THE UPDF SHOWING THE WAY ONCE AGAIN

Last week the UPDF’s Wazalendo Savings & Credit Coop had it annual meeting.

According to its financial report they made a profit of about sh12b, which was 30 percent higher than the previous year when profit after tax came in at sh9b. Savings almost doubled to sh60b while the loan book came in sh146b. The 69,000 member group had invested sh80b in their SACCO by subscribing to the SACCO’s shares.

And all this has been achieved in less a decade.

The devil is in the detail but on the surface of it this is progress not be laughed at.

"Our soldiers are nearer the worst paid than best paid workers in the economy, but by coming together they are now not only the largest SACCO in the county but, at the rate at which they are growing, it’s not inconceivable they will be a full-fledged commercial bank within the next decade....

The benefits to the soldiers, besides an avenue to save and invest, are affordable credit to resolve some of their most pressing needs – school fees, building and agriculture.

On a much wider level the UPDF are showing the rest of us once again the possibilities around us.

When in 1981 President Yoweri Museveni and his motley crew of 27 headed into the bush, they essentially took the little they had and emerged five years later much stronger and obviously much more influential.

Wazalendo, Swahili for patriots, is likely to change the configuration of the financial sector as they grow and also by their example, which one can expect will inspire other people to start SACCOs.

What is one of our major failings as an economy? The inability to aggregate the money we have into amounts that can drive development.

In 2011 money in circulation accounted for about 18 percent of total money supply. The rest of the money is being kept in banks. An equivalent comparison in the UK for instance shows that only about two percent of the total money is being held in people’s wallets and under their mattresses.

The net effect of this difference show themselves in lower lending rates and more efficient allocation of resources to the more productive sectors of the society.

So Wazalendo’s example means that money which had have found quick release at the nearest bar outside a UPDF barracks is instead being employed to build houses and set up farms. By lumping it together it more easily accessible to those who need it for productive endeavour.

Relatedly SACCOS like Wazalendo are reaching out into the furthest corners of these nation where the high street banks can’t be bothered to be caught dead.

And secondly, the profits are being distributed locally, as all Wazalendo’s members are citizens.  This important on several fronts but most importantly it means these monies are then being reemployed in this economy to create the virtuous multiplier effect we so badly need. Without naming names many of our banks pay some tax, some bonuses to their managers but the larger part of their profits are shipped out to pay off foreign shareholders who then benefit those economies.

Foreign Direct Investment is important for generating capacity and even allowing technological transfers. They are not charities so what they decide to do with their profits is entirely up to them. But what is stopping us building our own models and appropriating some of this profit for ourselves?

Even if for example the biggest shareholders in Wazalendo sometime in the future start taking home billions of shillings, chances are most of that money will be employed here – investing, paying salaries, donating to local charities and boosting demand locally.

"A pattern the multinationals are unlikely to do here, after all at the first sign of trouble – a few cans of teargas being sprayed around, they are quick to put projects on hold or expropriate their earnings, until things settle down...

Imagine a scenario with 100 Wazalendos and a few other lower tier SACCOs and imagine the transformation that would occur in the economy?

The point is, when you look down the history of development around the world, the more developed countries – many much less endowed than ourselves in terms of people and natural resources, relied on their own meagre resources to lift their societies out of poverty.

In fact no country has developed by relying on aid, the kind of which Africa has received over the last five decades, the patronising kind, designed to keep us locked in a dependency cycle, our best minds are convinced we cannot pull out of without the very aid that is perpetuating the vicious cycle.

"Of course Wazalendo should brace themselves for a backlash. Such attempts at self-sufficiency are frowned upon and they can expect that there will be attempts, overt and covert to subvert their project...

But then again they are big boys, they can take care of themselves.

NEW VISION’S LESSONS FOR UGANDA

The New Vision is in throes of celebrating its thirty years of existence.  On March 19^th 1986 the first issue – a grainy black and white, eight page newspaper hit the streets. The initial one thousand copy print run was snapped up within hours of landing in the vendors hands.

Uganda was barely two months into the new NRM administration and information was at a premium.

Over the last three decades the paper has grown into a multi-media company that straddles the media industry like a colossus.

