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Uganda Promotion

4th Africa IIPT Conference
About Peace Through Tourism

Commonwealth Heads of
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Excerpt from a speech by H. E. Yoweri K. Museveni
President of Uganda

The problem, however, comes when "encouraging" the national middle class can only be done through excessive external borrowing. This increases the country's indebtedness unnecessarily because GDP can be enhanced through another very important and debt-free way, that is foreign investment or, in the case of Uganda, domestic investment by the non-African element of the middle class (the Asians). Especially in the short run, there is no reason why Uganda should subsidize the impecunious Ugandan middle class and leave the cheaper options of attracting foreign and Ugandan Asian capital. This is clearly one of the areas where the aspirations of the Ugandan petty and middle class bourgeoisie do not coincide with the national interest. A time will come when the Ugandan State (the State of all: middle-class, peasants, factory workers, etc) will have a budget surplus. Then the Ugandan State can facilitate its citizens in various ways, including subsidies, but without incurring debt. However, to leave the cheaper option and go for the debt option, apart from increasing the debt burden, brings about the thoroughly unpatriotic side-effect of increasing our political dependence upon those from whom we borrow or beg, in order to help our middle class, among other tasks, to pursue private business.

Given our abundant natural resources, given that we are establishing law and order, and given that we are freeing the asphyxiating bureaucratic grip over the economy, foreign investors, or Ugandan Asian investors, will come here in their own interest because they can make money out of their coming to Uganda. We would worry and think of taking the more unfavourable option of borrowing in order to promote business if the other category of investors was not forthcoming. However, in the case of Uganda, investors are forthcoming, but they are being pilloried by the Ugandan middle class, including political leaders, who have an incomplete understanding of the dynamics of modern economies. This is not excusable from the historical point of view. Arising out of the foregoing discourse, it is beginning to appear that what is patriotic" and what coincides with the "national interest" is not borrowing to support indigenous business but, rather, attracting private investment, whether foreign or local.

However, we shall not rest the ghost of uninformed xenophobia until we have answered the question: "Is foreign investment beneficial to Uganda?" Before we answer this question, we should set out the objectives of investments. Since we cannot cover the whole spectrum of all investments, let us deal with investments in only two areas: manufacturing and transport (i.e. services) sectors. Let us take the question of a textile factory such as NYTIL, which is publically owned. It has an installed capacity of 37 million linear metres. Meanwhile, the government has borrowed US$23,080,747 on behalf of the factory. We never make a profit and hence we never receive dividends. Apart from dividends, what are the other possible advantages from any investment, public or private? The other possible advantages are:

1. providing a market for the raw materials (in this case cotton) produced by the peasants;

2. consumption of our utilities by the factory (water, electricity and telephones);

3. hiring of local labour;

4.investors' utilisation of other local facilities (hotels, airports, planes, etc.); and

5.taxes (e.g. corporation tax, excise duty, sales tax, income tax, ground rent) paid to the State by the factory or enterprise.

Members should note that the country will get all these advantages whether the factory is owned by the government or not, provided the factory is actually operating. The only difference there is between a privately owned factory and a publically owned one is that in the former, no dividends accrue to the Treasury (government). However, given the fact that publically owned factories never operate satisfactorily, we find ourselves unable to receive any of the above-mentioned advantages, dividends included. Therefore, non-privatisation is a hundred times worse, from the national point of view. The only casualties of privatisation I can see are the incompetent and pilfering parastatal bureaucrats. These are precisely the species I would like to see as near extinction as possible, as far as the Ugandan economy is concerned. Patriotism demands the expeditious demise of this breed. With privatisation, we forego imaginary dividends but get all the other advantages enumerated above. Without privatisation, we forego all the advantages stated, in addition to spending hefty sums to salvage the incompetent parastatal bureaucrats.