A LAY MAN'S VIEW OF THE BUDGET 

By Mutagubya Allan, June 2021

I have taken time to read and comprehend the budget speech for 2021/22 financial year as a lay man. I think going forward, the party in Opposition/opposition as my friend Karamagi refers to it should equally come out with an alternative budget premised on it's manifesto in a developing democracy like ours for one or two reasons; 

- It's attracts the attention of the public to rate the abilities of the government they had voted, and also gives confidence to elitist community that had doubts on the leadership of the party in opposition, including those in government and private sector. These would silently get attracted to this party and also volunteer in one way or the other.

-The budget speech of the party in (O)pposition would attract the attention of development partners that have doubts on the same party. These doubts when cleared, can results into clandestine support to the activities of this party in its way to organising to get into power.

The performance of parliament is appraised on; number of bills passed, number of reports produced in committees, how many corrupt officials in MDAs are brought to book among other things. Most if not all accountability committees that keep government in check are headed by opposition members of parliament. I think those who produce the parliamentary score cards should help the public understand the competence of the committee chairpersons by giving us reports on how many thieves have been brought to book. A comparison would be made between performance of government ministers and the shadow cabinet amidst the meagre resources alloted to the office of the leader of opposition. In the four stages of the budget cycle, parliament directly participates in two of them including budget approval and budget oversight.

In the  financial year 2021/22, government has themed it's paper on industrialization for inclusive growth, employment and wealth creation. The alternative government has focussed it's energies to Accountability and service, according to the leader of opposition. As a lay man, I have made a few highlights in this budget paper as follows:

Government has made thousands of commitments in this financial in the sectors of Agriculture, infrastructure, human capital development  and peace and security. I can confirm that the committee for government assurances headed by Hon. Nambooze Betty is going to be one of the busiest committees in seeing to it that these commitments are met. In the subsequent financial year, we hope that she gives us a report of government's performance on else Hon. Bobi Wine  shall address is in this regard.

The resource envelop for this financial year is 44.7trillions. If you exclude domestic debt financing,it comes to 36.01 trillion. Of this amount, domestic revenue is expected to 22.4trillion including tax and non tax revenue. This is 13.8% of the  GDP, of course the lowest in the three region excluding Burundi and  Congo. What's very funny is that government is going to borrow domestically 2.9 trillion and externally 5.5 trillion. This comes to 8.4 trillion in loans. The same government has 8.5trillion allocated for domestic debt financing. Simply put, government is borrowing money to pay it's loans. The challenge with domestic borrowing it's that they are largely concessional unlike the external loans. There several other disadvantages to domestic borrowing because of its trickle down effect to business men who depend on commercial banks. The finance minister designate stated that as of December 2020, Uganda's debt stood at $17.96billion, which was 49.8% of the GDP. However economists tell us that our debt to GDP ratio as of June 2021 stands at 51%, which is past the threshold. Government however can justify the borrowing.

Government is putting special attention to Agro- industrialization. Agriculture is stagnant at 23% in terms of contribution to GDP. 1.67trillion has been allocated to the sector. It's a good step in the right direction though much more should be injected.

In specific terms, a lot effort is going to be put in the parish development model. Unfortunately, on 30m has been allocated to each parish. In heavily populated parishes, I don't think this money can be felt. Sometime back this year Hon. Muwanga Kivumbi highlighted that only 33% of parishes in Uganda had parish chiefs.

Government is paying lip-service to Digitisation. That this will enhance e-governance, e-payments, e-learning, E-Trade among other things. Our internet Access is however still stagnant at 52% with only 21million users. Sadly, government is only injecting 134billions  to this sector. The same government has slapped a 12% excise Levy on airtime. Who is fooling who?

Government says the economy has expanded from 108.5trillions ($35billion) as of 2018 to 148.3trillion ($40billions) as of June 2021, with a per capita income of about $800. Well how many Ugandans fill the economy in their pockets. Those who loot and invest here are causing generalisation that leaves the common person un attended to. The national household say of 2020 indicates that 68% of Ugandans are employed in Agriculture, 74% of Ugandans of working age at least have some form of employment. May be I live in a different country, this looks a cooked up figure. That 39% of those employed in Agriculture are in subsistence. General Museveni concluded that the 61% remaining in Agriculture are therefore in the money economy 🤣🤣🤣🤣. Our population is projected to be 47m Ugandans. Out of these, only 1.5m are in formal employment and therefore taxed. This explains the heavy tax burden on the few tax payers.

That 16750 persons are employed in the middle East remitting $9m every month to our economy. Pulida Bwowe explain to us if we are about to have a bill that protects the safety of our sons and daughters in these countries. 

That Foreign Direct investment by 20% from $1.1b in 2018 to $1.3b in 2020. Domestic investment only increased by 13% in the same period from $385.3m to $433.8. Something could be fundamentally wrong with our investment policy. It favors foreigners to its citizens. Developed economies like India give as less as 1% to FDIs. Government should rethink it's incentives to domestic investors. Foreign investors largely repatriate profits, deplete our dollar reserves hence increasing the cost of money. Domestic investors value Ugandan more than foreigners.The wage bill should also be given the attention it deserves. 

The tax regimes on maize and maize brands, gold and other minerals were well thought. These shall largely encourage agro-processing and value addition to minerals respectively. The result will be more employment opportunities to Ugandans.

Lastly, it's not true that human capital development took the largest share of the budget as the government wants it to appear. Education, health, water and sanitation together have 7.7trillion. This implies that each sector has about 2.2 trillions. Peace and security alone have over 6.5trillion.  Domestic debt financing has the largest share of 8.4trillion. If you compare domestic revenue to domestic debt refinancing, 37.9% of the revenue collected would end up servicing debts.

By Mutagubya AllanA LAY MAN'S VIEW OF THE BUDGET 

I have taken time to read and comprehend the budget speech for 2021/22 financial year as a lay man. I think going forward, the party in Opposition/opposition as my friend Karamagi refers to it should equally come out with an alternative budget premised on it's manifesto in a developing democracy like ours for one or two reasons; 

- It's attracts the attention of the public to rate the abilities of the government they had voted, and also gives confidence to elitist community that had doubts on the leadership of the party in opposition, including those in government and private sector. These would silently get attracted to this party and also volunteer in one way or the other.

-The budget speech of the party in (O)pposition would attract the attention of development partners that have doubts on the same party. These doubts when cleared, can results into clandestine support to the activities of this party in its way to organising to get into power.

The performance of parliament is appraised on; number of bills passed, number of reports produced in committees, how many corrupt officials in MDAs are brought to book among other things. Most if not all accountability committees that keep government in check are headed by opposition members of parliament. I think those who produce the parliamentary score cards should help the public understand the competence of the committee chairpersons by giving us reports on how many thieves have been brought to book. A comparison would be made between performance of government ministers and the shadow cabinet amidst the meagre resources alloted to the office of the leader of opposition. In the four stages of the budget cycle, parliament directly participates in two of them including budget approval and budget oversight.

In the  financial year 2021/22, government has themed it's paper on industrialization for inclusive growth, employment and wealth creation. The alternative government has focussed it's energies to Accountability and service, according to the leader of opposition. As a lay man, I have made a few highlights in this budget paper as follows:

Government has made thousands of commitments in this financial in the sectors of Agriculture, infrastructure, human capital development  and peace and security. I can confirm that the committee for government assurances headed by Hon. Nambooze Betty is going to be one of the busiest committees in seeing to it that these commitments are met. In the subsequent financial year, we hope that she gives us a report of government's performance on else Hon. Bobi Wine  shall address is in this regard.

The resource envelop for this financial year is 44.7trillions. If you exclude domestic debt financing,it comes to 36.01 trillion. Of this amount, domestic revenue is expected to 22.4trillion including tax and non tax revenue. This is 13.8% of the  GDP, of course the lowest in the three region excluding Burundi and  Congo. What's very funny is that government is going to borrow domestically 2.9 trillion and externally 5.5 trillion. This comes to 8.4 trillion in loans. The same government has 8.5trillion allocated for domestic debt financing. Simply put, government is borrowing money to pay it's loans. The challenge with domestic borrowing it's that they are largely concessional unlike the external loans. There several other disadvantages to domestic borrowing because of its trickle down effect to business men who depend on commercial banks. The finance minister designate stated that as of December 2020, Uganda's debt stood at $17.96billion, which was 49.8% of the GDP. However economists tell us that our debt to GDP ratio as of June 2021 stands at 51%, which is past the threshold. Government however can justify the borrowing.

Government is putting special attention to Agro- industrialization. Agriculture is stagnant at 23% in terms of contribution to GDP. 1.67trillion has been allocated to the sector. It's a good step in the right direction though much more should be injected.

In specific terms, a lot effort is going to be put in the parish development model. Unfortunately, on 30m has been allocated to each parish. In heavily populated parishes, I don't think this money can be felt. Sometime back this year Hon. Muwanga Kivumbi highlighted that only 33% of parishes in Uganda had parish chiefs.

Government is paying lip-service to Digitisation. That this will enhance e-governance, e-payments, e-learning, E-Trade among other things. Our internet Access is however still stagnant at 52% with only 21million users. Sadly, government is only injecting 134billions  to this sector. The same government has slapped a 12% excise Levy on airtime. Who is fooling who?

Government says the economy has expanded from 108.5trillions ($35billion) as of 2018 to 148.3trillion ($40billions) as of June 2021, with a per capita income of about $800. Well how many Ugandans fill the economy in their pockets. Those who loot and invest here are causing generalisation that leaves the common person un attended to. The national household say of 2020 indicates that 68% of Ugandans are employed in Agriculture, 74% of Ugandans of working age at least have some form of employment. May be I live in a different country, this looks a cooked up figure. That 39% of those employed in Agriculture are in subsistence. General Museveni concluded that the 61% remaining in Agriculture are therefore in the money economy 🤣🤣🤣🤣. Our population is projected to be 47m Ugandans. Out of these, only 1.5m are in formal employment and therefore taxed. This explains the heavy tax burden on the few tax payers.

That 16750 persons are employed in the middle East remitting $9m every month to our economy. Pulida Bwowe explain to us if we are about to have a bill that protects the safety of our sons and daughters in these countries. 

That Foreign Direct investment by 20% from $1.1b in 2018 to $1.3b in 2020. Domestic investment only increased by 13% in the same period from $385.3m to $433.8. Something could be fundamentally wrong with our investment policy. It favors foreigners to its citizens. Developed economies like India give as less as 1% to FDIs. Government should rethink it's incentives to domestic investors. Foreign investors largely repatriate profits, deplete our dollar reserves hence increasing the cost of money. Domestic investors value Ugandan more than foreigners.The wage bill should also be given the attention it deserves. 

The tax regimes on maize and maize brands, gold and other minerals were well thought. These shall largely encourage agro-processing and value addition to minerals respectively. The result will be more employment opportunities to Ugandans.

Lastly, it's not true that human capital development took the largest share of the budget as the government wants it to appear. Education, health, water and sanitation together have 7.7trillion. This implies that each sector has about 2.2 trillions. Peace and security alone have over 6.5trillion.  Domestic debt financing has the largest share of 8.4trillion. If you compare domestic revenue to domestic debt refinancing, 37.9% of the revenue collected would end up servicing debts.

By Mutagubya AllanA LAY MAN'S VIEW OF THE BUDGET 

I have taken time to read and comprehend the budget speech for 2021/22 financial year as a lay man. I think going forward, the party in Opposition/opposition as my friend Karamagi refers to it should equally come out with an alternative budget premised on it's manifesto in a developing democracy like ours for one or two reasons; 

- It's attracts the attention of the public to rate the abilities of the government they had voted, and also gives confidence to elitist community that had doubts on the leadership of the party in opposition, including those in government and private sector. These would silently get attracted to this party and also volunteer in one way or the other.

