In June 2021, the International Monetary Fund(IMF) approved one billion US dollars approximately 3.5 trillion Uganda Shillings to Uganda. The money was approved to facilitate part of our 45 trillion national budget and also radically help Uganda invest in the fight towards Covid-19 and boost income in the medium term.
Among the reasons for approval, IMF
noted that Uganda has committed herself to radically fight corruption among other
vices. The approval was in the assumption that Uganda is on a constant growth
trajectory and is on track to low middle-income status by 2033 or 2034.
Whether Uganda
will commit to its mandate is a question of concern given the past record of
misuse of funds, lack of accountability and the growing financial debt that is
projected slightly over 50 percent of our GDP by the end of 2019-2020
financial year. With a debt nearing 50 trillion- there is a lot of our money
channelled to debt repayment and serving from the national budget, approximately
10 trillion of our budget will go to serving debt.
While the
majority of Ugandans languish from abject lack of basic essentials given the abruptness of the second lockdown, it is key for us as a nation to think towards
providing economic relief and investment support to businesses and entities
that are trying to stay afloat in the pandemic.
Amidst the high
competition in our highly capitalistic nation and monetary state, it is
imperative for the government to take on policies and strategies that work
towards providing economic relief to cushion Ugandans from the shocks of the
pandemic on their economic dexterity.
Middle income is
an economic development initiative. Uganda needs to shift into a
developmental state that is configured to run the economy, invest in people
and can manage private and state enterprises and run them efficiently.
Rather than the
state looking for avenues to tax Ugandans without investing, it could avail tax reliefs that will boost the economy but also create value for
taxes through service delivery and restoration of institutional autonomy and
functionality. We need to move away from the current revenue state and
create a developmental state that intervenes purposefully in the economy to be
able to move in the desired direction of middle-income status.
With the magnitude of debt, we have accumulated, it is likely that Uganda might default
on debt repayment given the fragility of our economy and failure to frugally manage
our finances. We are a country spending what we don't have! We cannot tax
ourselves out of debt, taxing already constrained people won’t guarantee
debt repayment if we do not address institutional failures in our governance system.
Poverty reduction is not a matter of enhancing aid flows but a matter of the political will to create and demand, design, implement and sustain
institutional arrangements which will deliver pro-poor growth and social
provision.
The government needs
to stop borrowing and find inward solutions to our income deficit. Lower taxes
so production can be affordable. Invest in the creation and availability of markets
for goods and services produced within the country. Encourage zoning and
regional production of goods and services. create checks that can curb corruption,
downsize on government offices by joining and grouping ministerial work that is
duplicated, reduce on ministers and parliamentarians and stop the radical gerrymandering
disguised in decentralisation.
The next few
years for Uganda and the global south are going to be tasking in economic
growth and development. If Uganda continues to borrow, our economy is going to be constrained and abject poverty will be the narrative for us, accompanied by chronic unemployment, inflation and excessive lack of basic needs for
survival. Therefore, our efforts as a Nation should be concerted towards
reducing corruption and pushing for a developmental state that can facilitate a
new paradigm to our development agenda as a Country.
TRICIA GLORIA
NABAYE
Resident
Research Associate
Great Lakes
Institute for Strategic Studies.