"All this achieved while beginning from a literal standing start in 1986 – the company’s accounts show that it was started with only a sh42m grant or about $30,000 from government, which included the land it sat on, furniture and some cash...

There are lessons to be had from this 30 year odyssey that will not only serve Ugandan businessmen well but the country as a whole.

1.       Service above money

The New Vision was built with a mission to “Inform, Educate and Entertain”, which has informed its middle of the road reporting tradition. It has been a profitable company every year but the first one of its life. While being profitable has been good, it is the basis on which the company can continue to pursue its original mission. The company has been painfully frugal – in its first year the entertainment budget came in at sh360,000, about $250 then and there has been little need to contract debt over the company’s lifespan. There have been many opportunities to make money away from the company’s core mission but these have only provided a passing temptation. Making money is good but is only a by-product of a service that is delivered well and cost effectively.

2.       Systems are everything

From the very beginning there has been an emphasis on developing and respecting systems. So much so that management staff have taken regular leave from the company’s earliest days without a fear that they would return to find a company tittering on the brink of disaster. This discipline has ensured that even as the company has expanded it has done so almost seamlessly.

"The story of our businesses is that in the last half century of independent Uganda there are a handful of indigenous companies that have transcended a generation successfully, the major failure being their lack of structure...

3.       People are key

New Vision has no choice but to take its Human Resource seriously, as it is its biggest asset literally and figuratively. Systems are all very good but in a knowledge company, a lack of investment in the people would be detrimental to the product quality and company durability. Competitive remuneration, regular training and the establishing of a conducive working environment are the hallmarks of the company’s history.

It used be one of the better paying companies in town, not any more, but that is a function more of the economics of the industry than anything else.

4.       Life is a marathon not a sprint

"Media companies have come and gone. The New Vision is not more special only maybe in its strict adherence to its journalistic tradition and financial discipline, which has been key to not only staying afloat but thriving through the ups and downs of the last three decades. For many businessmen when the money starts flowing, the cost of their lifestyles rises to consume the new surpluses and when the bad times come as the inevitably do the business can’t stand on it’s own feet for lack of savings.

The media world is changing at a very rapid pace. No sooner have new technologies been adopted than they are rendered obsolete. It is against this background that it may be hard to say with certainty that the New Vision will be here in 30 years’ time, or at least still be a predominantly media company.

However, the lessons can serve as a useful basis for other companies to learn from.

It is critical that we build credible businesses, because a country is only as viable as its private sector.

OIL PIPELINE: UGANDA AT CENTER OF HIGH STAKES GAME

Uganda finds itself playing the coy bride in a high stakes competition as neighbours Kenya and Tanzania court it for the right to pipe its oil to the Indian Ocean.

Last week Dar es Salaam announced that they were intent on fast tracking development of an oil pipeline from Uganda to the seaside port of Tanga and that French oil firm, Total had already earmarked $4b for the project.

In October Uganda and Tanzania announced that they were exploring the viability of a joint pipeline barely weeks after an August announcement by Kampala and Nairobi on the same subject.

An oil pipeline through Kenya via its northern oil fields would tie in nicely with the much touted LAPSSET (Lamu Port South Sudan Ethiopia Transport), a $20b project aimed at developing Lamu port, an oil pipeline from South Sudan, a road network and coal powered electricity.

Total however expressed disquiet about passing the pipeline through northern Kenya and onto Lamu for fear of terrorist attacks from neighbouring Somalia.

Total, CNOOC (China National Offshore oil Corporation) and London-listed Tullow Oil are partners in the development of the oil reserves in western Uganda.

Uganda’s reserves were upgraded to 6.5 billion barrels last year. Development has stalled as government and the oil companies negotiate production licenses, which the energy ministry had promised would have been issued by the end of last year.

"Last year Uganda laid down its conditions for Kenya to meet before it could put pen to paper – Kenya had to meet the cost of a risk guarantee on the project, pay for any cost overruns, offer affordable tariffs for use of the pipeline and, what is considered a potential deal breaker, that its eastern neighbour establish commercial viability of its oil reserves...

Kenya’s reserves are currently estimated at 600 million barrels, however commercial viability has not yet been established.

