The Economics of Generative AI Adoption: The risks of hesitation

 By Sebaggala Richard

 

Generative AI is revolutionizing professional fields, from writing and marketing to data analysis and design. However, the main obstacle to widespread integration is not technical challenges or ethical concerns — it’s people's hesitation to embrace it. This hesitation goes beyond personal reservations and carries economic and professional risks that could see many fall behind in an era of AI-enhanced productivity. Inspired by Melanie Holly Pasch’s article "Generative AI Isn’t Coming for You—Your Reluctance to Adopt It Is," this article explores the real threat to our careers: not AI itself, but the reluctance to adopt it. This article explores the economic impact of resistance to AI and how this hesitation can impact careers and industries, more profoundly than the AI technology itself.

Many professionals are skeptical of generative AI, seeing it as a threat to their specialized skills and hard-earned expertise. This reaction is only natural. Pasch herself initially doubted that AI could replicate the creativity and precision of her work. Professionals who have honed their skills over the years fear that AI could turn their expertise into a commodity. This resistance stems from a psychological barrier known as the“sunk cost fallacy”— a tendency to cling to skills we’ve invested time in, making us resistant to tools that seem to diminish those skills. However, resistance to new tools like AI can lead to being left behind while others use these innovations to accelerate their careers.

For those who resist AI, the opportunity cost is significant. Forgoing generative AI can mean missing out on productivity gains and falling behind the competition. Think of a writer who spends hours refining a draft that AI could complete in minutes, giving them more time for creative or strategic work. This procrastination is not only a missed opportunity, but also a lost competitive advantage. In academia, for example, generative AI can streamline the traditionally time-consuming tasks of literature research and synthesis. Tools like Avidnote allow researchers to efficiently organize and summarize literature, enabling researchers to focus on interpretation and insights. As AI evolves from a niche tool to a fundamental expectation, professionals who resist it will not only miss out on productivity gains but could also find their skills becoming less relevant. Over time, this could lead to an obsolescence of the profession as AI-driven practices become the industry standard.

Generative AI has redefined expectations of efficiency and productivity. Today, it is no longer enough to do a task well. Professionals are expected to deliver faster and more innovative results. In this environment, adaptability is becoming a competitive advantage. Those who are willing to experiment with artificial intelligence not only gain efficiency and effectiveness, but also acquire skills that make them valuable assets in evolving work environments. Pasch’s own journey illustrates this shift. After embracing AI, she found that it did not replace her work, but enhanced it. Her adaptability expanded her expertise and allowed her to redefine her professional values.

A common misconception about AI is that it devalues human talent by making skills more accessible. On the contrary, AI increases professional value by taking over routine tasks and freeing up time for higher-value work. Pasch initially feared that AI would dilute her craft, but she later realized that it allows her to focus on strategic, high-impact tasks. AI allows professionals to raise standards and focus on creativity, strategy, and relationship-building-the elements that truly set individuals apart.

For those still hesitant to adopt AI, some practical strategies can ease the transition. Starting with small steps is an effective way to get used to AI. Using it initially for routine tasks such as generating ideas or summarizing documents will help you familiarize yourself with its capabilities. Another important factor is formulating specific prompts that will make for more relevant and impactful AI-generated content. Recently, I discovered that you can share your initial thoughts with ChatGPT on what you want it to do, then ask the same AI to refine and improve the prompt before executing it. The results are impressive, effectively bridging the gap between those who are skilled and those less confident in communicating with AI. This approach enables clearer, more effective interactions with the AI, enhancing the quality of responses for everyone. The mindset that AI is a helpful assistant rather than a replacement can also encourage professionals to use it to tackle smaller tasks or overcome writer’s block, freeing up time for more complex projects. Finally, do not use AI output “as is,” but consider it a starting point that can be refined and personalized so that the final product reflects your personal expertise.

The hesitation to adopt AI is not just an individual problem, but a general economic risk. Industries and individuals that are slow to integrate AI will struggle to remain globally competitive. As productivity and growth increasingly depend on AI integration, resistance could hinder progress in sectors and economies already struggling with global competition. Adaptability to AI will be critical to economic resilience. As AI technology evolves, expectations for workers, industries, and economies will change. Those who adapt to AI could gain a competitive advantage, while those who resist risk being left behind.

Generative AI is not here to replace jobs but to augment human talent and eliminate inefficiencies. The economic impact of using AI goes beyond personal productivity and affects the competitiveness and survival of the entire human production chain. Using AI means using tools that reduce routine work and allow individuals and organizations to devote time and resources to high-impact, strategic initiatives. This transition opens up opportunities for innovation, skills development, and economic growth that can be transformative at every level —individual, organizational, and societal.

Hesitation to adopt AI comes at an economic cost by slowing productivity gains and reducing competitiveness. Regions, industries, and professionals that resist AI lose out on immediate efficiencies and miss out on the economic benefits that AI will bring over time. As more professionals and organizations integrate AI into their workflows, those who adopt it earlier can gain a first-mover advantage and establish themselves as leaders in their field. Early adopters are often better positioned to innovate, adapt to changing demands, and capitalize on the growing AI-driven economy.

