Uganda: Why Are Investment Policies Skewed to Favour Foreigners?

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    The Monitor (Kampala)

    Morris DC Komakech

    23 December 2011


    opinion

    Corruption in Uganda has reached a crisis level. Every unit of our society has succumbed to this vice which has been normalised in a monumental manner.

    The question we must ask our generation is why we have let this monster permeate our society and our conscience such that it alone, dictates our common future.

    In my previous dispositions, I posited that corruption is a function of neo-liberalism. The central premise for such assertion is that neoliberal ideologies that were imposed on the developing countries by the Brenton Woods institutions significantly destroyed social and political infrastructure of these countries. Most of the political infrastructure was a colonial construct that had gotten distorted by the advent of independence and rising socialist consciousness.

    For instance, in Uganda, the sustenance of Cooperative Union ensured a sustained agro-economy that provided soft landing for most small scale farmers from the vagaries of the global market. Through cooperatives, our farmers escaped market price fluctuations.

    Now, through the open market systems, cooperatives were abolished on the ground that they offered unnecessary protection to a growing market such as Uganda. They also advanced other complimentary arguments that foreign investment in agriculture and other ventures would provide the silver bullet required for development and national debt repayments.

    Neo-liberal proponents therefore introduced this monstrous principle in Africa and the rest of the developing world in haste, causing shocks. This is because its implementation did not avail significant time to prepare and mobilise human resources adequately in these countries to permit fair competition in the new economic model. Thousands of public servants were retrenched as governments were compelled to relinquish key responsibilities to its citizens. These would be given away to private and foreign firms.

    Notwithstanding the fact that international conglomerates and medium size investors would require time to study market dynamics and consumer patterns before gaining sufficient confidence to inject their capitals in these countries, most of the governments obliged to these harsh conditions. The education system was not revisited to prepare the locals to become competent global competitors. The health care sector was surrendered to speculations that private agencies would emerge to fill the gap left by the government. Most government institutions were purged of highly skilled human resources through retrenchment with the hope that new ideas and technology would perform their duties. Simply put, the expectations were way too high!

    These gaps left by this rather awkward “liberalisation” of the economy, only temporarily posted growth. The real Ugandan and their businesses started playing second fiddle to the bigger co-operate powers as their established industries, such as NYTIL and Coffee Marketing Board were being dismantled. Not before we could realise anything, our airwaves were filled with FM transmissions and then cell phone companies squeezed in. Uganda became a hub for “foreign investment”. The death of industries in Jinja symbolised the harshness of this economic disease called liberalisation.

    The purpose of every investment is for accumulation of profit. Most of the investors in Uganda are second class investors and most of them expropriate their capitals back to their homeland. We continue to witness painstaking levels of exploitation and abuse of local Ugandan worker in the hands of these so-called investors. Given the buzz of liberal economy, corruption has materialised as a result of striving for “rent allocation”. When indigenous people try to enter the chaotic open marketplace, they have to compete against well organised and experienced foreign investors.

    The incentives the Ugandan government has in place for foreign investors have never been matched with that for local innovation. For instance, tax waivers or tax free grace periods tend to favour foreigners. The investment policies are equally skewed towards the foreigner. The ordinary Ugandan, therefore, has to endure the briber’s dilemma if they are to remain afloat in the market; else they quickly sink.

    Corruption, therefore, is the means by which space in the so-called liberal market gets procured such that at every bureaucracy standpoint, one has to dispense millions of shillings to get an assurance of prospects and possibilities of upward mobility. And corruption takes many shapes and forms; it could come in terms of money, land, promises for shares in business venture and in some instances, sexual pleasures.

    Mr Komakech is social critic and political analyst based in Canada.

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