Cyclic Economic Disasters: The Rise of the Dangerous Poli-preneurs in Uganda’s Monetary Failures

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Min. of Finance PS and Secretary to the Treasury Keith Muhakanizi

KAMPALA, Uganda: Today’s Uganda economic challenges are simply enshrined in the era of the politicization of every government policy and indeed the shrewd politicians have equally benefited without anyone questioning. With the arrival of social media fused with the mainstream media; it has only exacerbated the problem from informing Ugandans to misinforming them in the name trending with the times and thus a few look at government policies but rather move on.

Without sounding academic here; let’s try to look at both the public choice literature and the other which focuses on the entrepreneurial element of politicians.  The public choice branch largely focuses on the rent-seeking aspects of political activity: the stifling of competition through legal barriers to entry, lobbying and special interest practices, legislation brokering, coalition-building, etc as noted by Matthew M & Salerno (2011) in their research. The second branch focuses on the entrepreneurial element more than the political, and largely relies on the entrepreneurial theory of Israel Kirzner, which emphasizes alertness and discovery as the key elements in entrepreneurial behavior. In branches, Ugandan poli-preneurs focus on rent-seeking and the power they have to extort and grab resources from the poor without government intervention.

In that confusion, politicians have emerged as winners but at the same time as businessmen. It is very easy now to find MPs busy running around in the streets of Beijing, Shanghai, Dubai, Mumbai, and Abu Dhabi and among others instead of legislating for Ugandans, they democratically represent in parliament. They are over 400 MPs, but only a few are committed to the parliamentary duties. Many of them are chasing their private businesses other than their duties.

I refer to these straight-on as “political entrepreneurs” aka the ‘poli-preneurs’. These are not only MPs by the way but also ministers, high-ranking government officers like policemen and army men, fading but powerfully connected politicians including religious leaders. All of us have the right to do business but these few poli-preneurs practice this differently to their personal benefit. They use their public offices to simply access their private business agendas.

Not only that but also poli-preneurs finance poor politicians into these offices with a serious intention of benefiting from these poor MPs lobbies plus gaining tenders. Many MPs are funded by these powerful individuals thus many of them have less of their mouthpieces. On top of that, they pamper them with exorbitant fuel-guzzlers (vehicles), give them financial loans to win campaigns and eventually do or accept everything at the benefit of the poli-preneurs or simply loose the post.

Many ministers in businesses do not pay taxes because of their impunity operations. KCCA or URA has always experienced this problem in tax collections that some of them are always by-passed. Some shops and other businesses owned by these poli-preneurs only make calls to directors of either URA or KCCA and henceforth fail their own system and government they operate in.

The few poli-preneurs also benefit a lot into the tearing apart of the country into districts. The politics of regional gerrymandering into small and identically poor districts has continued to only benefit a few government sycophants who only keep the weak system in operation. Believe me or not, the districts divided per say benefits only the Chairperson local council five (v) and his councilors of the different fused and smaller counties and sub-counties; RDCs and their deputies; the members of parliament in that region as the rest are left in balance. Previously, the idea of demarcating districts was simply for service delivery to the many in the country especially rural Uganda and the idea of following up and reviewing government policies domestically.

Precisely, political entrepreneurs are business entrepreneurs who seek to gain profit through subsidies, protectionism, government contracts, or other such favorable arrangements with governments through political influence or simply called corporate welfare. In the real terms, these might be those who strongly back the government and simply lobby in modern democracies but in Uganda, this is not the case.

These Ugandan poli-preneurs benefit in terms of corruption and bribery, extorting land tittles and augmenting land wrangles and escalating land grabbing, avoid taxes (tax avoidance), and practice business with impunity. The poli-preneurs also use their so-called powerful connections to the state house, president plus other avenues of even attracting foreign investors (sometimes extort money out of them), who in-turn also have benefited equally in the same way as them. Today, Ugandans are suffering with the sky-rocketing sugar prices and other items but clearly know who’s benefiting from what!

In economics, ‘Hoarding’ which is the practice of obtaining and holding scarce resources, possibly so that they can be sold to customers for a profit. In the same vein, ‘speculation’ is a practice of engaging in risky financial transactions in an attempt to profit from short term fluctuations in the market value of a tradable financial instrument – rather than attempting to profit from the underlying financial attributes embodied in the instruments like capital gains, extra.

The speculation business in Uganda exist especially in financial institutions and indeed there was a rise of foreign exchange bureaus outside the banks and these have had a great hand into inflation at the negligence of the central bank. With that, financially it has changed the financial trends including the change of charges from the same Ugandans again. Some of the examples are the landlords in the Central Business District of Kampala (CBD), Uganda Revenue Authority (URA) and others charging buildings rent as well as paying taxes respectively into US Dollars.

With such changes in the economy, many still do not see that but ask why poverty and the rising financial contractions in the economy are high. The poli-preneurs are not affected here. They charge as they wish; they pay no taxes, therefore the tax-base is still slim and those few who pay both taxes and dollar rent end up closing businesses over a short period of time. We can all agree to the only truth that, only the few benefit in such a setting which is sad.

Finally, both hoarding and speculation businesses are legal in terms of operation but governments always come up with solutions and implementing policies which must solve the problems earlier before the economic situation worsens! The problem in Uganda today is the fact that, those politicians and those with the powerful connections easily access tenders, practice cyclic but inflated scarcity through hoarding and use that to hold Ugandans at a ransom to access such commodities.

A kilogram of sugar is nearly at 10,000 shs yet the government is expected to earn only 50 shs on each kilo gram sold. By creating that artificial scarcity, the poli-preneurs directly smiles to the bank as the poor Ugandans continue to swing in abyss but rather absolute poverty. In a joking way, the trade and industries minister went ahead to pronounce that a kilo gram of sugar must not be sold beyond 5,000 shs but again she forgot the fact that Uganda has no functional policies either to pricing of commodities but rather claim to be a free market economy. The other minister also made an idiotic statement over sugar prices and the case of diabetes. May be he was high of some special grass (read weed) because diabetes as alleged is not one of Uganda’s urgent problem.

The unfortunate case here to state again is the case of the future with these poli-preneurs! The future of our country might be in their hands even after president Museveni with time. This is also true that they fund the opposition leaders too! Many opposition MPs are simply playing hide and seek with their financiers and this is both a future political and economic disaster. It is also the same that those who do not agree with the poli-preneurs demands; they throw them out and fund the obeying candidates and this is one reason why many MPs after losing an election eventually disappear.

In the current Uganda, to trace for those MPs who were in the 6th or 7th or 8th parliaments, you really find many back in the trimmed poverty levels also crying like any other Ugandan. In my view, you might not face poverty today but the dilemma of poli-preneurs also called Ugandan mafias is that our future might be tilting in their favor because not many of us can accept to live in poverty but rather join them. #Akume

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