SOMALIA: CASE OF THE GLASS BEING HALF FULL

 

Lieutenant General Katumba Wamala was last week in Somalia in one of his frequent visits to war torn Somalia.

Uganda contributes almost 20,000 troops to the Africa Union Mission in Somalia (AMISOM), the five-year regional peacekeeping effort to support the transition of the continent’s eastern most country.

During the duration of the mission a semblance of stability has returned to a country, which imploded after the overthrow of Siad Barre in 1991, torn apart by feuding clans jostling for supremacy.

The war against terror and recent threats to the safety of the maritime routes off the horn of Africa has made the continued existence of Somalia as a failed state untenable.

Enter Uganda and Burundi who provided the initial forces for the mission. The mission’s   objective among other things is to support the transitional government, implement a national security plan, to assist in creating a secure environment for the delivery of humanitarian aid.

Somalia is far from attaining a sustainable peace, but the green shoots of peace can be discerned.

"A sustainable peace will come when a critical mass of the society have individual and collective interest in acting within the law. That is when they have something to lose and breaking the law would risk igniting a downward spiral into anarchy and hopelessness...

Arguably the easy part of pacifying part of the country has been done the tricky part is to generate economic growth and then distribute this growth to create the bedrock of future stability.

Lt Gen Wamala is making the right noises. He suggested last week that a Marshall Plan for Somalia is necessary for it to resuscitate itself.

The Marshall Plan was a US sponsored financial plan to get Europe back on its feet in order to fend off communism.

Over the last two decades Somalia has literally bombed itself back into the stone age. The infrastructure and human resource have been so severely damaged and their development stunted by years of fighting that they are unable to marshall the resources internally to get themselves going again.

They have one big trump card, I think. The Somali diaspora is not only strewn all over the world, but has maintained close ties and developed into entrepreneurs of some repute wherever they are.

Entrepreneurs and not governments are what grow wealth. And if they are local entrepreneurs they are much more willing to take risks that foreign capital would not, creating confidence in the economy for the time when others will join the party.

Sluggish progress is being made towards building the foundations of government. Governments facilitate business development by providing public goods like security, social services and an overall enabling policy environment. This is important because without these a Marshall Plan for Somalia will not have the desired effect, will in fact be like throwing money down a black hole.

Just as AMISOM has shown that regional initiatives can provide solutions to regional problems, it’s probably time to show too that regional capital can play an instrumental role in lifting the economy of Somalia.

Nineteenth century financier Baron Rothschild once said, “The best time to buy is when there is blood in the streets” Investing in Somalia in the next five to ten years – assuming the current trajectory towards stability is maintained, will be like getting in on the ground floor.

By the time of the second world war the US had already taken its place at the high table of the world economy. Its pivotal role as the arsenal of the free world and the ensuing economic benefits that came with being at the center of reconstructing Europe is what cemented its place as the dominant economy of the second half of the last century.

"And just because the continent is helping Somalia stabilize does not mean we shall have first pickings of the opportunities available....

With Europe’s economy in the doldrums and the US recovery still making hesitant progress, capital is looking to Africa for investment returns.

The high risk situation that is Somalia is not a first choice investment destination but look out for western nations to jump in to provide the concessionary money that will build the communications and energy infrastructure, revive social services and bankroll the creation of the government bureaucracy as a fore runner to the entrance of private money.

Africa has the institutional set up to jump into the fray, what maybe in doubt is whether we have the political vision to see the benefits of such an investment.

East Africa will be the biggest beneficiary of a stable, economically vibrant Somalia. Not only will it cease to be a security threat to the region but will add at least another ten million people to the region’s market.

Africa has invested blood and sweat in Somlia but it need not stop there.

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, was shut down. 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 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.

IS 2013 THE YEAR TO MAKE OR BREAK FOR UGANDA'S RULING NRM?

The Golden Jubilee year was a good time for reflection.

