Why govt is responsible for the rising commodity prices

Following the rise in prices of essential commodities, the government has several times come out to deny responsibility as they continue to use the Russia-Ukraine war as a scapegoat as well as limited production of goods resulting from easing of lockdown by most countries early this year.

Our colleague NRM MPs recently went to caucus and came out with no resolution leaving Ugandans to fate. It’s quite bewildering how over 300 MPs could have a meeting to solve a problem and after hours of discussion come out with no single resolution. This indeed demonstrates the level of intellectual decay that President Museveni has caused to our leaders. It is obvious that NRM MPs as usual had gone to receive lectures from the President and where his will or intellect stopped in getting a solution for our people, the MPs couldn’t go beyond.

For starters, the world predicted the economic hardships that we are facing and World Bank, International Monetary Fund among other economic entities that manage the world economy put mitigation measures to the hardships.

In this, Uganda got over four trillion shillings in form of loans and aid to mitigate the likely effects of Covid-19. This money was supposed to be invested in productive sectors so that people can recover from the economic shocks as well as increasing their purchasing power to enable them to buy goods and services that would lead to government revenue through taxes.

Unfortunately, as always, our government officials and leaders looked at this money as a golden opportunity to plunder; to them it either appeared Covid-19 was to end soon or the world was ending and thus no time to account.  Most of the money was used during elections, money meant to support industries and farmers was used to build arcades, ministers and public servants hired their hotels to quarantine non-existent patients, others shared tenders to supply posho, masks, oxygen cylinders, and other health supplies that were never delivered, and the rest is history.

Although the Ukraine – Russia war contributed to this economic situation, for Uganda and many African countries, it found an already collapsed economy and was then used as a scapegoat. There was no war in 2011 when high inflation led to walk to work demonstrations, the prices started hiking in November 2021 when Russia and Ukraine hadn’t gone to war to mention but a few.

But that said, is it fair for the government to keep mute claiming to have no solution? Would it be fair for a parent to tell his children to sleep hungry claiming that he has nothing to do? Do our leaders recognize that the high price of bread led to a collapse of a government in Sudan and do they take some of these concerns seriously?

If the government reduced the tax of a litre of fuel from Shs1,300  to Shs1,000, do they know this could reduce the prices of fuel by about Shs500? Because unlike other taxes which are paid after earning, taxes on fuel are paid before consuming the fuel or earning a profit, this essentially means that a fuel dealer has to take a loan to buy fuel and a loan to pay its tax.

A fuel dealer who wants to buy 10,000 litres of fuel, would have a total of 3 million reduced on his expense, which would subsequently reduce the amount of money he has to borrow and their interests, and this would subsequently reduce the cost of fuel on a pump which would be replicated on all other commodities.

Secondly, the governments of East Africa can reduce taxes paid on the borders as well as import duty taxes on raw materials used in making essential commodities. Government also can investigate companies that are hoarding products to deliberately create a crisis and then fish in troubled waters.

Government can also promote alternative products, for example I have seen women and youth groups making liquid soap, such groups can be supported to improve both the quality and quantity of what they produce.
For leaders to fold their hands instead of addressing a mess they created is to demonstrate high level of incompetence.

Francis Mwijukye, (MP) is the Shadow Minister for Trade and Industry.