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Uganda suffering from ‘elite capture’, say researchers

How much do Ugandans own in their country?

Why are a few people becoming fabulously rich at minimal effort while others are trapped in cross-generational poverty?

At the first debate organised by the Society for Justice and National Unity (SoJNU), a new think tank based at Makerere University, participants interrogated these questions and found that more and more ordinary Ugandans are increasingly feeling alienated from having a stake in their country’s economy.

Dr Fred Muhumuza, a don at Makerere University’s school of Economics, who presented a keynote paper titled “Who owns Uganda’s economy?” said Uganda was a victim of “elite capture”. A few people are benefiting as a result of cronyism, nepotism, and patronage, his paper indicated. 

“We are at that stage where we say we are in this country but are not part of it,” he said.

According to Muhumuza, government policies and programmes define the organisation of production processes and ownership of those resources, but also have consequences on the distribution of social outcomes.

Dr Fred Muhumuza

“Depending on what you own, that is your part of the economy. You don’t have to own the assets but if you own land or a building, you [can] get rent out of them. The rest of the people can participate in those productive processes – [they] can get a job and earn a wage and then become [part of the economy]. If you are not part of these, then we begin to ask the fundamental question,” he said.

But where is the problem?

POLICY SHIFT

Muhumuza’s paper showed that Uganda has previously pursued state interventionist policy where the country owned such bodies as coffee marketing board, produce marketing board, foods and beverages.

Those bodies delivered services to ordinary people. The liberalisation in the 1990s twisted things, with a few people benefiting as majority were distanced away from the benefits.

“The implementation of neo-liberalism was captured by the politics. The divestiture was seen as having good potential as a political tool,” Muhumuza said, adding that the wanton sale of state enterprises became a source of patronage for the NRM regime and theft of public assets by powerful individuals.

Individuals stole state resources and branded themselves as capitalists, Muhumuza said. “This allowed a few to capture the basic assets and wealth of the nation. Donors gave govt latitude, state officials exploited this to serve political interest and enrich themselves,” he explained.

While the divestiture saved the state a burden of subsidizing unprofitable public enterprises, the cost has re-emerged in form of policy-induced support to a proxy private sector.

“State resources are being used by a few individuals to entrench their ownership of assets. They are actually stealing through policy and that’s what we call elite capture,” Muhumuza said.

The fast growth of real-estate, financial service and land grabbing have all been facilitated by state resources, he said.

OWNERSHIP Vs CONTROL

Augustine Ruzindana, an FDC stalwart and former MP, said the question should not be who owns Uganda but who controls the economic direction of the economy.

“If we talk of restructuring [it is actually] impossible unless you are in control of the direction of the economy,” he said. “There is unfair distribution of national product.”

Some participants said what is happening in Uganda was a clear indication of failed politics. Politicians control resources and determine who gets what.  

Former Eala MP Yona Kanyomozi said Ugandans should come out and say enough is enough and push for change.

“We can’t change the economy without changing the politics,” Kanyomozi said.

In Uganda, there is also an element of foreign ownership – a large part of the economy is owned by foreigners partly because of policy, liberalised environment and incentives like tax waivers designed to support foreign investors.

The biggest bank, controlling more than 50 per cent of industry assets, is owned by foreigners and so are other key services like telecommunications.

The services sector has grown while agriculture – where millions of Ugandans eke a living – is in dire state. Muhumuza said the poverty rate of 19 per cent was deceptive because it is based on a light measure. The World Bank, he said, “has used the international [poverty] line which says Uganda’s poverty rate should be at 34 per cent (about 12 million people).”

A recent Oxfam report said the top 10 per cent owns 35 per cent of the economy and the poorest 10 per cent own only 2.5 per cent of the economy. And the bottom 20 per cent of Ugandans own only six per cent of the economy.

Muhumuza said: “Political governance and government agenda should aim to reduce the skewing of ownership to a few. Redistribution through transfers and taxation of the rich must be considered. Without these, some individuals tend to gain more than others.”

SoJNU, which is chaired by law don Prof John Jean Barya and has Dr Moses Khisa, a political science don at the US-based Northwestern University, as its secretary, plans to organise several similar debates in future.

amwesigwa@observer.ug

Comments

0 #1 Didaz 2017-05-15 12:44
How elite captured is Salim Saleh or Rwabwogo or Kasule Lumumba?
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0 #2 Lakwena 2017-05-15 13:55
In other words, M7's/NRM political economy, is well calculated: It is anti people (anti-Ugandans), colonial and exploitative in form and practice (substance).
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0 #3 rubangakene 2017-05-15 22:41
This is rich coming from the mouth of Makerere don; yet he is in a position where he can change that through constructive delivery to change "the behaviour" of the many students who pass through his tutelage.

Researchers and lecturers in public institutions shape the future of our nation.

What is the use of the degrees if they are not geared to solving our basic needs?
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0 #4 Ugthinker 2017-05-16 10:14
Museveni was bound to fail Uganda, his from the onset was a plunder mission!

They have done it, my question is why non benefactors can't see it and many carry on unbothered! Have Ugandans been completely subdued?
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