-The budget speech of the party in (O)pposition would attract the attention of development partners that have doubts on the same party. These doubts when cleared, can results into clandestine support to the activities of this party in its way to organising to get into power.

The performance of parliament is appraised on; number of bills passed, number of reports produced in committees, how many corrupt officials in MDAs are brought to book among other things. Most if not all accountability committees that keep government in check are headed by opposition members of parliament. I think those who produce the parliamentary score cards should help the public understand the competence of the committee chairpersons by giving us reports on how many thieves have been brought to book. A comparison would be made between performance of government ministers and the shadow cabinet amidst the meagre resources alloted to the office of the leader of opposition. In the four stages of the budget cycle, parliament directly participates in two of them including budget approval and budget oversight.

In the  financial year 2021/22, government has themed it's paper on industrialization for inclusive growth, employment and wealth creation. The alternative government has focussed it's energies to Accountability and service, according to the leader of opposition. As a lay man, I have made a few highlights in this budget paper as follows:

Government has made thousands of commitments in this financial in the sectors of Agriculture, infrastructure, human capital development  and peace and security. I can confirm that the committee for government assurances headed by Hon. Nambooze Betty is going to be one of the busiest committees in seeing to it that these commitments are met. In the subsequent financial year, we hope that she gives us a report of government's performance on else Hon. Bobi Wine  shall address is in this regard.

The resource envelop for this financial year is 44.7trillions. If you exclude domestic debt financing,it comes to 36.01 trillion. Of this amount, domestic revenue is expected to 22.4trillion including tax and non tax revenue. This is 13.8% of the  GDP, of course the lowest in the three region excluding Burundi and  Congo. What's very funny is that government is going to borrow domestically 2.9 trillion and externally 5.5 trillion. This comes to 8.4 trillion in loans. The same government has 8.5trillion allocated for domestic debt financing. Simply put, government is borrowing money to pay it's loans. The challenge with domestic borrowing it's that they are largely concessional unlike the external loans. There several other disadvantages to domestic borrowing because of its trickle down effect to business men who depend on commercial banks. The finance minister designate stated that as of December 2020, Uganda's debt stood at $17.96billion, which was 49.8% of the GDP. However economists tell us that our debt to GDP ratio as of June 2021 stands at 51%, which is past the threshold. Government however can justify the borrowing.

Government is putting special attention to Agro- industrialization. Agriculture is stagnant at 23% in terms of contribution to GDP. 1.67trillion has been allocated to the sector. It's a good step in the right direction though much more should be injected.

In specific terms, a lot effort is going to be put in the parish development model. Unfortunately, on 30m has been allocated to each parish. In heavily populated parishes, I don't think this money can be felt. Sometime back this year Hon. Muwanga Kivumbi highlighted that only 33% of parishes in Uganda had parish chiefs.

Government is paying lip-service to Digitisation. That this will enhance e-governance, e-payments, e-learning, E-Trade among other things. Our internet Access is however still stagnant at 52% with only 21million users. Sadly, government is only injecting 134billions  to this sector. The same government has slapped a 12% excise Levy on airtime. Who is fooling who?

Government says the economy has expanded from 108.5trillions ($35billion) as of 2018 to 148.3trillion ($40billions) as of June 2021, with a per capita income of about $800. Well how many Ugandans fill the economy in their pockets. Those who loot and invest here are causing generalisation that leaves the common person un attended to. The national household say of 2020 indicates that 68% of Ugandans are employed in Agriculture, 74% of Ugandans of working age at least have some form of employment. May be I live in a different country, this looks a cooked up figure. That 39% of those employed in Agriculture are in subsistence. General Museveni concluded that the 61% remaining in Agriculture are therefore in the money economy 🤣🤣🤣🤣. Our population is projected to be 47m Ugandans. Out of these, only 1.5m are in formal employment and therefore taxed. This explains the heavy tax burden on the few tax payers.

That 16750 persons are employed in the middle East remitting $9m every month to our economy. Pulida Bwowe explain to us if we are about to have a bill that protects the safety of our sons and daughters in these countries. 

That Foreign Direct investment by 20% from $1.1b in 2018 to $1.3b in 2020. Domestic investment only increased by 13% in the same period from $385.3m to $433.8. Something could be fundamentally wrong with our investment policy. It favors foreigners to its citizens. Developed economies like India give as less as 1% to FDIs. Government should rethink it's incentives to domestic investors. Foreign investors largely repatriate profits, deplete our dollar reserves hence increasing the cost of money. Domestic investors value Ugandan more than foreigners.The wage bill should also be given the attention it deserves. 

The tax regimes on maize and maize brands, gold and other minerals were well thought. These shall largely encourage agro-processing and value addition to minerals respectively. The result will be more employment opportunities to Ugandans.

Lastly, it's not true that human capital development took the largest share of the budget as the government wants it to appear. Education, health, water and sanitation together have 7.7trillion. This implies that each sector has about 2.2 trillions. Peace and security alone have over 6.5trillion.  Domestic debt financing has the largest share of 8.4trillion. If you compare domestic revenue to domestic debt refinancing, 37.9% of the revenue collected would end up servicing debts.

 

IS  THE FISHERMEN CABINET FIT TO DRIVE UGANDA THROUGH THE SPEED LIMITS OF THE FOURTH INDUSTRIAL REVOLUTION?

Economic historians tell us that the industrial revolution is the most important event in history of humanity since the domestication of plants and animals. The first industrial revolution saw the use of water and steam to mechanize production, the second industrial revolution involved the use of electric power to create mass production, electronic and information technology were previously used to automate production in the third industrial revolution whereas the current fourth industrial revolution alias the revolution of Technology is a fusion of technologies including the digital, physical and biological spheres.

The fourth industrial revolution is characterized by emerging technology breakthroughs in Artificial Intelligence(Self driving cars, drones, virtual assistants, soft wares that translate, discover new drugs, detect disease etc), robotics, internet of things, autonomous vehicles, 3-D printing, Nanotechnology, Biotechnology, Material Science, Energy storage and Quantum Computing.

The fourth industrial revolution presents us with opportunities like the potential to raise global incomes  and improve the quality of life for example ordering a cab (Uber, safe boda), booking a flight, buying a product (Amazon, Albaba, Jumia), making payments, listening to music, playing games, electronic procurements among other things. The era also comes along with challenges like disruption of the labour market (displacement of workers) yet again aggregating safe and rewarding jobs.

THE CASE FOR UGANDA.

The economy/ wealth of any nation(GDP) is divided into three broad categories thus; Agriculture, Industry and services. Following Rostow’s stages of economic development, Uganda has stagnated between “Preconditions for take off stage”(transforming Agriculture to industry) and ‘Take off stage” (Manufacturing. This is evidenced in both Vision 2040 which aspires to transform the Ugandan society from a peasant to a modern prosperous economy  with a GDP per capita of $ 9500; and the theme for the budget of financial year 2021/22 which is “Industrialisation for Inclusive growth, employment and wealth creation.

Today Agriculture is about 24.5% of Uganda’s GDP and Industry has stagnated at 27% of the GDP. These figures relate to an economy that is 168.3trillion ($40 billion) big with a public debt estimated to be about $18billion and a GDP per capita of $794. The era of technology has manifested that it can easily turn around the economy of any country/ organization forexample; Apple Inc, a multinational technology company dealing in consumer electronics, software and online services is the fourth largest company when it comes to computer sales and smart phone manufacture with a net worth of $2Trillion and a net income of $57billion, a figure bigger than the total GDP of Uganda! Amazon is worth $1.5trillion, Albaba is over  $640billion worth and Facebook Inc. had a networth of $159billion and a net income of $29.15billion(slightly less than the total wealth of Uganda!) as of 2020.

Three years back or there about, the president of the republic of Uganda appointed a minister to the portfolio of ICT and National guidance only to shock social media gurus when they realized she possessed not a twitter account! Just a month back, another state minister in the ministry of ICT and national guidance ascended to office without a twitter account. The pearl of Africa is territory of endless possibilities. Recently, there’s a great trek to twitter largely by opposition members of Parliament thanks to the new leader of opposition. Does this explain why the management of Twitter.Inc had to find their headquarters in Africa placed in Ghana?

The Covid19 pandemic is hitherto reminding us that we are getting late to catch up with the fourth industrial revolution. During the first lockdown in Uganda, the education sector was hit hard and government thought radios and Televisions would remedy the station notwithstanding the fact that 72% of Ugandans get information from radio stations, only 9% from Tv and 1.6% from social media.  As to how students learn through radios is a conversation for another day. Well Uganda has over 15million students captured in the education sector and its assumed that these should be biggest consumers of the fourth industrial revolution with all the opportunities it has to offer. Need I remind you that Kenya five years back equipped all its teachers with laptops while students were equipped with tablets?

THE FUTURE  OF JOBS REPORT (2020-2025) AND WHAT IT MEANS FOR UGANDA

The future of Jobs report  by the World  Economic Forum provides timely insights needed to orient labour markets and workers towards opportunity today and the future of work. The report is compiled when global leaders, politicians, scientists, economic experts and professionals convene to map the jobs and skills of the future, tracking the pace of change and direction of travel. Since 2018, a third edition was held in 2020 with specific focus on the Covid19 pandemic and how technology  driven job creation is expected to outpace  job destruction over the next five years. The major highlights of the report are thus;

In 2018, the report had predicted that between the period 2018-2023, the world would lose 70million jobs to technology. In much the same period, technology would create 122million jobs! For the period 2020-2025, the world economic forum has estimated  in this report that the world would lose 85million jobs to technology and technology shall create 97million new jobs! How countries like Uganda are preparing themselves for such dynamics especially in the pandemic is a question for me, you and our leadership.

The report suggests that eight in ten (8/10) young people in the lower and middle income economies shall have create their own jobs. Simply put, 80% of young be in low and kiddle income countries should be Entrepreneurs. Well Uganda being among the best entrepreneurial countries may eat big.

About 43%  of the businesses will reduce their work force and integrate technology. 41% of the businesses/companies will only employ people on contract. With the Covid19 pandemic, everyone should look through what awaits them.

62% of the employees shall be taken back for reskilling. Reskilling and repurpose of employees displaced by technology shall be to cushion cut offs. Two thirds of the employers will get a return of investment on reskilling their workers within one year.

34% of the businesses will increase the workforce along technology lines. Newer skilled professionals will increase from 8% to 13%.

Nearly 44% of the employees are able to work remotely in the pandemic and human resource executives are considering  structural adjustments with digitization facilitating the process.

The inequality gap shall increase, with women and young people and lower wage workers to be negatively impacted.

The top 10 jobs with increasing demand in order are; Data analysts, Scientists, Artificial Intelligence & Machine learning specialists, Big data specialists, digital marketing& strategy specialists, Process automation specialists, Business development professionals, digital transformation specialists, Information security analysts, Software/Application developers and Internet of things specialists.

Conversely, the top jobs with decreasing demand in order are; Data entry clerks, Admnistrative and Executive secretaries,, Pay roll& bookkeeping clerks, Accountants &Auditors,  assembly and factory workers, Business services and administrative managers,, Clients Information& Customer service workers,  General and Operations managers, Mechanical Machinery repairers and stock keeping clerks.

CONCLUSION

Uganda’s internet penetration according to the 2021/22 budget speech stands at 52%. With 21million internet users and 3million facebook users,  someone should remind the president to free facebook such that online businesses like Jumia, online botiques, shops and restaurants thrive and we reduce unemployment. Government should deliberately move to step up internet coverage to about 95% given its associated advantages as exposed by the pandemic.

Government shall have to update and fund the education systems, revisit the curriculum and ensure skills retraining to cushion the displaced workers. Courses like GIS& Remote sensing should be priotized in all the major education institutions given the dynamics of the time. The fishermen cabinet may need factory retting to match the times!

