The five years I was Minister of State for Finance; Uganda was categorized as HIPC (Highly Indebted Poor Country). That categorization was a nightmare, because more than a half of our budget was financed by foreign sources (grants, donations and borrowing), mainly from The World Bank, IMF and some donor countries.
Under that categorization, we could not independently decide our priorities or development plans. Our budgets, development plans and national projects had to be approved by the World Bank, IMF and the Donor Community.
We were advised that to get out of that situation, we needed to do a number of things, including increasing production and productivity, increase exports, reduce luxury imports, manage inflation, and this would stabilize the macroeconomic conditions.
Besides the above, we were advised to fully liberalize capital flows. (allow foreign money to come in, and investors to repatriate their profits liberally and without hindrance)
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Our President became the champion of economic liberalization, and that was partly the reason why we liquidated some public parastatals and Government Enterprises.
I remember the Spring Meetings I used to attend in Washington representing Uganda, with Chris Kassami former Secretary to Treasury and Permanent Secretary To the ministry of Finance, Planning and Economic Development and his deputy Keith Muhakanizi and former Governor Bank of Uganda Emmanuel Tumusiime Mutebile (all are departed)
I remember the Donor Conferences both home and abroad, where we would be grilled on how much we had adhered to their conditionalities, including liberalizing the economy.
And I remember all the policies and legal frameworks we put in place to ensure the highest level of liberalization.
And then, it worked!! Not only do we fully finance our budget today, but we have built a sizable number of reserves. We have managed, not withstanding so many imponderables, to control inflation and to have an above average growth rate. The economy has expanded both quantitatively and qualitatively. We are told that we have now attained the Middle-Income Status!
I am not an economist, but a mere courtroom lawyer, but let me ask; have we now arrived and we find it necessary to engage in policy reversal? Why should we, at this juncture depart from a route that has brought us this far?
When I was a Minister of State for Labor both in 2020 and 2011, we were working tirelessly to smoothen the route for remittances of Ugandans abroad. This we did successfully, and the remittances grew from Us $400m then $600m, and by the time I left I think we were at $900m. Now I hear we are at Shs1.6bn
The Governor Bank Of Uganda is now telling us that we now have a sizable a mount of reserves and our balance of payments is in the positive. To a large extent, it’s our liberalization policy that allows in unlimited capital inflows that has contributed to this positive story!!
What do we intend to achieve by discarding the cloth that has carried the baby on our back (engozi) all this long?
I appreciate that the state should be concerned about the quantum of money that flows into our economy, and the source and use, for macroeconomic stability purposes and for security reasons.
But there are and have always been mechanisms to monitor and regulate. If there is any lacuna, it could be addressed by improving upon the existing legal and regulatory framework.
Over the time, I have witnessed a number of policy reversals that have started to yield negative results; two of them are the mainstreaming of Uganda National Roads Authority (UNRA) and Rural Electronification Agency (REA) into the mother ministries. If you are a rural based person like me, you must have noticed the difference by now, but I will leave it that!!
I notice, and I am happy that this Bill has been opposed by almost all segments of society. The movers should know that we legislate for the people. If any law is contrary to the wishes and aspirations of the people, then it must not be enacted. If you force it through, there will be two possible consequences; either to be applied more in breach than observance or to just remain on paper like the colonial “Prohibition of the Manufacture and Consumption of Enguuli Act”
My advice to the mover is to withdraw the bill, do widespread consultations to improve on it with a view to making it less toxic, or better still, shelve it and address the concerns therein in improving on the existing legal and regulatory frameworks
By Senior Counsel, Hon. Mwesigwa Rukutana, former Attorney General