The economics of AI adoption illustrate a broader principle: in an environment where technology is rapidly evolving, adaptability is no longer optional — it’s essential. The economic landscape is increasingly shaped by technological capabilities, and AI has set a new standard for what is achievable in terms of speed, depth, and scalability. By using generative AI, professionals can reduce costs, increase output, and improve the quality of their work, driving growth and resilience.

Pasch’s experience shows that the shift from resilience to adaptability allows us to redefine professional value, unlock new levels of productivity, and open doors to creative and strategic activities that were previously limited by time. Ultimately, the economics of AI adoption show that it is not just a tool to maintain relevance, but an investment in future productivity and competitive advantage. Generative AI is here to multiply opportunities and enable individuals and organizations to drive growth, innovation, and economic resilience in a fast-paced, technology-driven world.

Efficiency Trumps Nostalgia: Why AI-Enhanced Search is Not the "Death of Search"

By Sebaggala Richard

 

For those who are not yet familiar with generative AI, l will first provide a brief overview. Since the launch of ChatGPT in November 2022, the landscape of online information has changed dramatically. Generative AI tools such as ChatGPT are designed to generate human-like responses based on large amounts of training data. Initially, critics pointed out that these tools lacked real-time information and instead relied on static, pre-existing data, occasionally leading to what experts call “hallucinations" - moments where the AI generated inaccurate or outdated responses on newer topics. However, recent advances from companies such as OpenAI, Perplexity and Google have begun to address these limitations by integrating real-time search capabilities into their AI systems.

I was inspired to write this article after reading Matteo Wong's recent article "The Death of Search"," in which he addresses a sense of nostalgia — an emotional longing for the past — that some feel towards traditional search methods. Wong's article reflects a longing for the familiar process of trawling through pages of links and information, where users were in control of their search rather than having answers instantly curated by an AI. But is this move away from traditional search really a loss, or could it be seen as an overdue improvement that will help us become more efficient and cognitively empowered?

 

Steve Jobs famously likened computers to “bicycles for our minds",” tools that amplify our natural abilities (Markoff, 2011). Taking this metaphor further, AI could be seen as a “jet engine” for our minds, propelling us beyond the limits of our cognitive abilities. Whereas traditional search required a lot of mental energy to sift through links and refine keywords, AI-powered search engines streamline this journey, allowing us to access synthesized, relevant information almost instantaneously. Rather than lament the transition, we should recognize that AI elevates the concept of search to a higher level of cognitive empowerment.

From an economic perspective, search is not dying, it is evolving. This change is a well-known phenomenon of technological progress, comparable to the transition from slide rules to calculators. Just as calculators simplified arithmetic, AI search tools optimize information retrieval and allow users to focus on knowledge rather than information retrieval. Efficiency is a resource, and AI-powered search engines maximize its value by reducing redundant tasks and enabling deeper engagement with relevant data. Those who mourn traditional search are overlooking the greater potential that AI brings: Users can invest their time in critical thinking, analysis and innovation.

Indeed, AI-powered search mirrors the natural evolution of efficiency in our digital age. Every technological advance, from calculators to statistical software, has sparked similar fears of "loss," but these tools have consistently allowed users to move from mundane tasks to more meaningful pursuits. Calculators have not "killed" math, they have enhanced it. Similarly, AI-driven search doesn’t "kill" search, it optimizes it and provides a richer, results-driven experience. Why should we resist this development when it allows us to work smarter, not harder?

Wong’s article suggests that traditional search, with its search for keywords and lists of links, held intrinsic value. But this view holds to a process, not an outcome. AI search engines curate information with unprecedented precision, allowing users to bypass irrelevant links and go straight to what they need. This change does not mean that we are losing access to knowledge, but that we are accessing it more efficiently.

Let’s also tackle the notion that AI is a "replacement" for discovery. When calculators became indispensable, we didn’t mourn the loss of slide rules — we celebrated the new ease and accuracy they brought us. In the same way, AI search enables users to engage with knowledge, not replace it. The idea that efficiently delivered information has no value just because it’s fast is false; instead, it’s a testament to AI’s ability to serve us better.

In an age information overload, AI-driven search is essential. The economics of efficiency teaches us that our resources, especially time and cognitive energy, are finite. Why shouldn't we embrace a tool that helps us make the most of them? We should see the rise of AI-powered search not as the "death" of an old system, but as the birth of a smarter, more effective system.   To see how these AI advancements are improving our daily information handling, here are practical examples of how AI-powered search tools like ChatGPT are streamlining tasks and empowering users.

Efficiency in information retrieval and research: Traditional search engines require sifting through countless links, but AI-powered search can deliver summarized answers directly. For students and researchers, AI search tools like ChatGPT provide instant summaries and explanations, making research a more analytical, less repetitive process.

Personalized and real-time Assistance: AI search tools with features like real-time data access and personalized help make learning adaptable. Users can ask ChatGPT to explain new concepts or retrieve up-to-date information such as news or stock prices, simplifying knowledge acquisition and improving decision-making.

These examples show that AI-driven search not only increases efficiency, but also changes the way we interact with information, allowing us to focus on deeper insights and applications.

