Socialistic tendencies...
I had to wait and calm down before posting this: The new minister of finance is considering a more socialistic approach to support the economic development of the Republic of Uganda.
I do not condemn socialism at all... but I am a confessing liberal and I doubt whether the suggestions will lead into the right direction and whether Uganda can establish sustainable development with them.
Readers might wonder why I copy the whole text instead of just posting the links. Honestly, I do not know how long the links work... But anyway, I post the whole article of The New Vision below - did I ever mention that The New Vision is listed at the Uganda Securities Exchange? It is but whether anybody trades in it, I do not know. But I think the major shareholder is still the Government.
HIGHLIGHT 1:
"The laissez faire model is based on the belief that the Government should limit itself to ensuring a stable economic framework and public goods such as feeder roads, while leaving the peasants to fend for themselves by reacting to market incentives. By and large this is the model that we have been following and the productivity figures remain at the bottom of the world scale,”
Well, Dr. Suruma have you assessed all reasons why there is no significant economic development? What productivity figures are you assessing? It is probably not the market oriented approach, which was initiated by among others the present Governor of the Bank of Uganda, who causes the poor development of this country. Besides, it is not developing poorly. Unfortunately the positive effects are not as soon visible as the devastating results of the ages of terror and suppression Uganda went through.
HIGHLIGHT 2:
“In order to reach the vast number of households today, the cooperative model is the correct approach.”
I agree. But the co-operative is a based on liberal beliefs and it assumes that members take repsonsibility for themselves. Members must be active!
HIGHLIGHT 3:
"we will be estimating the minimum breakeven prices for each crop for farmers to cover their cost of production and assessing policy implications,”
Oh, my Gosh. Do not even think about it. That is something you learn in Economics 101. There are only negative welfare effects if prices cannot move freely and achieve only artificial balances.
HIGHLIGHT 4:
“efforts will be made to rationalise use of foreign exchange” as well as “promoting a favourable exchange rate”. He says that “the Bank of Uganda will be encouraged to work towards an exchange rate that is consistent with maximization of exports of Uganda”."
That would actually be funny, if they would try to "manipulate" the foreign exchange rate or if they re-establish fixed exchange rates. Really funny. Then our currency crisis model (http://www.hfb.de/Dateien/Arbeits59e.pdf) could be tested ... We could not conduct the final test for it because luckily Uganda has never experienced a currency crisis (yet):
All in all: A big joke. I count on the influence of IMF, World Bank and the donors. This just another attempt to manipulate the people who appreciates socialistic ideas - especially in a community where everybody is just striving for her/his own advantages.
"Suruma calls for radical economic shift
The policy paper appears to propose a return to a more interventionist model of macro-economic management. The paper is under discussion at a high level. However, for the new proposals to be effectively implemented, the Government would need to jettison the Three Year Budget Plan passed by Parliament last year. Suruma said existing economic policy needed revisiting. “The laissez faire model is based on the belief that the Government should limit itself to ensuring a stable economic framework and public goods such as feeder roads, while leaving the peasants to fend for themselves by reacting to market incentives. By and large this is the model that we have been following and the productivity figures remain at the bottom of the world scale,” he writes. Suruma is supportive of private outgrowers’ schemes but wants the next Budget to focus primarily on kick-starting the agricultural sector by revitalising the cooperative sector. He said, “In order to reach the vast number of households today, the cooperative model is the correct approach.” He proposed a major government drive in the next financial year to support cooperatives. He wants a farmers’ cooperative society formed at every sub-county and later at every parish; micro-finance institutions at every sub-country to finance inputs and seeds for these cooperatives; business training for them and construction by government of cooperative stories in all sub-counties. The paper states that the ministries of agriculture and finance have been asked to calculate the cost of assistance to the Cooperative Movement. Suruma also argues that it is necessary to provide broader macro-economic support to cooperatives by ensuring that they have markets and a fair price for their produce. The paper says the government should ensure a stable market for farmers but does not specify how. “A market must exist or be created to absorb the extra produce. It is also essential that prices do not collapse leaving them either the same or worse off,” he said. “In consultation with relevant line ministries, we will be estimating the minimum breakeven prices for each crop for farmers to cover their cost of production and assessing policy implications,” he said. Suruma indicates that transformation of agriculture will be his initial focus but he also proposes to tackle industrial and public sector development. Government will provide funding for research, development and pilot plants in key industrial sectors while the infrastructure needs to be developed, especially in the energy sector where Bujagali and Karuma dams need to be built. “Ugandans will be asked to supplement both equity and debt financing towards these key infrastructures”, he states. He also recommends that more competition should be introduced to the communication sector to reduce the cost of data transmission. Suruma also proposedstrategies for “maintaining price stability”. He says that “efforts will be made to rationalise use of foreign exchange” as well as “promoting a favourable exchange rate”. He says that “the Bank of Uganda will be encouraged to work towards an exchange rate that is consistent with maximization of exports of Uganda”. It is not clear whether this means a higher or lower exchange rate than presently. Government will also seek to reduce “High interest rates (that) continue to stifle investment in Uganda and to render Ugandan products less competitive”. This will be achieved partly by promoting competition in the financial sector, channeling local borrowing and foreign aid into productive priorities, and limiting government borrowing to productive areas. Suruma also proposed government investment in the services sector to “provide additional employment opportunities and also provide a market fort the expanded production of agriculture and industry.” To do this, government will organise construction projects in slum areas, sewage systems in mushrooming trade centres and increased tourism infrastructure."