I think the consensus would be that after fifty years of independence we as a nation have fallen short of the aspirations of that generation that saw the union jack come down and the new Ugandan flag rise in October 1963.

At the top of the pile people like Milton Obote and Kabaka Mutesa most likely appreciated the enormity of the task ahead. The general public was probably swept along with euphoria of the occasion and were content to believe that now that their own sons were in power things would improve exponentially.

Unfortunately the British, on the brink of bankruptcy after the second world war couldn’t leave fast enough and in the process left a lot of unresolved issues. Issues which quickly returned to bite us and trigger a downward spiral into political instability and economic chaos...

So lately we have been picking up the pieces. Trying to mend this entity called Uganda, which in all fairness, was formed under dubious circumstances to begin with.

In 1986 when the NRM came to power it inherited a country whose economy was on its knees and which had become ungovernable, in no small measure due to the “bush war” but also because of government infighting. In addition you had a largely incapable, diseased population that was lurching from one day to the next without hope or purpose.

And as fate would have it one challenge would not wait for another to be resolved before it raised its head, putting added pressure on the NRM, which not only had to run the affairs of state but also work at widening its legitimacy as a political force.

Fast forward to the present.

As the first tentative steps are made into the New Year, one would be forgiven for being pessimistic about the country’s prospects.

Economic growth is expected to slow down as donors suspend aid over revelations of corruption in the Office of the Prime Minister and in the public service ministry. We have adequate power but not for long as demand rises quickly to suck up Bujagali’s extra 250 MW. The delayed construction of the 700MW Karuma dam meanwhile is tied up in the courts.

"Politically, the ruling NRM continues to look like a house divided, as internal snipers hold the government ransom at every turn. A good thing in the sense that government has to watch its step, as its overwhelming majority in parliament does not guarantee that its every whim will be supported. On the other hand for reasons rather than ideological differences or patriotism – one suspects, this rear guard action is proving a stumbling block rather than an enabler to the smooth running of government.

Whether a country develops or not is determined by its politics. Political boundaries make a difference.

Uganda, like many countries on the continent has been set a tough political paper.

We are expected to develop, raise the living standards of our populations, while operating as full democracies. It has never been done before.

The process of development while empowering is also a disruptive process.

Unpopular decisions have to be taken, from the minor things like forcing people to use pit latrines to the contracting of major infrastructure projects like communication, transport and energy networks to the decisions to wage war or even put a man on the moon.

These endevours require a singleness of purpose.

As the dominant political party and given the huge decisions the country has to make in the coming years, something has to give.

"The NRM is the only political organization with a credible nationwide presence, which is its greatest strength. But it shows weakness and a lack of organisation when it struggles to take advantage of its numerical strength in the house or fails to rein its errant troops...

In the absence of credible opposition the internal heckling serves to show up the NRM as a liberal organization that tolerates dissent, but this playing to the gallery has its limits and has debatable long term value.

A line has to be drawn in the sand.

The NRM has been entrusted with the mandate to lead this country to a better place, its internal bickering is compromising this mission, the sooner they realize this, the better for all.

Is 2013 the year of reckoning?

UGANDA'S PARLIAMENTARY TYRANNY IN THE MAKING?

 

If recent reports are to be believed, Members of Parliament pushing for a recall of parliament from their current recess to discuss the issues surrounding the death of Buteleja MP Cerinah Nebanda have secured the required numbers and are seeking an audience with the speaker to effect the recall.

Nebanda died under mysterious circumstances and was allegedly abandoned by her “friends” at a local clinic apparently after they realized she was in bad shape.

A report released last week showed that the MP was getting medication for pre-existing conditions but may also have ingested illicit drugs.

Subsequently a government pathologist was arrested at the airport on his way to South Afica with samples from the deceased MP, that he was taking  for independent tests. The police say he had no authority to do that and are set to charge with abuse of office among other things.

The strange sequence of events have raised suspicion and understandably so.

The MPs claim to have raised 133 signatures, a figure more than the third of the 388 member house required by law to cause the house to reconvene.

