Reversing Permanent Backwardness

Published on 4th April 2006

Part One

How has the human society developed? People do not spend time to know society, and how it developed. They do not know much about this subject – you hear different theories about it. In Runyankore, which is a very rich language, there are different descriptions for a child as he is growing. If the child is just born, a few days say to two months, the child is called omwereere. Also between the first day and about five months, when the child develops the first tooth, the child will be called ekibumbe, which means a child who has no teeth; naateekwa ahansi – here they do not have one word, they describe. This is used when the child begins to sit by itself.

If the child is crawling, when he is beginning to stand, when he is walking, all these stages are described. When he is a young child, he is called omwaana. He is omwaana, until the stage of puberty, which we call okushogoya. At puberty, a boy is called omutsigazi, and a girl empangare; when the boy grows into a man he is called omushaija, an old man omugurusi, and, at the senile stage, empwitsi. Likewise, society undergoes stages of development.

You must be able to describe the development of society like the Banyankore learnt how to describe the development of a human being. The problem with African leaders, however, is that they do not seem to know that society goes through stages. That is why they are not able to provide solutions. I will start with the stage of the mature man (omushaija) – how should he be? I will, therefore, start with the subject of modernization, a mature stage of society. What are the fundamental elements or characteristics of modernization? There are basically six major elements.

The first one is full employment, or near full employment, of the factors of production – land, labour, capital, and entrepreneurship. We near full employment of the factors of production through industrialization and modernizing services such as transport, banks, insurance, hotels and tourism. This is the first element. We mean utilization when we talk of employment in this case.

Land in economics does not mean only the udongo; it also means all natural resources –minerals, forests, water, etc. Therefore, when I say land, I am referring to natural resources. Labour refers to human beings. Capital means stored value. For instance, if I worked in the past and I bought a bicycle, that bicycle is a capital item, because I use it to do other things. I earned a salary and used it to buy a bicycle; now I am using the bicycle to carry matooke to the market.Capital can be physical (e.g. bicycle) or cash. If I  keep money in the bank instead of buying a bicycle and that money is earning interest for me, that is also capital. When it is cash, we call it liquid. You hear people talking of liquidity; when the liquidity is high, that means that you have got a lot of cash.

Income (Y), minus Consumption (C), is equal to Savings (S). Y – C = S. Ugandans do not know that when you consume a bit of income, what remains is the savings. Savings (S), times the number of years for which you have saved money, e.g. 2001, 2002, 2003, (X), is equal to Investment (I). S x X = I.

Consumption in economics means immediate use on yourself, not for production. This includes food, clothing, leisure, etc. When you have got your income, minus what you consume in those various ways, what remains is savings. If you save for a number of years, then you are able to invest. Capital is past savings which are invested; my past earnings are now in this bicycle. I save my money and I buy a bicycle which is now an investment. It is a capital item as a result of investment. I can now use this bicycle to carry matooke to the market and earn more money. If I use the bicycle in that way, we call it kushubura (doing business) in Runyankore. On the other hand, if I use it to bring milk from the farm for family consumption (kugyemura), it will be an item of consumption.

When I say full employment of factors of production, it means all these factors should be working and not be idle. If you take the case of Karamoja, for instance, is it fully employed or utilized? If you go to Karamoja you can see that everybody is asleep. The land, the forests, the human beings, and the cows are all asleep! A fully-grown and well-fed indigenous cow should weigh 250 Kg, but because it has got worms, it is underemployed. Even the dogs are underemployed! Nothing has its full potential taken advantage of.

This is the characteristic of backward countries: the under utilization of the factors of production:– labour, natural resources. People are just sitting at home. For instance, when you meet a Muganda, “Mmhh, Osiibye otya nno? Maamu, Nyooge? ….” The whole day is spent on greeting. Why? It is because time management is not a priority. However, if you are rushing to work, “Jambo” is just adequate as a greeting. Where the whole society is operating at a very low tempo, everything is relaxed. In order to modernize, therefore,
you must fully, or near fully, utilize land, labour, capital, and entrepreneurship.

Entrepreneurship means the ability to detect economic opportunities and take advantage of them. That is one of the problems of backward countries. They have no eyes or ‘spectacles’ to see the available opportunities, let alone take advantage of them. Some time ago, some Whites from Zimbabwe, with a few Ugandans, came and started a ranch of crocodiles which are being slaughtered; for skin export and meat.

This was a very good example because the crocodiles have been here with us and they have been eating us all these years. No one ever considered, “Can’t we use this crocodile which is eating us?” You hear cries, “The crocodile has taken a child, it has mauled a person.” Until a whiteman comes and says there is a lot of money in this crocodile. Indeed, you know that handbags, shoes, are made out of the strong crocodile skin! None of our people had seen this opportunity; these Whites from Zimbabwe, therefore, come and make money out of an opportunity which  millions of Ugandans have not been seeing. Their level of entrepreneurship is very low because of their pre-capitalist culture and low education.

