SPARE A THOUGHT FOR ZIMBABWE

Winston Churchill once intoned “When you are going through hell, keep going.” If you think about it, you really have no choice. Or maybe you can lie down and die.

Well Zimbabwe and its people, don’t have a choice but to keep going through the hell they are in.

At the end of last year it was reported that 60 percent of Zimbabweans do not have adequate food. 

"People are missing meals not out of some adherence to the latest fad. Drought had caused crop failure. The prices of bread and maize, staples of the Zimbabwean diet, had gone up by as much twenty times in the last half of 2019.

As if that was not enough, aggravating the already dire situation, there is a shortage of foreign currency, inflation is back up in triple digits, fuel shortages persist and livestock losses are apocalyptic.

The total collapse of the economy, on the late Robert Mugabe’s watch over the last two decades, means the country doesn’t even have its own currency. The US dollar, South African Rand and hodge podge of other hard currencies are used as everyday mediums of exchange.

This is ironic because the southern Africa’s agriculture and mineral industries are in intensive care and there is not enough hard currency to go around.

The implications for the everyday man is as described above. The government has no control of its monetary policy and they are letting people die of hunger, because they cannot muster a disaster relief effort.

In Uganda if we had a drought on the scale that Zimbabwe is now facing, in the worst scenario we can print shillings to buy relief food. The inflation we can fight later. Zimbabwe doesn’t have that luxury.

"This story is even more tragic when you remember that Zimbabwe was the bread basket of the region. With their agriculture industry deep as it was wide, with a huge commercial production and vibrant agro-processing sectors, its incomprehensible that Zimbabwe finds itself where it is now...

They got to this point because Mugabe, facing growing opposition to his rule, pointed at the while commercial sector and turned on them, as a way to win cheap political marks. In the process he gutted the pillars of the country’s economy.

It is true that the colonialist dispossessed the native Zimbabweans of their land—it was estimated that the white farmers, who made up less than a tenth of the population, controlled more than two thirds the arable land at the height of their power.

No one can argue against the historical injustices meted upon the Zimbabweans by the colonialists and white minority government up to 1980.

However, a visionary leader would have assessed the situation and worked out that to redress those injustices, they would have to leverage the productive capacity built over decades to uplift his people. 

Done effectively and efficiently, the ordinary Zimbabwean would have seen a quick enough improvement in his standard of living. Eventually a shift of capital would even things out between the races.

The populist thing of course, would be to drive the white settlers into the sea, or at least over the border – Zimbabwe is landlocked, and divide the spoils among the frothing-at-the-mouth masses. 

There would be a temporary excitement as the locals gouged themselves on their erstwhile oppressors’ wine collections, choice livestock and prance around in their finest gowns.

The reality would catch up soon enough, when they cleared out the stock and couldn’t replenish it. As happened in Zimbabwe, and Uganda before that, in a manner of speaking.

"Mugabe was spared by death. Spared from seeing how deep Zimbabweans are going to have to sink before it gets better....

We know the formula. We have experienced it first hand in Uganda.

To begin with government is going to have to go bowl in hand to foreign capitals to beg for money to feed its people. Then they are going to try and resuscitate the abandoned industries, to try and generate some economic activity. They will fail and flog them off or return them to their rightful owners. They are going to do this in context of an austerity program – minimal spending on social services. This is necessary to bring inflation under control. In order to further accelerate economic growth, they are going to have to fling open the doors to the economy, bend over backwards to attract foreign investment. Because they do not have the internal capacity to do it themselves.

There will be much gnashing of teeth and renting of cloth in the hills and plains of Zimbabwe, before the light at the end of the tunnel comes into view.

Meanwhile there will be populists and demagogues inside and outside Zimbabwe criticizing the drastic measures the government will be forced to carry out, to get the country back on track. These dissenters will propose alternative, more benign policies, that look good on paper but have no practical chance of success.