Commercial and geopolitical reasons are pushing the latest thinking and in light of cratering oil prices time is of the essence for Uganda to reignite the momentum in the development of its oil resource, experts say.

Oil explorer Tullow needs the pipeline to pass through the oil fields of Lokichar near Lake Turkana, where it is also the lead explorer, to make the fields even more attractive to potential investors.

Oil explorers, often smaller operators than the oil majors, make their money by finding commercially viable oil fields and on selling them to the bigger oil companies. Accessibility of the fields is a major determinant in the final price they can get from a buyer. In land fields are invariably more attractive if the oil can be evacuated easily for export, hence the need for the pipeline.

Total, who is championing the southern pipeline, is not only averse to bypassing the highly insecure eastern Kenya but also sees the Tanzania as more cost effective.

Last year Uganda’s southern neighbour discovered more natural gas boosting their known reserves to 55 trillion cubic feet and is working on a pipeline to transport the gas from its southern astern shores to Dar es Salaam.

This find is key because of the nature of the Ugandan oil, which is waxy and solidifies under 40 degrees centigrade. As a result a pipeline to ferry the oil will need to be heated regularly along the length of the pipeline. Experts estimate that there will be a need for a two megawatt power station every 20 kilometers on the pipeline.

Total’s planners think that gas powered power stations would be more effective as along the northern line the extra infrastructure to get power to the heating stations would be an added cost they do not need in this time of historically low oil prices.

"US oil futures bottomed at $26 a barrel in February for deliveries in May. A brief rally last year saw the same prices peak at $60 a barrel, a far cry from the peaks in July 2007 of $140, around the time that commercial viability of the Ugandan fields was established....

In addition the Hoim-Tanga port route is shorter than the Hoima-Lokichar-Lamu route by about 150 km, which has obvious cost implications.

Uganda seen to be dragging its feet on the issue of developing its reserves by industry players, is determined to extract the maximum value for its oil that it can when it still can negotiate.

Kampala has been holding out for more recovery from its estimated reserves. All the 6.5 billion barrel reserve cannot be recovered mostly due to technology limitations. The proportion of the reserves that can be recovered is often a sticking point. If the anticipated recovery is too low the country can miss out on revenues and if it is too high it would affect the affordability of the project.

Negotiations have brought the figure up to about 30 percent from a low of as little as 10 percent.

In addition Uganda also made it a condition that the first call on the oil would be to the planned $2.5b oil refinery. The oil companies’ preference was to pipe all the crude oil out of the country and impasse that was only broken in 2013.

"The refinery which will initially handle 20,000 barrels day building up to 60,000 barrels daily is expected to spawn oil related industries in plastics, fertilisers, pharmaceuticals and other oil based derivatives like Heavy Fuel Oil used in power plants and bitumen, used for paving roads....

In addition the huge iron ore deposits established in the Kigezi region, of southern Uganda last year make a possible tie in with the infrastructure development – transport and energy infrastructure, surrounding the pipeline good economic sense.

In June the energy ministry announced that following surveys of the area that at least 200 million tonnes of iron ore worth about $16b had been verified. To optimally exploit these resources billions of dollars in investments in power generation, road and rail transport will be required in coming years.

Government planners also the development of the southern pipeline as a means to break decades long over reliance on Kenya for its access to the sea. This dependence means that more than 80 percent of Uganda’s external trade is funnelled through Mombasa currently. Historically disturbances in Kenya, most recently during the post-election violence in 2007, have left Uganda particularly vulnerable, triggering fuel shortages, trade blockages and subsequent price hikes.

"A fringe element also thinks by passing the pipeline through northern Kenya, making the LAPSSET economics more attractive, would shift South Sudan’s interest away from Uganda. Before the civil war broke out at the end of 2013 trade with our northern neighbour racked in more than a $100m a month, which has fallen drastically since but is expected to resume when things settle down in the troubled nation...

Tanzania of course is glad to have such a project passing through, making the planned Tanga port more viable and may even shift business away from Mombasa, especially from Rwanda, Burundi and the Democratic Republic of Congo.

Kenyan officials will be in Uganda in a fortnight’s time to address Kampala’s concerns about the pipeline and one can expect John Magufuli’s government will be casting a wary eye on developments then.

