OPINION: Why it was morally right to reward public officials for winning Shs1.6 trillion worth of government revenues
By Andrew M. Mwenda
“It is not easy to stand apart from mass hysteria, to argue against something that everyone, especially the most respected political leaders, academics, and experts are saying and instead argue that they are mistaken or deluded.” Leo Tolstoy, 1897.
Ugandans are angry, extremely angry, that their government paid out Shs3.58 billion as a cash bonus to public officials who helped our country to win $434m (Shs1.6 trillion) in Capital Gains Tax from two international oil companies. I find it strange that our people are angry with the government for rewarding exemplary performance. This is especially intriguing because Shs3.58 billion is less that 0.2% of the money that was won. In fact the arbitrator awarded Uganda costs of $4 million (Shs14.5 billion) and the bonus is only 25% of these costs. Why then is there a hue and cry?
Recently, Stanbic Bank Uganda announced that it would pay a bonus of Shs1 billion to its Managing Director, Patrick Mwehire, for exemplary performance in 2016. They made an unprecedented Shs200 billion in profits during a period when many banks in Uganda are struggling. This is 0.5% of their profits. There is a need for government to borrow some lessons from the private sector to improve public sector performance. This is one of such lesson.
Every decision we make has an opportunity cost i.e. the value of the second best alternative forgone when we make a choice. We think, and correctly so, that our public officials are very corrupt. Therefore, we should have expected Ugandan officials working on this oil tax dispute to do what all corrupt public officials do i.e. negotiate for private benefits at the expense of the common good.
For example they could have asked for a bribe of $2m (Shs7.2 billion) each and let the oil company win. The oil company would have paid $84m (Shs302 billion) worth in bribes but saved itself $360m (Shs1.3 trillion). This choice was open to our public officials. But they did not pursue their pecuniary interest but the national interest. Such exemplary display of the public spirit, which is rare among our public officials today, should be rewarded.
Uganda’s success on this matter is even the more inspiring because there is not a single country in postcolonial Africa that has ever won a Capital Gains Tax dispute against these multi-national oil companies.
I am reliably informed that since Uganda’s success other oil producing nations of Africa have had to amend their laws to follow our example. This achievement was unprecedented and rewarding public officials who did it with less than 0.2% of the proceeds was the morally right and fair thing to do.
There may have been problems on the criteria used to choose who to benefit and whom to exclude. But that is a debate on the procedure, not the substance of the bonus. I am willing to listen to that.