The middle class on strike in Uganda

The World Bank and IMF have warned Africa that a fresh economic crisis could hit the continent hard in 2012. This downward trend has to do with ripple effects from the Eurozone financial crisis and weakening growth in emerging markets. The Daily Monitor reports:

The bank also cut its global growth forecast for 2012 to 5.4 percent from 6.2 percent for developing countries and 1.4 per cent from 2.7 per cent developed countries. The global growth is projected at 2.5 and 3.11 per cent for 2012 and 2013, respectively.

That means that living costs on the continent will continue to rise. In Uganda, where the general populace is growing dissatisfied with rising prices, this is already fueling a fresh round of non-violent protests. Early in the year, traders in Kampala, under their umbrella organization, Kampala City Traders Association (KACITA), announced a strike. The traders, small shopowners who are a mainstay of the Ugandan economy, closed their shops for three days earlier this month to protest the new interests on existing bank loans. In November of last year, Bank of Uganda increased its base lending rate from 13 percent to 23 percent. Commercial banks then increased interest on their loans to 28-29 percent. Bank of Uganda's reluctance to intervene, and the commercial banks' refusal to lower their interest rates, triggered the strike. KACITA declared that it would mobilize its members to withdraw their money from banks en masse if the decision was not reversed.

The strike forced President Museveni to leave a political retreat at Kyankwanzi to address the traders. He met with over 1,000 traders at the Serena Hotel in Kampala to work out a solution. He called on the traders to diversify their imports and exports, and promised to get Bank of Uganda to look into scaling back its interest rates. He warned the traders not to sabotage their own businesses. He stressed that banks and the businesses belonged to Ugandans. Analysts had warned the traders not to mix their strike with politics.

I believe the president needs to let the relevant authorities deal with the conditions that provoked the strikes instead of trying to have the final say in all disputes. This meeting shows that a culture has been cultivated where Ugandans do not believe in their institutions; as a result, only the president can solve every crisis. This culture of misplaced patronage needs to be addressed, since it is a symbol of a weakness in the democratic process.

The public called the banks "thieves" who were out to exploit poor borrowers. At least one banker tried to explain that borrowing costs are dictated primarily by two factors: inflation, which is likely to be high in the year to come, and the cost of funds, which is set by market conditions as well as the central bank rate. But people aren't necessarily in a mood to listen.

The strike cost the government millions of dollars in lost tax revenues. With the traders back to work, it is not clear whether it has been a win-or-lose situation. No sooner had the traders' strike subsided than other Ugandans resumed their walk-to-work protests, which were greeted by the government, as usual, with mass arrests and indiscriminate use of tear gas. On several occasions this week the police deployed at dawn at the homes of different opposition politicians in order to prevent them from taking part in the demonstrations. On Thursday (Jan. 19), main opposition leader Kiiza Besigye was held for several hours -- along with a few sympathetic members of parliament and supporters -- at Kiira Road Police station in Kampala after he attempted to launch a new phase of protest. (The photo above shows him shortly before his arrest.)

The gloomy state of the economy means that other professions are gearing up to protest. Teachers have promised to strike after Jan. 22 if their salaries are not increased. It will be interesting to see how the government reacts.

AFP/Getty Images

Democracy Lab

Democracy Lab Weekly Brief

Welcome to the Weekly Brief from Democracy Lab, Foreign Policy's new online project devoted to the story of societies attempting to make the difficult transition from authoritarianism and closed economies to democracy and openness. A unique journalistic collaboration between FP and the Legatum Institute, Democracy Lab pursues this story through a genuinely global prism. Our coverage includes our new Transitions blog, a collective report from countries all along the spectrum of change, as well as case studies, in-depth investigations, and topical reporting - all aimed at illuminating the day-to-day complexities of this constantly evolving story.

Now for our take on the week's events:

The story in Burma (Myanmar) gets more interesting by the day. Last week's release of political prisoners has Western governments wondering whether it's time to ease up on sanctions. During a meeting with opposition leader Aung San Suu Kyi in Burma early in the week, U.S. Senator Mitch McConnell hinted that Washington might be prepared to reconsider its stance if reforms continue while emphasizing that the U.S. will follow Aung San Suu Kyi's lead on the matter. (For the moment, she and her fellow activists say that the government hasn't done enough to merit a relaxation of the West's bans on dealings with the regime.) By contrast, President Thein Sein, in an interview with The Washington Post, urged the West to lift sanctions now. He also said that he'd be willing to consider Aung San Suu Kyi for a government post if she wins a seat in parliamentary by-elections in April.

The Arab Awakening continues to offer a mixed picture. An IMF delegation visited Cairo without coming to an agreement on an envisioned $3.2 billon loan to boost that country's struggling economy; the two sides promised to continue the talks in February. Yemenis are preparing for next month's presidential election next month amid controversy over a proposed "immunity bill" that would protect current President Ali Abdullah Saleh from prosecution if he agrees to cede power. And in Syria, where dozens of activists appear to be dying in clashes with government forces each week, opposition forces succeeded in gaining tenuous control over the town of Zabadani, on the border with Lebanon.

Elsewhere, Bangladeshis awoke to the news that their government had foiled an attempted coup back in December. In Nigeria, President Goodluck Jonathan backed down on his campaign to end popular fuel subsidies but showed ominous signs of an inclination to retaliate against protestors.

Finally, the annual Freedom House report on the state of democracy counted Ukraine, Hungary, and South Africa among countries that have shown signs of backsliding on fundamental freedoms.

The Latest from FP

Charles Villa-Vicencio explains how the experience of South Africa's truth and reconciliation process could help the countries of the Arab Awakening.

Sheldon Garon argues that Chinese save a lot because their government has created institutions that provide corresponding incentives.

Christian Caryl makes the case that the recent victory for Malaysia's opposition undermines the arguments of authoritarian rulers around the region.

Min Zin offers an update on sanctions against Burma.

Mohamed El Dahshan celebrates one year of Tunisian revolution and worries about Twitter's treatment of its non-American clients.