One of my favourite columnists is Sunny Bindra in the Sunday Nation. He offers simple, but damn practical insight about all things commercial. In his latest column he dissects the current turmoil in the US banking sector and its impact on the Kenyan economy.
Why it caught my particular attention was the fact that I read last week that Dr. Maggie Kigozi, head of the Uganda Investment authority, declared that the country would not be affected by the economic crisis.
How naïve indeed. Sunny Bindra did point a couple of insights, that show how inter connected our economies are, even in deepest ‘darkest’ Africa.
Our search for foreign direct investment (FDI) is likely to hit a brick wall. All global multinationals are tightening their belts and aiming to maintain cash flows. So investing in a housing project in ntinda is not likely to show up on their radar screen.
Uganda relies heavily on donor aid to support its capital and recurrent budget spending. 50% or there abouts. With the US government pouring 700 billion dollars into the black hole that its financial system has become and the EU doing the same with 30 billion dollars, there can’t be much left over for their international development commitments. So we should expect an aid cut and with it, renovation of your local district hospital will be delayed and the micro finance loan facility will evaporate…end of ‘Entandikwa’ etc.
Tourism has been a growing component of GDP. But foreign travellers are very sensitive to changes in the global economy. They tighten their spending and the easiest cancellation to make is a holiday in a far away exotic land, considering that they are not sure if they will still have a job next week and the current oil price has made long haul flights a luxury, again!
And we cant't export anything if no one is buying our fish, simsim, bananas........crude oil (I guess not yet).
All is not necessarily lost, especially if Uganda is a well managed economy (Choke!!!). The NSSF land scandal is still fresh bile in the public’s mouth and it keeps getting worse. Last sunday's East African newspaper said that there is a massive loss at the East African Development Bank (8.9 million dollars) this financial year and attributes it to loans made to well connected NRM business insiders, that subsequently are poorly performing ( Of course they are).
We need to brace ourselves for tough times and don’t expect much help from Big brother, he cant even see it coming.
In the shadow of Covid
2 years ago
3 comments:
Thank you so much for breaking this down for me. I mean, I always wondered how Lehman Brothers would affect us measly little Uganda but now it's all clear. I actually believed Maggie Kigozi but I can see it's a bit short-sighted. Thanx again.
Hi Carlo
I actually forgot to add that our brothers and sisters who are sweeping the Streets of London are also most often the first to be laid off when a recession hits. And that means less money will be remitted to Uganda to pay fees, pay medical bills and build that proverbial house in the village
No situation is permanent.
Hope these issues are cleared soon such that life can go on normally again.
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