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.
