Dr. Ashie Mukungu, the economist behind the proposed bailout plan for distressed companies, says his proposal has been misunderstood. According to Mukungu, his proposal was meant to highlight the fact that the economy is in distress and there is a need for swift economic action and reforms.
Dr. Mukungu said the poor performance of the economy prompted him and two colleagues Henry Wavamunno, based in the United States, and Moses Kiwanuka, based in the United Kingdom to work out a bailout plan.
He claims that Wavamunno and Kiwanuka participated in the bailout of businesses in the United States and United Kingdom respectively after the global financial crisis of 2008. Dr. Mukungu vehemently denied that they wanted to exploit the situation in order to make a killing from taxpayers’ money.
There has been public furore after it emerged that the government plans to bail 66 companies and individuals using Shillings 1.3 trillion from public resources. The select companies and individuals are reportedly choking on huge bank loans and are at risk of collapsing altogether with dire consequences for the fledging economy.
According to Dr. Mukungu, their plan was just to help save a few companies whose collapse could have negative knock-on effects. He said the public should not focus so much on the List of 66, but rather the key standards for the bailout.
Dr. Mukungu said the best approach is for the government to explore ways of boosting the economy in order to make it responsive for all, and not just a few businesses and individuals.
Dr. Mukungu prescribed policy reforms in order to bring relief to the economy.
Dr Mukungu said he is happy that their proposal has sparked off a national debate that would likely lead to solutions for the distressed economy.
One of the allegedly distressed companies, Roofings Group, has come out to denounce that it is seeking a bailout of over 200 billion Shillings.
Dr. Sikander Lalani, the Chairman of Roofings Group, in a newspaper rebuttal, said they take great exception to and strongly disassociate themselves from the claim, adding that the Group is ” solid, sound, going concern that is not ‘drowning’ nor ‘sinking’ in any debt and is neither bankrupt nor insolvent”.
Dr. Lalani said Roofings Group is more than competent to meet any and all its liabilities on its own as it has done in the past and shall continue to do so and is presently 100 percent tax compliant.
The Group clarified that it has not in any formal or informal, public or private form or manner, applied to the Government of the Republic of Uganda for any bail out or made any request that Ugandan taxpayer’s money be donated, handed out, offered or given for charity to Roofings Group.
It added that the allegations are baseless and without merit and should be ignored and treated as unfounded. When asked about the denial, Dr. Mukungu insisted that saving businesses in distress is more important than allowing them go belly up.
Several economic experts have also weighed in rejecting the proposal. The Bank of Uganda and National Social Security Fund, from which the 1.3 trillion Shillings was reportedly to be got, have also rejected the proposal.
The Ugandan economy grew by 4.6 percent in the last financial, lower than most projections. The last three years have also seen a slump in trade with South Sudan, hitherto Uganda’s biggest trading partner.
Coupled with high interest rates, volatile exchange rates, relatively high inflation, low productivity, capital flight and political turbulence before, during and after the 2016 general election, the economy has found itself under a lot of strain.
The Uganda Revenue Authority today announced that it missed her target by 400 billion Shillings, attributing it to the election and other risks.