The writer is a Zoologist and a member of  Buganda Youth Council

 mutagubya.allan4@gmail.com

 THE POST COVID19 ECONOMIC CRISIS AND THE BODA-BODA ECONOMY- WAYFORWARD

The emergence of the #COlVID19 global pandemic shall leave the credibility of many institutions under check. At the international level, The European Union, BRICS, The African Union, The East African Community among others have so many unanswered questions. At the local level, institutions  like Kingdoms/Cultural institutions, Political Parties, Insurance companies, NSSF, KACITA, Uganda Chamber of Commerce, Workers’ unions among other institutions are being looked at by their subjects on how they are cushioning them from the after effects of the pandemic.

In the U.S.A, 6.6m Americans have filed jobless claims and the number is estimated to multiply five times by end of April. The United Nations predicted that many companies are likely to reduce their workers by a half by the end of the pandemic. In Uganda, the minister of finance predicted that 2.9m Ugandans are likely to lose their jobs. I must note also that for every 2years, 70% of Ugandans who make it above the poverty line slip back. Not forgetting that many Ugandans are hand to mouth workers.

The financial obligations of citizens however remain standing globally save for the interventions by different foreign governments through different stimulus packages. Loans are maturing, utility bills are due, home basic needs have been hiked, and health obligations remain high.

It is obvious that there’s going to be a global economic recession if it doesn’t exist already. Five (5) of the first  10 leading global economies (U.S.A, Germany, U.K, France and Italy) have been hit hard. Remember the first 10 global economies contribute 66% of the entire global GDP. 7 of the first 20 leading global economies are in a crisis, despite the same contributing to 79% of the entire GDP of the globe. The price of crude oil has steeply collapsed. As to whether U.S.A maintains its position as the world’s biggest economy is a discussion for another day. This leaves many African countries that are defendant on aid, donations and loans from these super powers at a crisis. As for Uganda, Ugandans in diaspora contribute ~ USD 1.4billion annually which is 5% of the countries economy and North America alone contributes ~ USD 100million in remittances. This crisis could however be a blessing in disguise for the African governments to refocus on domestic investment, financial independence and intercontinental trade. “If African governments put their domestic revenue into productive investments, Africa could perharps be in position to meet more than its resource needs”, Samuel Gayi, senior economist on Africa- UN Conference on Trade and Development (UNCTAD), 2004.

“African Countries’ ability to finance a great share of their development needs from domestic sources would give them the much needed flexibility in the formulation and implementation of policies” To address  development challenges, direct resources into high priority areas and strengthen state capacity- UNCTAD, 2007.

Africa is said to lose hundreds of billions of dollars in domestic revenue annually through capital flight, tax evasion, the repatriation of profits by transnational corporations and high debt repayments. In the case of Uganda, transnational companies like MTN, UMEME and others repatriate profits to their home countries with little domestic investment  yet they buy out our dollars in circulation to their home countries making the dollar scarce  in the economy and hence an increase in its purchase value. For the case of the Public debt, it stood at 36% of the total GDP of the country by 2019 and  97% of the loans taken in 2019 were directed to servicing maturing obligations and interests according to the auditor General’s report of 2019.

The informal sector holds considerable financial resources that are not deposited in savings accounts or pass through financial channels. Remember 83% of the population is locked in the informal sector. Dependence on external resource flows leaves countries vulnerable to external shocks like the Corona Pandemic yet Foreign direct investments are low. Of course institutions like the World Bank group, IMF and the Exports and Imports Bank of China have a lot of business in this Pandemic.

According to the East African Economic Outlook of 2019, the real GDP in E.A grew by an estimated 5.7% in 2018, slightly less than 5.9% in 2007 among African states. It was estimated to grow by 5.9% and a 6.1% projection in 2020 with the highest economic growth in Rwanda, T.Z, Ethiopia and Djibouti but this projection seems to have hit a dead end  since the Corona Pandemic was not factored in. In both Rwanda & Ethiopia, real GDP was built by industries whereas Services played a major role  for Kenya, and T.Z, followed by the Agriculture sector. Agriculture is of course vulnerable to vagaries of nature, high reliability to exports and oil prices due to inputs and external indebtedness. The service sector dominates the composition of the GDP in the region averaging 59% followed by Agriculture (25.7%), Industry (15%) and 14.6% for manufactured exports. In the case of  Uganda as of 2018/19, the service sector contributed 43.3%, 27.1 for industry and 21.9% for Agriculture . The interregional trade in E.A stood at 8.3% as of 2017 yet the intercontinental trade was at 14.5%.  

Traditionally, the African community lived with a culture of saving. They could produce more than they could shallow and save in proper storage facilities/granaries in preparation for harsh days like these and reinvestment (replanting).Wealth was determined by how much harvest a family would produce at the end of the season. The extra produce was later on used for barter trade. The rule of the thumb is save more, become wealthier by investing for the future. Richer countries have large groups of retirees that slash money aside. In China, more than half of what is produced is saved and then reinvested. In countries like India, 17% of  the  investments came from household savings in the 1970s, 25% by draw of  the millennium and today, 60% of the revenue comes from Indian  investments. Domestic investment in India has been predominantly financed through domestic saving. Foreign capital inflow accounts for less than 1% of the country’s GDP and there’s little foreign direct investment . India continues to receive foreign aid but this remains negligible relative to the size of the economy. It should also be noted that  over 60% of the revenue collected by URA comes from Indian owned companies. India remains the 5^th biggest economy in the world.

The Sub-saharan  Africa has the lowest saving rates in developing world. On average, the gross domestic savings were 18% of the GDP as of 2005 compared to 26% in South Asia and 43% in East Asia & Pacific countries. In 2007, Uganda’s saving rate was 10% of  its GDP, said Japheth Kato of the Country’s Capital Markets Authority. Jean Thisen of the  UN Economic Commision for Africa  (ECA) in 2015 noted that to hit poverty  it needed  investment of 25%  of the GDP. By then, only 20% of African families had bank accounts and this was attributed to factors like physical distance to banking institutions, high minimum deposits and balance requirements and the cost of maintaining accounts. Incentives to save were very low yet very high interest rates on loans. In Africa, 80% of household assets in rural Africa are in nonfinancial forms i.e. livestock, stock poles of goods for trading, grain, construction material thus new financial products needed to be introduced. According to the UN capital Development fund, people with access to formal banks accounts saved 3times more in 12months than those who hold their assets in the nonfinancial formats. The UN department of Economics and Social affairs noted in 2005 that increasing savings and ensuring that they are directed to productive investment are central to accelerating economic growth. According to UBOS 2018, only 12% of the population held bank accounts and research by bank of Uganda indicated that only about 3-5% of Ugandans save monthly earnings on regular basis. This is an indication of the crisis that lies before us as country. Uganda has the lowest savings to GDP of 13.48% compared to Kenya, Tanzania and Rwanda.

The Corona Pandemic is a wakeup call for African leaders to look into the social security of their citizens. With only 5% of salary earners saving on a monthly basis, and 83% of Ugandans being in the informal sector, a saving culture that translates into investment should be well thought otherwise many Ugandans shall remain with fragile businesses that have no cushions. It is worth noting that in private sector financing, only 12% of Ugandans access Agricultural loan, 20% access loans in real estate and 18% loans are in trade and commerce. Many private businesses are at the verge of collapse because they cannot meet their financial obligations that are due. After 34years in power, the traders under Kampala Capital City traders’ Association (KACITA) should have raised enough capital through the sacco-Microfinance-Commercial Bank chain and would be self-crediting. Many businesses in the informal sector should have been organized into Village savings and Loan association (VSLAs), Saccos and Cooperatives. These could  institutions where people themselves are shareholders and self-crediting would boost the economy a big deal in the long run. Imagine groups like fishermen, Bod bodas, Oil palm growers, Chapati vendors, market vendors, pastoralists, shop keepers, taxi drivers and conductors and all groups in the informal sector organized into VSLAs and Saccos. The wanainchi would do weekly/monthly savings as they buy shares as well whilst seeking loans at interest rates determined by themselves. A lot of capital would be accumulated in the absolute terms. These groups end up embracing group investments for example in Kenya, the road transport industry is owned by Kenyans under different Saccos and hence a Cooperative Bank that is native owned. Countries like India, Japan and China adopted these models hence the rapid growth in of their cottage industries that ultimately rendered them among the top 10 largest economies in the world. When cooperative banks thrive, people’s prime properties like land are protected since they can secure loans at the lowest interest rates. A case in point is Bushenyi district. In my opinion, Bushenyi is the most developed district in Uganda. A ride through this district would show you a cooperative bank and many Saccos and a number of local based projects. As the capital base of the citizens increases, investment in government projects in the areas of Energy, roads, Information and Communication technologies,  and treasury bills becomes plausible. These can as well take up the private sector in areas like Insurance, Stocks in companies etc. In the case of the Corona Pandemic, the government would just issue treasury bills and  citizens through their own financial organisations would take them up. The result is  that minimal foreign debts would be taken up by government with enhanced capacity to provide a citizen led social services sector.

 THE POST COVID19 ECONOMIC CRISIS AND THE BODA-BODA ECONOMY- WAYFORWARD

The emergence of the #COlVID19 global pandemic shall leave the credibility of many institutions under check. At the international level, The European Union, BRICS, The African Union, The East African Community among others have so many unanswered questions. At the local level, institutions  like Kingdoms/Cultural institutions, Political Parties, Insurance companies, NSSF, KACITA, Uganda Chamber of Commerce, Workers’ unions among other institutions are being looked at by their subjects on how they are cushioning them from the after effects of the pandemic.

In the U.S.A, 6.6m Americans have filed jobless claims and the number is estimated to multiply five times by end of April. The United Nations predicted that many companies are likely to reduce their workers by a half by the end of the pandemic. In Uganda, the minister of finance predicted that 2.9m Ugandans are likely to lose their jobs. I must note also that for every 2years, 70% of Ugandans who make it above the poverty line slip back. Not forgetting that many Ugandans are hand to mouth workers.

The financial obligations of citizens however remain standing globally save for the interventions by different foreign governments through different stimulus packages. Loans are maturing, utility bills are due, home basic needs have been hiked, and health obligations remain high.

It is obvious that there’s going to be a global economic recession if it doesn’t exist already. Five (5) of the first  10 leading global economies (U.S.A, Germany, U.K, France and Italy) have been hit hard. Remember the first 10 global economies contribute 66% of the entire global GDP. 7 of the first 20 leading global economies are in a crisis, despite the same contributing to 79% of the entire GDP of the globe. The price of crude oil has steeply collapsed. As to whether U.S.A maintains its position as the world’s biggest economy is a discussion for another day. This leaves many African countries that are defendant on aid, donations and loans from these super powers at a crisis. As for Uganda, Ugandans in diaspora contribute ~ USD 1.4billion annually which is 5% of the countries economy and North America alone contributes ~ USD 100million in remittances. This crisis could however be a blessing in disguise for the African governments to refocus on domestic investment, financial independence and intercontinental trade. “If African governments put their domestic revenue into productive investments, Africa could perharps be in position to meet more than its resource needs”, Samuel Gayi, senior economist on Africa- UN Conference on Trade and Development (UNCTAD), 2004.

“African Countries’ ability to finance a great share of their development needs from domestic sources would give them the much needed flexibility in the formulation and implementation of policies” To address  development challenges, direct resources into high priority areas and strengthen state capacity- UNCTAD, 2007.

Africa is said to lose hundreds of billions of dollars in domestic revenue annually through capital flight, tax evasion, the repatriation of profits by transnational corporations and high debt repayments. In the case of Uganda, transnational companies like MTN, UMEME and others repatriate profits to their home countries with little domestic investment  yet they buy out our dollars in circulation to their home countries making the dollar scarce  in the economy and hence an increase in its purchase value. For the case of the Public debt, it stood at 36% of the total GDP of the country by 2019 and  97% of the loans taken in 2019 were directed to servicing maturing obligations and interests according to the auditor General’s report of 2019.

