A broke Uganda might bear good fruit: A view from 2019

Wednesday April 28 2021
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Author, Charles Onyango Obbo. PHOTO/FILE

By Charles Onyango-Obbo

Uganda Finance minister  Matia Kasaija on Monday told Reuters  news agency that the government may approach its major creditors including China and the World Bank to negotiate a possible suspension of loan repayments amid a growing default risk after its debt load ballooned 35 per cent in a single year.

“Uganda’s total public debt surged to $18 billion as at December 2020, a 35 per cent rise from a year earlier, fueled by fresh borrowing to cover revenue shortfalls as measures taken to combat the coronavirus hit the economy hard and stifled tax collections”, the report said. 

“The country’s debt load is seen surging past 50 per cent of GDP by the end of the current financial year in June”, Kasaija was quoted.

And Uganda is not alone. “Uganda is joining fellow African countries including Ethiopia, Zambia, Chad and others that are facing debt pressures either triggered or exacerbated by the effects of Covid-19”, it said.

As it happens, almost exactly two years to this date, your columnist wrote in another publication on this issue of  an Africa up to its neck in foreign debts, and at that time the spectre of the Chinese taking away our ports, railways, lands, and even children because we can’t pay them back. The argument was that, historically, despite the pain, some good has come from debt. How? Below, is a slightly edited argument made then: 

If we go just 30 years back, the progress  that Africa has collectively made over this period owes to a large extent to a similar debt crisis of the 1990s.
After the end of the Cold War, the easy ideological money countries used to get for being either in the western or eastern camp dried up. Years of corrupt one-party and military dictatorships, and ill-conceived attempts by politicians and bureaucrats to run economies, left a shell. Most things had collapsed.

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Agriculture was kaput. Store shelves were empty. The “nation building” industries had folded. 
Debt forgiveness became the big thing, and African governments formed long queues outside the World Bank and IMF with begging hands stretched out.

They were desperate times. At that time, the arrival of a World Bank or IMF delegation could only be compared to what we saw when Barack Obama visited Africa when he was US president. Potholes were filled, and lavish receptions were laid on. 

That dramatic shift of power from African State Houses to the World Bank/IMF and western donors, ended up in the much-hated austerity programmes. But it also produced some benefits that decades of activism, campaigning and even war, had failed to get.  The reason is that African politicians and governments don’t respond positively to pressure, argument, and the threat of being murdered by rivals who have gone to the bush to fight them in a guerilla war. The one thing that gets them to act most is empty coffers.

When there is no money to feed the big men, their entourages, their armies and intelligence organs, their parties, and to buy off problematic chaps they can’t kill and feed to the crocodiles, that is when they yield.

Rare is a government that will say, “okay, we are producing 50 per cent of the food we need, let’s undertake reforms to increase that to 75 per cent in five years”.  Broke African governments in the 1990s allowed not just economic reforms, but also wrote new human rights laws; opened up schooling for more girls; freed media; established revenue collection agencies; allowed pseudo-independent electoral commissions and courts; and even multiparty politics, all so they could get a cheque from donors and the IMF/World Bank, and feed themselves.

I do know of a single instance of a government that suffered a bout of selfless enlightenment and said, “the press is 50 per cent free, let’s change the law so its 90 per cent because it empowers citizens”.

Going on past and current record, the only major source of reforms to create new wealth and improve lives could be when the IMF, World Bank, and Beijing put pressure on a delinquent African nation that can’t pay back its loans, and the president who no longer has money to appease his guards, to undertake reforms (e.g., expand intra-Africa trade, build irrigation) in exchange for debt rescheduling. Today some activists are seeing the possibility of a repeat.

This, however, also has to be a moment of shame for all sides. We got debt forgiveness, and endless rescheduling of repayments, years ago, and we should have cleaned house, and not be crawling back grovelling for another round. Secondly, the pro-democracy and good governance camps, should not be hoping that conditionalities and external pressure, will again force their autocrats to reform. We’ve been there before, so they should take it with their eyes closed.

Mr Onyango-Obbo is a journalist, 
writer and curator of the “Wall of Great Africans”. Twitter@cobbo3

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