I first of all congratulate the Indian community upon a successful visit from their PM, Modi. I honestly admired the happiness, love and glory they shared with Hon Modi while addressing them at Kololo. At one point I imagined whether Ugandans would ever genuinely share the same love with their presidents but that’s a decision for another day.
Uganda Revenue Authority recently revealed that the Indian community (estimated at 500,000 people) contributes 60% of the total country’s revenue. “Ordinarily” this means that they account for 60% of the country’s total production/GDP if all production was taxed. However, when you walk through the busy economic hubs in Kampala like Kikuubo, Namirembe road, Kisenyi, Nakivuubo etc, you barely see Indians doing business yet Ugandans are flooding. So the question is, “where do Indians operate from” and “why is it that Ugandans who operate in such busy economic hubs contribute less of the total revenue?”
The answer is simple, Indians more engaged in production (manufacture & sell) while Ugandans are more engaged in trade (buy& sell). I remember sometime back Museveni branded Uganda a “supermarket economy” because of its tendencies to mainly buy and sell rather than produce.
Whereas economic growth is desirable, we must also ask ourselves who is stirring it. Should we say that we are safe and comfortable as Ugandans when our country’s economic growth is largely stirred by foreigners? If 500,000 Indians are contributing 60% of our total revenue, what are these Ugandans (over 39 million people) we see working every day in Kikuubo doing? Are we just spectators in our own country’s economic growth?
Fellow Ugandans let me remind you that Indian which is the fastest growing country in the world did not rely on foreigners to grow its economy. India relied on its natives to develop itself and in the process, it attracted Foreign Direct Investments. On a contrary in Uganda, we prefer to attract FDI’s first before we build our local investors’ capacities, that’s why it’s easy for the government to give investment incentives to foreigners like tax exemptions while not only denying such incentives to local investors but also overtaxing them. Note; that FDIs are highly desirable but only if they enhance local investors’ capacity rather than exploit and out-compete the local investors for example an FDI that produces fertilizers is highly desirable because it enhances farmers’ production.
A good example is from the Asian tigers (Singapore, Hong Kong, South Korea and Taiwan). Singapore for example first invested its small resources in Education and later alone infrastructure. Through education, it internally and externally trained its own engineers who were later used to develop its own infrastructure. In other wards, it largely relied on its own people to setup infrastructure and this largely reduced capital outflow thus enhanced capital formation. In China, the government goes an extra mile to even lend money without interest to its local investors either producing for exports or to those operating FDI’s in other countries. American was built by Americans, Britian was built by the British, China was builted by the Chinese, India was built by the Indians, why won’t Uganda be built by Ugandans. Note; am not against the Indians role in the development of our country but am worried about the role of Ugandans in the development of their own country.
Today, Uganda’s education system is in absolute shambles. Every year, several universities release graduates in engineering for example but no single major government project in infrastructure is implemented by them. In my three years at Makerere University, I do not remember having a sight at an Indian student at my College, so where are they studying from? Our education system gives scholarships to students at university who end up as being employed as site managers by the Indians-that’s if they are lucky. As I said above, Singapore trained its own people and employed them to execute heavy government projects. Imagine the India PM, gave us a credit of $200m but 80% of this loan will be utilized by foreigners mainly Indians-WHY? As we use the loan to extend electricity and some infrastructure, no single local investor will get any contract.
Today, Uganda exports goods worth shs 159b to Indian annually while it imports goods worth shs 2.7 trillion from India. This is an extremely high trade (Balance of Payment) deficit. So where is the problem?, why are we exporting less while importing a lot?
Uganda’s problem is that it is doing what it ought to not have done while foregoing what it urgently ought to have done in terms of development priorities. We are comfortable in “buying and selling”-middlemen but we have not taken a step to “produce and sell”. To achieve this, we must promote export-oriented production or import-substitution production as a means of regulating its foreign exchange. Important to note is that all these strategies must have local investors at the fore-front. So how do we build local investor’s capacity?
1. Overhaul the education system. This is the most important pillar if we are to stimulate local investors’ capacity. We need to start producing engineers who are capable of constructing dams, bridges, railways, computer scientists who will not work as secretaries, teachers who are researchers at all levels, doctors who won’t treat malaria only among others. This must start NOW. We must stop studying irrelevant stuff. Why do we have brilliant young Indians as Bank managers when I didn’t see anyone at Makerere University-School of Business. We spend a lot of time studying theory yet they spend more of their time doing business practically.
2. Re-capitalize the Uganda Development Bank. I have shared experience with top local construction firms. Their experience is that although they have excellent technical capacity and experience, they are being let down by their financial capacities. Most foreigner companies out-compete local firms financially because they acquire cheap credit from home unlike here. Imagine if we had 100 ”Hamis Kiguddu’s” doing what Mr. Ham is doing to Nakivuubo stadium, how much money would be saved from capital outflow? In the era of globalization, you are not safe without a national bank.
3. Promote Public-Private Partnerships. Recently a group of young Ugandans won a global prize after inventing a technology that tests malaria without removing blood from the patient. As I talk now, these young men are keeping their application in their bedrooms. Mark-Proprietor of Facebook is many times richer than Uganda because of the online applications he invented. Am now imagining if government would help these young men promote their application in not only Uganda but the entire world, how much would we earn as a country? Most young Ugandans have very good ideas but have not been helped thus letting their ideas perish. This arrangement has succeeded in many developed countries like China, Singapore, Russia among others. So instead of distributing money to unorganized groups for political reasons, why can’t we allocate this money to PPPs.
4. Create a strategic direction that creates pathways which the government must follow to develop. One of Uganda’s biggest problems is jumping from one plan to another without making any needs assessment. For example in Vision 2040, where did we create multiple districts, unending elections among others. The tendencies of planning after getting a problem must stop. We need to set out realistic plans and follow them not mainly for our own benefit but for generations to come. The policy planners and implementers of the Asian Tigers had a great vision that aimed at benefiting the next generation. In Uganda, we must stop policies that benefit individuals in the next elections but rather policies that benefit the next generation.
Over and above all, all this cannot be achieved unless the question of good governance is addressed. The government must become more accountable, responsive, transparent and people-oriented. In return, the citizens will have more confidence in whatever government is doing thus have a shared vision. You could see the glory Indians showed their PM and how he was welcomed. In Uganda, the president has to first ferry and pay people to listen to him especially in public spaces. The mindset must change otherwise we shall be busy selling Uganda to foreigners.
In conclusion, let’s appreciate the role of FDIs in Uganda’s development however let’s not feel comfortable being too dependent of FDIs. Let’s build local capacity such that we can withstand foreign competition and also export services to other countries. Let’s not allow our local investors collapse due to foreign competition and thereafter praise foreigners. Foreigners are here to do business-get profits and go (of course that’s business). UGANDANS MUST BUILD UGANDA, OTHERS SHOULD FACILITATE OUR GROWTH AND DEVELOPMENT.
Arinaitwe Victor
Development Economist

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s