It is almost impossible to transform Uganda, not even in the next 50 years. The next President of Uganda will find him/herself in the same dilemma. There is this trap that Uganda and probably many other African countries will never escape.
They may grow here and there but they won’t transform. And one of the reasons why transformation won’t happen is an element of “Capital.”
Capital is essentially that which organizes other factors of production. Capital is the machinery, the money, the financial instruments, the debt etc.
In order to transform Uganda, one would have to understand the structure of capital in Uganda. Who owns the capital? Who creates the capital? Who distributes the capital?
When you study the structure of capital in Uganda, upto 90% of this is owned, created and distributed by foreigners. You have majority foreign capital.
You see this with the banks, you see it with the companies that dominate this economy, you see it with the people that fund major projects in this country, it is all majority foreign capital.
I have often used the example of the Chinese Government giving Uganda a loan through a Chinese Bank, to construct a road. The road is constructed by a Chinese Company using Chinese Equipment. The same road will transport Chinese Goods. The Consultant, and Contractor are both Chinese. The only thing Ugandan is the fact that the road has been constructed in this geographical location called Uganda. In this case, who is fooling who?
If we go to banks. Most Ugandan companies will never have the collateral to get a loan from the top banks (again all majorly foreign banks). These banks literally create money out of thin air. If a bank lends you 100 million, it is only required to have about 20m or less in reserves. So who gets to access these loans? Well it is foreign owned companies. Because they have the required security. But let’s also assume a Ugandan company or business man gets access to these loans. Often times, the interests rates are high. There is a likelihood this business person will fail to pay. What happens? The banks (foreign-owned) will take hold of the security.
If you look at the tender requirements for most Government Tenders, they literally just disqualify a Ugandan company. So by and large, Ugandans are locked out of this capital value chain.
You cannot mention a single Ugandan firm that’s registering a high turnover and is entirely owned and controlled by a Ugandan.
Have you ever asked yourself why despite complaints of corruption, the western governments will never stop giving us loans? Or Aid? Because all these loans and grants are structured in such a way that they benefit the giver more than the receiver! There is more money that leaves Uganda than what comes into Uganda.
I suspect most Presidents realize that they can’t escape this trap once they get into power. It is almost impossible to solve this puzzle of capital. How do you get capital into the hands of the nationals?
In the past, I have spoken of Land and Tax Reforms, today, I add Capital Reform. Without Capital Reforms, you can never transform a country!
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