IF EVER THERE WAS PROOF THAT AFRICA DOESN’T NEED AID

A group of researchers from the UK and Africa for the first time quantified flow of resources in and out of the continent, which shows that contrary to conventional wisdom Africa actually sends out more money than it receives in aid or even investment.

The report released earlier two years ago by Health Poverty Action, an NGO that seeks to eradicate poverty around the world shows outflows from Africa are $58b more than the inflows into our economies.

"The inflows they measured included official aid, foreign direct investment (FDI), inward remittances (kyeyo money) and private grans which amounted to $133.7b in 2014. In the other direction Africa sends out $191.9b in form of debt payments, multinational company profits, illicit financial flows, outward remittances and brain drain....

Admittedly most of these outflows are legitimate even necessary outflows but the net benefit still accrues to the developed world. For instance when we bump up our international reserves, these are banked in foreign banks which on lend them to their clients and derive a greater benefit than we do.

The same can be said for debt payments or repatriation of multinational profits, which are legitimate costs of interacting in a globalised environment and may even increase the capacity within our economies.

However, there are outflows like illicit financial flows – tax evasion and organised crime revenues, brain drain and illegal logging and fishing are as a result of criminal activity. Brain drain for instance the fact that our most talented feel a need to go abroad to better themselves is an indictment on our governments and this negligence borders on criminal.

That being said these figures are not an invitation to a pity party but an opportunity to open eyes and realise how much potential the continent and our respective countries have.

"For ages the narrative has been “Bambi, these poor Africans! They are hopeless they can’t pull themselves out of poverty. They need help.”

Research like this shows it’s obviously not true and our “benefactors” know it, and have known it for a long time....

The question for us as Africans is how do we retain a larger proportion of these funds for our own benefit?

First off we need to learn how to aggregate the resources we have to take advantage of greater economies of scale this starts from our individual households to our countries.

In Kenya where the savings and Credit cooperatives (SACCOS) are stronger by the end of 2014 their deposits had peaked at about $4.5b while their total bank industry deposits stand at about $20.7b – or about the total GDP of Uganda.

These funds aggregated in the financial sector rather than scattered under our pillows and mattresses or in our socks or bras can have a transformative effect on economies.

The growth of SACCOs is useful because they mop up resources where the high street banks cannot go.

Of course all of our major banks but one, are foreign owned entities so we might still be playing into that outflow narrative, compelling them to offload shares onto the stock exchange could tilt that balance more towards retaining funds locally.

The industry has grown sufficiently to the point that if some banks threaten to close shop rather than list on the exchange we can show them the door.

This important because our capital markets need to grow as they are an important other avenue of mobilising resources locally.

On a national level the creation of regional economic blocks like the East African Community (EAC) and The Common Market of East and South Africa (COMESA) as stepping blocks to a continent wide economic block are a step in the right direction.

Intraregional trade within the EAC grew threefold to about $6b in 2014 from $2b in 2004 with the coming into effect of the common market and then custom union and several other initiatives to ease cross border trade.

This accounts for about 23 percent of the region’s trade with the world, which is still low considering that intraregional trade in the European Union(EU) and North Atlantic Free Trade Area (NAFTA) is about 60 and 48 percent respectively.

"Our colonial legacy – artificial boundaries and main trade routes leading to the sea ports, means we have been wired to send stuff out and then reimport it, but by opening up our borders and reconfiguring our transport networks this can change....

The point is, within the limits of our political confines, there are things that can be done internally to not only mobilise our resources but unlock other resources to keep more of our money here, but also to grow the wealth for everyone.

It seems all it would take would be a reconfiguring of our elites thinking, but who are they working for?

WHY THE VENDORS HAVE TO LEAVE THE STREETS

Friday was the deadline Kampala City Council Authority (KCCA) gave to city vendors to leave the street peacefully.

Vendors had returned to the streets during the election period as law enforcement officers were loath to antagonise “voters”. Now that the campaigns are over sanity must be restored.

Of course the vendors are not on the streets to entertain themselves, they are looking for an income to support their families and finance their own ambitions. Better that, than they turn into metal bar wielding thugs at night.