It is impossible to see how this turnaround can be achieved in the context of democracy. It didn’t happen in post World War I Germany nor post world war II Japan or South Korea.

"For Zimbabwe to pull itself up by the bootstraps, there will have to be a singleness of purpose, an unbendable resolve and immeasurable sacrifice, all of which would be hard to marshall in a liberal setting...

While we spare a prayer for Zimbabwe, let us not delude ourselves that a like implosion, cannot visited upon us if we subvert the laws of economics for political expediency.

THE CASE FOR LOCAL BANK OWNERSHIP

The other day Professor Ezra Suruma published an opinion on how the banking industry is being remote controlled by neocolonialists, who have no interest in promoting the mobilization of indigenous capital by among other things shutting down local banks and making it too expensive for local businessmen to open banks.

He said as result local business struggle to access capital.

These were strong charges by a former deputy governor of the Bank of Uganda and former finance minister. They need to be taken seriously.

For people coming to the discussion late a look back into the history of the banking sector and how we got to where we are may be useful.

In the 1990s the banking industry was dominated by two government banks – Uganda Commercial Bank (UCB) and The Cooperative Bank. Both through mismanagement and political interference, had most of their loan book blighted by bad debt as to render them insolvent. They could not meet their day to day obligations.

"In fact in his “Advancing the Ugandan economy” Suruma reported that things were so bad, at UCB when he joined it as chairman and Managing director, that people seeking to withdraw from their accounts would have to seat and wait for depositors to come into the bank, which money would then be paid out to them...

A bank in similar distress today, would not survive an hour after it opened its doors for business on any day.

Government tried in both cases to salvage the banks but didn’t have the capacity to, shutting down Co-Operative bank and selling UCB to Stanbic Bank.

Unfortunately, this malaise was not restricted to government banks. Several small private banks fell victim to the same ills of mismanagement and folded under the weight of the subsequent bad debts. 

What was interesting is that the biggest source of bad loans was insider lending. The owners would lend themselves huge sums, drawn from depositor funds and fail or neglect to pay them back.

In effect the banks were providing inexpensive capital for its owners and directors.

As a result of this, government rewrote the law books to strengthen Bank of Uganda’s supervisory powers and improve the requirements for anyone wanting to start, own and run a bank.

Under the new laws the central bank was insulated from political interference, commercial banks’ shareholding was diluted to prevent against a single dominant individual owner and the capital requirements for owning a bank were pushed up substantially from sh1b to the current sh25b.

"Given our experience the logic was simple, we need a strong industry regulator and strong commercial banks that can not only absorb losses when they turn up, but have strong enough capital bases to innovate and better serve the public....

As a result of these changes private sector lending has jumped to sh16.5trillion at the end of last year from sh731.6b in December 2001.

This statistic alone suggests a strong growth in access to credit to the private sector. It is inconceivable that Ugandans are not getting their fair share of this.

That most of this credit is going to trade and services and not manufacturing and agriculture, is down to structural deficiencies that need to be addressed.

There is really no way around it. Ugandans will be best served by an industry that is robust enough to meet their needs, not whether it is owned by locals or not. Unless of course the argument is for these local bank owners to have access to cheap money at the expense of the depositors, which is what led to earlier bank collapses. 

That being said neocolonialism in its various guises is real and cannot be wished away. However, to blame it for our failures, poor governance in our institutions, is to abrogate our personal responsibilities to ourselves and country.

MILK, SUGAR AND THE CHANGING EAST AFRICA ECONOMY

It was an interesting coincidence that 10 years since the East Africa Customs Union came into force, a Kenyan delegation was in Uganda a few weeks ago, to help resolve a trade spurt between our two countries.

At issue was the surge in milk exports to Kenya from Uganda, which had halved farmgate prices in our eastern neighbor and made some powerful constituencies very jittery.

