Mobilise our own resources
Apr 19, 2007
Kenyan investment banker James Murigu this week said that the current power crisis could have been averted had we mobilised local resources to build dams instead of waiting for foreign aid.
Kenyan investment banker James Murigu this week said that the current power crisis could have been averted had we mobilised local resources to build dams instead of waiting for foreign aid.
He gave the example of the recent over-subscription of the Stanbic Bank share offer as proof that resources are available for such huge projects.
Murigu is right to the extent that we have been lulled into a sense of donor dependency so much that we can not see the diamonds in our own fields.
For the last 20 years finance officials, one after another, have lamented about the low saving rates in this country.
Apart from the mandatory 5% of income remitted to National Social Security Fund (NSSF) by every worker, there has been little incentive to save in the formal banking sector.
However, Ugandans still smarting from the 30% levy on all liquid assets during the shilling conversion 20 years ago have found other ways to save their money – in land, housing and livestock.
The promotion of Savings & Credit Cooperative Societies is a good start albeit 20 years late. More needs to be done.
For example, the Kenyan government can make income from infrastructure bonds tax deductible to companies and individuals. It can also make mortgages on personal residences tax deductible. And to make it more attractive to save with NSSF, members should be able to use their savings in the fund as collateral on buying houses.
International diplomacy is fickle. We may not always be the darlings of the international aid world.
The power crisis is only one of many other crises this country may face in the future for which there will be no urgency in Western capitals.
We therefore need to activate and exercise instruments for local resource mobilisation first, as a buffer against the changing mood of the donor community and most importantly to wean away permanently from aid.
He gave the example of the recent over-subscription of the Stanbic Bank share offer as proof that resources are available for such huge projects.
Murigu is right to the extent that we have been lulled into a sense of donor dependency so much that we can not see the diamonds in our own fields.
For the last 20 years finance officials, one after another, have lamented about the low saving rates in this country.
Apart from the mandatory 5% of income remitted to National Social Security Fund (NSSF) by every worker, there has been little incentive to save in the formal banking sector.
However, Ugandans still smarting from the 30% levy on all liquid assets during the shilling conversion 20 years ago have found other ways to save their money – in land, housing and livestock.
The promotion of Savings & Credit Cooperative Societies is a good start albeit 20 years late. More needs to be done.
For example, the Kenyan government can make income from infrastructure bonds tax deductible to companies and individuals. It can also make mortgages on personal residences tax deductible. And to make it more attractive to save with NSSF, members should be able to use their savings in the fund as collateral on buying houses.
International diplomacy is fickle. We may not always be the darlings of the international aid world.
The power crisis is only one of many other crises this country may face in the future for which there will be no urgency in Western capitals.
We therefore need to activate and exercise instruments for local resource mobilisation first, as a buffer against the changing mood of the donor community and most importantly to wean away permanently from aid.