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.