This archive report was first published on 23 June 2021.
June 23, 2021, marked a turning point for East African governments, who, like their citizens, learned a valuable lesson from the Covid-19 pandemic: to shoot without aiming. The African business community also took note, and the two are connected.
Kenyan peasants have taken their government to court over the reckless borrowing of $2.34 billion from the International Monetary Fund (IMF) in April. This is not an isolated incident; many families in the region have taken their drunken fathers to court over reckless handling of family assets and finances.
As the Kenyans dragged their Attorney General to the East African Court of Justice, Uganda's government 'economists' were celebrating another aimless shot – contracting another $1 billion loan from the IMF. Meanwhile, the Tanzanians are currently on their knees before the IMF, begging 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. However, what do you do if you sell beer to an alcoholic who hasn't bought milk for his children? If you chase him away, he will go to another bar where the less kind bartender will charge him double for a pint.
Smart borrowers first determine what they can do using their assets, what expenses they can postpone, what they cannot do by 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 things we cannot manufacture?
Imagine 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?
However, even as drunken dads delve into more binges, some of their 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.
Enter the corporates! While we agonized and binge-borrowed, creative fellows created a 'vehicle' called a Special Purpose Vehicle (SPV). This is not a para-military machine to move troops and fire rockets; an SPV is a business arrangement formed to execute a specific project. In this case, the SPV is about vehicles – making them and managing the routes on which they will travel. The vehicle has been named 'Tondeka' – a local word meaning 'don't leave me behind'!
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 programs, it will reduce the appetite of the trigger-happy governments that shoot without aiming, and we shouldn't be getting more peasants dragging governments to court over reckless borrowing.
Joachim Buwembo is a Kampala-based journalist.
