Monday, January 14, 2013

UGANDA DOES NOT LEARN FROM HISTORY

Five years ago Kenya was reeling from violence following the 2007 general elections.

President Mwai Kibaki had been sworn in for second consecutive term. According to official results his challenger Raila Odinga had come in a close second, a situation some of his supporters found hard to swallow, triggering an orgy of violence Kenya had never witnessed in its more than 40 years of independence.

It got so bad that the Mombasa route, through which four in every five shillings of Uganda’s trade outside the region transits. We were soon experiencing shortages of fuel and other imports on this side of the border.

In the few days that the route was effectively closed by rioting Kenyans we found out what we already knew, that we our over reliance on the Kenyan route was unhealthy for our economy.

The last time we had suffered such a disruption on trade on the route was at the end of 1987 when shooting between Kenyan and Ugandan security agencies erupted at the border.

The Kenyan elections will be held again in March. Kibaki steps down from the presidency and the main contenders are jostling for position. A repeat of the violence of the last election has not been ruled out.

In the meantime we have made no effort to wean ourselves off the Mombasa route setting ourselves up for a repeat of events from five years ago.

The alternative route for cargo is the Mutukula-Dar es Salaam route. Tanzania have rehabilitated the route over the last five years but Ugandan businessmen do not see it as a viable alternative because of the additional 600 km compared to the Mombasa route.

The railway line via Mwanza, whose use would have led to major cost savings, has fallen into disrepair and Tanzania is looking of the tens of millions of dollars required to rehabilitate it.

Meanwhile Kenyan authorities in an attempt to protect their roads have implemented an axle-load policy that transporters argue is impractical.

The dispute between transporters and Kenyan authorities caused a sit down strike by Kenyan Transporters in December that again caused supply shortages for traders and manufacturers here.
Apart from an overhaul of the infrastructure on the Tanzanian route, traders have proposed some tax relief to be worked out for cargo on that route to encourage usage of that route.

In addition they propose that air freight can be encouraged by not taxing the freight component of the cost making it more viable to import by air.

The government reeling under recent aid cuts, is scrambling for every shilling of revenue it can collect and is unlikely to cede any taxes now. It does not help that the economy is not firing on all cylinders too.

So little has changed from five years ago and were our Kenyan neighbours to descend into another bloodletting orgy – God forbid, disrupting trade, it will be déjà vu all over again. We will have only ourselves to blame.

The challenge for Uganda is that, while we claim that we want to encourage a private sector led economy, we display little sense of urgency in resolving private sector bottle necks.

But that should come as no surprise. There is little incentive for our political elite and bureaucrats to promote the productive sectors of the economies, finding it easier to extort bribes and indulge in rent seeking to sustain themselves.

If for example our elite were involved in major transport or manufacturing concerns, issues like keeping routes to the sea open or ensuring dependable, inexpensive power or ensuring a productive workforce would be a major concern.

Pandering to commercial interest groups has its problems. Policy can be hijacked by these groups to the detriment of the general public, but that is why we have representatives in government, to look out for our interests and keep everybody in check.

On the other hand if the interests of business include,  proper and functioning infrastructure to allow ready access to markets, dependable power and communications;  credible law enforcement to guarantee contracts and ensure safety of person and property; effective social services to ensure they have an educated and healthy workforce we all benefit.

A productive economy would ensure we are more self-reliant.

But maybe we are so wed to donor money – finding it easier to negotiate loans than engineer and nurture a self-sustaining economy, that the status quo works just fine for us.

Our actions or lack of thereof suggest as much, but we must know that this is an unsustainable course and the chicken will soon come home to roost.


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