The price collapse in the Kenyan dairy market was prompted by a near sevenfold jump in milk exports from Uganda. Last year according to official figures Uganda exported 110 million liters of milk to Kenya from 16 million liters the previous year.

It is safe to say our neighbours have seen nothing yet.

The Dairy Development Authority reported in June last year that in 2017/18, milk production stood at 2.5 billion liters. Of this only a third of the milk or about 800 million liters is processed.

So if Kenyans have got their undies in a twist about 110 million liters, what would happen if we processed 50% of our production and exported the extra 400 million liters their way?

This was one of the best business stories of last year. The surge in exports overturned our trade balance in Kenya for the first time ever, with us exporting more to them than we import from them. It vindicates the champions of regional free trade...

The Kenyans are pondering slapping 16% VAT on our milk to give their embattled dairy farmers a chance. Which is good politics, but bad economics.

One of the main benefits of free trade is that it sharpens competitive advantages, the ability to produce something better than your competitors, which is a good thing.

The most efficient producers of a good or service end up thriving and the less competitive ones go off to look for their niche, what they can produce better than everybody else in the market.

There will be casualties of course, especially of those refusing to adapt to the changing times.

The anti-market lobby like to say that this is a bad trend and government should step in to subvert the market every so often. Often times the ones fronting this argument are those caught on the wrong side of the competition who want a government bailout.

The best way to look at it is to think of Uganda and its 100-plus districts. Imagine if we had, hard district borders, with customs posts at every district boundary.

To get matooke from Isingiro to Kampala currently, your main impediment is the state of the lorry carrying the matooke. There are no real tariff barriers between Isingiro and Kampala.

But if they were hard borders the inconvenience in crossing the nine district borders to get to Kampala, the time spent – a trip that probably took 10 hours would now be drawn out over a week, and the costs in import levies, overnight travel, would make a bunch of matooke so expensive that Kampala would start growing its own matooke.

The Kampala soils are nowhere near the quality of those in Isingiro, so the people of the capital city would settle for lesser quality food because of these barriers to trade. Kampala will be forced to indulge in an activity it’s white and blue collar workers have no competitive advantage in.

"The net effect of this would be a lower standard of living for city dwellers, than if the district boundaries were brought down....

The East African Community is bringing this reality to the fore.

In 2019 Kenyan farmers have complained not only about Ugandan milk but Ugandan sugar, grain and even poultry. The hard border and Uganda’s years of instability in the 1970s and 1980s allowed less efficient Kenyan producers operate. With stability and the Uganda economy back on a growth path, the Kenyan farmer is being reminded that there are more efficient producers on the other side of the border.

But you can expect that the interest groups who have invested their lives in this inefficient arrangement will not roll over and die. They will fight long and hard to maintain the status quo. But as they say, there is nothing more powerful than an idea whose time has come.

In Uganda too, some of our producers will have to face up to this new reality. Those who were sucked into the whole import substitution drive will be the hardest hit. There are somethings we have no business trying to produce, because the Kenyans produce it cheaper or even further afield, the Chinese, with their massive economies of scale can produce and land it on our shores, for a fraction of the price that either of us can produce it at.

"Some cynics would argue that agriculture is not the way to develop modern societies, but that would be to ignore the experience of Denmark or New Zealand. This is also to not appreciate the scope of agro-industries that can be built around research, processing, logistics, marketing, retail, hospitality and, that we haven’t even begun to scratch the surface of our true potential....

The government rather than side with entrenched interest groups or crony capitalists needs to direct our economy towards the production of that, that we have a competitive advantage in. When we have mustered enough capacity and surpluses, we can tinker around in areas where we can develop some competence, eventually.

And by the way more than two decades ago the United Nations Development Program (UNDP) mapped out a strategy based on the industries that we have or can develop a real competitive advantage in, at least in the region.

These were agriculture, tourism, services – education, health, financial and ICT and mining. Twenty years later and we are just waking up to our agricultural potential.

