The economics and politics of Kampala city traders strike

By Dr. Robert K. Rutaagi

The greatest paradox is that 20 years after privatisation, the traders want the government’s assistance in businesses

The popular cliché that ‘man is a political animal’ can manifest in various versions and situations. One such is that ‘man is a rebellious animal’.

For example in 1980, when the UPC, under Milton Obote, allegedly rigged elections which the Commonwealth Election Observers described as having “expressed the will of the people” (never mind the anomalies), one of the contesting parties, the Uganda Patriotic Movement (UPM), under Yoweri Kaguta Museveni, rebelled, plunged into the Luwero bushes to fight a protracted guerilla war from which they emerged victorious five years later.

As I have argued many times before, if Museveni, before going to Luwero Triangle, had convened a Press Conference in Kampala, attended by all stakeholders, including the media,   and presented his war plans, some clever academician, journalist or trader would have, probably, told Museveni that his war plans were politically dangerous, socially undesirable and economically unviable without due diligence and an economic feasibility study. But what happened? Twenty seven men and women, armed with only 26 guns bravely plunged into the bushes, fought a gallant and protracted ware  and five years later, emerged victorious, captured state power until today and may continue doing so until, at least, 2026 as reportedly revealed by Gen. Caleb Akandwanaho aka Salim Saleh, President Museveni’s younger brother.

UPM, later turned NRM/A, had in 19890 won only one seat during the elections, courtesy of Dr Crispus Kiyonga. It became rebellious because of the belief that elections had been rigged. Despite its low level of performance, the few who felt unfairly treated rebelled against the system considered grossly unjust.

Let us now look at Kampala City Traders’ Association’s (KACITA) recent strike. The traders  said that the government was unjust for many reasons – all represented by one ‘tablet’ called high bank interest rate which necessitated calling a three day strike that Museveni ended on Monday, 16 January, 2012 after marathon meetings. The high bank interest rates were triggered off by Omwami Emmanuel Tumusiime Mutebile raising the CBR to 23% up from 14%. Following that, Commercial Banks adjusted their rates up to 38%. Borrowers (long term) saw their mortgages drastically raised. To them, that did not make economic (or any other) sense. They argued that, while new borrowers could not avoid the new imposed rates, the old borrowers could not see any justification in the equation.

But KACITA has many more grudges against the whole world economy, not only their government. They were saying that power tariffs were ridiculously high, so was water, petroleum products, food, pharmaceuticals and all other imports. As if that is not enough, the roads are full of potholes and hospitals have no essential drugs.

There was a time, before 1992/1993, when the Private Sector, including KACITA, used to lament that “Government was a poor owner and Manager of Public scarce resources which they (government Officials) ravenously appropriated to themselves – meaning rampant corruption”. The Private Sector advocated that “Government should get out of the ominous business of doing business, leave it to them (Private Sector) and concentrate only on providing political leadership and governance, social services, policy formulation and building of social and economic infrastructure”. Government and the International Development Partners, especially World Bank and the International Monetary Fund (IMF), listened and introduced macroeconomic policies and programmes including but not limited to:

• Liberalisation of the economy including foreign exchange.
• Privatisation, divestiture and restricting.
• Decentralisation.
• Regional economic integration.

This “isationisation” of the economy resulted into, interalia, privatisation or liquidation of hitherto State Owned Enterprises (SOEs) such as Food and Beverages, Uganda Hardwares, Uganda General Merchandise, Uganda Pharmaceuticals, Uganda Motors, Intra Africa Traders, Uganda Tea Blenders, Lake Victoria Bottling Company, Label (EA Ltd), Uganda Textiles Board, Nytil etc. All Uganda Hotels were privatized. The Uganda Agricultural Enterprises were privatized. Uganda Baati, E.A. Steel Corporation and Tororo Steel Works were all privatised. All SOEs were either privatised or liquidated to enable businessmen and women to take over those business opportunities which the government of Uganda used to mis-own and mismanage.

It is true the government is a poor owner and manager of resources (never mind whether they are scarce or plenty). Having worked in public and private sectors for 32 years, 26 of which as CEO of mainly, SOEs, I am an experienced witness about the government’s incapacity to own and manage businesses efficiently and effectively.

