It is now public knowledge. All that glitters is not gold and Uganda’s tycoons have run to the government, seeking to be bailed out of a bad debt situation. More than 60 companies and individuals are seeking a bailout of a massive Shs1.3 trillion owed to leading commercial banks in Uganda, international financial institutions and loan sharks. A good number of the borrowers are high-flying socialites and businessmen/women whose extravagant lifestyles have for long mesmerised those of us whose ATMs are ‘slow’ in dispensing cash, obviously because there is little to dispense anyway.
A few weeks ago, one of these tycoons, who is in his early 30s, held a lavish party at his splendid lakeside mansion, which competes favourably with those I have seen in places like Beverly Hills, Los Angeles. He is not the only one to live so lavishly since their competition in ‘out-lavishing’ each other is legendary. Naturally, the guest list included the creme de la creme of Ugandan society, particularly in the world of money.
These billionaires also have a ‘cozy’ relationship with the ruling party; often bankrolling political campaigns of big wigs in NRM. The government also happens to be one of the major consumers of their products and services and it is hardly surprising that they pander to it.
Ironically, part of their problem arises from the government’s failure to meet its financial obligations to them and hence laying them open to receivership by banks. According to Mr Matia Kasaija, the Minister of Finance, the government is looking into its indebtedness of almost Shs1.5 trillion to the business community and may soon provide some relief to them. This will be in addition to the requested bailout.
The financial plight of the business community has been aggravated by the ridiculously high interest rates charged by commercial banks, made worse by the fact that the government is borrowing massively from the same sources. The government has increased its borrowing through treasury bills to finance its budget and hence reduced available liquidity for public lending by commercial banks. The political and military quagmire in South Sudan has also twice led to the collapse of the lucrative South Sudan market, resulting in losses of hundreds of millions of dollars in trade, unpaid bills, theft, etc.
The distressed companies should, however, look closely at their own businesses and shed off loss-making operations. Most of those listed are in real estate, entertainment and services and very few in manufacturing. A very small number of them appear on the list of 100 top taxpayers in the country and even fewer on the list of top employers. They definitely have no moral right to expect a bailout from taxes to which they contribute relatively little. Besides, business requires balancing ups and downs, as well as enjoying profits and absorbing losses.
As for those companies that lost money in war-torn South Sudan, the government should get tough with the authorities in South Sudan and make them compensate our traders. Kenya did it in 2014 by freezing Sudanese government accounts in Nairobi until its traders were compensated. The South Sudan government has accounts in Uganda too.
There is a rumour going around that these distressed businessmen are eyeing the Shs6.5 trillion workers savings in NSSF as a possible source of the Shs1.3 trillion to bail them out since the government is broke. The Ministry of Finance, the NSSF board and management and in particular the workers themselves must resist a possible raid on their hard-earned retirement benefits.
Mr Naggaga is an economist, administrator and retired ambassador.
0 comments:
Post a Comment