In conclusion, while I approach the future of AI with measured optimism, recent advancements offer the most compelling glimpse yet into what may lie ahead.The rapid refinement of these tools shows us how transformative AI can be, not just for routine tasks, but for reshaping entire fields, from research to education. For those who have not yet embraced these tools, now is the time. Early adopters will gain a significant advantage, and those who hesitate will find it increasingly difficult to keep up. In a world where technological inequality often separates the developed from the developing world, the widespread adoption of AI is not just about progress, but also about equity. By encouraging early and widespread adoption, we can help bridge this technological divide and create more equal opportunities. By harnessing the potential of AI now, we can all move towards a more connected, informed and empowered future.

 Economics of choice: Generative AI anxiety and Choice Overload

By Sebaggala Richard

Over the past six months, I have had the opportunity to promote the use of generative AI (GenAI) to researchers and students across Africa, introducing platforms such as Avidnote, ChatGPT, Elicit, Gemini and others. These tools are transforming research and learning. They offer features that can streamline literature reviews, enhance collaborative research and even automate aspects of data analysis and writing. Yet despite the transformative power of GenAI, I have noticed that many people, even those expected to be tech-savvy—students, academic staff and professionals at universities— have little familiarity with the wide range of  GenAI tools now available.

This lack of familiarity is not due to indifference. Rather, it is due to a mixture of AI anxiety and a feeling of being overwhelmed by the sheer number of tools available to choose from. Generative AI is developing at an astonishing rate. New applications appear almost daily, each with unique capabilities, price points and skill requirements. This rapid development creates a landscape of "choice overload," where the sheer number of options can lead to confusion, hesitation and ultimately inaction.   As I thought about this, I was reminded of the economics of choice, a field that examines how we make decisions when faced with a multitude of options — and the emotional and cognitive impact of too many choices. Understanding this concept is essential if we are to effectively combat the fears associated with the adoption  of GenAI.

The economics of choice and the Jam study

In the field of behavioral economics, one of the most illustrative studies on choice overload is the Jam Study (2000) by Sheena Iyengar and Mark Lepper; When choice is demotivating: Can one desire too much of a good thing? In this experiment, the researchers presented shoppers with two different displays of jam: one with 24 options and one with just six. Although more people were attracted to the large display, fewer people made purchases than those who were presented with only six options. This study illustrates a paradox: more options attract us, but they also lead to decision paralysis, which decreases our satisfaction and increases the likelihood that we will abandon the decision altogether.

Today’s GenAI landscape mirrors the Jam study on a much larger scale. GenAI tools promise endless possibilities — from boosting productivity to revolutionizing education. But for new users, choosing between a dozen tools that all seem to perform similar functions can feel as overwhelming as looking at a wall full of jam jars. This overabundance often leads to GenAI anxiety, where users, especially in developing regions, feel paralyzed by choice and afraid of missing out on the “perfect” tool.

Choice Overload and AI anxiety

Anxiety surrounding new technologies is not unique to artificial intelligence. Throughout history, every technological wave has brought with it a mixture of excitement and trepidation. From the printing press to the Industrial Revolution to the advent of the internet, humanity has often felt uneasy about the rapid changes these technologies bring. However, while previous advances primarily impacted mechanical or technical aspects of life — such as the efficiency of production or information processing — AI is attacking something much more profound: human intelligence itself.

Unlike previous innovations, GenAI, for example, doesn’t just automate physical tasks or process data faster. It emulates and improves cognitive tasks such as understanding language, generating creative content and even making recommendations based on user input. This interaction with human intelligence adds a layer of complexity and personal relevance that can increase anxiety.

Furthermore, the speed at which GenAI is evolving is unprecedented. When ChatGPT was launched in November 2022, it marked a milestone in public AI participation. Since then, the scale of GenAI applications has expanded at an astonishing pace, with new tools, features and integrations emerging almost daily. This rapid pace has heightened anxiety about AI, especially in developing regions where access to training and resources can be limited. It’s not just about getting used to new machines or a faster computer, but about coming to grips with an evolving ecosystem of tools that have far-reaching implications for research, business and even personal decision-making.

In developing regions, the fear of GenAI is compounded by unique contextual challenges. A digital divide, limited technical support and budget constraints make it difficult for users to freely explore and adopt new AI technologies. Many researchers and students I’ve spoken to feel intimidated when it comes to AI — not only because they are unfamiliar with the technology, but also for fear of choosing the "wrong" tool. This fear is compounded when you consider how much time and money required to subscribe to familiarize yourself with these tools. The misconceptions people have about generative AI, along with ethical challenges such as plagiarism, biases, and hallucinations (incorrect or misleading results that AI models generate), often create confusion around the technology's reliability and ethical use.

Imagine a postgraduate student in Africa who wants to use GenAI for their research. They may have heard of tools like ChatGPT for generating text, Avidnote for collaborative writing, Elicit for synthesizing research findings and Gemini for image creation. But each of these tools has its own learning curve, skill requirements and subscription costs. Without clear guidance, a student can easily become overwhelmed and not know where to start or which tool is most useful for their work. This sense of paralysis—of being overwhelmed by choice — inhibits the adoption of GenAI and prevents users from fully realizing the transformative potential that generative AI offers for research and innovation.

