EDITORIAL: Walks like nationalisation, talks like…

Sunday January 27 2019

Uganda's President Yoweri Museveni

Uganda's President Yoweri Museveni inspecting the guard of honour on budget speech day June 8, 2017. Rebalancing the ownership of the economy may be desirable but its execution needs to be carefully managed. PHOTO | MORGAN MBABAZI | NMG 

The EastAfrican
By The EastAfrican
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Although they may at first appear to be random and isolated statements, Ugandans of a certain vintage are bound to find disturbing echoes in what Uganda government officials have been saying in recent days.

On January 20, Junior Finance Minister responsible for Planning, David Bahati, told the media that President Yoweri Museveni had directed that no new sports betting firms be licensed while incumbents were not to be allowed to renew their licences once the existing ones expired, because the business was diverting youth from productive activities.

In later statements, the government clarified that only exclusively foreign-owned betting firms were banned but those in which Ugandan citizens were listed as partners would be allowed.

That was followed midweek by a statement attributed to President Museveni in which he said companies in the telecommunications sector should give Ugandans partial ownership of the businesses through listing on the Uganda Securities Exchange.

Indeed, days later, State House announced that South Africa-headquartered MTN had agreed to place a stake of yet undetermined size with the National Social Security Fund.

In a country that has for decades feted foreign investors at the expense of locals, and where unemployment runs high despite lofty economic growth records claimed by its leaders, the pronouncements were actually popular.

To investors and even those Ugandans old enough to remember the disastrous drift towards socialism at the turn of the 1970s, such statements raise the prospect of a policy reversal that could unhinge an already wobbly economy.

And history could be on the side of the doubting Thomases. As he consolidated his power following the abolition of kingdoms a couple of years earlier, then president Milton Obote in October 1968, announced the famous Common Man’s Charter under which the state would take majority ownership in the bigger private businesses in the mining, finance and agricultural sectors.

Just over a year later in May 1970, Obote again raised the government stake to 60 per cent of all privately and mostly foreign-owned businesses. The move affected some 80 corporations that formed the core of Uganda’s industrial economy.

The nationalised stakes would be paid for from the profits posted by the firms over a 15-year period. It was this policy that Idi Amin would build on by expelling Indians and dishing out their businesses to nationals. In a sense, Obote and Amin were wrestling with the devil of how to restore a measure of economic parity after a colonial legacy that had relegated local people to mere serfs in their own countries.

President Museveni’s case is however different because after Obote and Amin had done the dirty job for him, he surrendered to international pressure and once again opened the gates of the economy wide.

Rebalancing the ownership of the economy may be desirable but its execution needs to be carefully managed because the economic contradictions that are likely to make it fail have not changed.

Investment of any colour cannot be attracted by threatening investors. Even local investors will hold back because they will not feel secure in an environment where private property can be nationalised.

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