IN THE NEW YEAR LET US LOOK TO OURSELVES

Professor Ezra Suruma published an interesting, if an unsurprising, commentary in the last week about the capture of the financial industry by foreign capital.

He argued that improved regulation of the banking industry – increased minimum capital requirements and improved governance requirements, was shutting out indigenous capital from bank ownership. He also argued that a new regulatory framework of SACCOs was going to plug the last loophole for indigenous capital.

I agree with Suruma in as far as foreign capital has the capacity and will to dominate our markets, I disagree with him in as far as he suggests that controls should be eased on local businessman to give them a chance to compete in the market. And this can extend to all markets from retail to construction to agriculture.

To start a bank today you need a minimum paid up capital of sh25b, far out of the reach of most, if not all Ugandan businessmen. But it was not always the case.

When the first bank in the NRM era went down, The Teeffe bank in 1993, minimum capital required for a bank was sh30m or about $20,000.

One of the main reasons of the bank failures, apart from mismanagement was that the failed banks were not adequately capitalised. What this means that when the losses started to climb, due to hard economic times, but mostly due to mismanagement, the shareholders could not cover them.

Banks are particularly senstitive to changes in the economy or business environment. Unlike a normal trading business they are structured in a way in which their shareholders’ interest is a small fraction of their liabilities or obligations to the public.

If you opened a shop you can have all your equity in stock and no major liabilities apart from rent, utilities and the wage bill, which in times of crisis the shopowner can cover for a while in the hope the business turns around.

What makes up for the huge mismatch between the banks’ liabilities and the shareholder money is confidence. The public’s confidence in the bank’s track record. Put more crudely, the confidence that when I want my money, which you are keeping from me I will get. Even if no bank can meet this high standard.

Without this confidence no bank can survive.

"With deposits in the banking industry up more than 50 times last year compared to 1999, when UCB was taken over by the Bank of Uganda, it would be irresponsible even criminal for the central bank to keep bank owners capital low to favour local banks....

Apart from enriching a connected elite, it does not guarantee improved service or even the overall health of the industry.

In fact, one can argue that the minimum requirement now of sh25b for the 24 banks in the market, should be increased substantially, quadrupled even, given that industry deposits are now about sh20trillion or sh20,000b.

But let us look at this issue of indigenous businessmen’s failure to raise capital.

What does it take to raise capital in this market?

I have seen some spectacular fundraising efforts being done for weddings. Families and friends come together and raise tens, even hundreds of millions of shillings in aid of a one day orgy of feasting and drinking to celebrate the marriage of their children.

We can contribute to such a cause because it promises the return of a good time at the ceremony, children. This will happen through a well understood institution, which has a better than average success rate in terms of a continuation of the clan and species.

So why cant we raise money for our business endevours the same way?

One, business owners would rather own 100% of a small enterprise than 10% of a bigger venture. We want to got it alone. Two, we don’t trust each other with our money. In fact, as the last year has shown with the collapsed Ponzi schemes, in order to separate people from their hard earned money we need to promise outlandish returns in order to overcome their mistrust.

"Our failure to raise capital to compete in the banking industry is down to our deficiencies in management, especially of other people’s money....

All those banks, which collapsed could not stand up to scrutiny by the most objective measures. Their promoters ignored the rules of prudent business and were caught in the act.

Suruma neglected to mention that right now their SACCOS and investment groups raising enormous amounts of capital from their members, growing by the year, in good and bad economic cycles, thanks mostly to their observance of good governance practices and foresighted leadership.

It is true that Bank of Uganda’s interest in them could cause some discomfort, but the central bank would be remiss as the custodian of the country’s monetary policy to ignore these huge pools of money, collected from normal citizens on nothing more than the trust of the SACCOS leadership.

As for the neocolonial plot to subvert the building of local capital, the above argument suggests that the neocolonialists will walk all over you if you are weak internally to begin with.