"It will be no consolation to the evicted vendors but they need to leave the streets for the good of the country. It is their patriotic duty...

Hernando de Soto in his book “The Mystery of Capitalism” sought to explain why capitalism works in some parts of the world and not in others. His conclusion is that for capitalism to work there have to be strong property rights. 

That society recognises that when I own something it is mine and can only be transferred through mutual exchange of value or not at all. That the law and general practice recognises and defends these rights uniformly regardless of people’s status in society.

Land, from which all property is derived more especially.

If you think about it we do not really own the land we own – even if we have freeholds we have  finite lifespans, but we have the right to the land to do with it as we see for the duration that it is in our possession. What we really own is the rights to the land. Now if those rights are hazy, people are not sure I own the land, or even if they know I do they are not sure I will tomorrow, the value of my rights to the land are jeopardised.

This is detrimental to how much I can invest on the land. Why should I plant hundreds of millions of shillings in brick and mortar on a piece of land I am not sure is mine?

So if I am a shop owner who has leased, not only the space to sell my wares but also the right to be the only one to do so in a given space, I expect that everybody should recognise this right, that I have a right to defend it and the right to call on the authorities to defend it as well.

So If vendors camp on my door step to do their business, even if they are not selling the same things as I am, I should be able to defend or have my right to my space defended. Because their presence infringes on my rights and therefore lowers the value of my shop not to mention leads to lower and lower sales.

The issue of whether vendors are on the street or not has far reaching consequences than inconveniencing shop owners and their clients.

"Because if the rights of shop owners are being infringed on then it will be ok to, squat on anyone’s land, seat in a restaurant and not buy anything but just enjoy their air-conditioning on a hot day or plaster your neighbours wall with your campaign posters without his permission...

Basically all property rights will be in doubt, investors will shun our shores, jobs will not be created and the ticking of our time bomb will become ominously louder as we hurtle towards self-destruction.

The point is obvious if we are really serious as a country about our development ambitions there are somethings that we should not and must not compromise, property rights being right up there.

Of course the vendors are real people with real responsibilities but enforcing property rights benefit them as well. Enforcing property rights improves the general environment for doing business, attracts investment, creates jobs and generates revenues for government to improve social services like education and health which will allow people to climb up the social ladder.

Climbing the social ladder takes time but if society tries to take shortcuts they inevitably turn out to be costly.

"For many of us we would rather have stayed home and played all day. We forget but school was drudgery and we didn’t get the point of it. If it wasn’t for our parents insisting that we go to school we would have forgone long term gain for short term pleasure, with disastrous results...

Our parents showed leadership and that is what we require in dealing with street vendors.

We may like to pay less for goods and enjoy the convenience of buying off the street instead of walking into intimidating shops but that is short term pleasure at the risk of long term development.

WHILE WE SQUABBLE THE WORLD GOES ON

This week the Supreme Court challenge of President Yoweri Museveni’s victory in the recently concluded polls kicked off.

In a nutshell rival Amama Mbabazi wants the court to find that Museveni’s victory was fraudulently achieved and should be cancelled altogether.

The civil tones in which the debate is being conducted mask the high stakes involved.

Not to denigrate the importance of the process underway on its impact on the current events and its repercussions down the ages, but elsewhere issues of much wider importance are being contemplated.

This week more than 1000 people gathered in Dakar, Senegal for the first global gathering of African scientists, the “Next Einstein Forum”.

Uganda was very ably represented among the 15 young African “fellows” singled out for the impact of their work and to demonstrate to the world that the continent is not only about war, disease and poverty.

Our representative Noble Banadda, not a household name, is doing ground breaking work in bioprocessing engineering, one of which application would be the ability to predict the future based on biological observations, a skill which would be useful in predicting outbreaks. For countries without the resources to fight epidemics this science would be critical.

The other young scientists are inquiring into such other pressing subjects as waste management, cellular immunology to improve disease diagnosis, cyber security as a predictive tool for natural disasters, better therapeutic and diagnostic tools for HIV and optimisation of government resource allocation using mathematics through.

It is all Greek but will probably find wide application in our life time.

Most of us would be bored within an inch of our lives in a hall with all these geniuses but this conference is important for one critical reason.

