Uganda’s finances are already under heavy strain. Interest payments now eat up nearly a third of all government revenue, leaving less for health and education. Public debt has passed the government’s own ceiling, reaching 52.3 percent of GDP, and unemployment stands at 12.2 percent, with nine in 10 workers in informal jobs that offer no security. Pearl Sweet Oil, long promised, still has not started flowing, and farmers still sell their coffee and maize cheaply at harvest just to get cash.
A growing line of thinking proposes a different path that could liberate us from our financial shenanigans, a concept I call social-capitalism: Keep the markets open for private business, but make every Ugandan a partial owner in the establishments they work for. This way, ordinary Ugandans get a real share of the country’s wealth.
How it would work
The country would set up one protected national fund. Money from oil, gold, minerals and hydropower would go in, and politicians could not dip into it. Part would back the Shilling, part would be saved for hard times, and part would be invested in roads, renewable energy and local business. Citizens would get a small yearly payout or have it added to their pensions.
Three more tools would help. Farmers could store their farm produce in certified food banks/warehouses and borrow against it, so they need not sell cheaply. Ugandans abroad could buy bonds that pay for roads and housing. Workers could receive company shares on top of their wages, so they become part-owners.
It would not be easy, because oil money would be locked away, so the government would have less to spend at first. Printing money to pay bills would be banned, because that is how prices spiralled out of control in the Weimar Republic of Germany in the 1920s. Payouts would be small in the early years, and shares can lose value if a company fails.
This would result in a stronger Shilling, cheaper loans, and farmers and workers who own assets that grow. About $1.4 billion more in safe savings would be needed to back the Shilling properly. Arguably a big sum, but not out of reach.
The catch
To implement a social-capitalist framework, everything depends on honest management anchored on the will of the people. If the fund falls into the wrong hands, it becomes another source of corruption.
The opportunity cost of social-capitalism is a few tight years now, or the same boom-and-bust cycle again.
Ultimately, the argument for social-capitalism is that buying insurance for Uganda’s economy is cheaper in the long run than repeatedly paying to rebuild after an economic disaster.