Tuesday, July 19, 2016


The flare up in fighting in South Sudan is disheartening for the disruption and loss of lives that it entails but also for the economic loss to Uganda that it signals.

Clearly the recent peace deal between the South Sudan government of Salvar Kiir and the rebels led by former vice president Riak Machar has failed to hold.

This only serves to strengthen the argument that our northern neighbours need to fight until a conclusive winner is determined, never mind how much blood letting this will cost or how long it will take.

By the time the world's newest country descended into civil war at the end of 2013, our trade with 
South Sudan had risen to $200m officially. It's hard to tell how much more trade went on informally.

"Before South Sudan attained independence in 2011, fighting there was routine. But since independence South Sudan assumed added importance as the neglected land mass, which is nearly thrice Uganda's size with only 100 km of tarmac road, demanded everything from eggs to iron roofing sheets. In addition the massive aid inflows helped shore up our shilling, inflate our real estate bubble and lit up our night life...

There are two morals to this story that leap to mind immediately.

That a nation is not a nation just because the international community wills it. A nation is more than a people cobbled together within boundaries on a map.

Secondly a scarceness of resources and sparseness of economic opportunity are a signal for chaos.

And maybe for Uganda the lesson should be that whereas exporting ourselves out of underdevelopment is an attractive option, the more sustainable thing is to focus on growing our own market to develop and sustain our companies and economy.

Economic history shows that the more sustainable development comes from launching from local markets rather than trying to first develop foreign markets.

On the continent South Africa is a classic example.

Ostracised as pariah state in the last half of the last century, the state worked on growing local demand to support its industries. Granted that the increases in income were concentrated in the hands of the minority white population, but also the development in their financial sector meant they are way ahead of the continent on access to credit, which has seen further growth since the abolition of apartheid.

Those same industries -- SABMiller and Standard Bank, leap to mind, unshackled, refocused their businesses and now compete internationally with a solid local market as their bedrock.

South Sudan was a boon for Ugandan industry while it lasted and it will again one day, hopefully soon, but in the meantime let us focus on growing our own markets.

Our macro economic policies have shown themselves to be effective in producing general growth, without which development is impossible.

However we struggle to translate that into equitable improvements in living standards for the masses.

"For starters someone has to bell the cat and tackle corruption more decisively. On many levels corruption is hurting any efforts to grow local demand...

Not only does it concentrate resources in a few hands, it affects service delivery and distorts the market for genuine business men and other economic actors.

When a handful of individuals appropriate a few billion shillings that is money government budgets for thousands of out patients or primary school children or a few kilometers of feeder road it's hard to justify.

In denying thousands healthcare or education you deny them the tools to climb out of poverty, with the funds a few technocrats use to school their own mediocre offspring abroad or on lavish holidays or lavish lifestyle in the midst of poverty.

Just as devastating is that these same officials in an effort to launder their money dabble in agriculture, real estate or general trade. Their free money distorts the market as they undercut the genuine businesmen who soon go out of business or fail to scale up their operations.

Of course the corrupt officials once they are out of government see their businesses collapse but the damage will already be done.

We can skirt around the issue but the truth is that if corruption is brought under control or eliminated all together every other challenge putting the brakes on our development will be sorted.

"It is a delusion to think that by allowing corruption we shall build a middle class that will carry the rest of the country along. The nature of corruption is that it's never enough. For its practitioners every corrupt act is a stepping stone to the next act in an never ending cycle that can only end in doom...

Eventually of course they murk the whole environment even for themselves but the pain is felt more by the masses.

Let the general global economic depression, the slowdown in China and the implosion in South Sudan wake us up to our responsibility to improve incomes at home before we looking abroad for markets.

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