WHY IS UGANDA A DIFFICULT INVESTMENT ENVIRONMENT?

In the last two weeks we have witnessed the swearing in of President Yoweri Museveni and the 500-odd MPs of he 11^th parliament.

We await the announcement of the new cabinet with bated breath, not least of all the business community.

The Uganda National Chamber of Commerce & Industry (UNCCI) president Olive Kigongo and businessman Patrick Bitature in these pages have called for a private sector friendly house.

They appeal to the politicians because while the strength of any economy is dependent  on the viability and vibrancy of the business community, the politicians are the ones who lay down the rules and ensure their enforcement, or not...

Enforcement of the law is important because it provides a predictable environment in which investors – local and foreign, can make  educated calculations on how to invest in the country. If there is uncertainity investors – local and foreign, stay away or adopt a wait-and-see attitude and don’t invest as much as they should. that’s common sense. Even if for love of country I would not put all my eggs in this basket when I am not sure I can keep my eggs leave alone produce more eggs.

Amidst all the political high drama of the last few weeks, some news fell between the cracks.

At cigarette company BAT’s annual General Meeting last week the country boss Kirunda Magola complained that there is an increase of smuggled cigarettes in the country, which are easily identifiable as they do not carry the statutory required warnings on their packets.

This suggests that not only are they not paying taxes and are allowed to sell in our shops despite being obviously contraband, but they are also dampening BAT sales hence denying us much needed revenue. It also means that we may be letting in substandard products that we have no control over.

That is bad enough, but it is also  affecting our neighbours because the country has become a conduit for this illicit trade, affecting legitimate businessmen in the region.

And BAT are not the only ones complaining of government’s inability to enforce its own laws.

A few years ago a major fuel company pulled out of Uganda because, while they were enforcing all the standards required by the law at their stations, at great cost to their margins, other players were flaunting these with impunity, undercutting the major players and in the process turning Kampala into a fireball waiting to happen.  

We are shooting ourselves in the foot.

"Government officials can talk all they want how the country is a good investment destination with double digit returns on investment, widening market and liberal policies, but businessmen listen more to their fellow businessmen and know better than to swallow wholesale everything the government tells them....

Then net effect of this is that legitimate businesses steer away and the more unscrupulous types come calling.

They have their local backers in high places who, for a few dollars more, ensure government looks the other way, the genuine businessmen be damned.

In defending the illicit trade they appeal to some false nationalism -- “Its our people eating at least” but the road to hell is paved with good intentions.

What we are doing as a country is nurturing organised crime and the networks that feed them. The networks that are used to smuggle cigarettes or fuel or batteries are the same networks that are used to smuggle guns, drugs, facilitate human trafficking, the movement of terrorists and assassins.

"Very soon, if its not already happening, these organised gangs coopt government officials into their nefarious schemes and we could very soon become a gangster state....

It has happened before.

In Montenegro, to go around UN imposed sanctions on the former Yugoslavia in the 1990s they leased their ports to cigarette smugglers. When things returned to normal the cigarette smugglers – by this time they had branched out into prostitution and gun running, did no t go away and the new government could not make them.

It got so  bad that Italy at one time put out an arrest warrant for former prime minister Milo Djukanovic for his or his government’s alleged role in the cigarette smuggling business. 

The last elections showed that government needs to urgently create millions of jobs by the time this political cycle ends, we can not do that by letting tax dodgers take root in this country.