Govt ironically hindering economic development
Mar 18, 2007
SHILLINGS AND CENTS<br><br>THE Government’s economic transformation is in danger of remaining an election slogan.
SHILLINGS AND CENTS
By Paul Busharizi
THE Government’s economic transformation is in danger of remaining an election slogan.
At every turn, government policy is squelching initiative, stunting economic growth and killing entrepreneurship.
Case study one: Seeing how the Government was failing to keep pace with our growing population’s education demands, the private sector quickly jumped in to close the gap. When we look back, we will see this as the single biggest intervention by the private sector in history that saved our youth from being semi-literate, unsociable and untrainable lumpens.
But government taxes these schools at the same rate as bars, discotheques and businessmen.
A skilled human resource is critical to economic transformation so it defies common sense that these institutions that are covering government’s inadequacies are not given tax relief – at least until the Government can guarantee quality education for all school-going children.
Case study two: For the last 20 years, the low saving rate of Ugandans has been lamented from the roof tops, but the Government has done little to encourage savings.
Once in a while, this minister or the other travels to the far east and comes back marvelling at the orientals’ savings rates. However, because the said minister’s close scrutiny was saved for the duty-free shops, he fails to appreciate the policies put in place to ensure that the east Asians keep saving if at all they are naturally disposed to be that way.
Singapore workers, for example, are mandated to save 42% of their incomes in pension plans, health insurance schemes and house mortgages, which transparently run and provide good returns.
One would be hard pressed to find instances of economic transformation where donor funds rather than locally-mobilised resources were the key.
Case study three: As an incentive for local breweries to start brewing using local inputs, the Government waived excise duty on these beers. As a result, there has been a spurt in production of Nile Breweries’ Eagle Lager – which is now the largest selling beer in Uganda and Uganda Breweries’ Senator Lager.
Eagle Lager has created a new cash crop – epuripur (sorghum) for 8,000 farmers where there was none before. It has raised the incomes and well being of these farmers more than any government hand-out would do.
Production of epuripur has jumped to an annual 12,300 tonnes in 2006/07 from 1,700 tonnes in 2002/03 – a more than seven-fold leap.
If we all agree that we have a comparative advantage in agriculture and in order to turn this into a competitive advantage we need to push agro-industry, then this was an inspired policy initiative.
But no sooner had the project found its feet than the Government jumped in to slap first a 10% duty before raising quickly to its current 30%. Of course the brewers have passed it on to the consumer and sales volumes are beginning to suffer.
Currently, the brewery has guaranteed the farmers a price for their sorghum, which if allowed to float would have crashed as a result of over production. Nile Breweries’ warehouses are bursting at the seams and they have asked farmers not produce in the coming season.
Economic transformation will remain a pipe dream if the rural masses cannot be linked to markets that assure them of steady income.
These are just three of the most glaring cases that come to mind.
It seems the Government can talk the talk but refuses to walk the talk. We continue to be like a drunken man with a loaded gun unsure of our progress and in danger of shooting ourselves in the foot with every stumble.
By Paul Busharizi
THE Government’s economic transformation is in danger of remaining an election slogan.
At every turn, government policy is squelching initiative, stunting economic growth and killing entrepreneurship.
Case study one: Seeing how the Government was failing to keep pace with our growing population’s education demands, the private sector quickly jumped in to close the gap. When we look back, we will see this as the single biggest intervention by the private sector in history that saved our youth from being semi-literate, unsociable and untrainable lumpens.
But government taxes these schools at the same rate as bars, discotheques and businessmen.
A skilled human resource is critical to economic transformation so it defies common sense that these institutions that are covering government’s inadequacies are not given tax relief – at least until the Government can guarantee quality education for all school-going children.
Case study two: For the last 20 years, the low saving rate of Ugandans has been lamented from the roof tops, but the Government has done little to encourage savings.
Once in a while, this minister or the other travels to the far east and comes back marvelling at the orientals’ savings rates. However, because the said minister’s close scrutiny was saved for the duty-free shops, he fails to appreciate the policies put in place to ensure that the east Asians keep saving if at all they are naturally disposed to be that way.
Singapore workers, for example, are mandated to save 42% of their incomes in pension plans, health insurance schemes and house mortgages, which transparently run and provide good returns.
One would be hard pressed to find instances of economic transformation where donor funds rather than locally-mobilised resources were the key.
Case study three: As an incentive for local breweries to start brewing using local inputs, the Government waived excise duty on these beers. As a result, there has been a spurt in production of Nile Breweries’ Eagle Lager – which is now the largest selling beer in Uganda and Uganda Breweries’ Senator Lager.
Eagle Lager has created a new cash crop – epuripur (sorghum) for 8,000 farmers where there was none before. It has raised the incomes and well being of these farmers more than any government hand-out would do.
Production of epuripur has jumped to an annual 12,300 tonnes in 2006/07 from 1,700 tonnes in 2002/03 – a more than seven-fold leap.
If we all agree that we have a comparative advantage in agriculture and in order to turn this into a competitive advantage we need to push agro-industry, then this was an inspired policy initiative.
But no sooner had the project found its feet than the Government jumped in to slap first a 10% duty before raising quickly to its current 30%. Of course the brewers have passed it on to the consumer and sales volumes are beginning to suffer.
Currently, the brewery has guaranteed the farmers a price for their sorghum, which if allowed to float would have crashed as a result of over production. Nile Breweries’ warehouses are bursting at the seams and they have asked farmers not produce in the coming season.
Economic transformation will remain a pipe dream if the rural masses cannot be linked to markets that assure them of steady income.
These are just three of the most glaring cases that come to mind.
It seems the Government can talk the talk but refuses to walk the talk. We continue to be like a drunken man with a loaded gun unsure of our progress and in danger of shooting ourselves in the foot with every stumble.