"The inadequacy of our continent, mainly manifested by our sub human levels of poverty, is because we are unable to unlock the vast resources under, in and on our soils and our own human potential...

It is estimated that our continent – not only around east and central Africa, not only has traces of all know mineral resources but in proportions if properly exploited to banish world poverty for generations.

The key word is estimated, because no comprehensive exploration has been done except maybe in south and north Africa to map out these riches. That is a problem because the capital required to exploit this potential will not move unless there is a real commercial proposition to do so. Our adventures with oil are evidence enough of that.

But before we even try to scratch at our soils our won human potential has not been fully exploited for lack of education, sickness and bad government.

One may wonder about the next example but in the book “TheHalf Has Never Been Told” author Edward Baptist shows that slavery was the rock on which US capitalism was built. People have argued that the abolition of slavery in the US came about because it was an inefficient means of production, in fact Baptist shows that at its height the slave camps of the south were much more productive than the industries of the north.

Slavery was beaten back in order to neuter the slave owners who were politically powerful and in the way of rapid industrialisation of the northern states.

The point is that if our forefathers helped build America our human capacity to turn around our current plight is not in dispute. Never mind that the American slavers extracted productivity from their slaves by physical and mental torture the likes of which had never been seen before or since.

"In order for the continent to unlock its vast bounties for the benefit of its people we need to not only seat up and take notice when our youth are pressing against the boundaries of known science but to encourage them in any way possible because it is this new technologies honed at home that will be our salvation...

No one else is going to do it for us. For instance in the west most medical research goes to non-communicable diseases – heart disease, cancer and degenerative diseases, while in Africa our most pressing problems are Malaria, HIV-AIDS, Tuberculosis and Diarrhoea, and maybe add Ebola, which the west only commits a relatively small amount to.

Gatherings like the “Next Einstein Forum” are more than just a curiosity, they need to be taken seriously.

Somebody clearly is. At the gathering there were people from more than 100 countries represented. But there are only 54 countries in Africa!!!

THE MACRO ECONOMY IS TICKING ALONG BUT ….

It’s very easy to lose sight of the facts with the current tense political environment. Thankfully presidential candidate Amama Mbabazi has petitioned the Supreme Court to annul the presidential elections so we can expect that by the end of that process clarity will reign and we can go back to being the benign society we are known to be.

Last week this column suggested that given the experience of the just concluded campaigns, which were dominated, by angry, unemployed youth, it doesn’t take a rocket scientist to work out that we need to focus on creating jobs.

For that to go beyond political rhetoric the government has to ensure a stable macroeconomic environment – low inflation and continued growth. This should go hand in hand with determined efforts to improve the business environment – reduce red tape, widen markets and improve the quality of human resource, to make Uganda attractive for investors.

It is heartening to know while the rest of us were running around like the sky was going to fall on our heads some people were keeping their eye on the ball.

Last month the Bank of Uganda released its monthly policy report, which outlines the state of and the actions the central bank to regulate money supply. If money supply grows out of control price increases will not be far behind.

The central bank reported that money supply growth was subdued as a result of a determined tightening of supply by the bank of Uganda that begun in February last year.

According to the report growth, M2, which includes money in circulation, cash deposits and near money instruments grew by 5.2 percent. While during a similar period just after the elections in 2011 the same measure was growing at 26 percent.

"What this means is that inflationary pressures are much more contained than they were during a similar period five years ago...

Of course we remember that as a result of the central bank’s delay on clamping down on growing money in circulation inflation hit 30 percent, a 19-year high, in October later that year.

The shilling too held steady in the run up to the election but it is expected to continue its decline as importers return to the market.

Of course BOU’s vigilance has its short term downside. In an attempt to wrestle down in inflationary pressures they have raised the  policy Central Bank Rate (CBR) to 17 percent from 11 percent a year ago which has had the knock on effect of raising bank lending rates and put a damper on credit to the private sector.

Lower private sector activity has registered in lower economic growth projections to five percent from the previous 5.8 percent.

In the near term this is painful but the alternative scenario of runaway inflation is too horrendous to contemplate.