How can you get full employment? You get it through industrialization: the more industries you build, the more people you will be able to employ. Backward agriculture cannot employ many people. How many people do you need to dig half an acre using a hoe? Not many – two or three. This explains why there is a problem of employment in the backward countries. The nature of the activities being done such as backward agriculture, cannot give enough jobs. Only industries can give enough jobs.

Consider small countries like Rwanda (which is about 27,000 Sq. Kms.) and Burundi (about the same). You can say that Rwanda and Burundi are about 50,000 Sq. Kms. They have a population of say 14 million people; and you hear them crying that they are overcrowded! Holland, however, which has a land area of 40,000 Sq. Kms., is smaller than Rwanda and Burundi combined, but with a population of 16 million people. When you go to Holland, however, you do not even see the people! You find that in the countryside there are no people – there are just farms. The people live in flats and are working in the factories. In that small space in Holland they are doing high value work – producing computers, textiles, etc. However, in backward agriculture you need big space.

When you hear that Rwanda and Burundi are overpopulated, it is not true at all! They are simply underdeveloped, and their human potential underdeveloped. The land output is very low because people are using poor seeds, and no fertilizers. One acre, therefore, instead of yielding 8 tonnes of maize, will yield only 800 Kgs. In order to create full employment, therefore, we must ensure industrialization and modernization of services.

The second element, which is a result of the first one, is widening the tax base, so that you can collect taxes, support education, support health, build roads, and pay better salaries to public servants. The more industries you have, the more products they produce, and the more tax you collect. If you tax many things you will collect more money than when you tax only two crates of beer. That is why you hear that there are two types of countries: donor countries, which collect more tax than they need for themselves; and countries which receive aid because they do not collect enough tax and can only survive on getting donations from other people.

That shows you the idiocy of African governments. Idi Amin, for instance, in 1972, chased away the Indians, in what he termed an economic war. “I am engaged in an economic war. I want the Africans to take control of their economy”, Idi Amin says. How will they? Are they not controlling the economy now? According to Amin, Africans were not controlling the economy in spite of the fact that we were exporting sugar, textiles, beef, merely because some of the players were brown-coloured.

Madhvani (of Uganda) is an Indian by colour, but he is more African than 2 million Africans combined because he is doing more value for the Africans. By producing sugar, soap and a number of other products he is paying the government of Uganda 45 billion Shillings in taxes. What is the wage bill of UPDF? UShs 120 billion the whole year. Madhvani alone can pay military chiefs for five months! Many African leaders, apparently, have never understood the meaning of an economic measurement known as GDP (Gross Domestic Product). This is a measurement that captures the value of all the production on our territory, whether by our citizens or foreigners.

Not long ago, people did not know how the human body works. A man called Harvey  discovered that that blood moved from the heart, through the lungs, through the arteries and then back through the veins. Leaders have not discovered the blood circulation of the economy. Their Excellencies, Commander in Chief, do not know the “blood circulation” of economy. This is the tragedy of Africa. Take the example of Museveni: I say I am a cattle keeper; my neighbours bring cows with a lot of potential for milking; they put them in my farm, then I chase them! I should not chase the cows that give milk; I should milk them for my children! When the Indian comes here, get from him ‘milk’ for your children! The Indian’s ‘cow’ gives much more milk than our weak African ‘cows’, which are not yet able!

When Madhvani’s father turned a swamp into a sugarcane plantation, were the Basoga not here? “Munaife, munaife”, but they could not see this opportunity. The Indian Mehta comes and says, “These people are really foolish; not one of them can think of growing sugarcane here!” And he does it for you. After he has done it, you chase him away! What sort of people are you!

BAT pays the government UShs 55 billion as tax; and this is even just because there is still some smuggling of cigarettes from Kenya. If there was no smuggling, they would be paying us UShs 65 billion a year as tax. Add to this the money they pay the peasant farmers who produce tobacco leaves from Arua, Bunyoro, Rukungiri, about UShs 20 billion. Then they are employing a labour force of about 500 people, mostly Ugandans, who are paid wages. They buy electricity, water and other utilities from Ugandan companies. By the end of the day, therefore, BAT has done for you a very big job.

Here in Uganda, people give excuses that we had war; but Kenya did not have a war; why are they backward? Tanzania, Zambia, Senegal, Ivory Coast (which only had problems very recently), have all not developed, in spite of having had no wars. Why have they not developed? It is because they do not apply the right stimulus to their economies. They discourage the private producers, like our BAT here, and they interfere with them.

Permanent Secretaries, for instance, are ‘Permanent Nothing’! If you are a permanent Secretary, what have you done to show that you are permanent? Why do we have permanent backwardness in a continent of Permanent Secretaries? They have stifled production because they interfere with the one who can produce, who are the private sector. Whether they are foreign or Ugandan, it does not matter as long as he invests in your country; he is your citizen, because he is producing for you!

To be continued...

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