Stop haemorrhage of hard currency by lazily piling up unnecessary debt

Thursday May 20 2021
Ugandan shillings.

Ugandan currency notes. PHOTO | FILE | NMG


One of our high school teachers had a scar on the face which he sustained in a fight for beer on his graduation day. During Uganda’s ‘bad old days’ in the late ‘70s, the government managed to provide a beer per graduand at the country’s then sole university and the thirsty fellows fought over the free drink.

But our man’s father was manager of the country’s brewery, so his mother pleaded with him, reminding him that a lorry full of beer had been delivered at their home for his party. The bloodied young man fought on arguing that the free bottle at the university was his right.

His story seemed strange then, but two decades later we were to see mothers from our generation facing similar dilemma of unnecessarily greedy boys. Dropping off and picking up children at primary schools, it was ‘normal’ to see a distressed mother listening to a teacher recounting her son’s misconduct, fighting for a pancake. The perplexed mothers would try to explain the plentiful of ‘grub’ at home, wondering why their boy would fight for a pancake.

Last week, I watched another East African mother reminding the ‘boys’ of the plentiful that she has in her home, their home. Her Excellency Samia Suluhu pointed at the massive land and natural resources in Tanzania, and opened her heart to invite the business community of neighbouring Kenya to take advantage. Now when you see the sheer wealth of this East African region of ours, it is simply inexplicable why we cannot think of another development funding model and stop fighting for risky debts from Europe, Asia and America just because they are available. Did you hear Bob Marley pleading in his Redemption Song: “Emancipate yourselves from mental slavery; none but ourselves can free our minds.”

It looks like the economic intelligence units of African governments don’t built analytical scenarios and for example as what would happen if today’s lenders for one reason or another stopped lending. Would they surrender to recolonisation? For why do governments knowingly seeking unsustainable loans without seeking funding options.

The word “knowingly” is used advisedly, because for example in Uganda’s case, it is now official that the debt is crossing beyond the 50 percent of the Gross Domestic Product, actually at the close of the next accounting period it should be at 51.8 percent. You can only rebase the GDP up to a limit for the debt ratio look safely small, beyond which, the stagnant/shrinking revenue to GDP ratio will become unexplainable.


It is a sad situation that afflicts all EAC partners. The lenders themselves, particularly the IMF, have warned that the debt is spiralling out of control, but it is like we have no ears or have no capacity to think of funding options.

Where Africans go to borrow, the money is not just printed. It is money earned through economic activity — through selling goods and services which they lend us. But Africa too also has goods to sell, even services like tourism. Africa has natural resources which, when sold, earn money. That is money that should be directed towards funding infrastructure, instead of lazily accumulating debts without knowing how they will be repaid. If we knew how the loans would be repaid, we wouldn’t be heading into a debt crisis.

But identifying Africa’s resources and using them for development funding is one side of the story. We must watch the expenditure, and stop the haemorrhage of hard currency.

A small country like Uganda, which can comfortably feed its people, is importing so many things that are not critical to its survival. The bill for petroleum and old cars is $2 billion a year, yet we have also borrowed $2 billion to generate electricity, half of which we are not consuming. Yet the electricity for whose installation we are paying debts could be used to power our transport so we don’t have to import all that fuel. It is as if we have an obligation to buy the petrol dealers’ petrol while failing to use our electricity – our conduct is simply confusing.

Is there an agency that looks at the combined resources in the East African Community? Does the EAC Secretariat in Arusha do it? If so, to what use to they put that information? Can the East African leaders rally around Samia, the one who has the biggest pot of natural wealth, and see how they can co-ordinate their activities and stop behaving like immature boys who fight for a pancake, yet Mom’s fridge is full of food?

Joachim Buwembo is a Kampala-based journalist. E-mail:[email protected]