Tumwebaze, Besigye differ on gov’t bailing out tycoons

Information and ICT minister Frank Tumwebaze

Information and ICT minister Frank Tumwebaze

A plan by President Yoweri Museveni to bail out heavily indebted prominent businesses in the country with taxpayers’ money continues to draw attention from sections of the public.

The plan if approved could see the use of Shs1.3 trillion taxpayers’.

According to government spokesperson Ofwono Opondo, all the companies that applied to be bailed out will be investigated and genuine ones approved.

Appearing on NBS TV morning breeze Monday, ICT and Information minister Hon. Frank Tumwebaze said companies will be bailed out based on relevance to economy and how much tax they pay.

“But first, we need a criteria‪.”

He said people were trading in speculation explaining that there is no way government can selectively bail out companies.

“Business owners who mismanage their businesses into bankruptcy will not be bailed out.”

He said the list of companies/people government is going to bail out is a product of tabloid journalism and speculation.

“There is a proposal that seeks to bail out local companies. Let us define the criteria and a policy.”

Tumwebaze revealed that bailouts are not on ‪‎Kyankwanzi Retreat agenda.

“A framework will come to Cabinet and Parliament for discussion. Is it bad to support our own companies? Some of our companies lost billions in South Sudan.”

Besigye argues in the opposite direction

Speaking to press after leaving Makindye court on Monday, opposition leader Kizza Besigye said business that are collapsing and those strategic to the country can be bailed out.

“Yes, we could consider how to save them as a country and make sure the money comes back.”

Besigye said the companies supposed to be bailed out are the same companies that gave Museveni money during 2016 elections.

He claims one of them gave Museveni Shs500m during elections.

Experts say

According to Workers’ MP Arinaitwe Rwakajara, most businessmen are commission agents from government “so when they ask for bail outs, don’t be shocked”.

Appearing on NTV Monday, Rwakajura said if government considers this bail out thing as a discussion, it will be bad.

“And I’m against it.”

Meanwhile, economic experts have warned government not to play around with taxpayers money.

“If the government is to bail out companies, then they would have to weigh the implication of the company closing on the economy. What is their tax contribution? How many jobs do they generate? Because the entire economy is distressed, how do you go about bailing out a few?” Dr Fred Muhumuza, an economist working with the Financial Sector Deepening Project Uganda (FSDU), told Daily Monitor.

Dr Muhumuza says it shouldn’t be an easy decision for the government to make noting that debt forces companies to restructure the business and return it to profitability.

Isaac Nkote, the Dean Faculty of Commerce and Senior Economics lecturer at Makerere University Business School(MUBS), told the newspaper bailouts are part and parcel of any active economy, because, like an individual, companies fall sick and will need treatment.

The companies and individuals listed borrowed money from commercial banks and have fallen back on debt obligations.

“So the government can intervene and bail out these companies, put them on the road and they begin to work normally,” Nkote says.

Ramadhan Ggoobi, a senior economics lecturer at Makerere University Business School, says the only problem is that most of the listed companies’ influence on the economy is questionable.

“These companies invest in mainly non-tradable activities, they don’t employ so many people and most are personal companies run by a few individuals. Some do not even pay tax,” Ggoobi says.

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