The Bank of Uganda was harangued  last year for beginning to tighten money supply in February when inflation stood at about two percent, but indicators pointed to rising inflationary pressure especially as a result of anticipated depreciation of the shilling.

In hindsight they were obviously wise to take pre-emptive action to put a lid on growth in money supply at the time because they would have been scrambling like they did in 2011, now to mop up all the campaign cash sloshing around right now.

But that was a short term intervention, although the last 12 months have lasted longer than normal!

Bank of Uganda’s role is not unlike first aid to bridge the gap between the accident and when the real medical care comes along and as such is not a permanent solution to our woes.

By definition inflation is too much money chasing too little goods. The way to bring inflation under control is to either reduce the money in circulation or produce more goods, a combination of both often does the trick.

Bank of Uganda does not produce any goods. So that is why the government needs to focus on creating the environment – beyond macroeconomic stability, that allows for the creation of more goods. More investment in the productive sectors like agriculture and manufacturing is key because these two sectors have the potential to suck up all our unemployed.

"It’s safe to say that the central bank has got its mandate under control, but we probably can’t say the same for government....

To entice new investment government has to be committed to a stable macroeconomic environment, in addition they need to, reduce red tape around registration of businesses, land and other properties, ease the process of paying for licenses and tax, smoothen the flow of goods and services in and out of Uganda, all while improving the quality of the human resource available in the market.

In addition government needs to take a more determined stand on corruption. Corruption exacerbates the issues of unemployment for example, by concentrating resources in a few hands to the detriment of the majority.

It is self-defeating for the central bank to be doing its best while the rest of the government is not and threatening the gains we have made so far as a country and the future gains that should be made.

THIS IS DEMOCRACY

During President Yoweri Museveni’s final campaign ahead of the February 18^th poll, while live on UrbanTV the host, after outlining a litany of wrongs that stood out during the last three months of campaigning asked me, “Is this democracy?”

“It is an evolving democracy,” was my reply.

The eager young host was obviously unimpressed by the response.

"Sometime into his first term President Barack Obama fighting to get support for healthcare legislation famously said “Democracy is a messy business,” and went on to paraphrase Winston Churchill, “It is the worst form of government except for all the other ones that have been tried.”...

And even then he was talking about the decision making process. The evolution of a democracy is even messier.

The challenge for many of our countries that aspire to higher forms of democracy, is that many of our elite watch tv, travel or even live in more developed democracies and are impatient for developments at home to keep up with what they see happening elsewhere.

This is a good thing and a bad thing.

To aspire to a higher state is essential, even critical for any form of development. However our impatience to improve quickly can make us miss some fundamental steps along the way. The problem with this is that you will inevitably have to retrace your steps to remedy the situation, often at great cost to society.

I remember when the 1995 constitution was promulgated, it was touted as one of the best constitutions in the world. It probably still ranks up there with the best but the same cannot be said of our democratic practice.

Democracy was not and cannot, be written into existence.

The American Declaration of Independence, which serves as the foundation on which the US Constitution was built, has the immortal declaration that “All men are created equal”.  But we know that that country’s black population never got to vote until 100 years after independence and segregation laws were still on the books well into the 20^th century.

The practice has had to catch up with the text and even now, there is still controversy whether “all men are created equal” given the political, social and economic struggles the African Americans and other minorities are engaged in daily to rise to their full potential.

As somebody said the other day, the constitution is a set of ideals to which we aspire, the question then becomes who is responsible for bringing these aspirations to fruition?

The knee jerk reaction is to point to the government, which is to put the responsibility where it should lie, but this would be to ignore the real nature of governments.

"To be in government is to wield power over society. Power by its nature is more likely to concentrate rather than diffuse power away from itself. To expect governments to open up democratic space for people out of the goodness of their hearts, is to misunderstand or ignore how power operates....

So then clearly democracy has to come from the actions of the potential beneficiaries who are the people.

The constitution says all power belongs to the people and we should take that on face value.

Getting out to vote, the ruling party caucusing to push laws or their views through parliament, political contestation along party lines and court challenges of the outcomes of the polls are helping moving our democratisation process forward.

As unbearable as it seems even the current standoff between the government and the opposition is part of the process. Of course its resolution can have disastrous consequences or not, but with the hindsight of history Ugandans (hopefully living in an even more democratic society) will be able to say all this was needed to happen for democracy to advance.

