Economy after elections: Paying the price of poor governance
Posted Tuesday, February 23 2016 at 02:00
What will be the individual and national economic outlook after the February 18th 2016 general election?
During the run up to the February 18th 2016 elections, fear gripped many residents of Uganda. The fear was partly stoked by security advisories who passed around both formally and informally. One organisation opted to pay the February salary for its staff before the 15th so that they would have money in their pockets.
Many people living in and around Kampala either took their family away from the city or stocked up supplies of food and other essential commodities to prepare for any eventualities.
The trouble with fear is that it can give rise to irrational behaviour. Often people find the month of February to be financially challenging due to the heavy expenditures incurred over Christmas and the New Year.
The school term is opening has opened yet many households have already spent or borrowed a lot of money for the festive season and pre-election expenses. I predict that many individuals and households will struggle financially after the February 2016 elections.
The national economic outlook is far from rosy.
The inflation rate has remained below 10 per cent until the election period. However, I will not be surprised if inflation goes up to 13 or 14 per cent. This is especially because government has to find money to pay bills such as pension which have been withheld for several months.
Expected increase in domestic borrowing will very likely fuel an increase in interest rate. Given that our balance of payment is not likely to improve in the short run, I expect that the shilling will weaken further.
One lesson that Ugandans ought to learn from both the 2011 and 2016 elections is that holding elections without good governance is very costly in economic terms.
James Abola is the Team Leader of Akamai Global, a business and finance consulting firm. Email: email@example.com