In the context of developing regions, this combination of choice overload and fear is not just a minor inconvenience, but a significant barrier to progress. By addressing these challenges thoughtfully and providing targeted support, we can pave the way for greater adoption of GenAI and ultimately enable users to harness the full potential of this revolutionary technology

Practical lessons for tackling choice overload

To counteract choice overload, we can be guided by a few economic principles. One of these is the concept of opportunity cost — the realization that every decision involves a trade-off. In the context of GenAI, this means that we recognize that choosing one particular tool may mean forgoing another. Instead, it can be an opportunity to focus on tools that provide the most immediate benefit and set aside more complex options for later exploration.

For many of the individuals and organizations I advise, I start with a simple, effective strategy: list the tasks that take up the most of your time. If you’re a student, this might be reviewing class notes, grasping complex concepts, or organizing study materials. If you’re a researcher, it might mean identifying the most time-consuming aspects of research, such as summarizing literature, managing citations, or analyzing data. Once these tasks are identified, we can explore how GenAI can help streamline them. By starting with specific, time-intensive tasks, users can develop an understanding of GenAI’s capabilities and gradually acquire the skills they need to use these tools effectively.

This targeted approach aligns well with the Jam study's findings: narrowing the scope and focusing on immediate, high-impact solutions can help users navigate the overwhelming landscape of AI options. For example, a small business owner could start by implementing a single AI-powered planning tool that offers clear benefits without being overly complex. This approach allows them to experience the benefits of GenAI in a manageable way before moving on to more advanced applications.

Another useful strategy, inspired by the Harvard Business Review, is to focus on the problem, not the tool. Before choosing an GenAI platform, I advise users to identify their most pressing challenge. For example, a researcher might have trouble managing citations, while a student might need help understanding dense study materials. By starting with a concrete problem, you can avoid the distraction of endless features and instead focus on an AI application that provides an immediate, practical benefit.

Conclusion

In order for GenAI to realize its full potential in developing regions, simplifying the adoption process is crucial. Universities and organizations could put together “starter” toolkits tailored to specific use cases, such as research or small business management, so that users can experiment more easily without feeling overwhelmed. training, peer to peer support from those who have gained the AI competences, guided introductions, and local tech support would also go a long way towards reducing the fear of GenAI and helping users gain confidence and competence in using these tools.

In summary, the economics of choice teaches us that while options can be empowering, too many choices can also discourage decision-making and leave potential untapped. As the GenAI landscape continues to expand, developing a mindful, problem-centered approach to tool selection will allow us to overcome choice overload, tackle the fear of AI head-on, and make GenAI a powerful ally in economic development in Africa.

 

 The Cost of Ignoring Dissent: Critical Reflections on Uganda’s UCDA Debate

By Sebaggala Richard

In the recent discussions around the proposed dissolution of the Uganda Coffee Development Authority (UCDA), I have had the opportunity to listen to various stakeholders: Government officials, parliamentarians, academics, farmers, leaders from the church and traditional institutions and esteemed Ugandans. One might expect that such a wide range of perspectives would influence the government’s stance. However, the prevailing opinion seems to be a resolute determination to pass the National Coffee (Amendment) Bill, 2024 and there is little evidence of openness to alternative viewpoints. This observation prompts us to examine more deeply the nature of our political and policy-making processes.

James Buchanan and Gordon Tullock’s seminal work, The Calculus of Consent (2004), offers valuable insights into this phenomenon. The authors examine the complexity of collective decision-making and emphasize the importance of reconciling individual preferences with collective choices. They argue that decisions are only truly representative if the process takes into account different points of view and strives for consensus. In the context of the UCDA debate, the apparent exclusion of dissenting opinions raises questions about the inclusivity and legitimacy of the decision-making process.

A recurring theme among government officials and politicans has been  a 'know-it-all' ” attitude that effectively sidelines opposing views. This behavior is consistent with the observations of C. Wright Mills in The Power Elite (1956), in which he notes that elite groups often assume that they possess superior insight, which they use as justification for ignoring dissenting popular opinion. While it is true that some degree of elitism is common in many countries and that elite consensus can be beneficial, over-reliance on elite decision-making can have unintended, even harmful, consequences. In the case of Uganda coffee sector, this attitude is particularly worrying as  the choice decision at stake  could significantly affect the livelihoods of nearly 10 million Ugandans who depend on the coffee sector.

In a mature political environment, one would expect an issue of this magnitude to invite open, inclusive debate, ensuring that different viewpoints are not only heard, but actively considered in the formulation of policy. Interestingly, in many economics and political science courses, students are taught that “doing nothing” is sometimes the wisest policy response, especially when it comes to “pockets of effectiveness.” The premise here is that if effective results are already being achieved in certain institutions, forcing change may inadvertently harm what is working well. The adage “the devil you know” is particularly relevant here. It suggests that in some cases it may be wiser to preserve a structure that works than to risk its success with reforms that have history of failure in many countries.

