At last, we seem to be on the path of total economic development. I was thrilled by the end of year presidential speech by H. E. Yoweri Kaguta Museveni, late last year.
One of the components of the speech was that “Food science graduates are to access loans for agro–processing ventures with a maximum interest of 5%.” It was a good gesture.
To me, for a country to have serious development economics, it needs to invest in its people; the most important asset of any country is its people and the president indicated his value for the people by beginning to dictate interest rates rather than just using the market lending rates.
For 200 years, the Dutch fixed interest rates at only 5% and the Dutch Golden Age impressed the British so much so that they also fixed their interest rate at 6% by order of King William III in 1688.
Fixing interest rates by leaders is not a new thing and has helped local investors in many countries to access affordable loans and eventually spur development.
In other words, Uganda needs to rethink its economic policies and move towards radical macro-economics which revolve around promoting and expanding the local domestic financial market which, at the end of it all, will lead to a happy population.
This is because goods and services will be produced and provided in specialised ways and they will also be produced and provided in an efficient and affordable manner.
Here we are talking about two pillars of sound economic growth that include a conducive investment atmosphere where local investment can yield high dividends to the local investor and the second one is robust consumerism, where domestic consumption will stimulate the domestic economy.
But if the economy is based on external investments and the consumption of largely imported goods and services, the benefits will only be realised in the external economies.
In economies like China and USA, exports account for 12% of GDP and their economies are based on internal markets. This is because the people in these countries have been economically empowered and have money to spend and consume.
Our economy needs a complete overhaul that will ensure that economic planners don’t get to the point of beginning to think of minting currency and borrowing externally from institutions like IMF and the World Bank as a solution for deficit financing.
This can happen only when much emphasis is put on domestic borrowing through making it attractive for people to buy bonds at a good interest rate.
After 1783, Alexander Hamilton the US’ first secretary to the treasury borrowed $ 70 million domestically and supervised a nationalistic tax collection that helped America start off on the path of economic power.
This in itself proved that the most important financiers of any country are not external lenders such as the IMF or foreign investors, but its own citizens.
The spirit of citizens lending money to the US government and the government in turn giving attractive interest rates and paying them promptly led to the development of the US Treasury Bond market which is the largest in the world today.
This goes a long way to show that we simply need to develop a viable financial market and educate and stimulate interest in our people on the opportunities in company stocks and company and government bonds as a way of boosting the economy through the people.
I would, therefore, once again like to thank our president for emulating the British high quality economic policies, such as fixing the interest rate at only 5%, as a good move to empower the citizens of his country. All economic policies which are not pro-people are sour and may leave the country high and dry.
The writer is an Economics Analyst
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Indeed Mr Ben this article has high economic hopes. However, the economic infrastructure that was functional but was briefly fractured by incessant civil wars up to now have failed to take over. Here one is talking about the Kasese train route, International and domestic Uganda Airlines, interstate motorways, EA shipping and ferries, Agricultural and Commercial cooperative unions and much more. All these are real domesticated enterprises African people were able to run let alone to rule themselves. The African leaders are the ones who have gone on the rampage and destroyed all. They know well these mistakes but retort back: It is their nature. They could not help themselves.
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