May, Comey & EAC budgets; a contest for attention

June almost literally saw off May, I mean UK Prime Minister and Leader of the Conservative Party Theresa Mary May whose reign almost got snapped by a snap election which was totally uncalled for; clearly, she is an apolitical learning to play politics and pressed the wrong button.

June almost literally saw off May, I mean UK Prime Minister and Leader of the Conservative Party Theresa Mary May whose reign almost got snapped by a snap election which was totally uncalled for; clearly, she is an apolitical learning to play politics and pressed the wrong button.

May, may be headed for a slot alongside George Canning as the shortest-serving Prime Minister (April-August 1827), if voices calling for her resignation gain ground; this is likely to happen as her frail coalition government prepares to head into the hostile Brexit negotiations.

 

From May’s political boomerang, one learns that taking voters for granted is a fatal gamble. Also, that, as the case is in soccer, in politics, a lead is a lead, even if it is by one vote.

 

In trying to seek a bigger majority to aid her Brexit strategy, May called for a snap election which she thought her party would win based on her perceived ‘popularity.’

 

Unfortunately the result was a bloody-nose for her party which lost its previous lead in parliament pushing it to grapple for political alliances to form a coalition government; but history hasn’t favored such arrangements and May maybe headed for a bigger storm ahead.

May also finds herself in an almost similar scenario as her American counterpart Donald Trump whose decision to fire former FBI Director James Comey is also turning out to be another boomerang.

The difference between May and Trump is that while the latter is a champion at riding storms, the former is not and stands high chances of drowning in her political storm; we are staring at potentially two scenarios, one in which May and Trump get booted or where both leaders survive the storm and lead on but with very frail authority.

But both scenarios represent one effect, instability in global leadership. The UK and USA are among the top sources of development aid to African economies including those of East Africa which have just read their budgets for the fiscal year 2017/2018.

Forget how impressive our respective Ministers of Finance have planned out the budgetary allocations for priority sectors; the real problem they face is how to mobilize the resources needed to execute the budgets.

First, they must win the stiff competition for attention from instability in the home affairs of USA and UK, hitherto the leading sponsors of African development aid; the instability in these countries mean they may not be as helpful as they have previously been, as they focus putting their own houses in order.

A substantial chunk of the budgets of East African nations are still dependant on donor aid, a factor that has become addictive over the years and slowed down the exigency to attain economic independence.

For instance, Uganda’s total budget totals Shs28.9 trillion will be incomplete without the Shs7 trillion expected from donor aid. In Rwanda’s case, the 2017/18 domestic revenue is projected at Rwf 1,375.4 billion which translates to 66 percent of Rwf2.094.9bn total budget.

Kenya and Tanzania, the region’s leading economies (by size) respectively also have budget deficits that they intend to fill through external resources including development aid and grants.

As the room for development aid to Africa narrows, owing to refocusing of priorities in ‘donor countries’ there is an urgent need for East African economies to answer the question of how to fully finance their budgets from domestic resources.

Certainly, the answer is not in finding alternative sources of aid as that is clearly unsustainable; European, American, Asian and British aid is all the same, addictive and unsustainable.

The answer is in boosting Africa’s manufacturing base to strengthen our countries’ participation and earning from international trade. It is also in African economies strengthening the fight against corruption and embezzlement of public funds to reduce wastage of resources.

Indeed, there is scientific evidence to show that if African economies clamped down on resource leakages either through embezzlement or overgenerous tax incentives, there would be no need for the addictive so called development aid.

Rwanda’s choice of a budgetary direction is commendable as it prioritized import substitution through the blossoming Made in Rwanda strategy; this, if successful, is expected to boost exports, better balance of payment and job creation leading to raised incomes per capita.

With increased incomes for Rwandans, consumption is expected to surge, indirectly feeding into Rwanda Revenue Authority’s tax net whose hopes are highly anchored on increased VAT collections from all the collective economic activity expected in the fiscal year ahead.

But raising efficiency in collecting VAT is vital for RRA to benefit from the anticipated growth in net consumption as a result of improved incomes; here, more investment in awareness to entrench the culture of electronic billing machine generated receipts will be needed.

True dignity of a person is when they can afford to finance their own budget without hoping for support from neighbours. EAC nations should aspire to afford financing their own dreams.

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