Our economy in danger - UPC
Tabu Butagira
Kampala
The Uganda People's Congress party is calling for direct state control of
crucial economic sectors, warning that the obsession with liberalisation could
dip Uganda into irrevocable chaos in the wake of the global financial crisis
that has seen several pillars the US economy collapse.
Mr Chris Opoka, the party's assistant secretary-general said in a statement
Friday that the ruling government's casual approach to, and enthusiasm for the
free-market economic model was only enriching speculators and corrupt state
cronies.
"The people who have amassed riches under President Yoweri Museveni's regime
are not the producers of real wealth but the 'smart' dealers and the corrupt
that supply [commodities] to government and its agencies at exaggerated
prices," Mr Opoka said. "And [they] then speculate in real estate business,
driving up the price of land, especially in Kampala city, beyond the
affordability of the working class."
He said that economic prosperity in such circumstances is not sustainable since
the resource base of such entrepreneurs inevitably crumbles with a change of
government.
President Museveni has on a number of ordered the Ministry of Finance to
selectively dish out public funds to rescue troubled businesses owned by
supporters of his NRM party, including hides and skins dealer/proprietor of
Kampala International University Hassan Basajjabalaba who heads the party's
entrepreneurship portfolio.
Mr Opoka said the credit crunch being experienced mainly in the US and Europe
arises from poor economic planning by governments and reckless free-market
practices, including unsecured lending to prospective home owners by
unprincipled and exploitative bankers.
Many major investment, insurance and mortgage firms in Western capitals have
gone bust in past months, triggering massive job losses in an economic crisis
blamed on excessive and unsecured lending that has been hit by a high default
on loan servicing, which forced banks to seize client's properties but with
nobody ready to buy.
This caused prices in the housing market to plummet and banks, unsure of each
other's debt burden, stopped lending to each other, which in turn limited
financing available to borrowers.
This resulted in negative balance sheet for businesses and slowed economic
activity, forcing governments to fork out tax payer's money to rescue firms on
the brink of collapse.
The US Congress on Friday approved a $700 billion bail-out package for troubled
conglomerates.
Mr Opoka said the UPC, as a social democratic party, believes that the strength
of an economy is in the "quality and quantity of its domestically-produced
material goods; work force and how the income derived from such production is
distributed [to improve the welfare of citizens]."
"While free enterprise should be encouraged to free up and utilise the
competitive energies of all productive people, there must be safeguards and
regulations to ensure that competition does not turn into corrupt speculation
and exploitation of workers and consumers," he said.
Government officials yesterday rejected the Opposition party's proposal for
re-adoption of nationalisation policy, saying the shift would neither protect
nor revive the country's economy and branded the suggestion as "bad and
ill-advised."
"Nationalisation is a misguided policy," Mr Keith Muhakanizi, the deputy
secretary to the treasury said.
He said the country should instead develop stronger and more independent
government institutions, including the judiciary, to enforce individual
property rights and protect investment contracts to stimulate growth.
"Our financial sector is now very strong, and we need to strengthen it by
tightening the way banks give out loans [to avoid the default trap Western
economies are embroiled in]."
The UPC party had said unregulated financial and investment activities in a
free-market environment is dangerous for the safety of individual savings,
which is why government should play a central role in the economy.
The present financial troubles afflicting the US and Europe, according to the
party, was the predictable result of government's abandoning of basic economic
planning and regulation, which is "capitalism run amok".
Mr Opoka said: "The result was that what were called smart Chief Executive
Officers in the financial industry resorted to maximising returns on investment
not production of actual goods. They manufactured financial instruments that
were traded in primary and secondary markets. With time the layers of
transactions, projects and interest based on few physical assets (houses)
became unsustainable."
Yesterday morning, MP William Okecho, the chairman of Parliament's Budget
Committee partly backed Mr Muhakanizi saying a policy reversal from
liberalisation would be counter-productive when former communist countries like
China and Russia are reaping huge dividends from opening economies to
international trade.
"Our government should use financial and monetary instruments to induce
investment and regulate the economy because what is happening in the US [is a
result of] grand scale mismanagement," he said.
The legislator said government should form a lead agency to identify profitable
investments requiring huge initial capital, which it can undertake and later
float on the stock market for citizens to acquire.
UPC urged Ugandans to demand a "proper economic management, away from excessive
consumerism and unregulated credit that is bound to lead to economic ruin."
The Mulindwas Communication Group
"With Yoweri Museveni, Uganda is in anarchy"
Groupe de communication Mulindwas
"avec Yoweri Museveni, l'Ouganda est dans l'anarchie"_______________________________________________
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