The government’s persistent push to dissolve the UCDA despite significant opposition provides an insight into the dynamics of public choice theory. This theory states that policy makers, much like individuals in markets, often act out of self-interest. This can lead to decisions where political or personal goals take precedence over the common good. As a result, public policy becomes a commodity — a tool to promote individual goals rather than the common good. This commodification may explain the persistence behind dissolving the UCDA, as policymakers may be influenced by factors that are not fully aligned with the broader public interest. When policy is commoditized in this way, it can have serious consequences: reduced policy effectiveness, increased risk of policy failure, and erosion of public trust. To address these problems, mechanisms are needed to align the incentives of policy makers with the public good, ensuring that decisions truly meet people's needs and aspirations.

An apt example of the consequences of policy commodification are the Structural Adjustment Programs (SAPs) of the 1980s and 1990s. Mandated by international financial institutions, these programs required developing countries, including Uganda, to undertake far-reaching rationalization measures such as the privatization and dissolution of state-owned enterprises. In Uganda, as in many other countries, the government implemented these reforms despite widespread public concern and opposition, often ignoring dissenting voices.

The implications of this approach were profound. While the SAPs achieved certain macroeconomic goals, they also brought with them significant social challenges. The rapid privatization and downsizing of public services led to job losses, reduced access to essential services and increased poverty. Today, the proposal to dissolve the UCDA as part of ongoing rationalization efforts is reminiscent of these reforms of the past. Various stakeholders — farmers, church leaders, politicians, academics and traditional leaders— - are expressing concern about the potential negative impact on the coffee sector and related livelihoods. The adage "experience is the best teacher" seems to be almost disregarded in this context. I have read and heard Ugandans who were involved in the SAP reforms express concerns rooted in the hardships and lessons they have learned through these experiences. They recall the reasons for setting up agencies such as the UCDA as safeguards for vulnerable sectors. However, the government’s steadfast adherence to this policy despite significant opposition raises important questions about the inclusivity and responsiveness of the decision-making process.

Looking at Uganda’s experience with SAPs, it is clear that the exclusion of public input can lead to policies that are economically rationalized but do not serve the broader public interest. When policy decisions prioritize economic metrics woven in polictical at the expense of societal wellbeing , they risk alienating the public they are supposed to benefit, undermining trust and leading to unintended negative outcomes. To avoid repeating the mistakes of the past, it is imperative that the government engages in genuine dialogue with all stakeholders. This will ensure that policies are not only economically viable, but also socially just and reflect the needs and aspirations of the people they are intended to serve.

Institutional dynamics play a crucial role in shaping policy outcomes. It is often driven by the tendency of organizations to pursue policies that mirror those of their supposedly successful counterparts — a concept known as institutional isomorphism. In the case of Uganda, the drive to streamline public entities, including UCDA, may have been influenced by external pressures, similar to SAPs. However, history shows that blanket approaches can be problematic and often act like squared pegs in round holes. They tend not to take into account local contexts and the unique economic, social and cultural forces at play.

Should we continue to uncritically follow external advice, disregarding our own history, experience and the valuable insights of those directly affected? Rationalization is of course essential — no one disputes that it is important to improve efficiency. But meaningful reforms need to be tailored to Uganda’s unique socio-economic context and truly responsive to the voices of the people they will affect. The importance of contextualizing reforms cannot be overstated. Without it, we run the risk of repeating past mistakes that erode trust and compromise policy effectiveness.

The debate on the dissolution of the UCDA reminds us of the complexity of policy making and the importance of anchoring reforms both in the local context and in inclusive processes. In The Narrow Corridor:How nations struggle with liberty,  Acemoglu and Robinson (2019) argue that effective institutions emerge from a balance between state and society that evolves through constant negotiation and co-evolution, rather than rigid, top-down imposed reforms. They suggest that development is a journey along a “narrow corridor” where state and society must constantly adapt to each other. From this point of view, the dismantling of the UCDA should not be a unilateral decision. It must involve all stakeholders to ensure that it meets the needs of those who are most directly affected.

James Scott, in Seeing Like a State: How certain schemes to improve the human condition have failed, highlights the dangers of centralized reform efforts that overlook local knowledge and informal systems. Scott's beautfully written book uncover why states so often fail--sometimes catastrophically in grand efforts to engineer their society. He notes that development projects often fail when they ignore the practical ways in which people organize themselves and solve problems independently. In the case of Uganda, rushing to dissolve the UCDA without fully understanding the intricate relationships and practices within the coffee sector risks destroying the systems that have driven the coffee sector to the level admired by everyone.

The foregoing above remind us that we need to reevaluate our decision-making frameworks to ensure that they are inclusive, transparent and aligned with the common good. By considering diverse perspectives and fostering genuine dialogue, Uganda can develop policies that not only address immediate challenges but also lay the foundation for a more equitable and prosperous future. With these considerations in mind, the government would do well to reflect on whether the dissolution of UCDA is really in the best interest of the country. A thoughtful, inclusive approach could ultimately lead to a decision that is not only economically viable, but also socially responsible — one that takes into account the voices of those whose lives are most directly affected.

