KAMPALA, Uganda -- Retired Sgt. John Basco Sekitoleko learned, at age 21, how to hurl a grenade and thrust a bayonet. Now, at age 21, he is selling tomatoes and learning to read and add.

"When I finish school, I'd like to be a doctor or an engineer," says the veteran in the exuberant way a far younger person might ponder a distant career. Mr. Sekitoleko, who was one of thousands of kadogos, or child-soldiers, who fought in the Ugandan National Resistance Army, knows the terrors of guerrilla war and hopes he is done with soldiering for good. There wasn't enough food or medicine," he recalls. "You knew you couldn't go back because your village was destroyed and because government forces knew you were a guerrilla and they'd kill you."

The sergeant's transition parallels that of his country. Ten years ago, this lush East African nation was an appalling slaughterhouse. More than a million people died in the state-sponsored terror of Idi Amin and Milton Obote. Civil war and random violence caused hundreds of thousands more deaths.

Today, most Ugandans live peacefully, the economy grows modestly and the government spends more on schools than on arms. At least 30,000 warriors have surrendered their weapons and taken up farming or commerce somewhere in this country of rolling hills, rich farmlands and sad, ramshackle villages. And although Uganda's ethnic and religious fault lines could cause problems again, violence has subsided for now.

Far beyond Uganda and the troubled continent of Africa, cash-strapped countries are trying to learn how they, too, can disarm and develop. The world's poorest countries will spend $118 billion this year on their armies -- a about twice the official development aid they will receive, according to the United Nations Development Programme. However, as the Cold War legacy fades along with residual colonial military alliances, many war-torn countries now are ready to turn from militarism to mending broken economies.

Namibia, Chad and Zimbabwe have already cut their armies back with help from Western development organizations. On the cusp of demilitarization is Haiti, where 40% of the budget goes to the military -- the same as in Uganda before that nation began reducing its forces two years ago. South Africa sees demobilizing as central to post-apartheid rebuilding. Nicaragua, El Salvador, Ethiopia and Mozambique also are shrinking armies, having emerged from civil wars. Someday Cambodia, Angola and even Somalia and Rwanda may be ready to end the cycles of violence and disarm.

Underdeveloped countries face a conundrum as they try to demilitarize: Oversize armies sap their economies, but their private sectors can't absorb retiring soldiers. Demobilization can sometimes bring more mayhem. "The most dangerous person in the world is a soldier with a gun who isn't being paid," warns Michael Ward, a World Bank official who has been working on Cambodia's incomplete transition to peace. In Nicaragua, many soldiers dumped into a dysfunctional economy have turned to banditry. When Angola attempted a peace accord three years ago, thousands of hungry and demoralized soldiers formed marauding gangs. Eventually, as power-hungry leaders played on the economic despair, the war resumed.

All this causes the World Bank, the U.S. Agency for International Development and other large development groups, which once avoided military matters, to view demobilization as perhaps the most critical step in economic reconstruction. And specialists find that retreading soldiers into civilians can be as vital as disarming them and sending them home. These institutions now are pumping millions of dollars into buyouts and severance packages to lure warriors into productive economic activities.

Says a German development official, "The price of peace can be high, but it's worth paying."

The dividends come in two ways: First, demobilization frees resources for schools, doctors, roads and power stations; second, the stability that results from demilitarization supports investment and growth.

Uganda's demilitarization came only after prodding from the World Bank, which told Ugandan President Yoweri Museveni in 1991 it wanted to stop the military from continuing to drain development funds. To the bank's surprise, President Museveni, whose guerrilla forces had brought down the tyrannical Obote regime and quashed insurgencies around the country, accepted the bank's arguments. "I want to downsize," Michael Carter, head of the World Bank's East Africa division, recalls the former guerrilla leader’s saying, "but you've got to help me."

The bank solicited funds from the U.S., several European countries and the U.N., and in 1992, Uganda began using the money to finance a $1,000 severance package for each soldier. The package included iron roofing sheets to build homes, medical care, cash payments and transport home for the soldier and family. All told, the effort will cost about $45 million.

The money also finances a new Uganda Veterans Assistance Board to disburse benefits from offices in each of the country's 38 districts and help veterans adjust to civilian life. So far, about 32,000 soldiers have been demobilized, and 10,000 more will follow next year, reducing the old army by half.

Nowhere is the transition more striking than in the so-called Luwero triangle, a region north of Kampala where about 500,000 are believed to have died in the early 1980s in battles or government massacres mounted to root out the guerrillas' civilian supporters. The government is still collecting remains from Luwero's killing field, and plans several mass burials before year end.

Julius Mukibi, a former National Resistance Army officer, two years ago returned to his home village of Luwero, where his mother was killed by the Obote army as she tried to flee and where his two sisters were penned in an isolated area and starved to death. "It was very difficult to come back," Mr. Mukibi says, speaking through a translator. '"We found each and every thing disorganized. There was no food at all. There was no house." In a few months, however, he has built a family dwelling from roofing sheets supplied by the veterans board. To earn money, he produces waragi, a frothy brew made from fermented bananas, for a profit of about $200 a month.

Nearby, 27-year-old John Kalule used his severance package to buy two cows and open "The Mirembe Tea Room." a dark, mud-and-timber hovel separated from the dusty square by streamers of yellow and green plastic. Inside are two benches and two tables. On the menu are bread, milk, fruit and tea.

Most veterans seem to relish the challenges of starting a business, albeit a rudimentary one. Godfrey Nakabale, who just left the army last May, has a shop in Luwero where each day he sells about $8 worth of freshly churned butter, soap, candles, cooking oil and shirts. As a sideline, Mr. Nakabale, a 29-year-old father of 11, loads shirts onto the back of his bicycle and makes a little more money as a peddler while a partner watches the store.

