To mourn Mulwana’s death is to cry out for local investors
Posted Thursday, January 17 2013 at 09:55
A friend recently took me to see his farm 30 kilometres to the north of Kampala. It is a small, modest farm with crossbreed goats, free-range chicken and rabbits.
After the farm we went to another of his initiatives; a small-scale whisky plant set up in a converted house. Again, nothing fancy but although my friend has big dreams, he likes to start small.
On the way back I asked my friend what inspired him to start looking beyond employment (hint! hint!), beyond trade (he has done business in Kikuubo and continues to do so) into manufacturing.
He told me the usual stories of how trade margins in Kikuubo were under pressure from taxes, competition, et cetera, but also said something that astounded me.
Petty Asian traders, he told me, were slowly taking over the import trade in downtown Kampala and other commercial areas. Many of them, from China, India and Pakistan, were able to bring in goods on credit and undercut the market, making more money on volume sales.
He told me of a story of a young female trader who arrived from China and was granted “investor” status, allowing her preferential terms and a five-year tax holiday. Within those five years she had become one of the largest electronics traders, with some of the healthiest margins.
Then the five years ran out. So she returned to China, returned with her father who acquired “investor” status, set up a new company, which then acquired the older business, in effect renewing the tax exemption for another five years.
So, I asked my friend, what incentives has the government given you? None, he said. He pays full tax on the liquor he produces and the money he invests in both businesses (which he saves from his day job) is not tax deductible.
As I read the platitudes and condolence messages for James Mulwana, my mind kept drifting back to my friend and the millions of Ugandans who are trying to emulate his industry and write their own rags-to-riches stories.
Mulwana grew up in a Uganda where colonial political-economic policy was designed to favour the European rulers and the Asian trading and manufacturing class over the indigenous class, whose role was to grow the raw materials (cotton, coffee, sugarcane, etc.) that fed the industries at home and abroad.
It was understandable but not justifiable and it took violent riots and the onset of the Independence movement to deal with some of the more extreme discriminatory policies.
Fifty years after Independence, my friend and others like him, you and me live in a society of political independence without economic liberation. We remain prisoners of predatory policies and parasitic poverty.
If my friend, who already employs close to 30 people with his modest enterprises, were able to somehow become a “foreign investor” he would probably get a tax break, some free land, and political support from the government.
But because he is Ugandan and not politically connected, he soldiers on, trying to cut corners where he can or simply leaving things to fate.
Uganda must be the only country in the world where citizens, other than the passports that they have to pay for, and discounted entry prices to game parks, hardly enjoy any benefits that visitors do not.