Is rationalization a double-edged sword? Weighing up economic wisdom and bureaucratic reform

By Sebaggala Richard

 

My reflections on the possible rationalization of the Uganda Coffee Development Authority (UCDA) were prompted by two compelling but opposing views I recently heard from respected voices in Uganda’s policy sphere. The first speaker, a respected political commentor argued that the Ugandan government is both capable and conscientious, carefully assessing the impact of any reform to ensure that it aligns with the best interests of the country. By this logic, the rationalization agenda aimed at streamlining the public sector and reducing redundancies is a necessary step in Uganda’s development that we should support with confidence including the UCDA. I wondered why those who oppose the government do not give it the benefit of the doubt?

But just a few hours later, a second voice challenged this view and appealed to my understanding as an applied economics scholar. This speaker presented a cost-benefit analysis comparing the economic potential of coffee with that of Uganda’s oil sector. He explained that coffee could bring in 75 billion dollars over the next 25 years — even taking into account market uncertainties — compared to the 44 billion dollars the oil sector is expected to bring in over the same period if oil prices per barrel remains at 100 dollars. Considering the huge infrastructure investments and public spending already devoted to the oil agencies, his argument was simple but convincing: if coffee holds such promise, disbanding the UCDA under the pretext of reducing public spending could be counterproductive. He warned that moving UCDA’s functions to a larger ministry could suffocate the sector in a more cumbersome bureaucracy, which could jeopardize Uganda’s competitive advantage in the coffee sector.

These conflicting viewpoints made me wonder: is our government really conducting the thorough assessments of economic policies and reforms that it claims? And if so, how could it overlook the compelling economic argument for preserving UCDA’s independence?

It is important to recognize that the UCDA is not the only agency being reformed. The government’s proposal to merge UCDA’s functions into the Ministry of Agriculture, Animal Industry and Fisheries (MAAIF) is part of a larger rationalization agenda aimed at streamlining public agencies to reduce costs and increase efficiency. Parliament has passed laws to merge other agricultural institutions such as the Cotton Development Organization (CDO), the Dairy Development Authority (DDA) and the National Agricultural Advisory Services (NAADS) into MAAIF. Other institutions such as the Uganda Trypanosomiasis Control Council (UTCC) and the Agricultural Chemicals Board (ACB) have also been absorbed into their parent ministries.

This rationalization is widespread. By September 2024, almost 20 agencies have been rationalized. In the Ministry of Gender, Labour, and Social Development (MGLSD), for example, the National Youth Council, National Women’s Council and National Children’s Authority will be merged. Other authorities such as the Uganda Warehouse Receipts System Authority, the Uganda Free Zones Authority and the National Physical Planning Board have been merged into the Ministry of Trade and the National Planning Authority (NPA). This trend extends to various sectors, from meteorology to higher education, and shows a strategic shift towards a leaner government structure.

The UCDA's dilemma now is to find a balance between the economic impact of coffee and the cost-saving objectives of rationalization. Cost-benefit analysis, a basic requirement for economic decision-making, offers a pragmatic view here. Reducing bloated public spending is essential, but abolishing the UCDA risks diluting specialized oversight, as coffee would then fall under broader bureaucratic control within a ministry. This could stifle growth, as ministries often lack the sector-specific focus and agility of specialized agencies. Moreover, history has shown that the consolidation of specialized agencies into broader ministries often leads to bureaucratic inertia. Agencies with targeted goals, such as the UCDA, are structured to maximize sector-specific knowledge, market adaptability, and international trade engagement. Government departments, on the other hand, may not have the same level of agility and depth of focus.

One of the key questions this debate raises is whether the government’s assessments truly take into account the nuanced economic impact of the UCDA’s dissolution. Public confidence rests on the certainty that any reform will be supported by data-driven analysis, but doubts arise when economic projections, such as those for the future of coffee, are overlooked. Transparency could strengthen the government's position here. Disclosing the methodology and results of its assessments would not only clarify the rationale, but also show that Uganda’s policies take into account both immediate fiscal constraints and long-term economic benefits.

 

While rationalization can streamline governance, but a one-size-fits-all approach could miss opportunities where specialized agencies which make unique contributions to the economy are merged. If the UCDA is self-sustaining and capable of generating significant economic returns, its abolition could be counterproductive. The experience of other countries argues for a selective approach where the agencies that have proven their worth are retained and strengthened with additional resources rather than abolished.

Victor Ayeni’s Public Sector Reform in Developing Countries offers valuable insights into rationalization and highlights that while efficiency gains are possible, there are also significant risks. Success stories such as the selective reform of underperforming public enterprises in Malaysia show that targeting inefficiencies can improve governance without undermining functioning institutions. Conversely, Ayeni’s examples from Zimbabwe and Kenya illustrate the unintended consequences of losing specialized expertise and institutional knowledge, leading to impaired service delivery and economic setbacks.

For me as an applied economics scholar, I find the debates and counterarguments surrounding the UCDA’s rationalization both enriching and insightful. The UCDA has received substantial attention from politicians, academics, and the general public—a level of scrutiny that other merged institutions have not. This suggests that Ugandans are thoughtful, rational, and deeply concerned about issues that directly impact their lives and the country’s economic future. I hope that the government listens carefully to the arguments raised against dissolving UCDA, perhaps taking them into account to avoid the policy failures that have marred similar decisions in the past.