The informal sector holds considerable financial resources that are not deposited in savings accounts or pass through financial channels. Remember 83% of the population is locked in the informal sector. Dependence on external resource flows leaves countries vulnerable to external shocks like the Corona Pandemic yet Foreign direct investments are low. Of course institutions like the World Bank group, IMF and the Exports and Imports Bank of China have a lot of business in this Pandemic.

According to the East African Economic Outlook of 2019, the real GDP in E.A grew by an estimated 5.7% in 2018, slightly less than 5.9% in 2007 among African states. It was estimated to grow by 5.9% and a 6.1% projection in 2020 with the highest economic growth in Rwanda, T.Z, Ethiopia and Djibouti but this projection seems to have hit a dead end  since the Corona Pandemic was not factored in. In both Rwanda & Ethiopia, real GDP was built by industries whereas Services played a major role  for Kenya, and T.Z, followed by the Agriculture sector. Agriculture is of course vulnerable to vagaries of nature, high reliability to exports and oil prices due to inputs and external indebtedness. The service sector dominates the composition of the GDP in the region averaging 59% followed by Agriculture (25.7%), Industry (15%) and 14.6% for manufactured exports. In the case of  Uganda as of 2018/19, the service sector contributed 43.3%, 27.1 for industry and 21.9% for Agriculture . The interregional trade in E.A stood at 8.3% as of 2017 yet the intercontinental trade was at 14.5%.  

Traditionally, the African community lived with a culture of saving. They could produce more than they could shallow and save in proper storage facilities/granaries in preparation for harsh days like these and reinvestment (replanting).Wealth was determined by how much harvest a family would produce at the end of the season. The extra produce was later on used for barter trade. The rule of the thumb is save more, become wealthier by investing for the future. Richer countries have large groups of retirees that slash money aside. In China, more than half of what is produced is saved and then reinvested. In countries like India, 17% of  the  investments came from household savings in the 1970s, 25% by draw of  the millennium and today, 60% of the revenue comes from Indian  investments. Domestic investment in India has been predominantly financed through domestic saving. Foreign capital inflow accounts for less than 1% of the country’s GDP and there’s little foreign direct investment . India continues to receive foreign aid but this remains negligible relative to the size of the economy. It should also be noted that  over 60% of the revenue collected by URA comes from Indian owned companies. India remains the 5^th biggest economy in the world.

The Sub-saharan  Africa has the lowest saving rates in developing world. On average, the gross domestic savings were 18% of the GDP as of 2005 compared to 26% in South Asia and 43% in East Asia & Pacific countries. In 2007, Uganda’s saving rate was 10% of  its GDP, said Japheth Kato of the Country’s Capital Markets Authority. Jean Thisen of the  UN Economic Commision for Africa  (ECA) in 2015 noted that to hit poverty  it needed  investment of 25%  of the GDP. By then, only 20% of African families had bank accounts and this was attributed to factors like physical distance to banking institutions, high minimum deposits and balance requirements and the cost of maintaining accounts. Incentives to save were very low yet very high interest rates on loans. In Africa, 80% of household assets in rural Africa are in nonfinancial forms i.e. livestock, stock poles of goods for trading, grain, construction material thus new financial products needed to be introduced. According to the UN capital Development fund, people with access to formal banks accounts saved 3times more in 12months than those who hold their assets in the nonfinancial formats. The UN department of Economics and Social affairs noted in 2005 that increasing savings and ensuring that they are directed to productive investment are central to accelerating economic growth. According to UBOS 2018, only 12% of the population held bank accounts and research by bank of Uganda indicated that only about 3-5% of Ugandans save monthly earnings on regular basis. This is an indication of the crisis that lies before us as country. Uganda has the lowest savings to GDP of 13.48% compared to Kenya, Tanzania and Rwanda.

The Corona Pandemic is a wakeup call for African leaders to look into the social security of their citizens. With only 5% of salary earners saving on a monthly basis, and 83% of Ugandans being in the informal sector, a saving culture that translates into investment should be well thought otherwise many Ugandans shall remain with fragile businesses that have no cushions. It is worth noting that in private sector financing, only 12% of Ugandans access Agricultural loan, 20% access loans in real estate and 18% loans are in trade and commerce. Many private businesses are at the verge of collapse because they cannot meet their financial obligations that are due. After 34years in power, the traders under Kampala Capital City traders’ Association (KACITA) should have raised enough capital through the sacco-Microfinance-Commercial Bank chain and would be self-crediting. Many businesses in the informal sector should have been organized into Village savings and Loan association (VSLAs), Saccos and Cooperatives. These could  institutions where people themselves are shareholders and self-crediting would boost the economy a big deal in the long run. Imagine groups like fishermen, Bod bodas, Oil palm growers, Chapati vendors, market vendors, pastoralists, shop keepers, taxi drivers and conductors and all groups in the informal sector organized into VSLAs and Saccos. The wanainchi would do weekly/monthly savings as they buy shares as well whilst seeking loans at interest rates determined by themselves. A lot of capital would be accumulated in the absolute terms. These groups end up embracing group investments for example in Kenya, the road transport industry is owned by Kenyans under different Saccos and hence a Cooperative Bank that is native owned. Countries like India, Japan and China adopted these models hence the rapid growth in of their cottage industries that ultimately rendered them among the top 10 largest economies in the world. When cooperative banks thrive, people’s prime properties like land are protected since they can secure loans at the lowest interest rates. A case in point is Bushenyi district. In my opinion, Bushenyi is the most developed district in Uganda. A ride through this district would show you a cooperative bank and many Saccos and a number of local based projects. As the capital base of the citizens increases, investment in government projects in the areas of Energy, roads, Information and Communication technologies,  and treasury bills becomes plausible. These can as well take up the private sector in areas like Insurance, Stocks in companies etc. In the case of the Corona Pandemic, the government would just issue treasury bills and  citizens through their own financial organisations would take them up. The result is  that minimal foreign debts would be taken up by government with enhanced capacity to provide a citizen led social services sector.

 THE POST COVID19 ECONOMIC CRISIS AND THE BODA-BODA ECONOMY- WAYFORWARD

The emergence of the #COlVID19 global pandemic shall leave the credibility of many institutions under check. At the international level, The European Union, BRICS, The African Union, The East African Community among others have so many unanswered questions. At the local level, institutions  like Kingdoms/Cultural institutions, Political Parties, Insurance companies, NSSF, KACITA, Uganda Chamber of Commerce, Workers’ unions among other institutions are being looked at by their subjects on how they are cushioning them from the after effects of the pandemic.

In the U.S.A, 6.6m Americans have filed jobless claims and the number is estimated to multiply five times by end of April. The United Nations predicted that many companies are likely to reduce their workers by a half by the end of the pandemic. In Uganda, the minister of finance predicted that 2.9m Ugandans are likely to lose their jobs. I must note also that for every 2years, 70% of Ugandans who make it above the poverty line slip back. Not forgetting that many Ugandans are hand to mouth workers.

The financial obligations of citizens however remain standing globally save for the interventions by different foreign governments through different stimulus packages. Loans are maturing, utility bills are due, home basic needs have been hiked, and health obligations remain high.

It is obvious that there’s going to be a global economic recession if it doesn’t exist already. Five (5) of the first  10 leading global economies (U.S.A, Germany, U.K, France and Italy) have been hit hard. Remember the first 10 global economies contribute 66% of the entire global GDP. 7 of the first 20 leading global economies are in a crisis, despite the same contributing to 79% of the entire GDP of the globe. The price of crude oil has steeply collapsed. As to whether U.S.A maintains its position as the world’s biggest economy is a discussion for another day. This leaves many African countries that are defendant on aid, donations and loans from these super powers at a crisis. As for Uganda, Ugandans in diaspora contribute ~ USD 1.4billion annually which is 5% of the countries economy and North America alone contributes ~ USD 100million in remittances. This crisis could however be a blessing in disguise for the African governments to refocus on domestic investment, financial independence and intercontinental trade. “If African governments put their domestic revenue into productive investments, Africa could perharps be in position to meet more than its resource needs”, Samuel Gayi, senior economist on Africa- UN Conference on Trade and Development (UNCTAD), 2004.

“African Countries’ ability to finance a great share of their development needs from domestic sources would give them the much needed flexibility in the formulation and implementation of policies” To address  development challenges, direct resources into high priority areas and strengthen state capacity- UNCTAD, 2007.

Africa is said to lose hundreds of billions of dollars in domestic revenue annually through capital flight, tax evasion, the repatriation of profits by transnational corporations and high debt repayments. In the case of Uganda, transnational companies like MTN, UMEME and others repatriate profits to their home countries with little domestic investment  yet they buy out our dollars in circulation to their home countries making the dollar scarce  in the economy and hence an increase in its purchase value. For the case of the Public debt, it stood at 36% of the total GDP of the country by 2019 and  97% of the loans taken in 2019 were directed to servicing maturing obligations and interests according to the auditor General’s report of 2019.

The informal sector holds considerable financial resources that are not deposited in savings accounts or pass through financial channels. Remember 83% of the population is locked in the informal sector. Dependence on external resource flows leaves countries vulnerable to external shocks like the Corona Pandemic yet Foreign direct investments are low. Of course institutions like the World Bank group, IMF and the Exports and Imports Bank of China have a lot of business in this Pandemic.

According to the East African Economic Outlook of 2019, the real GDP in E.A grew by an estimated 5.7% in 2018, slightly less than 5.9% in 2007 among African states. It was estimated to grow by 5.9% and a 6.1% projection in 2020 with the highest economic growth in Rwanda, T.Z, Ethiopia and Djibouti but this projection seems to have hit a dead end  since the Corona Pandemic was not factored in. In both Rwanda & Ethiopia, real GDP was built by industries whereas Services played a major role  for Kenya, and T.Z, followed by the Agriculture sector. Agriculture is of course vulnerable to vagaries of nature, high reliability to exports and oil prices due to inputs and external indebtedness. The service sector dominates the composition of the GDP in the region averaging 59% followed by Agriculture (25.7%), Industry (15%) and 14.6% for manufactured exports. In the case of  Uganda as of 2018/19, the service sector contributed 43.3%, 27.1 for industry and 21.9% for Agriculture . The interregional trade in E.A stood at 8.3% as of 2017 yet the intercontinental trade was at 14.5%.  

Traditionally, the African community lived with a culture of saving. They could produce more than they could shallow and save in proper storage facilities/granaries in preparation for harsh days like these and reinvestment (replanting).Wealth was determined by how much harvest a family would produce at the end of the season. The extra produce was later on used for barter trade. The rule of the thumb is save more, become wealthier by investing for the future. Richer countries have large groups of retirees that slash money aside. In China, more than half of what is produced is saved and then reinvested. In countries like India, 17% of  the  investments came from household savings in the 1970s, 25% by draw of  the millennium and today, 60% of the revenue comes from Indian  investments. Domestic investment in India has been predominantly financed through domestic saving. Foreign capital inflow accounts for less than 1% of the country’s GDP and there’s little foreign direct investment . India continues to receive foreign aid but this remains negligible relative to the size of the economy. It should also be noted that  over 60% of the revenue collected by URA comes from Indian owned companies. India remains the 5^th biggest economy in the world.