Evolution is messy business, advancing sometimes three steps forward and before taking two steps back, meandering off the true course before finding its way again and oftentimes at greater cost than was necessary.

For us who are in the thick of things, where we can’t tell the forest from the trees, we need to stay the course, even if through the fog of political bickering and manoeuvring we cannot see the next step on the ladder.

POST ELECTIONS, FOCUS ON JOB CREATION

As the dust from the just concluded polls settles it’s time to move on, use the lessons of the campaigns as a stepping stone to a better future for all Ugandans.

As far as I am concerned everything – political or social has its root in how the economy is faring, how it’s being run.

"Going by our per capita GDP of $800 we are a poor country, however that is to wildly discount the potential of our people and the bounty of our natural resources. We are poor because we have failed to mobilise ourselves to exploit these natural attributes for the benefit of our people...

Understandably we are only just emerging from the dark hole that was the 1970s and 1980s, when the productive sectors of our economy were gutted and we regressed into a subsistence economy. Since 1986 the economy has rebounded, posting prodigious growth figures year after year to the point that the economy has grown by a factor of seven since President Yoweri Museveni marched into Kampala at the head of the rebel National Resistance Army.

And there is the rub. Economic growth is critical for development – the upliftment of people’s wellbeing, but economic growth does not necessarily translate into development.

Currently we are seeing a widening in wealth inequalities as the rich get richer and the poor get poorer, a concentration of resources which manifests itself in angry urban youth and sub human rural poverty.

Economic growth for its sake is useless, economic growth has to be enjoyed by more and more people every year.

That is he challenge the new government has to face up to with increasing determination.

One way to do this to create an environment that encourages investment and therefore creates jobs.

Every first Friday of the month the US Bureau of Labour Statistics office puts out the Non-Farm Payroll (NFP) numbers. These represent the number of jobs created in the previous month excluding government and private household employees.

Over the last 12 months more than two million jobs have been created in the US. Job creation is important beyond having people gainfully employed and not engaging in running battles with the police, the more people employed means the more demand there is in the economy and the more attractive it is as an investment destination. And the more investment the more jobs that are created, a literal virtuous economic cycle.

Clearly we have done some good work on the macroeconomics front with our consistent growth figures, but clearly more work has to be done.

According to the latest World Bank’s Ease of Doing survey, Uganda jumped to 122 from 135, which is something although we were much nearer the bottom the 189 polled nations than the top.

To come up with the result the surveyors measured such things as how easy it is to set up a business, register property, pay taxes, enforcing contracts, access to credit, getting electricity, obtaining permits among other things.

Government can through a combination of sensitisation of its workers and adoption of new technologies go a long way to easing the regulatory processes around doing business in Uganda. For instance why should it take 10 procedures and one and a half months to register a property versus 5 procedures and less than a month in the more developed countries?

I find we are shooting to low when we compare ourselves with Sub-Saharan numbers as if we deserve a lower quality of life than human beings in the developed economies.

Like Rwanda did these regulatory stumbling blocks can be felled in a blink of an eye.

Understandably making these processes more cumbersome allows some public servants to take advantage of the situation, easing the going for those willing to part with a few thousands more.

Which brings me to the biggest factor behind concentrating wealth in a few hands to the detriment of the larger majority – corruption.

Undeniably corruption is making doing business in Uganda more and more difficult.

And we are not talking about the direct cost of bribing an official here and there but the indirect cost to businesses which manifests itself in a poorly educated workforce, high levels of absenteeism due to illness, pilferage that is hard to plug because law enforcement agencies are not performing and high transport costs because of the poor road network.

"Unfortunately some of these nefarious networks have ossified themselves into place over the last three decades. Uprooting them may be politically costly but ignoring them only means they spread their tentacles into every facet of society, making it harder and harder for economic actors to be productive and, not unlike running in molasses, the economy will eventually grind to a halt...

So going forward let us be lie the Americans let us track how many jobs the economy is creating every quarter to begin with. In trying to create jobs we will have to work backwards and remove the impediments to job creation.

They say when you focus on something it expands. Let us focus on creating jobs.