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Economy: Where Next?

By Kalundi Serumaga

The Ugandan government has finally woken up. It has accepted that the western economic crisis will indeed have a seriously negative impact on Uganda Such an admission is no small matter for people who have been enthusiastic advocates of completely opening up Africa’s economies to Western engagement, thereby marrying us into this mess. In fact, as late as last year’s Independence Day rally, President Museveni very insisted that the crisis would have no real effect on Uganda. To have now admitted that it will could eventually turn out to be the end of whatever is left of his credibility as the leader of the National resistance Movement, as it implies doctrinal collapse and a malfunctioning vision.

While we continue to observe the rich irony of the Westerners who made our government sell the then-struggling Uganda Commercial Bank (and other public enterprises) now nationalising their own banks, there is also the need to understand the broader meaning of the greatest crisis in the Western economies since the ones that led to their first and second ‘World’ Wars.

First of all, it is important to recognise the distinction between owners and onlookers, or perpetrators and victims, as it were. Just as Europe deliberately misnamed their conflicts for global domination and trade as ‘World Wars’ and dragged their colonial subjects into them, they now want to present what is in fact a crisis inherent to their economic systems as a shared responsibility.

This whole situation grew out of the West’s leaders using a retail-consumerist economic model to try to maintain high standards of living for their own populations for reasons of political expedience. (To tell bazungu voters to tighten their belts and live within their means is political suicide.) Since their economies no longer produce enough real value to trade with the rest of the world, they resorted to mainstreaming their credit system (leasing, hire-purchasing, credit cards and mortgages) to bridge the gap between what they want and what they can actually afford. This madness eventually reached the full extent of its viability and collapsed onto economies everywhere. We Africans are now simply collateral damage.

When the easily foreseeable (that is, foreseeable to anyone not distracted by the burden of living in an African State House) negative effects began to kick in through fewer tourists and significant drops in tax collections, there was some unease and a little anger. However, it was not until Dr Dominique Strauss-Kahn, the global boss of the International Monetary Fund, speaking at the March 11-12 Dar es Salaam IMF African Summit, pointed out to them the truth that was under their collective ministerial noses all along (i.e. that Africa will indeed be affected not just the most, but for longer than anywhere else) that the real panic set in.

Now we hear a chorus of their African Excellencies demanding that the West ‘do something’ since they had done nothing themselves from when the crisis began two years ago, believing that we would not be affected by it.

This is a risky request to make. One outcome could be Africa opening up for the most rapacious types of investment activities (open-cast mining, sweatshop factories, timber logging etc) that guarantee higher returns then, any investment opportunities currently available anywhere else but that require a freedom from all environmental, safety and labour laws, leaving the host country an economic, social and environmental wreck for decades afterwards.

President Museveni and company had insisted that Uganda would not be so badly affected because our economy is ‘not fully exposed to and integrated with the global economy’ Even if that piece of self-delusion had turned out to be true, it would have been more through accident than design, as the NRM have been making every effort since 1986 to push our economy further and further into greater intimacy with the industrialised world.

In fact, they have often complained most vocally about our slow pace of opening up: they abuse our traditional leaders for resisting ‘modern’ land laws that attract foreign investors; they criticise our people for being too obsessed with family and tradition to make an orderly workforce; and the media is often attacked for exposing the environmental and other damage being caused by investors, thereby ‘scaring them off’. The President in particular is fond condemning all this ‘backwardness’ as the obstacle to greater ‘modernisation’ (recently echoed by Disaster Preparedness Minister Tarsis Kabwegyere who called Acholi and Buganda leaders ‘backward and ignorant’ in a March 24 tirade during a land tenure workshop).

Clearly, the extent to which we have opened up is the extent to which we will be affected. But for these same leaders to now present as a newly discovered strength the very thing they have been condemning as a weakness, (without even acknowledging the foresight of those who have maintained a healthy suspicion of the so-called ‘global economy’ and have been resisting it politically, intellectually and culturally for decades now), is the height of shamelessness.