The Sub-saharan  Africa has the lowest saving rates in developing world. On average, the gross domestic savings were 18% of the GDP as of 2005 compared to 26% in South Asia and 43% in East Asia & Pacific countries. In 2007, Uganda’s saving rate was 10% of  its GDP, said Japheth Kato of the Country’s Capital Markets Authority. Jean Thisen of the  UN Economic Commision for Africa  (ECA) in 2015 noted that to hit poverty  it needed  investment of 25%  of the GDP. By then, only 20% of African families had bank accounts and this was attributed to factors like physical distance to banking institutions, high minimum deposits and balance requirements and the cost of maintaining accounts. Incentives to save were very low yet very high interest rates on loans. In Africa, 80% of household assets in rural Africa are in nonfinancial forms i.e. livestock, stock poles of goods for trading, grain, construction material thus new financial products needed to be introduced. According to the UN capital Development fund, people with access to formal banks accounts saved 3times more in 12months than those who hold their assets in the nonfinancial formats. The UN department of Economics and Social affairs noted in 2005 that increasing savings and ensuring that they are directed to productive investment are central to accelerating economic growth. According to UBOS 2018, only 12% of the population held bank accounts and research by bank of Uganda indicated that only about 3-5% of Ugandans save monthly earnings on regular basis. This is an indication of the crisis that lies before us as country. Uganda has the lowest savings to GDP of 13.48% compared to Kenya, Tanzania and Rwanda.

The Corona Pandemic is a wakeup call for African leaders to look into the social security of their citizens. With only 5% of salary earners saving on a monthly basis, and 83% of Ugandans being in the informal sector, a saving culture that translates into investment should be well thought otherwise many Ugandans shall remain with fragile businesses that have no cushions. It is worth noting that in private sector financing, only 12% of Ugandans access Agricultural loan, 20% access loans in real estate and 18% loans are in trade and commerce. Many private businesses are at the verge of collapse because they cannot meet their financial obligations that are due. After 34years in power, the traders under Kampala Capital City traders’ Association (KACITA) should have raised enough capital through the sacco-Microfinance-Commercial Bank chain and would be self-crediting. Many businesses in the informal sector should have been organized into Village savings and Loan association (VSLAs), Saccos and Cooperatives. These could  institutions where people themselves are shareholders and self-crediting would boost the economy a big deal in the long run. Imagine groups like fishermen, Bod bodas, Oil palm growers, Chapati vendors, market vendors, pastoralists, shop keepers, taxi drivers and conductors and all groups in the informal sector organized into VSLAs and Saccos. The wanainchi would do weekly/monthly savings as they buy shares as well whilst seeking loans at interest rates determined by themselves. A lot of capital would be accumulated in the absolute terms. These groups end up embracing group investments for example in Kenya, the road transport industry is owned by Kenyans under different Saccos and hence a Cooperative Bank that is native owned. Countries like India, Japan and China adopted these models hence the rapid growth in of their cottage industries that ultimately rendered them among the top 10 largest economies in the world. When cooperative banks thrive, people’s prime properties like land are protected since they can secure loans at the lowest interest rates. A case in point is Bushenyi district. In my opinion, Bushenyi is the most developed district in Uganda. A ride through this district would show you a cooperative bank and many Saccos and a number of local based projects. As the capital base of the citizens increases, investment in government projects in the areas of Energy, roads, Information and Communication technologies,  and treasury bills becomes plausible. These can as well take up the private sector in areas like Insurance, Stocks in companies etc. In the case of the Corona Pandemic, the government would just issue treasury bills and  citizens through their own financial organisations would take them up. The result is  that minimal foreign debts would be taken up by government with enhanced capacity to provide a citizen led social services sector.

 THE POST COVID19 ECONOMIC CRISIS AND THE BODA-BODA ECONOMY- WAYFORWARD

The emergence of the #COlVID19 global pandemic shall leave the credibility of many institutions under check. At the international level, The European Union, BRICS, The African Union, The East African Community among others have so many unanswered questions. At the local level, institutions  like Kingdoms/Cultural institutions, Political Parties, Insurance companies, NSSF, KACITA, Uganda Chamber of Commerce, Workers’ unions among other institutions are being looked at by their subjects on how they are cushioning them from the after effects of the pandemic.

In the U.S.A, 6.6m Americans have filed jobless claims and the number is estimated to multiply five times by end of April. The United Nations predicted that many companies are likely to reduce their workers by a half by the end of the pandemic. In Uganda, the minister of finance predicted that 2.9m Ugandans are likely to lose their jobs. I must note also that for every 2years, 70% of Ugandans who make it above the poverty line slip back. Not forgetting that many Ugandans are hand to mouth workers.

The financial obligations of citizens however remain standing globally save for the interventions by different foreign governments through different stimulus packages. Loans are maturing, utility bills are due, home basic needs have been hiked, and health obligations remain high.

It is obvious that there’s going to be a global economic recession if it doesn’t exist already. Five (5) of the first  10 leading global economies (U.S.A, Germany, U.K, France and Italy) have been hit hard. Remember the first 10 global economies contribute 66% of the entire global GDP. 7 of the first 20 leading global economies are in a crisis, despite the same contributing to 79% of the entire GDP of the globe. The price of crude oil has steeply collapsed. As to whether U.S.A maintains its position as the world’s biggest economy is a discussion for another day. This leaves many African countries that are defendant on aid, donations and loans from these super powers at a crisis. As for Uganda, Ugandans in diaspora contribute ~ USD 1.4billion annually which is 5% of the countries economy and North America alone contributes ~ USD 100million in remittances. This crisis could however be a blessing in disguise for the African governments to refocus on domestic investment, financial independence and intercontinental trade. “If African governments put their domestic revenue into productive investments, Africa could perharps be in position to meet more than its resource needs”, Samuel Gayi, senior economist on Africa- UN Conference on Trade and Development (UNCTAD), 2004.

“African Countries’ ability to finance a great share of their development needs from domestic sources would give them the much needed flexibility in the formulation and implementation of policies” To address  development challenges, direct resources into high priority areas and strengthen state capacity- UNCTAD, 2007.

Africa is said to lose hundreds of billions of dollars in domestic revenue annually through capital flight, tax evasion, the repatriation of profits by transnational corporations and high debt repayments. In the case of Uganda, transnational companies like MTN, UMEME and others repatriate profits to their home countries with little domestic investment  yet they buy out our dollars in circulation to their home countries making the dollar scarce  in the economy and hence an increase in its purchase value. For the case of the Public debt, it stood at 36% of the total GDP of the country by 2019 and  97% of the loans taken in 2019 were directed to servicing maturing obligations and interests according to the auditor General’s report of 2019.

The informal sector holds considerable financial resources that are not deposited in savings accounts or pass through financial channels. Remember 83% of the population is locked in the informal sector. Dependence on external resource flows leaves countries vulnerable to external shocks like the Corona Pandemic yet Foreign direct investments are low. Of course institutions like the World Bank group, IMF and the Exports and Imports Bank of China have a lot of business in this Pandemic.

According to the East African Economic Outlook of 2019, the real GDP in E.A grew by an estimated 5.7% in 2018, slightly less than 5.9% in 2007 among African states. It was estimated to grow by 5.9% and a 6.1% projection in 2020 with the highest economic growth in Rwanda, T.Z, Ethiopia and Djibouti but this projection seems to have hit a dead end  since the Corona Pandemic was not factored in. In both Rwanda & Ethiopia, real GDP was built by industries whereas Services played a major role  for Kenya, and T.Z, followed by the Agriculture sector. Agriculture is of course vulnerable to vagaries of nature, high reliability to exports and oil prices due to inputs and external indebtedness. The service sector dominates the composition of the GDP in the region averaging 59% followed by Agriculture (25.7%), Industry (15%) and 14.6% for manufactured exports. In the case of  Uganda as of 2018/19, the service sector contributed 43.3%, 27.1 for industry and 21.9% for Agriculture . The interregional trade in E.A stood at 8.3% as of 2017 yet the intercontinental trade was at 14.5%.  

Traditionally, the African community lived with a culture of saving. They could produce more than they could shallow and save in proper storage facilities/granaries in preparation for harsh days like these and reinvestment (replanting).Wealth was determined by how much harvest a family would produce at the end of the season. The extra produce was later on used for barter trade. The rule of the thumb is save more, become wealthier by investing for the future. Richer countries have large groups of retirees that slash money aside. In China, more than half of what is produced is saved and then reinvested. In countries like India, 17% of  the  investments came from household savings in the 1970s, 25% by draw of  the millennium and today, 60% of the revenue comes from Indian  investments. Domestic investment in India has been predominantly financed through domestic saving. Foreign capital inflow accounts for less than 1% of the country’s GDP and there’s little foreign direct investment . India continues to receive foreign aid but this remains negligible relative to the size of the economy. It should also be noted that  over 60% of the revenue collected by URA comes from Indian owned companies. India remains the 5^th biggest economy in the world.

The Sub-saharan  Africa has the lowest saving rates in developing world. On average, the gross domestic savings were 18% of the GDP as of 2005 compared to 26% in South Asia and 43% in East Asia & Pacific countries. In 2007, Uganda’s saving rate was 10% of  its GDP, said Japheth Kato of the Country’s Capital Markets Authority. Jean Thisen of the  UN Economic Commision for Africa  (ECA) in 2015 noted that to hit poverty  it needed  investment of 25%  of the GDP. By then, only 20% of African families had bank accounts and this was attributed to factors like physical distance to banking institutions, high minimum deposits and balance requirements and the cost of maintaining accounts. Incentives to save were very low yet very high interest rates on loans. In Africa, 80% of household assets in rural Africa are in nonfinancial forms i.e. livestock, stock poles of goods for trading, grain, construction material thus new financial products needed to be introduced. According to the UN capital Development fund, people with access to formal banks accounts saved 3times more in 12months than those who hold their assets in the nonfinancial formats. The UN department of Economics and Social affairs noted in 2005 that increasing savings and ensuring that they are directed to productive investment are central to accelerating economic growth. According to UBOS 2018, only 12% of the population held bank accounts and research by bank of Uganda indicated that only about 3-5% of Ugandans save monthly earnings on regular basis. This is an indication of the crisis that lies before us as country. Uganda has the lowest savings to GDP of 13.48% compared to Kenya, Tanzania and Rwanda.

The Corona Pandemic is a wakeup call for African leaders to look into the social security of their citizens. With only 5% of salary earners saving on a monthly basis, and 83% of Ugandans being in the informal sector, a saving culture that translates into investment should be well thought otherwise many Ugandans shall remain with fragile businesses that have no cushions. It is worth noting that in private sector financing, only 12% of Ugandans access Agricultural loan, 20% access loans in real estate and 18% loans are in trade and commerce. Many private businesses are at the verge of collapse because they cannot meet their financial obligations that are due. After 34years in power, the traders under Kampala Capital City traders’ Association (KACITA) should have raised enough capital through the sacco-Microfinance-Commercial Bank chain and would be self-crediting. Many businesses in the informal sector should have been organized into Village savings and Loan association (VSLAs), Saccos and Cooperatives. These could  institutions where people themselves are shareholders and self-crediting would boost the economy a big deal in the long run. Imagine groups like fishermen, Bod bodas, Oil palm growers, Chapati vendors, market vendors, pastoralists, shop keepers, taxi drivers and conductors and all groups in the informal sector organized into VSLAs and Saccos. The wanainchi would do weekly/monthly savings as they buy shares as well whilst seeking loans at interest rates determined by themselves. A lot of capital would be accumulated in the absolute terms. These groups end up embracing group investments for example in Kenya, the road transport industry is owned by Kenyans under different Saccos and hence a Cooperative Bank that is native owned. Countries like India, Japan and China adopted these models hence the rapid growth in of their cottage industries that ultimately rendered them among the top 10 largest economies in the world. When cooperative banks thrive, people’s prime properties like land are protected since they can secure loans at the lowest interest rates. A case in point is Bushenyi district. In my opinion, Bushenyi is the most developed district in Uganda. A ride through this district would show you a cooperative bank and many Saccos and a number of local based projects. As the capital base of the citizens increases, investment in government projects in the areas of Energy, roads, Information and Communication technologies,  and treasury bills becomes plausible. These can as well take up the private sector in areas like Insurance, Stocks in companies etc. In the case of the Corona Pandemic, the government would just issue treasury bills and  citizens through their own financial organisations would take them up. The result is  that minimal foreign debts would be taken up by government with enhanced capacity to provide a citizen led social services sector.