"Ethiopia, unlike the rest of the countries on the continent, was not colonized because they were united and not led by opportunistic leaders who either, sold their own into slavery or allied with the colonialists to try and subjugate local rivals....

If increased capital requirements are keeping indigenous capital out of the banking industry a lot of the blame for this sad situation is due to us. The sooner we acknowledge and do something about it the better.

WHAT GROWING TRAFFIC OUT OF KAMPALA SAYS ABOUT UGANDA

Pictures on Christmas Eve, of traffic bumper-to-bumper on the Kampala-Masaka and Kampala-Jinja highway caused a sensation on social media.

One photo caption had it that the Kampala-Masaka highway had been turned into a one-way street. Another picture taken in Mabira on the Kampala-Jinja highway showed three lane snarl up beyond the horizon.

It is safe to say that the rush up county during the Christmas season has intensified over the years.

The mad dash out of Kampala should not come as surprise. With almost 80% of the population in the rural areas, the probability is that most urban dwellers either grew up in the rural areas or are one generation removed from our rural roots...

So it’s the most natural thing for us to go back to the village to confer with the elders, reunite with long lost friends and dare I say, impress the villagers at how well we are doing in the city.

It is during the festive season that people from Kampala are introduced at church congregations and other public gatherings. The people from Kampala are what having arrived looks like for the rural people.

And it is a big deal. To the returnees and their rural cousins.

You can tell because related to that massive motor exodus up country, is the ghost town quality that Kampala assumes at the end of the year. All the cars have, as if, been vacuumed off the streets of our capital.

Many years ago during the Christmas period there used to be a seasonal shortage of sodas on the market. Our beverage bottlers didn’t have the capacity to match the spike in demand during the festive period. Some people made a killing by hoarding sodas and marking them up at twice or even thrice the price during the normal days of the year. That is a thing of the past now, because the production and variety of beverages to be had, have increased.

Clearly the hiking of transport fares out of Kampala during the Christmas period follows a similar supply-demand pattern. Believe it or not, but bus companies can hike transport fares because there are not enough buses going up country to cater for the explosion in demand. Hence the doubling and tripling of bus fares...

Also the chockablock traffic on major highways suggests that, once again that the private sector is moving much faster than public investment.

Nearly 30 years ago in 1991 there were about 50,000 cars on our roads. In 2011 Uganda Revenue Authority (URA) reported there were 635,656. By extrapolation, for lack of a more current number, there are about 1,754,000 cars on our roads today. In about 30 years the number of cars in Uganda have grown by a factor of 30.

Our paved, or tarmac, roads on the other hand have grown to just over 5,000 km from 580 km over the same period, a tenfold growth.

Is it any wonder then that when we power our vehicles for the annual ritual, that we end up in a situation, not unlike molasses trying to squeeze through a small noozle?

The numbers seem to suggest we need to expand our road network, allowing for more options out of Kampala than the major trunk roads. Or alternatively expand those same trunk roads, say to six lane highways to ease the flow of traffic during the festive season.

I think better use of our money would be to pave alternative routes before expand the major trunk roads, why expand the highways for the one day freakshow?

Probably a more cost effective solution maybe to recommit to building a railway network around the country. Train transport, running a 24-hour schedule, can carry more people, cheaper and more cost effectively than the best road transport.

As if seating in traffic for hours is not bad enough, this same phenomenon is one of the most manifest signs of inequality in the country today.

Last week the UNDP Human Development Index (HDI) ranked Uganda 159 out 189 countries. The HDI, which measures the quality of life of a country’s citizens in terms of life expectancy and access to essential services, is a better measure of how an economy is working for its people than the traditional GDP per capita measures.

This deficiency is one of the best justifications for the rush to play catch up and lay down the transport, communication and energy infrastructure. The concentration of economic activity around Kampala can be correlated to the concentration of infrastructure in and around the capital city. And by extension the concentration of human resource.