Published on: Friday, 18th February, 2005 in The New Vision
SOURCE: http://www.newvision.co.ug/D/8/12/418885
I do not condemn socialism at all... but I am a confessing liberal and I doubt whether the suggestions will lead into the right direction and whether Uganda can establish sustainable development with them.
Readers might wonder why I copy the whole text instead of just posting the links. Honestly, I do not know how long the links work... But anyway, I post the whole article of The New Vision below - did I ever mention that The New Vision is listed at the Uganda Securities Exchange? It is but whether anybody trades in it, I do not know. But I think the major shareholder is still the Government.
HIGHLIGHT 1:
"The laissez faire model is based on the belief that the Government should limit itself to ensuring a stable economic framework and public goods such as feeder roads, while leaving the peasants to fend for themselves by reacting to market incentives. By and large this is the model that we have been following and the productivity figures remain at the bottom of the world scale,”
Well, Dr. Suruma have you assessed all reasons why there is no significant economic development? What productivity figures are you assessing? It is probably not the market oriented approach, which was initiated by among others the present Governor of the Bank of Uganda, who causes the poor development of this country. Besides, it is not developing poorly. Unfortunately the positive effects are not as soon visible as the devastating results of the ages of terror and suppression Uganda went through.
HIGHLIGHT 2:
“In order to reach the vast number of households today, the cooperative model is the correct approach.”
I agree. But the co-operative is a based on liberal beliefs and it assumes that members take repsonsibility for themselves. Members must be active!
HIGHLIGHT 3:
"we will be estimating the minimum breakeven prices for each crop for farmers to cover their cost of production and assessing policy implications,”
Oh, my Gosh. Do not even think about it. That is something you learn in Economics 101. There are only negative welfare effects if prices cannot move freely and achieve only artificial balances.
HIGHLIGHT 4:
“efforts will be made to rationalise use of foreign exchange” as well as “promoting a favourable exchange rate”. He says that “the Bank of Uganda will be encouraged to work towards an exchange rate that is consistent with maximization of exports of Uganda”."
That would actually be funny, if they would try to "manipulate" the foreign exchange rate or if they re-establish fixed exchange rates. Really funny. Then our currency crisis model (http://www.hfb.de/Dateien/Arbeits59e.pdf) could be tested ... We could not conduct the final test for it because luckily Uganda has never experienced a currency crisis (yet):
All in all: A big joke. I count on the influence of IMF, World Bank and the donors. This just another attempt to manipulate the people who appreciates socialistic ideas - especially in a community where everybody is just striving for her/his own advantages.
"Suruma calls for radical economic shift
The policy paper appears to propose a return to a more interventionist model of macro-economic management. The paper is under discussion at a high level. However, for the new proposals to be effectively implemented, the Government would need to jettison the Three Year Budget Plan passed by Parliament last year. Suruma said existing economic policy needed revisiting. “The laissez faire model is based on the belief that the Government should limit itself to ensuring a stable economic framework and public goods such as feeder roads, while leaving the peasants to fend for themselves by reacting to market incentives. By and large this is the model that we have been following and the productivity figures remain at the bottom of the world scale,” he writes. Suruma is supportive of private outgrowers’ schemes but wants the next Budget to focus primarily on kick-starting the agricultural sector by revitalising the cooperative sector. He said, “In order to reach the vast number of households today, the cooperative model is the correct approach.” He proposed a major government drive in the next financial year to support cooperatives. He wants a farmers’ cooperative society formed at every sub-county and later at every parish; micro-finance institutions at every sub-country to finance inputs and seeds for these cooperatives; business training for them and construction by government of cooperative stories in all sub-counties. The paper states that the ministries of agriculture and finance have been asked to calculate the cost of assistance to the Cooperative Movement. Suruma also argues that it is necessary to provide broader macro-economic support to cooperatives by ensuring that they have markets and a fair price for their produce. The paper says the government should ensure a stable market for farmers but does not specify how. “A market must exist or be created to absorb the extra produce. It is also essential that prices do not collapse leaving them either the same or worse off,” he said. “In consultation with relevant line ministries, we will be estimating the minimum breakeven prices for each crop for farmers to cover their cost of production and assessing policy implications,” he said. Suruma indicates that transformation of agriculture will be his initial focus but he also proposes to tackle industrial and public sector development. Government will provide funding for research, development and pilot plants in key industrial sectors while the infrastructure needs to be developed, especially in the energy sector where Bujagali and Karuma dams need to be built. “Ugandans will be asked to supplement both equity and debt financing towards these key infrastructures”, he states. He also recommends that more competition should be introduced to the communication sector to reduce the cost of data transmission. Suruma also proposedstrategies for “maintaining price stability”. He says that “efforts will be made to rationalise use of foreign exchange” as well as “promoting a favourable exchange rate”. He says that “the Bank of Uganda will be encouraged to work towards an exchange rate that is consistent with maximization of exports of Uganda”. It is not clear whether this means a higher or lower exchange rate than presently. Government will also seek to reduce “High interest rates (that) continue to stifle investment in Uganda and to render Ugandan products less competitive”. This will be achieved partly by promoting competition in the financial sector, channeling local borrowing and foreign aid into productive priorities, and limiting government borrowing to productive areas. Suruma also proposed government investment in the services sector to “provide additional employment opportunities and also provide a market fort the expanded production of agriculture and industry.” To do this, government will organise construction projects in slum areas, sewage systems in mushrooming trade centres and increased tourism infrastructure."
Published on: Friday, 18th February, 2005 in The New Vision
SOURCE: http://www.newvision.co.ug/D/8/12/418885
posted by Torsten at 5:23 pm
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