 THE POST COVID19 ECONOMIC CRISIS AND THE BODA-BODA ECONOMY- WAYFORWARD

The emergence of the #COlVID19 global pandemic shall leave the credibility of many institutions under check. At the international level, The European Union, BRICS, The African Union, The East African Community among others have so many unanswered questions. At the local level, institutions  like Kingdoms/Cultural institutions, Political Parties, Insurance companies, NSSF, KACITA, Uganda Chamber of Commerce, Workers’ unions among other institutions are being looked at by their subjects on how they are cushioning them from the after effects of the pandemic.

In the U.S.A, 6.6m Americans have filed jobless claims and the number is estimated to multiply five times by end of April. The United Nations predicted that many companies are likely to reduce their workers by a half by the end of the pandemic. In Uganda, the minister of finance predicted that 2.9m Ugandans are likely to lose their jobs. I must note also that for every 2years, 70% of Ugandans who make it above the poverty line slip back. Not forgetting that many Ugandans are hand to mouth workers.

The financial obligations of citizens however remain standing globally save for the interventions by different foreign governments through different stimulus packages. Loans are maturing, utility bills are due, home basic needs have been hiked, and health obligations remain high.

It is obvious that there’s going to be a global economic recession if it doesn’t exist already. Five (5) of the first  10 leading global economies (U.S.A, Germany, U.K, France and Italy) have been hit hard. Remember the first 10 global economies contribute 66% of the entire global GDP. 7 of the first 20 leading global economies are in a crisis, despite the same contributing to 79% of the entire GDP of the globe. The price of crude oil has steeply collapsed. As to whether U.S.A maintains its position as the world’s biggest economy is a discussion for another day. This leaves many African countries that are defendant on aid, donations and loans from these super powers at a crisis. As for Uganda, Ugandans in diaspora contribute ~ USD 1.4billion annually which is 5% of the countries economy and North America alone contributes ~ USD 100million in remittances. This crisis could however be a blessing in disguise for the African governments to refocus on domestic investment, financial independence and intercontinental trade. “If African governments put their domestic revenue into productive investments, Africa could perharps be in position to meet more than its resource needs”, Samuel Gayi, senior economist on Africa- UN Conference on Trade and Development (UNCTAD), 2004.

“African Countries’ ability to finance a great share of their development needs from domestic sources would give them the much needed flexibility in the formulation and implementation of policies” To address  development challenges, direct resources into high priority areas and strengthen state capacity- UNCTAD, 2007.

Africa is said to lose hundreds of billions of dollars in domestic revenue annually through capital flight, tax evasion, the repatriation of profits by transnational corporations and high debt repayments. In the case of Uganda, transnational companies like MTN, UMEME and others repatriate profits to their home countries with little domestic investment  yet they buy out our dollars in circulation to their home countries making the dollar scarce  in the economy and hence an increase in its purchase value. For the case of the Public debt, it stood at 36% of the total GDP of the country by 2019 and  97% of the loans taken in 2019 were directed to servicing maturing obligations and interests according to the auditor General’s report of 2019.

The informal sector holds considerable financial resources that are not deposited in savings accounts or pass through financial channels. Remember 83% of the population is locked in the informal sector. Dependence on external resource flows leaves countries vulnerable to external shocks like the Corona Pandemic yet Foreign direct investments are low. Of course institutions like the World Bank group, IMF and the Exports and Imports Bank of China have a lot of business in this Pandemic.

According to the East African Economic Outlook of 2019, the real GDP in E.A grew by an estimated 5.7% in 2018, slightly less than 5.9% in 2007 among African states. It was estimated to grow by 5.9% and a 6.1% projection in 2020 with the highest economic growth in Rwanda, T.Z, Ethiopia and Djibouti but this projection seems to have hit a dead end  since the Corona Pandemic was not factored in. In both Rwanda & Ethiopia, real GDP was built by industries whereas Services played a major role  for Kenya, and T.Z, followed by the Agriculture sector. Agriculture is of course vulnerable to vagaries of nature, high reliability to exports and oil prices due to inputs and external indebtedness. The service sector dominates the composition of the GDP in the region averaging 59% followed by Agriculture (25.7%), Industry (15%) and 14.6% for manufactured exports. In the case of  Uganda as of 2018/19, the service sector contributed 43.3%, 27.1 for industry and 21.9% for Agriculture . The interregional trade in E.A stood at 8.3% as of 2017 yet the intercontinental trade was at 14.5%.  

Traditionally, the African community lived with a culture of saving. They could produce more than they could shallow and save in proper storage facilities/granaries in preparation for harsh days like these and reinvestment (replanting).Wealth was determined by how much harvest a family would produce at the end of the season. The extra produce was later on used for barter trade. The rule of the thumb is save more, become wealthier by investing for the future. Richer countries have large groups of retirees that slash money aside. In China, more than half of what is produced is saved and then reinvested. In countries like India, 17% of  the  investments came from household savings in the 1970s, 25% by draw of  the millennium and today, 60% of the revenue comes from Indian  investments. Domestic investment in India has been predominantly financed through domestic saving. Foreign capital inflow accounts for less than 1% of the country’s GDP and there’s little foreign direct investment . India continues to receive foreign aid but this remains negligible relative to the size of the economy. It should also be noted that  over 60% of the revenue collected by URA comes from Indian owned companies. India remains the 5^th biggest economy in the world.

The Sub-saharan  Africa has the lowest saving rates in developing world. On average, the gross domestic savings were 18% of the GDP as of 2005 compared to 26% in South Asia and 43% in East Asia & Pacific countries. In 2007, Uganda’s saving rate was 10% of  its GDP, said Japheth Kato of the Country’s Capital Markets Authority. Jean Thisen of the  UN Economic Commision for Africa  (ECA) in 2015 noted that to hit poverty  it needed  investment of 25%  of the GDP. By then, only 20% of African families had bank accounts and this was attributed to factors like physical distance to banking institutions, high minimum deposits and balance requirements and the cost of maintaining accounts. Incentives to save were very low yet very high interest rates on loans. In Africa, 80% of household assets in rural Africa are in nonfinancial forms i.e. livestock, stock poles of goods for trading, grain, construction material thus new financial products needed to be introduced. According to the UN capital Development fund, people with access to formal banks accounts saved 3times more in 12months than those who hold their assets in the nonfinancial formats. The UN department of Economics and Social affairs noted in 2005 that increasing savings and ensuring that they are directed to productive investment are central to accelerating economic growth. According to UBOS 2018, only 12% of the population held bank accounts and research by bank of Uganda indicated that only about 3-5% of Ugandans save monthly earnings on regular basis. This is an indication of the crisis that lies before us as country. Uganda has the lowest savings to GDP of 13.48% compared to Kenya, Tanzania and Rwanda.

The Corona Pandemic is a wakeup call for African leaders to look into the social security of their citizens. With only 5% of salary earners saving on a monthly basis, and 83% of Ugandans being in the informal sector, a saving culture that translates into investment should be well thought otherwise many Ugandans shall remain with fragile businesses that have no cushions. It is worth noting that in private sector financing, only 12% of Ugandans access Agricultural loan, 20% access loans in real estate and 18% loans are in trade and commerce. Many private businesses are at the verge of collapse because they cannot meet their financial obligations that are due. After 34years in power, the traders under Kampala Capital City traders’ Association (KACITA) should have raised enough capital through the sacco-Microfinance-Commercial Bank chain and would be self-crediting. Many businesses in the informal sector should have been organized into Village savings and Loan association (VSLAs), Saccos and Cooperatives. These could  institutions where people themselves are shareholders and self-crediting would boost the economy a big deal in the long run. Imagine groups like fishermen, Bod bodas, Oil palm growers, Chapati vendors, market vendors, pastoralists, shop keepers, taxi drivers and conductors and all groups in the informal sector organized into VSLAs and Saccos. The wanainchi would do weekly/monthly savings as they buy shares as well whilst seeking loans at interest rates determined by themselves. A lot of capital would be accumulated in the absolute terms. These groups end up embracing group investments for example in Kenya, the road transport industry is owned by Kenyans under different Saccos and hence a Cooperative Bank that is native owned. Countries like India, Japan and China adopted these models hence the rapid growth in of their cottage industries that ultimately rendered them among the top 10 largest economies in the world. When cooperative banks thrive, people’s prime properties like land are protected since they can secure loans at the lowest interest rates. A case in point is Bushenyi district. In my opinion, Bushenyi is the most developed district in Uganda. A ride through this district would show you a cooperative bank and many Saccos and a number of local based projects. As the capital base of the citizens increases, investment in government projects in the areas of Energy, roads, Information and Communication technologies,  and treasury bills becomes plausible. These can as well take up the private sector in areas like Insurance, Stocks in companies etc. In the case of the Corona Pandemic, the government would just issue treasury bills and  citizens through their own financial organisations would take them up. The result is  that minimal foreign debts would be taken up by government with enhanced capacity to provide a citizen led social services sector.

 THE POST COVID19 ECONOMIC CRISIS AND THE BODA-BODA ECONOMY- WAYFORWARD

The emergence of the #COlVID19 global pandemic shall leave the credibility of many institutions under check. At the international level, The European Union, BRICS, The African Union, The East African Community among others have so many unanswered questions. At the local level, institutions  like Kingdoms/Cultural institutions, Political Parties, Insurance companies, NSSF, KACITA, Uganda Chamber of Commerce, Workers’ unions among other institutions are being looked at by their subjects on how they are cushioning them from the after effects of the pandemic.

In the U.S.A, 6.6m Americans have filed jobless claims and the number is estimated to multiply five times by end of April. The United Nations predicted that many companies are likely to reduce their workers by a half by the end of the pandemic. In Uganda, the minister of finance predicted that 2.9m Ugandans are likely to lose their jobs. I must note also that for every 2years, 70% of Ugandans who make it above the poverty line slip back. Not forgetting that many Ugandans are hand to mouth workers.

The financial obligations of citizens however remain standing globally save for the interventions by different foreign governments through different stimulus packages. Loans are maturing, utility bills are due, home basic needs have been hiked, and health obligations remain high.

It is obvious that there’s going to be a global economic recession if it doesn’t exist already. Five (5) of the first  10 leading global economies (U.S.A, Germany, U.K, France and Italy) have been hit hard. Remember the first 10 global economies contribute 66% of the entire global GDP. 7 of the first 20 leading global economies are in a crisis, despite the same contributing to 79% of the entire GDP of the globe. The price of crude oil has steeply collapsed. As to whether U.S.A maintains its position as the world’s biggest economy is a discussion for another day. This leaves many African countries that are defendant on aid, donations and loans from these super powers at a crisis. As for Uganda, Ugandans in diaspora contribute ~ USD 1.4billion annually which is 5% of the countries economy and North America alone contributes ~ USD 100million in remittances. This crisis could however be a blessing in disguise for the African governments to refocus on domestic investment, financial independence and intercontinental trade. “If African governments put their domestic revenue into productive investments, Africa could perharps be in position to meet more than its resource needs”, Samuel Gayi, senior economist on Africa- UN Conference on Trade and Development (UNCTAD), 2004.

“African Countries’ ability to finance a great share of their development needs from domestic sources would give them the much needed flexibility in the formulation and implementation of policies” To address  development challenges, direct resources into high priority areas and strengthen state capacity- UNCTAD, 2007.

Africa is said to lose hundreds of billions of dollars in domestic revenue annually through capital flight, tax evasion, the repatriation of profits by transnational corporations and high debt repayments. In the case of Uganda, transnational companies like MTN, UMEME and others repatriate profits to their home countries with little domestic investment  yet they buy out our dollars in circulation to their home countries making the dollar scarce  in the economy and hence an increase in its purchase value. For the case of the Public debt, it stood at 36% of the total GDP of the country by 2019 and  97% of the loans taken in 2019 were directed to servicing maturing obligations and interests according to the auditor General’s report of 2019.

