Saturday August 30 2014

Reckless borrowing and spending will fail our economy

By Steven Turyahikayo

I refer to Daniel Kalinaki’s article of August 28 on indebted Members of Parliament. Our leaders are borrowing at an alarming rate as if there is no tomorrow.

They have ordained themselves to develop Uganda so that future generations will have ‘nothing’ to do but to enjoy! The gap between our exports and imports $613m tells it all.

Our dear MPs should be asking where we get money to pay for our imported goods and services if our exports are so meagre. Or simply put; they should be asking themselves why the money lenders are on their necks and yet Uganda can afford to borrow endlessly.

Recently, the Public Private Partnership Act was passed. I did not hear much about its cons. In the current circumstances, how will such borrowing be controlled?

China or other rich nations may appear to give generous terms, currently the interest rate is at about 1-2 per cent with a 5-10 years grace period but they are in effect narrowing our future borrowing space and sovereignty.

One day the little interest and principal repayment will come to haunt our children when they suddenly realise they cannot sustain the repayment as well as providing services of the day.

One may ask why the rich’s change of heart and attitude towards Africa in general and Uganda in particular. The minerals and unexploited resources that abound in Africa, just as at the eve of colonialism, give part of the answer. In Uganda’s case, the oil, minerals, water, weather and labour are real incentives.

The easy availability of ‘cheap money’ has not led to only reckless borrowing but also to reckless budgeting and spending. One cannot help but envision a Uganda sovereign state headed for an economic explosion. This is what our MPs should work to stop the culture of borrowing.

Steven Turyahikayo,