A determined, systematic expansion of infrastructure upcountry is bound to stimulate economic activity there, as production grows in response to improved access to markets, improving incomes and growing wealth upcountry.

If this is done, maybe like the soda shortages of yesteryear, the Christmas traffic will remain in the past, a legend we can tell our grandchildren about.

OF BLUE FLIES, THE MAFIA & UGANDA’S POTENTIAL – 2019

Twelve months, is but a blink of the eye viewed against the vast expanse of history. But in Uganda 12 months can seem an eternity. We pack so much drama in a year that it’s easy to forget what happened  this time last year. At least that is how it seems to me.

To wrap the year I looked back on 12 months of this column. There was plenty to laugh about. Plenty to shake your head about. And quite a bit that would bring higher mortals to tears.

In January, this column took a stroll down memory lane to a bleak Christmas for this author, in Wandegeya.  Not for lack of money, in 1994 I had to settle for a meal in the market in Wandgeya, that I thought were left overs form the night before. But is also where I came to appreciate the perfection of the blue, on the blue fly.

The column was prompted by an uncharacteristic attack on foreign investment – MTN was being wrung through the mud at around this time. I was exploring the fact that as a country which had not and until now, has not, effectively mobilized its internal resources, we have had to rely heavily on foreign direct investment to pull us out of the hole we were in thirty years or so ago.

"Thankfully we have been able to attract enough credible entities that have created jobs, provided goods and services and paid taxes. Unfortunately for them, because they represent “foreign” capital, it can be easy to fan sentiments against them for the most spurious reasons, sometimes none of their making....

They are not doing us any favours being here. They are here because there is money to be made. It is a win-win situation. It would do us some good if we didn’t think of our relationship as a zero sum game – either we win or they lose. We can benefit so much more, in jobs, technological transfer, taxes, goods and services, if we can maintain the enabling environment for them to thrive.

Fast forward to September and this column was totally unamused about the shenanigans surrounding UTL. This is the month the investment minister Evelyn Anite warned that the “mafia” had taken over the government owned telecommunications company, intent on stripping it of its assets and whatever else they could pry from the hinges.

This column argued that UTL, which is technically insolvent, because of the hoolah balooh may very well go for a dollar. Its debts far exceed its assets. Not to mention that to bring it up to speed with other industry players would require a massive outlay that no sane investor would put up. Shut it down we said and be done with it...

But it was not all doom and gloom. In that same month NSSF announced an 11% interest on members’ savings a climb down from 2018’s 15%, but a better rate nevertheless than you would get on the market for your long term savings.

This column was practically drooling at the prospects for NSSF, which if a clause in the new law governing the Fund is passed, allowing for voluntary contributions, NSSF will be well set up to mop up a lot of the billion dollars or so, in remittances from abroad. Under the current law that governs NSSF only members in formal employment can contribute. In the new law the benefits of the fund will be open to those in the informal sector and anyone else wanting to sock away money for the future.

There was still more good news. In October this column stumbled (if one can stumble upon a 13,000 acres agricultural operation), Asili Farms in northern Uganda. The farms together with Joseph Initiatives are owned by Agilis Partners, which has set as its target to unlock Uganda’s potential as the continental food basket...

They grow maize, soya bean and sunflower seed. In the space of less than five years, they logged 25,000 tons of grain exports last season. In addition to their own land holdings, they have mobilized 15,000 farmers in the Bunyoro region to supply them with the grain.

They have gone beyond lip service about Uganda’s agricultural potential. And that will be key in coming years. Seven in ten Ugandans derive their livelihood from farming. Rudimentary farming practices, lack of bargaining power in the market and poor access to those same markets means they are doomed to a second class existence where the economy’s continued growth is just a story.

We keeping our fingers crossed for them and like to see how they have done in five -, ten years’ time.

And then we had the laughable circus of the pallets.