The informal sector holds considerable financial resources that are not deposited in savings accounts or pass through financial channels. Remember 83% of the population is locked in the informal sector. Dependence on external resource flows leaves countries vulnerable to external shocks like the Corona Pandemic yet Foreign direct investments are low. Of course institutions like the World Bank group, IMF and the Exports and Imports Bank of China have a lot of business in this Pandemic.

According to the East African Economic Outlook of 2019, the real GDP in E.A grew by an estimated 5.7% in 2018, slightly less than 5.9% in 2007 among African states. It was estimated to grow by 5.9% and a 6.1% projection in 2020 with the highest economic growth in Rwanda, T.Z, Ethiopia and Djibouti but this projection seems to have hit a dead end  since the Corona Pandemic was not factored in. In both Rwanda & Ethiopia, real GDP was built by industries whereas Services played a major role  for Kenya, and T.Z, followed by the Agriculture sector. Agriculture is of course vulnerable to vagaries of nature, high reliability to exports and oil prices due to inputs and external indebtedness. The service sector dominates the composition of the GDP in the region averaging 59% followed by Agriculture (25.7%), Industry (15%) and 14.6% for manufactured exports. In the case of  Uganda as of 2018/19, the service sector contributed 43.3%, 27.1 for industry and 21.9% for Agriculture . The interregional trade in E.A stood at 8.3% as of 2017 yet the intercontinental trade was at 14.5%.  

Traditionally, the African community lived with a culture of saving. They could produce more than they could shallow and save in proper storage facilities/granaries in preparation for harsh days like these and reinvestment (replanting).Wealth was determined by how much harvest a family would produce at the end of the season. The extra produce was later on used for barter trade. The rule of the thumb is save more, become wealthier by investing for the future. Richer countries have large groups of retirees that slash money aside. In China, more than half of what is produced is saved and then reinvested. In countries like India, 17% of  the  investments came from household savings in the 1970s, 25% by draw of  the millennium and today, 60% of the revenue comes from Indian  investments. Domestic investment in India has been predominantly financed through domestic saving. Foreign capital inflow accounts for less than 1% of the country’s GDP and there’s little foreign direct investment . India continues to receive foreign aid but this remains negligible relative to the size of the economy. It should also be noted that  over 60% of the revenue collected by URA comes from Indian owned companies. India remains the 5^th biggest economy in the world.

The Sub-saharan  Africa has the lowest saving rates in developing world. On average, the gross domestic savings were 18% of the GDP as of 2005 compared to 26% in South Asia and 43% in East Asia & Pacific countries. In 2007, Uganda’s saving rate was 10% of  its GDP, said Japheth Kato of the Country’s Capital Markets Authority. Jean Thisen of the  UN Economic Commision for Africa  (ECA) in 2015 noted that to hit poverty  it needed  investment of 25%  of the GDP. By then, only 20% of African families had bank accounts and this was attributed to factors like physical distance to banking institutions, high minimum deposits and balance requirements and the cost of maintaining accounts. Incentives to save were very low yet very high interest rates on loans. In Africa, 80% of household assets in rural Africa are in nonfinancial forms i.e. livestock, stock poles of goods for trading, grain, construction material thus new financial products needed to be introduced. According to the UN capital Development fund, people with access to formal banks accounts saved 3times more in 12months than those who hold their assets in the nonfinancial formats. The UN department of Economics and Social affairs noted in 2005 that increasing savings and ensuring that they are directed to productive investment are central to accelerating economic growth. According to UBOS 2018, only 12% of the population held bank accounts and research by bank of Uganda indicated that only about 3-5% of Ugandans save monthly earnings on regular basis. This is an indication of the crisis that lies before us as country. Uganda has the lowest savings to GDP of 13.48% compared to Kenya, Tanzania and Rwanda.

The Corona Pandemic is a wakeup call for African leaders to look into the social security of their citizens. With only 5% of salary earners saving on a monthly basis, and 83% of Ugandans being in the informal sector, a saving culture that translates into investment should be well thought otherwise many Ugandans shall remain with fragile businesses that have no cushions. It is worth noting that in private sector financing, only 12% of Ugandans access Agricultural loan, 20% access loans in real estate and 18% loans are in trade and commerce. Many private businesses are at the verge of collapse because they cannot meet their financial obligations that are due. After 34years in power, the traders under Kampala Capital City traders’ Association (KACITA) should have raised enough capital through the sacco-Microfinance-Commercial Bank chain and would be self-crediting. Many businesses in the informal sector should have been organized into Village savings and Loan association (VSLAs), Saccos and Cooperatives. These could  institutions where people themselves are shareholders and self-crediting would boost the economy a big deal in the long run. Imagine groups like fishermen, Bod bodas, Oil palm growers, Chapati vendors, market vendors, pastoralists, shop keepers, taxi drivers and conductors and all groups in the informal sector organized into VSLAs and Saccos. The wanainchi would do weekly/monthly savings as they buy shares as well whilst seeking loans at interest rates determined by themselves. A lot of capital would be accumulated in the absolute terms. These groups end up embracing group investments for example in Kenya, the road transport industry is owned by Kenyans under different Saccos and hence a Cooperative Bank that is native owned. Countries like India, Japan and China adopted these models hence the rapid growth in of their cottage industries that ultimately rendered them among the top 10 largest economies in the world. When cooperative banks thrive, people’s prime properties like land are protected since they can secure loans at the lowest interest rates. A case in point is Bushenyi district. In my opinion, Bushenyi is the most developed district in Uganda. A ride through this district would show you a cooperative bank and many Saccos and a number of local based projects. As the capital base of the citizens increases, investment in government projects in the areas of Energy, roads, Information and Communication technologies,  and treasury bills becomes plausible. These can as well take up the private sector in areas like Insurance, Stocks in companies etc. In the case of the Corona Pandemic, the government would just issue treasury bills and  citizens through their own financial organisations would take them up. The result is  that minimal foreign debts would be taken up by government with enhanced capacity to provide a citizen led social services sector.

 THE POST COVID19 ECONOMIC CRISIS AND THE BODA-BODA ECONOMY- WAYFORWARD

The emergence of the #COlVID19 global pandemic shall leave the credibility of many institutions under check. At the international level, The European Union, BRICS, The African Union, The East African Community among others have so many unanswered questions. At the local level, institutions  like Kingdoms/Cultural institutions, Political Parties, Insurance companies, NSSF, KACITA, Uganda Chamber of Commerce, Workers’ unions among other institutions are being looked at by their subjects on how they are cushioning them from the after effects of the pandemic.

In the U.S.A, 6.6m Americans have filed jobless claims and the number is estimated to multiply five times by end of April. The United Nations predicted that many companies are likely to reduce their workers by a half by the end of the pandemic. In Uganda, the minister of finance predicted that 2.9m Ugandans are likely to lose their jobs. I must note also that for every 2years, 70% of Ugandans who make it above the poverty line slip back. Not forgetting that many Ugandans are hand to mouth workers.

The financial obligations of citizens however remain standing globally save for the interventions by different foreign governments through different stimulus packages. Loans are maturing, utility bills are due, home basic needs have been hiked, and health obligations remain high.

It is obvious that there’s going to be a global economic recession if it doesn’t exist already. Five (5) of the first  10 leading global economies (U.S.A, Germany, U.K, France and Italy) have been hit hard. Remember the first 10 global economies contribute 66% of the entire global GDP. 7 of the first 20 leading global economies are in a crisis, despite the same contributing to 79% of the entire GDP of the globe. The price of crude oil has steeply collapsed. As to whether U.S.A maintains its position as the world’s biggest economy is a discussion for another day. This leaves many African countries that are defendant on aid, donations and loans from these super powers at a crisis. As for Uganda, Ugandans in diaspora contribute ~ USD 1.4billion annually which is 5% of the countries economy and North America alone contributes ~ USD 100million in remittances. This crisis could however be a blessing in disguise for the African governments to refocus on domestic investment, financial independence and intercontinental trade. “If African governments put their domestic revenue into productive investments, Africa could perharps be in position to meet more than its resource needs”, Samuel Gayi, senior economist on Africa- UN Conference on Trade and Development (UNCTAD), 2004.

“African Countries’ ability to finance a great share of their development needs from domestic sources would give them the much needed flexibility in the formulation and implementation of policies” To address  development challenges, direct resources into high priority areas and strengthen state capacity- UNCTAD, 2007.

Africa is said to lose hundreds of billions of dollars in domestic revenue annually through capital flight, tax evasion, the repatriation of profits by transnational corporations and high debt repayments. In the case of Uganda, transnational companies like MTN, UMEME and others repatriate profits to their home countries with little domestic investment  yet they buy out our dollars in circulation to their home countries making the dollar scarce  in the economy and hence an increase in its purchase value. For the case of the Public debt, it stood at 36% of the total GDP of the country by 2019 and  97% of the loans taken in 2019 were directed to servicing maturing obligations and interests according to the auditor General’s report of 2019.

The informal sector holds considerable financial resources that are not deposited in savings accounts or pass through financial channels. Remember 83% of the population is locked in the informal sector. Dependence on external resource flows leaves countries vulnerable to external shocks like the Corona Pandemic yet Foreign direct investments are low. Of course institutions like the World Bank group, IMF and the Exports and Imports Bank of China have a lot of business in this Pandemic.

According to the East African Economic Outlook of 2019, the real GDP in E.A grew by an estimated 5.7% in 2018, slightly less than 5.9% in 2007 among African states. It was estimated to grow by 5.9% and a 6.1% projection in 2020 with the highest economic growth in Rwanda, T.Z, Ethiopia and Djibouti but this projection seems to have hit a dead end  since the Corona Pandemic was not factored in. In both Rwanda & Ethiopia, real GDP was built by industries whereas Services played a major role  for Kenya, and T.Z, followed by the Agriculture sector. Agriculture is of course vulnerable to vagaries of nature, high reliability to exports and oil prices due to inputs and external indebtedness. The service sector dominates the composition of the GDP in the region averaging 59% followed by Agriculture (25.7%), Industry (15%) and 14.6% for manufactured exports. In the case of  Uganda as of 2018/19, the service sector contributed 43.3%, 27.1 for industry and 21.9% for Agriculture . The interregional trade in E.A stood at 8.3% as of 2017 yet the intercontinental trade was at 14.5%.  

Traditionally, the African community lived with a culture of saving. They could produce more than they could shallow and save in proper storage facilities/granaries in preparation for harsh days like these and reinvestment (replanting).Wealth was determined by how much harvest a family would produce at the end of the season. The extra produce was later on used for barter trade. The rule of the thumb is save more, become wealthier by investing for the future. Richer countries have large groups of retirees that slash money aside. In China, more than half of what is produced is saved and then reinvested. In countries like India, 17% of  the  investments came from household savings in the 1970s, 25% by draw of  the millennium and today, 60% of the revenue comes from Indian  investments. Domestic investment in India has been predominantly financed through domestic saving. Foreign capital inflow accounts for less than 1% of the country’s GDP and there’s little foreign direct investment . India continues to receive foreign aid but this remains negligible relative to the size of the economy. It should also be noted that  over 60% of the revenue collected by URA comes from Indian owned companies. India remains the 5^th biggest economy in the world.