"We began with a small amount of money, but we progressed," Mr. Nakabale says through a translator. "It's thrilling in a way." And after 12 years in the army, he recalls feeling, "I don’t want to be a soldier any more." The cost had been high. After he left home at 17 to join the guerrillas, government troops cornered his father and demanded to know where his son was. When he wouldn't say, they killed him -- an oft-used method to discourage parents from letting sons join the resistance.

Across Uganda, the transition -- in an economy that creates paid jobs for fewer than 10% of the veterans -- has been difficult. For one thing, veterans must contend with the daily hardships virtually all Ugandans face.

Acellam Nilong-got left the army last year and launched a small business producing a sandwich spread made from ground nuts, which comes in plastic containers with homemade labels that say "G-nut butter." But because he can't obtain a loan, he operates at 10% capacity and must sell from a remote location. George Bwekaso went into vanilla-bean production with another veteran, who then died of AIDS (it is estimated that 18% of Ugandan adults are infected with HIV).

There are other obstacles. Soldiers have had to compete for scarce jobs with tens of thousands of civil servants who were jettisoned in a campaign to cut government. Ex-soldiers were given U.S.-made roofing sheets as American donors bowed to congressional pressure to favor U.S. suppliers. But these made their homes stand out and, according to some veterans, marked occupants as both unarmed and comparatively rich -- tempting targets in a country with an average annual income of only $170 a person.

There also has been thuggery by former soldiers. One recently tossed a grenade at his lover, injuring himself and her. Retired Gen. Emilio Mondo, a former officer in Idi Amin's army and now manager of the veterans board, worries that the typical ex-guerrilla has been through so much horror that civilian life may be deeply frustrating, possibly leading to violent outbursts. "He thinks, 'What is it I suffered and bled for?’" If the civilian world seems like a dead end, Gen. Mondo continues, "He can think, 'I've been an idiot, and all the people who, run things now just used me.' He remembers how easy it is to got rid of life."

Beyond this, distrust of soldiers -- many of whom had brutalized civilians during the turmoil -- has made it difficult for some former combatants and their families to fit back into society.

Still, the veterans, by and large, are adjusting. "The important thing is getting people to see themselves not as ex-combatants from one side or the other but just regular people," says Aileen Marshall of the Global Coalition for Africa, which works on economic and political issues.

For John Bosco Sekitoleko, the former child-soldier, searing memories of war convince him change is worth it. He particularly remembers his induction as a guerrilla. One night, the government army charged into his village, killing a slew of people including his father, who was suspected of supporting the resistance. John Bosco and his mother escaped and hid in a banana plantation for several days.

"Then we came back, peeping at home to see if they were still around," he recalls. The guerrillas offered him the prospect of joining up, living under their protection and receiving training as a fighter. "I thought, if I remain here I may be killed," he recalls, so he joined up.

Uganda's demobilization hasn't been entirely orchestrated by the World Bank. Thousands of soldiers have had to lay aside their arms because they have AIDS. About 3,500 more were Rwandan Tutsis by birth who returned to Rwanda in 1990, with Ugandan weapons, to join the Tutsi fight against a Hutu government.

Indeed, Rwanda represents a chilling failure in the World Bank’s demobilization drive. Last February, a bank team persuaded government and rebel leaders to sign a detailed plan for shrinking the Hutu and Tutsi fighting forces. Two months later, before it could take effect, the country imploded in a grisly apocalypse.

Uganda, however, is fortunate to have enough rich farmland to support many veterans. In Kangulumira, only miles from the Nile, warrior-turned-farmer Dick Lubanga experiments with 18 varieties of exportable chilis, which lessen his dependence on coffee, Uganda's traditional cash crop. "I've just introduced a new system of mulching," he boasts.

Another Ugandan advantage is President Museveni's talent for reconciliation. After gaining power in 1986, he folded the defeated government army into his own, along with several other fighting forces. As insurgencies flared up around the country, he continued incorporating the defeated forces, even bringing in the followers of a Christian mystic named Alice Lakwena who, Joan-of-Arc-style, employed visions and hallucinations to inspire her fighters. The upshot: No group of soldiers was sent home vanquished and humiliated.

Other countries eager to climb out of chaos are studying the Uganda example. "Most of the experience of Uganda we can use in our reality," says Gen. Zacarias Mundome of Angola, who attended a conference in Kampala on demobilization. "We'll have to start from ground zero." Officials from beleaguered Sierra Leone, which devotes about 60% of its budget to the military, someday will have to disarm. "We know we have to do it," says Major James Max-Kanga.

South Africa will attempt a consolidation similar to Uganda's over the next year, first bringing

together seven different fighting forces, then beginning a three-year demobilization. But Major General Dion Mortimer worries that demobilization will aggravate South Africa's unemployment

problem.

Ethiopia and Namibia, however, found they couldn't afford to consolidate opposing armies before demobilizing. Mozambique, helped by U.S. and Swiss funds, is dismissing some soldiers from government and rebel forces while retaining others to form an entirely new army. In Mozambique, the transition to civilian life will be arduous, because some 36% of the demobilized soldiers have virtually no education. Yet the war-ravaged country, like Uganda, is weaning thousands from military life so it can build its economy.

Looking back, Ugandans say there is little choice. "In restoring normality and peace, we couldn't continue With a large army when social services were being starved for funds," says John Kazzora, a presidential adviser. "We have to try to demystify the gun."