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Uganda Struggling to win back lost capital |
ECONOMY
There was a time
when people did their utmost to get their money out of
the country.
Now the situation is in reverse
Uganda has managed to attract back capital that had been either taken out of the country or invested outside the country by politicians and business people when Uganda’s economy was stagnant. Also, money taken out of the country by the Asian community after they had been expelled by former Ugandan military leader Idi Amin in 1972, has been finding its way back. This, according to World Bank officials, has helped in Uganda’s economic revival. It has also partly contributed to the fall in the number of people living below the poverty line.
Mr. Robert Blake, Program Manager at the World Bank in Kampala, says that in the last couple of years, inflow of capital from Ugandans living outside the country, has also substantially increased, taking over from coffee as the country’s main source of foreign exchange earnings. «Inflow of private capital has been averaging $700 million every year», he says. «Ugandans who fled the country during the years of turmoil, are now bringing back their money».
Investing elsewhere
The fact is, Uganda’s record of economic and civil strife, discouraged a considerable number of people, both politicians and ordinary citizens, from investing in their own country. They were placing their money in foreign bank accounts or investing outside the country. Now, relative peace and economic stability has returned to a country, once referred to by Winston Churchill as the «Pearl of Africa».
The flight of capital was worsened by Idi Amin‘s infamous but locally popular expulsion of Asians, in what he termed the «Economic War» of 1972. In an effort to Africanise the economy that was largely controlled by the Asians, President Amin gave them only ninety days to leave Uganda. Their investments were distributed to Amin’s cronies.
However, many Asians somehow managed to get part of their money out of the country and most of them went with their capital to either Britain, Canada, India, the United States and Kenya. Many have now returned and have invested heavily in the economy, so as to secure a place in Uganda’s economic recovery.
Return of capital
According to Uganda Investment Authority officials, most new investments in the country made from 1986 onwards, are now owned by Asians who have returned to Uganda. On the insistence of the donor community, many have managed to repossess their properties.
The World Bank says it is not only capital which is being brought back, but also professional expertise. Notable among the returnee Asians of Ugandan origin who have invested heavily, include the Madhavani Group, who own several companies here including a brewery and a sugar factory, and the Mehta Group, which owns several companies, including a commercial bank and a sugar factory. The Madhavanis left the country in 1972, after Idi Amin’s infamous dream that «God had asked him to expel all foreigners mainly the Indians». Madhavani then managed to build up a substantial business in the UK.
Among the key areas where huge investments are being made by the returnee Asians, is in the tea sector. Former owners are busy reclaiming and expanding their estates, which in the process has helped to raise production from a paltry 4 million kgs in the early 1980s, to the current level of 27 million kgs. Before Idi Amin’s expulsion order, the tea industry was one of the three leading foreign exchange earners for Uganda, after cotton and coffee.
Efforts to revive the tea sector have included the return of estates to their former owners, the liberalisation of the industry and the privatisation of the estates once owned by the government. These efforts had started paying off, but now farmers have to contend with the problem of stiff competition from Asian countries whom they accuse of over-production, thus having a negative influence on international prices.
In recent years, Uganda has also benefited from the fact that Ugandans living abroad, are sending money back to their home country. Many Ugandans have left the country for Europe and the USA, and are willing to take on almost any kind of work. This means they earn money which can be sent home to Uganda to support their families and set up small businesses. Last December,a number of Ugandans living abroad, held a convention in Kampala to discuss ways of increasing their participation in the country’s economic growth and development.
Yes. Uganda’s riches both in kind and in people, are returning to the country.
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