The Sub-saharan  Africa has the lowest saving rates in developing world. On average, the gross domestic savings were 18% of the GDP as of 2005 compared to 26% in South Asia and 43% in East Asia & Pacific countries. In 2007, Uganda’s saving rate was 10% of  its GDP, said Japheth Kato of the Country’s Capital Markets Authority. Jean Thisen of the  UN Economic Commision for Africa  (ECA) in 2015 noted that to hit poverty  it needed  investment of 25%  of the GDP. By then, only 20% of African families had bank accounts and this was attributed to factors like physical distance to banking institutions, high minimum deposits and balance requirements and the cost of maintaining accounts. Incentives to save were very low yet very high interest rates on loans. In Africa, 80% of household assets in rural Africa are in nonfinancial forms i.e. livestock, stock poles of goods for trading, grain, construction material thus new financial products needed to be introduced. According to the UN capital Development fund, people with access to formal banks accounts saved 3times more in 12months than those who hold their assets in the nonfinancial formats. The UN department of Economics and Social affairs noted in 2005 that increasing savings and ensuring that they are directed to productive investment are central to accelerating economic growth. According to UBOS 2018, only 12% of the population held bank accounts and research by bank of Uganda indicated that only about 3-5% of Ugandans save monthly earnings on regular basis. This is an indication of the crisis that lies before us as country. Uganda has the lowest savings to GDP of 13.48% compared to Kenya, Tanzania and Rwanda.

The Corona Pandemic is a wakeup call for African leaders to look into the social security of their citizens. With only 5% of salary earners saving on a monthly basis, and 83% of Ugandans being in the informal sector, a saving culture that translates into investment should be well thought otherwise many Ugandans shall remain with fragile businesses that have no cushions. It is worth noting that in private sector financing, only 12% of Ugandans access Agricultural loan, 20% access loans in real estate and 18% loans are in trade and commerce. Many private businesses are at the verge of collapse because they cannot meet their financial obligations that are due. After 34years in power, the traders under Kampala Capital City traders’ Association (KACITA) should have raised enough capital through the sacco-Microfinance-Commercial Bank chain and would be self-crediting. Many businesses in the informal sector should have been organized into Village savings and Loan association (VSLAs), Saccos and Cooperatives. These could  institutions where people themselves are shareholders and self-crediting would boost the economy a big deal in the long run. Imagine groups like fishermen, Bod bodas, Oil palm growers, Chapati vendors, market vendors, pastoralists, shop keepers, taxi drivers and conductors and all groups in the informal sector organized into VSLAs and Saccos. The wanainchi would do weekly/monthly savings as they buy shares as well whilst seeking loans at interest rates determined by themselves. A lot of capital would be accumulated in the absolute terms. These groups end up embracing group investments for example in Kenya, the road transport industry is owned by Kenyans under different Saccos and hence a Cooperative Bank that is native owned. Countries like India, Japan and China adopted these models hence the rapid growth in of their cottage industries that ultimately rendered them among the top 10 largest economies in the world. When cooperative banks thrive, people’s prime properties like land are protected since they can secure loans at the lowest interest rates. A case in point is Bushenyi district. In my opinion, Bushenyi is the most developed district in Uganda. A ride through this district would show you a cooperative bank and many Saccos and a number of local based projects. As the capital base of the citizens increases, investment in government projects in the areas of Energy, roads, Information and Communication technologies,  and treasury bills becomes plausible. These can as well take up the private sector in areas like Insurance, Stocks in companies etc. In the case of the Corona Pandemic, the government would just issue treasury bills and  citizens through their own financial organisations would take them up. The result is  that minimal foreign debts would be taken up by government with enhanced capacity to provide a citizen led social services sector.

 v

THE POST COVID19 ECONOMIC CRISIS AND THE BODA-BODA ECONOMY- WAYFORWARD

The emergence of the #COlVID19 global pandemic shall leave the credibility of many institutions under check. At the international level, The European Union, BRICS, The African Union, The East African Community among others have so many unanswered questions. At the local level, institutions  like Kingdoms/Cultural institutions, Political Parties, Insurance companies, NSSF, KACITA, Uganda Chamber of Commerce, Workers’ unions among other institutions are being looked at by their subjects on how they are cushioning them from the after effects of the pandemic.

In the U.S.A, 6.6m Americans have filed jobless claims and the number is estimated to multiply five times by end of April. The United Nations predicted that many companies are likely to reduce their workers by a half by the end of the pandemic. In Uganda, the minister of finance predicted that 2.9m Ugandans are likely to lose their jobs. I must note also that for every 2years, 70% of Ugandans who make it above the poverty line slip back. Not forgetting that many Ugandans are hand to mouth workers.

The financial obligations of citizens however remain standing globally save for the interventions by different foreign governments through different stimulus packages. Loans are maturing, utility bills are due, home basic needs have been hiked, and health obligations remain high.

It is obvious that there’s going to be a global economic recession if it doesn’t exist already. Five (5) of the first  10 leading global economies (U.S.A, Germany, U.K, France and Italy) have been hit hard. Remember the first 10 global economies contribute 66% of the entire global GDP. 7 of the first 20 leading global economies are in a crisis, despite the same contributing to 79% of the entire GDP of the globe. The price of crude oil has steeply collapsed. As to whether U.S.A maintains its position as the world’s biggest economy is a discussion for another day. This leaves many African countries that are defendant on aid, donations and loans from these super powers at a crisis. As for Uganda, Ugandans in diaspora contribute ~ USD 1.4billion annually which is 5% of the countries economy and North America alone contributes ~ USD 100million in remittances. This crisis could however be a blessing in disguise for the African governments to refocus on domestic investment, financial independence and intercontinental trade. “If African governments put their domestic revenue into productive investments, Africa could perharps be in position to meet more than its resource needs”, Samuel Gayi, senior economist on Africa- UN Conference on Trade and Development (UNCTAD), 2004.

“African Countries’ ability to finance a great share of their development needs from domestic sources would give them the much needed flexibility in the formulation and implementation of policies” To address  development challenges, direct resources into high priority areas and strengthen state capacity- UNCTAD, 2007.

Africa is said to lose hundreds of billions of dollars in domestic revenue annually through capital flight, tax evasion, the repatriation of profits by transnational corporations and high debt repayments. In the case of Uganda, transnational companies like MTN, UMEME and others repatriate profits to their home countries with little domestic investment  yet they buy out our dollars in circulation to their home countries making the dollar scarce  in the economy and hence an increase in its purchase value. For the case of the Public debt, it stood at 36% of the total GDP of the country by 2019 and  97% of the loans taken in 2019 were directed to servicing maturing obligations and interests according to the auditor General’s report of 2019.

The informal sector holds considerable financial resources that are not deposited in savings accounts or pass through financial channels. Remember 83% of the population is locked in the informal sector. Dependence on external resource flows leaves countries vulnerable to external shocks like the Corona Pandemic yet Foreign direct investments are low. Of course institutions like the World Bank group, IMF and the Exports and Imports Bank of China have a lot of business in this Pandemic.

According to the East African Economic Outlook of 2019, the real GDP in E.A grew by an estimated 5.7% in 2018, slightly less than 5.9% in 2007 among African states. It was estimated to grow by 5.9% and a 6.1% projection in 2020 with the highest economic growth in Rwanda, T.Z, Ethiopia and Djibouti but this projection seems to have hit a dead end  since the Corona Pandemic was not factored in. In both Rwanda & Ethiopia, real GDP was built by industries whereas Services played a major role  for Kenya, and T.Z, followed by the Agriculture sector. Agriculture is of course vulnerable to vagaries of nature, high reliability to exports and oil prices due to inputs and external indebtedness. The service sector dominates the composition of the GDP in the region averaging 59% followed by Agriculture (25.7%), Industry (15%) and 14.6% for manufactured exports. In the case of  Uganda as of 2018/19, the service sector contributed 43.3%, 27.1 for industry and 21.9% for Agriculture . The interregional trade in E.A stood at 8.3% as of 2017 yet the intercontinental trade was at 14.5%.  

Traditionally, the African community lived with a culture of saving. They could produce more than they could shallow and save in proper storage facilities/granaries in preparation for harsh days like these and reinvestment (replanting).Wealth was determined by how much harvest a family would produce at the end of the season. The extra produce was later on used for barter trade. The rule of the thumb is save more, become wealthier by investing for the future. Richer countries have large groups of retirees that slash money aside. In China, more than half of what is produced is saved and then reinvested. In countries like India, 17% of  the  investments came from household savings in the 1970s, 25% by draw of  the millennium and today, 60% of the revenue comes from Indian  investments. Domestic investment in India has been predominantly financed through domestic saving. Foreign capital inflow accounts for less than 1% of the country’s GDP and there’s little foreign direct investment . India continues to receive foreign aid but this remains negligible relative to the size of the economy. It should also be noted that  over 60% of the revenue collected by URA comes from Indian owned companies. India remains the 5^th biggest economy in the world.

The Sub-saharan  Africa has the lowest saving rates in developing world. On average, the gross domestic savings were 18% of the GDP as of 2005 compared to 26% in South Asia and 43% in East Asia & Pacific countries. In 2007, Uganda’s saving rate was 10% of  its GDP, said Japheth Kato of the Country’s Capital Markets Authority. Jean Thisen of the  UN Economic Commision for Africa  (ECA) in 2015 noted that to hit poverty  it needed  investment of 25%  of the GDP. By then, only 20% of African families had bank accounts and this was attributed to factors like physical distance to banking institutions, high minimum deposits and balance requirements and the cost of maintaining accounts. Incentives to save were very low yet very high interest rates on loans. In Africa, 80% of household assets in rural Africa are in nonfinancial forms i.e. livestock, stock poles of goods for trading, grain, construction material thus new financial products needed to be introduced. According to the UN capital Development fund, people with access to formal banks accounts saved 3times more in 12months than those who hold their assets in the nonfinancial formats. The UN department of Economics and Social affairs noted in 2005 that increasing savings and ensuring that they are directed to productive investment are central to accelerating economic growth. According to UBOS 2018, only 12% of the population held bank accounts and research by bank of Uganda indicated that only about 3-5% of Ugandans save monthly earnings on regular basis. This is an indication of the crisis that lies before us as country. Uganda has the lowest savings to GDP of 13.48% compared to Kenya, Tanzania and Rwanda.

The Corona Pandemic is a wakeup call for African leaders to look into the social security of their citizens. With only 5% of salary earners saving on a monthly basis, and 83% of Ugandans being in the informal sector, a saving culture that translates into investment should be well thought otherwise many Ugandans shall remain with fragile businesses that have no cushions. It is worth noting that in private sector financing, only 12% of Ugandans access Agricultural loan, 20% access loans in real estate and 18% loans are in trade and commerce. Many private businesses are at the verge of collapse because they cannot meet their financial obligations that are due. After 34years in power, the traders under Kampala Capital City traders’ Association (KACITA) should have raised enough capital through the sacco-Microfinance-Commercial Bank chain and would be self-crediting. Many businesses in the informal sector should have been organized into Village savings and Loan association (VSLAs), Saccos and Cooperatives. These could  institutions where people themselves are shareholders and self-crediting would boost the economy a big deal in the long run. Imagine groups like fishermen, Bod bodas, Oil palm growers, Chapati vendors, market vendors, pastoralists, shop keepers, taxi drivers and conductors and all groups in the informal sector organized into VSLAs and Saccos. The wanainchi would do weekly/monthly savings as they buy shares as well whilst seeking loans at interest rates determined by themselves. A lot of capital would be accumulated in the absolute terms. These groups end up embracing group investments for example in Kenya, the road transport industry is owned by Kenyans under different Saccos and hence a Cooperative Bank that is native owned. Countries like India, Japan and China adopted these models hence the rapid growth in of their cottage industries that ultimately rendered them among the top 10 largest economies in the world. When cooperative banks thrive, people’s prime properties like land are protected since they can secure loans at the lowest interest rates. A case in point is Bushenyi district. In my opinion, Bushenyi is the most developed district in Uganda. A ride through this district would show you a cooperative bank and many Saccos and a number of local based projects. As the capital base of the citizens increases, investment in government projects in the areas of Energy, roads, Information and Communication technologies,  and treasury bills becomes plausible. These can as well take up the private sector in areas like Insurance, Stocks in companies etc. In the case of the Corona Pandemic, the government would just issue treasury bills and  citizens through their own financial organisations would take them up. The result is  that minimal foreign debts would be taken up by government with enhanced capacity to provide a citizen led social services sector.