President Speaks Out On Distressed Companies

Kyankwanzi - President Museveni yesterday spoke fervently about the plight of "distressed companies" that need government bailout to stay in business, singling out those which were exporting to the troubled South Sudan but were not paid by the government as a result of the war there.

Illuminating on the controversial bailout to distressed companies, the President, during a brief question-and-answer session on the side-lines of a joint Cabinet retreat at the National Leadership Institute in Kyankwanzi, said there are two types of distressed companies and that the first category comprises those that sold goods to South Sudan government but were not paid.

Types of companies

"There are mainly two types of businesses, those that put blood into us and those taking blood from us," Mr Museveni said. "The companies that were exporting to South Sudan were bringing blood to us, they were bringing money to us and those should be looked at differently because the government of South Sudan was not able to pay," the President said. He added: "..and when importing, he is taking money from us. In fact, other countries have what we call Export Credit Guarantee Fund, where the government puts money for helping people who are exporting to risky areas. We need this type of fund for our people otherwise they will fear to export."

The other group, Mr Museveni said, involves companies that sell their goods inside the country and they sell to government ministries. He said it is the fault of government to buy when they don't have money to pay for the supplies. However, he insisted that government had a duty to pay for supplies. "Why ministries have not paid is another matter but morally, as government, we have a duty to pay for these supplies," he said.

Mr Museveni castigated capitalism and pledged to focus on social-economic transformation in the new term. He said he does not care about the distressed importing companies but promised to come in not with cash bailout but to use other policy mechanisms to ensure that these companies get justice, especially where banks "unethically" grab their assets.

He did not, however, explain the kind of intervention.

The bail out

At least 66 companies and individuals were named in bailout talks with government in a leaked list recently. The campanies are said to be seeking a Shs1.3 trillion blanket handout. The bailout proposal has generated divisive discourse among Ugandans, with some economic analysts arguing that a selective rescue will not solve the country's distressed economy.