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It is wrong economics to consider a bailout for ‘vendors’

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A lot has been said and written about the ‘bailout’ allegedly being sought by over 60 Ugandan ‘limping’ companies. This topic is currently trending amongst the elite Ugandan society, with most largely critical of anything that countenances a bailout of the said distressed companies, most of which are involved in retail trade or vending.

The issue of bailouts first found its way in the country’s lingua franca in 2003 when government advanced hides and skins tycoon Hassan Basajjabalaba with billions of shillings to save his then flailing businesses. Then, just before hosting the Commonwealth Heads of Government (CHGM) meeting in November 2007, government gave millions of dollars to several local companies, to boost their capacity to provide the services needed to ensure that the meeting was a success. The two moves elicited parallel reactions from the Ugandan community: the CHOGM move, through which several hotels were given cash and tax holidays to facilitate speedy construction and the importation of crucial construction materials, was hailed by Ugandans while the Basajjabalaba ‘bailout’ was castigated by several people including experts, who argued against bailing out individual businessmen, some of them largely lavish, to ‘unfairly’ benefit from the taxpayer.

Then enter the current ‘bailout’ of the 65 companies. First, many people are wondering how the list of companies that are claiming to be almost insolvent, was arrived at. Second, what is the economic advantage of bailing out companies, most of which are just involved in retailing? Call them vendors! For instance, what is the strategic economic value of bailing out an airtime vendor or discotheque operator who, on the other end, is unapologetically lavish?

Needless to say, if Uganda is to attain middle income status as envisaged, the country needs to have its priorities carefully selected. For instance, such huge monies can be injected in sectors like education, health and agriculture, areas that that benefit majority of Ugandans. Closer scrutiny would inform one that if those sectors are boosted even the limping companies would get ‘naturally resuscitated’ through increased sales. This is not rocket science, its just ‘prioritised thinking’, a panacea for development.

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