Even when a dream is not about real life events, it still remains a real dream. In my dream, four young men turned up to arrest me for… Like many dreams, I could not connect the dots. I guess it was preventive arrest. However, I remember us discussing why the economy had not created many opportunities for them and their peers. The discussion was diversionary as I later tried to run into the bush before they caught me and I woke up! We wondered whether Uganda had good economic policies as some have claimed and, if so, why the development outcome has offered few opportunities for almost everybody – not just the youth.
Looking at the economics behind the economy, we discussed why government was pursuing both an expansionary fiscal policy (increasing expenditure) that pumps money into the economy and a tight monetary policy to restrict everyone else (call it private sector) from having money. Yet, the same government was wondering why there was limited response whenever it seeks to borrow from the private sector.
Governments that spend more will have decided to tolerate temporary higher inflation on grounds that such spending will eventually yield benefits in terms of jobs, higher production and productivity and eventually lower inflation. This can only be if the monetary and fiscal authorities harmonise approaches. Otherwise, constrained private investment and growth will continue to drive inflation and create no jobs for the youth and all.
Unless all the critical factors such as lending rates and governance (mainly corruption), are addressed, competitiveness can remain elusive. The anticipated investors, both genuine and corrupt, will ask for more incentives such as free public land and tax exemptions. The resultant erosion of government assets and revenues means the energy loans can only be paid through higher tariffs.
Now I need to really wake up!