The campaign season is now truly here.
Last week the NRM’s Central Executive Committee filled its top positions. The election of older persons, people with disability and youth chairmen at village level were concluded. In the constituencies far and wide its getting hot under the collar.
The main event – the presidential elections will be decided in February.
I got to wondering if I was a presidential candidate what would I propose as my action plan for the next five years.
Below are my first and ready thoughts for some of what candidate Paul Busharizi’s economic plans would be.
1. Introduce a Covid-19 bond
The challenge of the Covid-19 pandemic will be with us long after next year's polls. The major challenge is keeping businesses open and expanding.
As it is now with depressed economic activities people are out of work, making companies returning to full production difficult as there are no people to buy their goods.
We have two choices either to let every one for himself, God for us all and the devil take the hindmost. There will be a lot of pain – closed business and lost jobs, for a year or two but the ingenuity and resilience of our people will come through.
Or provide some government support to businesses and the most vulnerable, avert the worst effects of the economic slow down and provide a base for economic recovery.
This will cost money.
I will propose the initiation of a Covid-19 bond, with a tenure of between 20 and 30 years, to raise about 10 percent of GDP, $3b or about sh10 trillion. The money can be raised in four tranches, one auction every half of the next two financial years.
This money will be focused on providing unemployment benefits, grants and soft loans for SMEs, facilitating the creation of alternative financial institutions and encourage/compell more big companies to sell there shares or debt on the capital markets.
2. Cash transfers for the most vulnerable
As I understand it government is reluctant to offer cash grants to the most vulnerable because they don’t have the money and are averse to going bowl in hand to the donor communities.
The big political upheavals from Zambia to Sudan have come as result of the removal of subsidies. To allow the donor community to finance this would be a recipe for disaster when we disagree, as we inevitably do on one policy move or the other. I sympathise.
Hence my going to the open market.
It is estimated that there are at least eight million living below the poverty line. The covid-19 pandemic is expected to raise this number to 11 million. Assuming an average of five people per household that would be 2.2 million families. Assuming a handout of sh100,000 per family monthly or sh220b a month. I would provide this for a year long enough for people to get back on their feet. That would cost about sh2.7trillion.
To access the money beneficiaries must have a national ID and even better, a mobile money account to which the money will be sent directly.
This I would be a direct benefit to the families and boost demand in their local economies.
3. Support for SMEs
Support of SMEs will take two forms the smaller part of which would be grants to keep them in business and the second part, soft loans offered at least half the market lending rates for up to five years.
In addition I would fund business support services to ensure that not only do the businesses survive and thrive but can repay the money. This will be a seed of a revolving fund to benefit SMEs well into the future.
To benefit from this facility SMEs will have to be registered companies.
4. Encourage alternate financiers
As it is now our financial sector is dominated by commercial banks, who are well suited to funding going concerns but not start ups or providing long term capital.
The capitalisation of Uganda Development Bank will continue but at more determined pace, the target will be a $2b capital base by the end of my first term. Incentives will also be offered for other development banks to set up shop here.
On the other side of the pendulum we provide tax incentives and seed some angel investors and venture capitalists, who in more advanced economies finance start up companies.
My government will also actively nurture the growth of a broader and deeper financial sector ecosystems that can support businesses from the smallest to the largest.
5. Compel companies to list on the exchange
There will be no more pussyfooting around banks, telecommunications companies and big industry during my time. We will encourage, compel them to list on the Uganda Securities Exchange.
With one stroke we will be able to increase local ownership in these companies – we encourage SACCOs and investment clubs to invest and secondly, improve the capacity of our capital markets to raise capital. This will be crucial for the country to raise capitalf for its companies and development.
There are other development issues like infrastructure development, quality social services delivery but I believe resource mobilisation and building a robust and dynamic private sector are key to building a self sustaining economy. The taxes from these will more than cater for everything else.
By the way a major objective all the above initiatives will be to widen the tax base, as all beneficiaries of the above actions will become tax paying members.
