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Why I find Ugandan economists dumb

Agrarian economies never collect enough taxes to fund their budgets. Government budgets are funded – to the exclusion of foreign aid and exploits in the extractive industry – by productive enterprises from which governments make profits.

The logic of taxation is after productivity (or as is in the Islamic tradition, after an individual’s expenditure—since individual welfare comes ahead of collective responsibility). To this end, governments can then tax people for whom it has created opportunities for income.

Imposing taxes on paupers, risks not only hostility – as the taxed fight back either through evasion or open violence – but is also deterrent to creativity/investment. Even the colonialists understood this better: They taxed people after creating them avenues of income.

They thus introduced and forced the colonised to grow coffee and cotton from which they could then be taxed. I mean not to justify colonialism, whose evils have been thoroughly documented, but we need to appreciate the colonialist logic to taxation.

Why tax people who are eking an existence writing blogs or riding motorcycle taxis! If this is not a political gamble to bankrupt and keep the governed in servitude, it is outright idiocy.

 We will always return to the1980s – specifically the time of structural adjustment programmes (SAPs) – as a defining moment in our history.

African agrarian economies were destroyed when they were left to the mercy of the markets. This is when government moved away, not only from investing and owning enterprises, but also supporting local farmers in the countryside.

The argument then was that the market will sort itself – demand will inspire more production. On paper, this was superb, but in practice, it was a disaster. A couple of years down the road, African economies were shattered.

 The argument that public enterprises were failing because the public servants did not have enough motivation to work well as they would have done if they were private enterprises (following Peter Ekeh’s analytical amnesia about his two publics) was simply ridiculous.

The absolute silliness of this reasoning became even more visible when World Bank and IMF actually had to forge accounts to show that public enterprises were struggling. Plenty of scholarship has showed that Uganda suffered a double tragedy with SAPs:

The moment of these reforms came at a time when the men in office had just arrived from the bush. Poorly educated, and hungry, many saw in SAPs an opportunity to reward themselves for their fight to power. Like carnivores starved for months, they went on rampage bankrupting the country and also leaving it incapable of any productive business.

 We are living in a moment of the failure of privatisation, which was exacerbated by the actors of the time. Government has no other source of income except taxes and grants.

Taxes are thus viewed as a remedy for budget deficits. But this is rough-and-ready economics. Government should be a manufacturer, service provider and trader.

Imagine all the profits that private telecommunication companies – as Uganda Telecom Ltd limps on – make and expatriate to South Africa and India?! Imagine all the money that UMEME is stealing and expatriating to England and South Africa!

Imagine Uganda Airlines up and running. Can you imagine there was a time, after the mismanagement of Uganda Coffee Marketing Board, and disposal of almost all its properties (residential houses, warehouses, land and equipment) in Kampala, Mombasa and London, Uganda placed its major cash cow – coffee export – in the hands of a private Germany-born investor?

This fellow made a lot of money from several dubious deals, before government woke up to cancel the contract. This is list of missed opportunities is long.

Surely then, Uganda’s so-called economists – in Uganda Revenue Authority, Bank of Uganda, Ministry of Trade and Investment, Uganda Investment Authority – have to get their act together, and appreciate that (a) this is an agrarian economy, which can never produce enough taxes and (b) the present logic of taxation actually stifles productivity.

I am not arguing for nationalisation, but rather a state-led economy. Just the way we are excited about oil exploits – hoping we haven’t given all our rights to a private investor – as government with most resources (HR, borrowing, supervision, etcetera), we ought to be excited about starting big business, and making direct profits.

The argument that public institutions or businesses often struggle because workers do not perform at the same level as they do under private administrations is not only weak but also ahistorical.

The author is a PhD fellow, Makerere Institute of Social Research.


-2 #1 Ngoga 2018-05-16 14:02
There are several points here but they're lost in all the meandering. Poorly written.
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0 #2 Apuli. S 2018-05-16 17:02
What makes you think SAPs were a choice?

They were dictated to the government as a condition for much needed liquidity!
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+1 #3 Lakwena 2018-05-16 18:35
In other words Yusuf, compared to the (BOARD [corporate]) it is the authoritarianism in the nomenclature of the statutory state enterprises (authority) that makes for inherent failures/curse in our economy under the dealership of Mr. M7, who for all intent, only fights for himself:

E.g.; Uganda Revenue Authority (URA) is authoritarian, Uganda Coffee Development Authority (UCDA) is authoritarian; Uganda Road Authority, is authoritarian (roads must be built to dead-ends, where there is no productivity)

Uganda Electricity Regulatory Authority, is authoritarian. Build dams wherever there is a river/waterfall.

The Ugandan Investment Authority is authoritarian in nature (white elephant Industrial parks); Operation wealth creation is authoritarian (militarized).

Forest, Environment, etc., Authorities are all authoritarian with negative results.
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0 #4 juwait kali 2018-05-17 00:19
So if major kiggundu and formers police the boss felix kaweesi were steal hearing zeyi could paying lot tax because rich.

But now dead during za day. I sink not good for the economies. And zen you adding the kidnappingzings and the invested or basizi fearing.
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+6 #5 Opolot 2018-05-17 13:40
You have some point. But your title could have been better/humble.

One, you didn't have to generalise all Ugandan economists as dense - as though you are the only one with sound economic insight!

You could have said, at least, 'Government economists'. But still, the word dense is an imprudent choice
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+5 #6 Fil Koy 2018-05-17 22:30
Your Ph.D. (if you get it), should provide avenues on how to extract proper trade and investment agreements from the G8.

If not, you risk becoming yet another quack academic. Talk much, achieve nothing!

Do you even know what you are talking about?! Take your poison to the nearest World bank and IMF offices, and when there, administer liberally!

Who is funding your Ph.D.? Hm? Who wrote the books you purportedly read? All studies show that SAPS failed, and made Africa poorer!

Without the requisite trade policies/pacts with western economies, world bank and IMF SAPS, sucked the very life from recipient African economies.

The debt created by SAPS ensures WESTERNERS have access to our raw materials and infrastructure on very reasonable terms. Poor, we are dependent on their benevolence, vulnerable to expensive debt, and an easy dumping ground. Developed we would only be a source of competition.
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0 #7 Kirya 2018-05-21 02:26
African economist are not the ones who make the the call In the case Uganda m7 is presented with bogus economical analyses and he decided to implement because he lacks the brain to think for himself!

Sell UCB and other public companies. He does and puts out a collection basket for loans, handouts.....!
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+3 #8 Niko 2018-05-22 17:50
Dear Observer Chief Editor, may I implore you to do your job of checking the quality articles from your guest writers (facts and decorum).

Mr. Sserunkuuma obviously has his frustrations about the current state of the economy and so do many of us.

However, the choice of language is utterly repugnant and therefore inappropriate to appear in a credible daily. Finally, as Mr. Sserunkuuma is not an Economist, may his leave matters of the economy to Economists.
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