In line with Ayeni’s findings, the government’s decision to adopt a three-year transition period for the rationalization of UCDA is a wise move. Agriculture Minister Rwamirama explained, "Given the tensions surrounding UCDA's rationalization, the government has granted a three-year transition period. This will provide time for stakeholders to understand that the same government that supported UCDA aims to empower farmers to earn more." This period offers a window of certainty and flexibility for stakeholders concerned about the reform’s impact on the coffee sector. It allows time to evaluate whether the transition truly supports farmers, preserves the UCDA’s crucial functions, and provides room for adjustment or reconsideration if the intended outcomes are not met.

This phased approach, consistent with Ayeni’s principles of strategic preservation, proposes a rationalization model that focuses on efficiency without compromising specific roles that are important to Uganda’s economy.  As Uganda moves forward with rationalization, prudence and selectivity are key to striking a balance between efficiency and economic resilience. By maintaining a flexible approach that allows for adjustments based on sector-specific impact assessments, Uganda can avoid the risks of blanket rationalization. Ultimately, reforms should strengthen rather than diminish Uganda’s competitive advantages in sectors such as coffee so that they are consistent with both immediate fiscal goals and long-term economic priorities.

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.

 The deadly dance with danger: Lessons from the Fuel Tank Tragedies in Uganda

By Sebaggala Richard

Within the space of a week, two catastrophic tanker accidents occurred in Uganda and Nigeria, in which numerous people lost their lives. These events, characterized by overturned tankers being ignited while onlookers gather to siphon fuel, are indicative of a broader pattern rather than isolated incidents. This incident is reminiscent of previous tragedies in Uganda. In 2013, a similar accident in Kampala killed 31 people, and in 2001, 90 people died in eastern Uganda in almost identical circumstances. Despite the well-documented dangers associated with such actions, people continue to engage in this dangerous behavior, which raises an important question: What motivates people to engage in such life-threatening activities even though they are aware of the risks involved?

While poverty is often cited as a major factor in these decisions, it is not a sufficient explanation on its own. A critical understanding of these recurring tragedies requires research into the psychological underpinnings of risk-taking behavior, particularly the cognitive biases that drive people to make dangerous decisions.

The immediate reason for these actions often has to do with economic desperation. Many people see these accidents as an opportunity to obtain a valuable resource — fuel — that they can use or sell for their financial gain. From a rational economic standpoint, such decisions can be interpreted as an expression of desperation, as individuals are willing to jeopardize their safety for short-term monetary gain in a context characterized by great scarcity. However, eyewitness accounts reveal a more complex scenario. One witness reported that the truck driver fled the scene while cautioning people to keep a safe distance. Footage from another observer shows an urgent request for others to leave the area, indicating that people were aware of the impending danger. Despite these warnings, many people continued to siphon fuel, indicating that they were aware of the potential consequences and were not deterred. This behavior indicates that the motives for such risky behavior go beyond mere economic need. Insights from behavioral economics that explore irrational behavior and cognitive biases — mental shortcuts that can distort decision-making in high-risk contexts — provide valuable clues as to why people engage in such dangerous practices.

The Limits of Rational Perspectives

The immediate reaction to fuel siphoning incidents often focuses on the obvious: poverty creates desperation, and desperation leads people to take risks. While poverty can indeed drive desperate acts like fuel siphoning, this rational economic explanation has limitations. Banerjee (2000) study, The Two Poverties, distinguishes between "poverty as desperation" and "poverty as vulnerability," which provides deeper insights into why people engage in risky behavior even when the dangers are clear.

Poverty as desperation suggests that individuals make high-risk decisions because their economic situation leaves them with little choice. In this view, people are driven to siphon fuel because the immediate need for survival outweighs long-term safety considerations. This framework aligns with the idea of rational decision-making, where the need to secure valuable resources, such as fuel, justifies taking extreme risks. However, poverty as vulnerability focuses on the precariousness of people's lives and the constant exposure to risks that make them more likely to engage in dangerous behaviors. Vulnerability is not just about immediate desperation but also about the chronic uncertainty and lack of safety nets that prevent individuals from making safer choices. In this context, even when people are aware of the risks or receive warnings, they may still engage in risky behavior because they have become conditioned to taking chances due to the absence of viable alternatives.

 

This distinction highlights that desperation alone does not explain why people knowingly place themselves in danger. Vulnerability compounds this issue by revealing how the structural conditions of poverty limit people's capacity to make safer, long-term decisions. Therefore, while the rational perspective explains part of the behavior, it overlooks the cognitive biases and psychological factors that interact with the chronic vulnerability experienced by many, leading to repeated engagement in high-risk activities.

 

Let us now examine how cognitive biases come into play, offering a broader framework for understanding these tragedies. Cognitive biases are psychological tendencies that influence decision-making, often leading to flawed judgments, particularly in complex or stressful situations. Several key biases help explain why people continue to ignore the clear dangers of siphoning fuel:

 

Optimism Bias: This bias leads individuals to believe that they are less likely to experience negative outcomes than others. In the case of fuel siphoning, people may acknowledge the risk of fire but assume that it will not happen to them. They believe they can extract the fuel quickly enough or that previous experiences of taking risks without harm mean that they will be safe this time.