There are many reasons why a government can never be a good owner and manager of scarce (even if they were plenty) public resources. First, is the mentality of the Public! Public resources belong to them or everybody or all or us or nobody or the government or the public or the management. This is the mali (Swahili word for resources) Ya (Swahili word for of), ‘Z’ (to symbolize an unspecified owner) Syndrome. Mali ya Z syndrome. It is this very attitude that could partly explain the pandemic corruption in Uganda, especially, in the public domain.

Second, is the political interference in the management affairs of all public institutions by political bosses, at various levels, from the presidency to the lowest office. This is a shared collective misdemeanor. Only Jesus, in the history of mankind, has moral authority to throw the first and only stone unto the adulterer (read: sinner, John 8:7).

Third, most, if not all, businesses owned and managed by the government tend to be underfunded, courtesy of incompetence, indecision, corruption, bureaucracy, sheer inefficiency and ineffectiveness, poverty etc of government bureaucrats.

Fourth, is over-employment. Most Parastatals employ more people than required. There are many reasons but because time and space are not sufficient, let these serve as mere examples.

The greatest paradox, however, is that 20 years down the road, after the government has handed over ownership and management of businesses, including but not limited to KACITA’s, Kampala Traders have the audacity to close their shops for three days, demanding that the government should come out to give them technical assistance to manage their businesses. How, on earth, can a government that was yesterday perceived and accused as a “poor owner and manager” of scarce recourses be protested against to render assistance on how to manage the same (business)?

KACITA, what has gone wrong? Banks (except BOU), like the KACITA shops, are private businesses. The banks, like KACITA traders, depend on the economics and politics of the national, regional and global economics. Suppose all the Buyers (customers) of KACITA went on strike because of the poor products, expensive products and services, poor distribution channels and dismal communication (abuse of customers), leave alone the erratic and exorbitant prices! Banks, too, have stakeholders. Banks, too, like traders, borrow and pay loans – locally and globally.

Banks and KACITA are mutual customers who desire each other’s products and services on voluntary basis. Why doesn’t KACITA, instead of flexing muscles and involving politicians and civil Servants, who may also be owning banks and business, simply negotiate with the banks?

Bank of Uganda’s Omwami Emanuel Tumusiime Mutebile (ETM) is right, and as usual, refused to lower the CBR. Why should he? ETM is a professional economist and banker and a pre-eminent treasury administrator for donkey years as most Ugandans know.

Twenty six years ago, when NRA/M had just emerged out of the bush, ETM was Principal Economist of the Ministry of Planning and Economic Development in Uganda House. At that time, it is alleged that Mr Museveni and his NRM, were still espousing socio-marxist ideology. When ETM was allowed to speak in a meeting presided over by Museveni or his representative, he reported, logically, that capitalism, as epitomised and embodied by the World Bank, was the way to go.  NRM ideologues agreed to ignore him (ETM) at best and deal with the Kipingamizi (imperialist agent) at worst. ETM insisted that there is no way Uganda, as a poor Country, would manage the economy without World Bank and IMF being involved.

Before long, Uganda renewed its relationship with the Bretton Woods Institutions (World Bank, IMF, IDA) and has remained a faithful borrower up to this day. Omwami Mutebile became, not only WB’s bluest boy in Uganda and Africa, he was promoted through ranks to the prestigious ranks of PS/ST, MOFPAED, and, subsequently, the envied GBOU and professor.

This is why he could not, should, and will not drastically reverse the CBR, even if KACITA throws itself in Lake Victoria, River Nile or any shallower or deeper waters. Finally, the Government, through the CBR, is doing its only residual mandate, after handing over the ‘’business of doing business to the business people like KACITA’’, which is, inter alia, policy management, regulation and supervision. Let those who have ears to hear, hear this message. Reading between and beyond lines, KACITA had no case to answer. As lawyers (I am not) love to say, I rest my case.

Dr. Robert K. Rutaagi is a retired Public Sector management Specialist, now a Writer & Freelance Journalist & Management Consultant with Pragma Consultants Ltd & University Lecturer.

E-mail: rrobertrutaagi@gmail.com

Blog: robertrutaagi.wordpress.com