For those who were not around in June (It was that long ago), the story broke of how central bank officials connived with our currency note printers to print extra notes. The figure being bandied around was sh87.5b more.

The story grew legs because in our day to day living we do this kind of thing. We are always looking to cut corners, to win a bargain, to beat the system. So because we do it, somebody must be doing it at the central bank.

"Never mind that the printers have reputation of a few hundred years and would not jeopardise that from some small banana republic. Never mind that the scale of the operation to smuggle from under security – both here and abroad, 350 kgs of notes (a conservative estimate) and hence the ease with which the secret would have leaked, not weeks but hours after the cache had touched down in Uganda.

But yes! This is Uganda!

MUSEVENI HAS THE LAST LAUGH ON CORRUPTION?

Marketing gurus Al Ries and Jack Trout spelled it out a long time ago. That when you are the market leader one of the key ways of bolstering your position is always be aware of what the contenders are up to, and then hijack their effort.

The Anti-corruption walk this week that was led by President Yoweri Museveni may one day serve as a test case for that very theory.

Coming up to the 2021 election the strategists must have worked out that the biggest Achilles heel of this government is the growing corruption, or at least the perception that corruption is growing. So how to prevent the opposition from taking it on as their rallying cry? Own the fight against corruption.

"As was pointed out somewhere Museveni was actually demonstrating against his own government....

So where does that leave the opposition? They have to hope that after the fanfare of the walk, government falls back to business as usual. Despite the President’s best intentions, the money is on that being the outcome.

Corruption is not unique to Uganda.

Across the border in Kenya the government is working hard to fill a hole in the budget that was created by officials who cooked the books, projecting higher revenues and underreporting expenditure. In South Africa once proud enterprises like South African Airlines, power company, Eskom and media house, SABC are all but dead, buried under the weight of corruption and mismanagement in the last two decades.

Dealing with corruption there will require unique approaches specific to them as it will here.

But let us walk through this process. So countries that are not corrupt how did they get there?  

In medieval Europe there were kings who had supreme power. They descended from the strongest cavemen, who through physical might imposed their will on their hunter-gatherer communities.

As these communities grew in size they settled down in one place. Power shifted from the muscle bound caveman to the man who by working his fields could command the most surpluses. He became the leader of the now larger tribe.

But he had his cronies who were shoring him up. The resources of the tribe – paid to the crown as tribute, were not enough to go around, so they started wars of conquest and expansion, and shared in the spoils of war and the enlarged resource pool.

But meanwhile the collective surpluses were also used to pay the artists, the thinkers and innovators. Out of innovation came the industrial revolution, which created a new industrial class who became a counter to the absolute power of the realm.

Through protracted negotiations, that were often bloody, the realm ceded some of its power in exchange for retaining its lands and exalted position in society. In some places France and Russia this progression of events went spectacularly wrong for the ruling class.

What the industrialists sued for were more objective rules for the management of society, that did not depend on the whims of one mad ruler or another, which effectively rolled back corruption. 

"Corruption thrives in situations where there are huge discretionary powers allowed the leadership, which can easily degenerate into impunity....

Long story short, if there is no credible counter to governments, corruption will flourish. You cannot shame corrupt governments into good behavior, they have to be compelled. To expect them, out of the goodness of their hearts, if there is any goodness left, to mend their ways, is an exercise in futility.

Meanwhile the corrupt are not asleep and are actively sabotaging the aforementioned evolution. They coopt, wear down or get rid of all together the anti-corruption activists as long as they don’t coalesce into a real threat to the corrupts’ power.

Maybe we can short circuit this process. We can’t wait the hundreds of years it too Europe to organize itself. I wouldn’t hold my breath.

Some people point to other countries where leaders have put the fear of god in their citizens and no one dare steal a shilling. They want that absolute power here but only to fight corruption. But still that is arbitrary power that doesn’t build institutions, shocking as it seems, it’s a regression rather than progression from where Uganda is today.

So we are back to where we started.