SAYING BYE TO WORLD BANK BILLIONS, FOR NOW

The World Bank last week announced it would not be contracting any new assistance to Uganda, their response to our enacting of the Anti-Homosexuality law earlier this year.

This was not an announcement to thumb your nose at.

"The World Bank has been front and center of jumpstarting Uganda’s economy over the last four decades. Currently they have more than $5b (sh18.5trillion) in projects in areas as diverse urban redevelopment, agriculture, environment protection, energy, education, health and digital development among others....

These current projects reaching back to 2013 are riding on the back of and in support of fundamental economic reforms that saw this country liberalise the economy. The liberalisation of the economy not only unlocked local initiative, but has led to huge foreign direct investment into the economy.

The reform process has been more successful in Uganda than in other places because Kampala has embraced the logic of the reforms.

It was basic economics, to resuscitate the economy we needed to increase production, to increase production we need to improve infrastructure and remove inefficiencies like government parastatals. People who are hankering for a return to parastatals either have forgotten this context or have ulterior motives.

This mutually beneficial partnership has clearly come to a cross roads. The World Bank says the anti-homosexuality law undermines efforts to have inclusive development for everybody regardless of race, gender or sexuality.

Uganda on the other hand enacted the law through parliament, the representatives of the people, a democratic process.

"It would not be a stretch to interpret the World Bank’s action as saying, “if you want our billions, you have to drop the law.” It takes your breath away, when you narrow it down to its bare essentials.

It should serve as a wakeup call to us.

Our wellbeing and that of generations of Ugandans to come is really up to us. Everybody else can only be an enabler or hinderance to our developmental ambitions.

In this journey others will have their own values and priorities with which they will choose to help or not. They have choices, we don’t. Development has to happen with or without the helpers.

That being said our dependence on donor support is long past its sale by date. We have the means to mobilise our own resources.

We have a budget of sh50trillion, which has to be adjusted not to reflect this new reality, as more than half of it is going to be underwritten by the donors. WE all know that we are not collecting as much revenue as we should, the excuse has always been we area largely informal economy.

As an indicator of how much money we are leaving on the table, last year more than sh170trillion flowed through mobile money platforms. This is more than thrice the size of the budget and the size of the entire economy at $47b. As an indicator of economic activity few indicators beat this.

"The problem is not that the economy is largely informal but that we are not exercising creativity and innovation to collect what is due from all citizens...

I have always argued that we need to tax all land in Uganda. Not only will it increase our revenue collections but even better it will increase the productivity of those lands. If I have my acres of idle land and you slap a sh100,000 tax on every acre I will either have to put it to work, that it pays for itself or sale or lease it to someone who can put it to good use.

But also we need to stop thinking of tax according to the text book. I was a supporter of the tax on mobile money transactions and even on data because these are all economic activities or proxies for economic activities that need to be taxed. I know the arguments about financial inclusion and access to the internet, but anything to make these more productive, which tax does, is welcome.

When the colonialists came to Uganda and wanted us to grow coffee they instituted a poll tax, a tax on every grown man, that forced us to sell something – our labour or goods to pay the tax. Coffee was useful and hence our huge small holder coffee farmer population, which feeds into us now being the biggest exporter of coffee on the continent.

"The seduction of aid is that it is easier to access than taxes. To introduce or raise taxes governments have to negotiate with their people, show some quid pro quo. You pay taxes and we will deliver public goods. Governments don’t like such pressure. It is easier to hop on a plane to Washington DC and over cocktails and canapes, sign aid contracts – per diems all around. The lender will not care as much as the local whether the money is employed for its intended use, more than if he gets paid.

This will undoubtedly have a ripple effect through the donor community.

Locally we may very well have to change the way we think about democracy. For example how do we cut public expenditure for example, in the size of our current parliament? Do we think MPS would ever vote to cede their seats in the house? If push comes to shove how do you do it using the current processes in place?

The move by the World Bank is unprecedented since they pulled out of Uganda during the Idi Amin era, this might just be the push we needed to become more self-reliant.