Cologne, Germany

A few weeks ago, Daily Monitor and later Sunday Vision published the list of Uganda's leading 1,000 taxpayers. The list showed how Uganda's economy is heavily reliant on foreign-owned companies for tax revenues. There is no business owned by an indigenous Ugandan entrepreneur among the first 100 taxpayers (who contribute about 60 percent of total revenue). And there are very few among the leading 200 taxpayers. Multi national corporations, Asian capital, and government departments/ministries dominate the list of the leading 100 taxpayers. This third factor is most significant because of its political implications.

The greatest weakness of the contemporary global debate on poverty is that it ignores the link between development and political action. Nations do not develop because leaders are good people, nationalistic, altruistic or hard working. Countries develop when political leaders find it in their immediate self-interest to build political institutions and promote public policies that favour rapid capital accumulation.

Financial muscle
For this to happen those who own capital must have the capacity to challenge those who control political power when the latter promote policies that undermine business. It is the capacity of the economically strong to effectively penalise the politically powerful that creates fertile ground for business growth.The dominance of multi national and Asian capital in the list of Uganda's leading taxpayers shows the political weakness of the economically dominant in this country.

This is because if the government of Uganda promotes policies that undermine business, multi national and Asian capital would be politically impotent to reverse the trend. The chief executive officer of MTN Uganda - the leading taxpayer - Mr Noel Meier, is a white South African. The managing director of the third largest taxpayer, Uganda Breweries Limited, Mr Chris Emptage, is a white Briton.

The owner of Crane Group of companies, Sudhir Ruparelia, the one for Imperial Group, Karim Hirji, and the MD of Mukwano Group, Alykhan Karmali are all Indians. Because they are a racially alien minority, multi national and Asian capital lack the necessary social ties with the wider Ugandan society to organise a mass political base. They cannot therefore transform an economic policy disagreement with the government into a political disagreement.

Neither Meier nor Sudhir can politically challenge President Museveni for the presidency as would, say, Sulaiman Kiggundu, formerly of Greenland Group. Rather than confront the state, they will seek to work around it. Impotent to transform politics to favour a broader project of capital accumulation such racially alien capital prefers to buy favours from the state.

Rather than organise collectively as business, they come individually to the state seeking particularistic advantage. For example, instead of organising collectively to establish a policy to promote the textile industry generally, Kananathan Veluppillai can only secure a cheap loan and other subsidies from the state for his individual firm - Tri Star Apparels.

In return, such a business may offer large campaign contributions to the ruling party or the incumbent president.

This is the subtle way in which African governments have sustained individual foreign private enterprises while at the same time pursuing economic policies that are generally harmful to business. This is because whereas at the level of official policy the interests of business and those of the people holding political power are in conflict, at the level of unofficial practice, they are consonant.

This teaches us a second lesson; the conflict between foreigners doing business and locals holding political power offers joint gains for both through corruption. The politicians will offer fiscal or monetary incentives to individual business organisations to help them overcome the bad business environment. Foreign businesses find that they can do better by seeking to become an individual exception to the bad business environment by offering bribes to the politicians.

This is the reason, for example, why although Asians have prospered in East Africa, collectively as a class, their capital is incapable of transforming these countries into dynamic capitalist economies. Multi national capital has suffered a similar setback even when it has been privileged by structural adjustment policies.

Growth trajectory
The economies of East Asia - South Korea and Japan, for example were transformed into industrial societies because their growth trajectory was based on developing what Marxists call a "national bourgeoisie" class. It was not IBM, General Motors or Microsoft but Hyundai, Sum Sung, LG (for South Korea) and Toyota, Toshiba, Mitsubishi (for Japan) that were the engines of industrial policy. One major cause of the failure of Latin America - Brazil and Argentina - to achieve such industrial transformation was the early presence of multi national capital from the US; the political clout of their agrarian classes - the other.

The first democratic presidential election in South Korea in 1992 should be a further lesson for us. Among the candidates running against the incumbent President, Gen. Tae-woo Roh, was the founding chairman of Hyundai, Chung Ju-Yung. His campaign slogan was "get government out of business" - demonstrating the ability of indigenous capital to act politically to change economic policy. The military government in South Korea had helped bring into existence a class of local industrialists with a vested interest in a democratic and accountable state. Thus in 1996, Gen. Roh and his predecessor, Gen. Chun Doo-Whan were both arrested and charged with corruption - Roh admitting to accumulating a fortune of $630 million through bribes while still president.

The collapse of Sembule, Greenland group, the Katto family, Give and Take (of John Katuramu) etc. should be a pointer to how the alliance between multi national capital and the NRM built around a naïve and mechanical understanding of free market economics has crippled the internal impulse for future transformation - by killing an emerging national bourgeoisie. That is why I think Museveni was right to bail out Hassan Basajabalaba, a subject I will discuss next week.

- MONITOR, Sept. 25, 2005 -