Bailout? The economic genesis of the problem and some solutions
The media has been awash with the bailout buzz over the last couple of weeks. Most commentaries expressed displeasure at the idea that some distressed private businesses would need to be bailed out using public funds. In this article, I look beyond the individuals who have taken centre stage in the heated debate and instead discuss the macroeconomic genesis of the problem and offer some solutions. First I argue that the distress in the private sector points to a much larger problem with a struggling economy, misdirected investments and a weak indigenous private sector. The genesis of the problem dates back to the years following the global financial crisis. Initially, the Ugandan economy appeared to have been spared the gruelling after effects of the crisis. Economic growth averaged 8% between 2007 and 2009 a period in which the crisis unravelled. That Uganda enjoyed limited integration with the world financial markets helped. The ensuing loss in foreign direct investment, rem