions. Pressure to adopt “best practices” in rationalization, often driven by notions of economic rationalism, can crowd out judgment and promote reforms that may not serve local priorities. Resisting these pressures would show that true progress lies in strengthening what works well in the local context, not in conforming to external neoliberal capitalistic ideals. By preserving some pockets of effectiveness, Uganda can ensure that its key economic sectors continue to thrive and contribute to the country’s prosperity.