The resuscitation of Uganda Airlines, the bailing out of
this or the other businessman and the return of government into the business-owning
fold are but a few symptoms of growing movement supposedly to address the issue
of rising unemployment.
The proponents of this argument point to south-east Asia’s
tigers and more recently across the border to Rwanda as an example of how state
intervention works.
The inefficiency of government owned companies across the board
measured by profitability (or lack of thereof), their inability to innovate or
even create jobs, is well documented.
This has a spill over into the economy’s ability to grow and
up lift the welfare of its people.
Government owned businesses are often
favoured, squelching competition and the attendant benefits that come with a
vibrant sector.
Thankfully in Uganda we have numerous examples of the
companies, which were government parastatals, which have not only increased
production, widened the variety of products, grown their workforces
exponentially and pay us much more taxes than we were led to believe was
possible previously.
One may argue that these companies many of which are foreign
owned have some drawbacks when it comes to expatriation of profits and
half-hearted long term investments, but that they were sold off due to our own
weakness not because they were thriving businesses.
It is absolutely essential that we have a strong
entrepreneurial class, if only because the investment decisions of local players
can be more long term, take into consideration other issues that are not of a
purely economic nature and also because the local investor is the best advert
for Foreign Direct Investment (FDI).
Government has a role to play in building this indigenous
business class but government re-entering the business fray is not the way to
do it.
Listening to our businessmen both local and foreign, their
frustrations with government can be listed as, in no particular order; archaic,
disjointed, disenabling policies and regulations, indifferent execution of
these policies, a lack of long term strategy for the private sector and a lack
of commitment to plugging in gaps that would improve the business environment.
If these can be fixed the business community is convinced
that such incidentals as access to affordable finance would be addressed as a
matter of course.
The businessmen actually don’t want government back in
business.
Then who is screaming for government to jump back into the
frying pan? It’s not the consumers – who have little faith in government’s
ability to deliver service. It’s not the technocrats – who are struggling to
meet ever expanding needs without adding a few other fiscal black holes.
So who is calling for government to be more involved in the
private sector?
The people calling for government to jump back in are those
who are failing to get employed in a competitive private sector, who need other
criteria other than merit to get jobs. The people who are calling for
government to jump back in are those businessmen who have failed to compete,
mismanaged loans or just want free money. The people who are calling for
government to jump back belong to the forgotten phenomenon of “air suppliers”,
who again can’t supply to private companies but in government see a bottomless
pit of free money.
Government does not need to be in business, but government
has a responsibility to create an environment in which businesses can thrive.
Government’s role would be in charting out business enabling
strategies and policies, providing public goods like security, infrastructure
and basic social services, bankrolling research and development among others.
The country will get a greater return on investment if
government concentrated its billions on these areas rather than squandering it
on say, trying to re-establish Uganda Airlines.
By the way the proponents of FUBA (Force Uganda Airlines
Back Again) have never explained what benefits to the country a government owned
airline will bring that is not already being provided by the 19 airlines that
fly in and out of the country today.