Normalcy Bias: Many people involved in these incidents have likely encountered hazardous situations before, whether through handling fuel or being exposed to other dangerous materials, without serious consequences. This experience reinforces the belief that things will continue as usual, leading them to underestimate the risk of a catastrophic explosion.

Herd Behavior: The sight of others siphoning fuel creates a powerful social dynamic. When a few individuals begin to engage in the activity, others quickly follow suit, assuming that the collective action somehow reduces individual risk. This herd mentality overrides personal caution, as people rely on the behavior of the group rather than independent risk assessment.

Temporal Discounting: This bias causes individuals to prioritize immediate rewards over future risks. In the context of poverty, where survival often depends on day-to-day gains, the short-term benefit of obtaining free fuel can eclipse the long-term danger of a fire or explosion. The immediate need for fuel or the potential to sell it for cash can blind individuals to the potential for fatal consequences.

These cognitive biases don’t only explain behavior in fuel siphoning incidents; they extend to many aspects of life in African countries, shaping decisions related to health, education, and economic opportunities. These biases, combined with economic challenges, perpetuate cycles of poverty and suffering.

 

Broader Implications

The effects of cognitive biases are not limited to fuel siphoning. These psychological tendencies influence decision-making in various areas, lead to risky behavior and contribute to major social and economic challenges. A recent example is the COVID-19 pandemic, where governments around the world, including Uganda,  struggled to convince people to take preventive measures. Despite the obvious dangers posed by the virus, many people were reluctant to take health precautions such as wearing masks and social distancing.

The difficulty in enforcing these safety measures across the board can be attributed to cognitive biases such as the optimism bias (the belief that “I won’t get sick”) and the normalcy bias (the expectation that life will go on as usual despite the warnings). This bias made it difficult for public health campaigns to convince people to change their behavior in the face of an invisible but deadly threat.

A similar pattern is evident in the context of the upcoming general elections in Uganda. In previous elections, reckless behavior has claimed many lives, especially among boda-boda riders who ride dangerously on their motorcycles during campaign rallies. This behavior, often driven by the excitement of the campaign season, reflects both herd mentality and temporal discounting. Riders are influenced by the actions of like-minded individuals and focus on the immediate thrill or potential rewards without considering the long-term risks to their safety.

Delays in emergency response to accidents, such as tanker truck explosions, exacerbate the dangers posed by risky behavior. If emergency services take too long to arrive and secure the area, people are more likely to congregate to siphon fuel, which can have deadly consequences. Quick intervention could stop this behavior and prevent loss of life. However, Uganda’s emergency response capacity remains limited, especially in densely populated areas with many fuel stations, which are effectively “time bombs” if not properly managed.

As the country continues to urbanize, the growing number of petrol stations in close proximity to residential areas and businesses increases the risk of future fire disasters. Countries such as Brazil and India, which also face similar risks, have invested heavily in faster emergency response systems, including firefighting hubs near high-risk areas and advanced training for emergency personnel. These countries also enforce strict regulations on the placement of fuel stations and ensure that emergency response teams are equipped to deal with fuel-related accidents quickly. Uganda can look to these examples to strengthen its own fire prevention and emergency response systems.

Lessons for Uganda

To prevent future fuel tanker tragedies in Uganda, a multifaceted approach is needed—one that addresses both the root causes of poverty and the cognitive biases that contribute to risky behavior. While tackling poverty requires long-term solutions, raising awareness of cognitive biases and implementing targeted interventions can more swiftly mitigate their impact.

For example, public safety campaigns must do more than just inform people about the dangers of fuel siphoning. They should also address the cognitive biases that lead to risky behavior, such as optimism bias and normalcy bias. Campaigns could employ powerful stories of past tragedies to make the risks more tangible and immediate to the public. Community-led initiatives that engage people at the local level can further enhance the effectiveness of these campaigns by building trust and making the messages more relatable.

In addition, the government must strengthen its ability to quickly secure accident sites and prevent people from accessing hazardous areas. Institutional vigilance—through faster emergency responses and the enforcement of public safety regulations—will act as a necessary deterrent to dangerous behavior. Moreover, ensuring that disaster response teams are well-trained to manage crowds and protect public safety is essential for preventing future incidents.

Conclusion

The tragic fuel tanker fires in Uganda are not merely the result of poverty; they are part of a deeper issue rooted in cognitive biases—psychological tendencies that drive people to make risky decisions in high-stakes situations. These incidents illustrate a deadly dance with danger, where individuals, despite knowing the risks, are drawn to perilous behavior due to desperation and mental shortcuts. While poverty remains a significant factor, understanding and addressing these cognitive biases is key to preventing future tragedies and improving decision-making across various aspects of life in Africa.

To move forward, Uganda must adopt a multifaceted approach that tackles both cognitive biases and poverty, strengthens public safety governance, and creates economic opportunities. By raising awareness and providing safer alternatives to risky behavior, the country can begin to break free from this dangerous cycle of poverty and tragedy. These lessons extend beyond Uganda, offering valuable insights for all African nations striving to create safer and more prosperous futures for their people.