Tuesday, May 29, 2018

UGANDA’S PROBLEM: WE PAY THE WRONG GUYS

The sugar industry in Uganda is under siege. Not only has cane production plummeted as a result of some dubious decisions by the trade ministry to license an unsustainable number of sugar factories in the Busoga region. But also because officials are looking the other way as sugar is smuggled over our eastern border and sold in our shops at knock down prices.

As a result our own producers cannot sell their stock, which has now grown into mountainous piles in their warehouses.

Thousands of jobs stand to be lost, billions of dollars in revenue have gone unpaid and as our politicians and technocrats drag their feet on the subject, the sugar industry is in the intensive care unit. And recovery is not guaranteed.

This is sad because the sugar industry is the best example in the last 30 years, of what success can come from Public, Private Partnership and provides a useful model of what our industrialisation path can look like.

The sugar industry while leveraging our natural endowments of land, human resource and weather has not only created sugar but also spinoffs like industrial alcohol and electricity.

Contrast this with the speed with which the parliament have proposed to double their basic pay in the new budget. One has to commend them for their uncharacteristic stealth in presenting a fait accompli, with not a whisper getting out as they put the scheme together.

According to the proposal an MP’s basic pay is set to more than double to sh24m from the current sh11m. This will amount to a threefold increase in the house’s total wage bill in the coming year.

The audacity of the proposal even as a negotiating position takes ones breath away.

As my friend likes to say, “The lightening that is going to strike these people is still doing press ups!”
As with an individual, it is easy to tell by a country’s expenditure patterns whether future prosperity is a mathematical certainty or a distant pipe dream.

There are only two ways to spend money either you consume it or you invest it.

In the former case there is no real return except for a full stomach or the passing pleasure of a new toy. In the latter case there is the possibility of a return on the investment, which can be reinvested and if repeated with even passable results will lead to wealth.

In the case of nations consumption often takes the form of shelling out money on recurrent expenditure – salaries, official travel and incidentals. While the investment is seen in the development budget, in the building of infrastructure both hard and soft.

Using the above example and applying it to the near death experience of the sugar industry versus the “eat, drink and dance, for tomorrow you die” mentality of the MPs, is it a surprise that we are writhing in the throes of an economic downturn?

Of course the role of parliament is crucial in any functioning democracy. It makes laws to ensure safety of person and property and holds the executive wing of government to account, restrains them from running rough shod over the population. They are supposed to serve with an eye on the greater good of society.

Clearly our MPs cannot be mistaken for the paragons of selflessness and public service.
History is littered with the economic carcasses of societies that diverted resources away from the productive sectors to the non-productive sectors of society. It never ends well.

 It’s not economics, it’s just plain common sense.

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