Oct 18, 2021

Mawazo Writing Africa

Writing about the main

EA’s appetite for debt is high, can citizens stop the borrowing spree?

One of the things East African governments learnt from the Covid-19 pandemic was to shoot without aiming. The African business community also learnt their lessons, and the two are related.

By now you may be aware that Kenyan peasants have taken their government to court over recklessly borrowing another $2.34 billion from the International Monetary Fund (IMF) in April. Nothing new there — many families in the region have taken their drunken fathers to court over reckless handling of family assets and finances.

As the Kenyans were dragging their Attorney General to the East African Court of Justice, Uganda’s government ‘economists’ were celebrating another aimless shot — contracting another $1billion loan from the IMF. And before we forget, the Tanzanians are currently on their knees before the IMF not to withhold a half a billion-dollar loan for non-disclosure of Covid-19 data.

Many people and institutions led by the IMF have questioned the East Africans’ reckless borrowing. But what do you do if you sell beer and an alcoholic comes to your counter? If you chase him away, he will go to another bar where the less kind bartender will charge him double for a pint. So you sell beer to a father even as you know he hasn’t bought milk for his children.

Smart borrowers first determine what they can do using their assets, what expenses they can postpone, what they cannot do borrowing and above all, what the return on each borrowed dollar will be. But when the Covid-19 pandemic happened, a frenzied quest for loans was triggered without East Africa’s Finance ministers even determining the absolute necessity of the loans.

Did they borrow simply because the loans were offered by people whose economies are affected differently than ours? Did we use all the borrowed billions to buy that we cannot manufacture?

If by the time Uganda registered 300 covid-19 deaths we had sought $2 billion in Covid loans, shall we by extension borrow $20 billion by the time we register 3,000 deaths in the next few weeks as it now appears inevitable?

But even as drunken dad delves into more binges, some of his children can take their fate into their hands, roll up their sleeves and get to work. That is what the corporate sector has been doing, looking outside the box of exploding the national debt, and there are noteworthy things happening in the region.

Imagine a donor-funded project to decongest Kampala capital city whose physical planning was abandoned half a century ago when its population was 300,000 people but is now three million by night and five million by day when everybody is moving about! The traditional donors would come up with a five-year package of maybe $5billion, or $2billion for the circulation (transport infrastructure alone). There have been several projects for Kampala that in the last 35 years probably worth a billion dollars or more, but ask any resident or visitor if they feel the impact! However, the debt accumulated has to be paid.

Enter the corporates! While we agonising and binge borrowed, creative fellows were creating a “vehicle” which in corporate language is called a Special Purpose Vehicle (SPV). No, it is not some para-military machine to move troops and fire rockets. An SPV is a business arrangement formed to execute a specific project, except in this case the SPV is actually about vehicles – making them and managing the routes on which they will travel. The vehicle has been named ‘Tondeka’ – a local world meaning “don’t leave me behind”!

We are told the special vehicle comprises several corporate bodies: one from China to supply the vehicular technology, one from Uganda to build the required over 1,000 buses, several local authorities to designate the bus routes and stops, then there are the corporate financiers, and the actual promoter to coordinate the whole complex arrangement including the technologies for running Uganda’s first ever cashless transport business.

Will they pull it off? Will ‘Tondeka’ become a household name as the greater Kampala metropolis finally becomes a sane zone where people move with minimal frustration without sitting for hours in stationary cars as if they have nothing to do?

It is early days to tell how successfully this daring plan will be implemented. But whatever the case, the plan shows that some people are thinking outside the governmental box of ever growing national debt.

If the corporate bodies can look for their finance to take on serious programmes, it will reduce the appetite of the trigger happy governments that shoots without aiming, and we shouldn’t be getting more peasants dragging governments to court over reckless borrowing.

Joachim Buwembo is a Kampala-based journalist. E-mail: [emailprotected]