However, the older, more deep-seated crisis that was created by the very act of forming Uganda will also become more intense. The West will be hard put to resist the logical temptation to simply use force to make us further drive down producer prices, thereby making us subsidise their economies even more.

This is not as far fetched as one might initially think. There are G8 armies in a number of African countries already, sometimes even taking a direct role in fighting insurgents and other security threats. Liberian President Ellen Johnson-Sirleaf inadvertently confirmed this when she warned the Big Powers of the G20 in March this year that they should help Africa with aid now it will ‘be cheaper than having to send peacekeeping troops later’ to contain resultant political crises when our fragile economies break down further. There is also the ongoing buying up of fertile land in various parts of sub-Saharan Africa. Such deals exist in several African countries, the most extreme example being the 99-year lease of 1,300,000 hectares given free late last year to the South Korean industrial giant Daewoo in Madagascar (basically, 50% of the country’s arable land), whose ‘too rapid liberalisation and over-dependence on foreign investors’, has been a key factor in the island nation’s current political upheavals according to Dr Stephen Ellis, a historian and expert on the country.

African economies will have to put even greater economic distance between ourselves and this toxic economic system that was politically imposed on us a century ago. This raises the question as to what alternative there is to the prevailing economic doctrine.

There is the route of renationalisation, as demonstrated by Venezuela, which has seized rice mills, oil refineries and land previously owned by foreign-investor conglomerates. The trouble here is a that the native communities in Uganda may create the same problems for a central government that the Uganda Peoples’ Congress party experienced with Buganda in the 1960’s, as they are more numerous than the indigenes of the Americas, and unlike foreign investors, are actually the original owners of these natural resources.

There is also the opportunity to rebuildthe co-operatives movement that acted as a stabilizer of producer prices, a social security safety net, and also a base for the formation of capital funds autonomous of the Western financial system.

Both of these policies suffered in the past from internal political mismanagement coupled with entrenched hostility from the West, culminating in their dismantlement by the subservient governments such as Uganda’s NRM.

It is clear that unless the natives have a sense of actual ownership of such policies, there will be no way to maintain internal political support. This is why any policy aimed at public ownership must at the same time grant real power to the people of the regions where the resources lie. This is the economic aspect of federation. For example, Buganda must own her land, and Bunyoro and Acholi must own their oilfields.

Does the current political class in Africa have the capacity to implement such polices again and even defend them against Western attacks?

MPs Stephen Mukitale (Chair of the Committee on the National Economy) and Charles Ojok Oleny (Vice chair of the Finance Committee) say it is more productive (and certainly more tactful) to focus on finding the opportunities within this crisis, rather than focusing on the President’s economic blunders.

They advocate developing our domestic and regional markets, especially with regard to agricultural production and a re-thinking privatization.

In short, a return to nationalisation and an agricultural base de-linked from western markets and not premised on dispossessing the peasantry of their land. This marks an actual ‘fundamental change’.

From this, we can see a trend emerging within the NRM where the top leadership is pursuing policy at variance with the thinking of an increasing number of its more sober-minded middle cadres. We saw this with the Temangalo dramas and with the earlier controversy on the lifting of term limits (until that debate was suffocated using large bundles of cash), and we see it now on the economic front.

If an organised body of opinion is to emerge within the NRM that serves as a credible counterweight to President Museveni’s discredited economic policies, it will present a danger to the Museveni Presidency: It is almost as if there is now the view that the NRM old-guard has become the obstacle to the party becoming a genuinely viable democratic organisation pushing progressive policies. The riddle is how to remove the old-guard without losing state power as a party. Many are thinking it, but nobody is going to say it just yet.

Meanwhile our national leaders still turn to the creators of this crisis for a solution. Hence the representatives of African leaders at the G20 summit all presenting their problems to the British Prime Minister Gordon Brown (as if he does not have enough problems of his own).

The irony here is that it was that very same Brown who, while the longest serving UK finance minister in two centuries between May 1997 and June 2007, created many of the policies that have created this meltdown. Logically, therefore, he should actually have been the one explaining himself to them!

Perhaps there is no limit to blind faith.

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