The proposers of the recall want the house to discuss the recent arrest of MPs for utterances they made following the arrest of the Nebanda.

The MPs arrested were Chris Baryomunsi and Meddie Nsereko who were detained separately and released.

In addition some MPs seem intent on discussing the happenings around Nebanda’s death. MP Geoffrey Ekanya speaking on a local radio station said that they had lost faith in the government process following similar mysterious deaths in the past that he claims have gone unresolved.

The ruling NRM do not support the house’s recall from the festive recess.

That the MP’s death was unfortunate is an understatement.

These contestations and many others before and many more to come, are the teething pains of democracy.

The law may be well laid out as to separation of powers between the three arms of government but one can always expect there will be jostling for space for a longtime before each arm appreciates its boundaries.

It would seem unreasonable to try and inquire into the death of Nebanda by the house,  as it has become a criminal case.

The MPs made statements outside the house, which therefore makes the susceptible to prosecution, but more importantly being honourable men whatever they said, I would like to believe, was backed by fact and could be useful in investigations into their counterpart's death.

It would be strange if MPs in discussing the issue for example demand that charges be dropped against their counterparts, as that would be interfering with the work of the police.

In fact, why the police continue to be understaffed, undermanned, undercompensated and therefore always  several steps behind the criminal elements could be a question parliament may be well placed to answer.

"That there may be a loss in confidence in the police as MP Ekanya suggests, usurping their role would not be the best way to redress the issue, unless the MPs are trying to expand their powers to criminal investigations....

They say that, all tyranny needs to gain a foothold is for people of good conscience to remain silent.

Some MPs knowingly or unknowingly are looking to perpetuate a tyranny of parliament over us. The oversight role of parliament is important, even critical in the smooth running of nations, but even its powers are not unlimited.

Some may argue that executive’s excesses are such that its only parliament that can check it, but two wrongs do not make a right.

MPs putting government on tenterhooks may make for very good drama. But when the drama becomes an end in itself, while ruing the fact that we get the leaders we deserve, we wonder whether we are getting value for money...

ANOTHER THEORY OF DEVELOPMENT?

In 1986 when president Yoweri Museveni came to power he lamented how backward the country was. One of his favourite illustrations of why we remain backward was that more than two decades after independence we did not even manufacture safety pins.

Well 26 years down the road and we still do not manufacture safety pins.

Last month the key note speaker at the 6^th Competitiveness Forum was economist Professor Ricardo Hausmann,

Hausmann’s work on relatedness of products traded in the global economy, the product space, and its predictive value in determining the economic growth prospects of countries is fast gaining traction.

One of the outcomes of this work is the creation of the Economic Complexity Index, which differentiates economies by the complexity of the products they make. The more complex the products and economy makes e.g. jet planes the more developed it is.

In explaining why the US for example, has experienced an explosion in wealth in the last two centuries, unparalled in economic history, Hausmann says that it is down to the country’s ability to produce more and more products.

So the trick seems to be, to produce more and more products and that are also increasing in sophistication. You expand your product range by producing related products and then increase the sophistication of the products and processes.

So for instance since we do fish not only can we go up the value chain in fish processing but we can also branch out into crocodile farming and its related industry maybe, with much greater success than we would if we attempted manufacturing speed boats?

The greater the sophistication of an economy or product the more knowledge is embedded in it – a calculator has much more knowledge embedded in it than a pencil and needs greater organizational sophistication to produce.

For purposes of illustration Hausmann uses the term personbyte to refer to the knowledge in one person.

“To create products with more than one personbyte, you need to aggregate personbytes. This is done by creating networks of people we call firms and networks of firms we call the value chain,” Hausmann said.

Government interventions have been many and registered varying success.

It seems though that the more sustainable interventions by governments would be to enable companies to go about the business of making these products.

Interventions such as charting credible national strategies, efficient provision of public goods – law & order, social services and infrastructure are more effective than government trying to startup companies and create products.

This is because the private sector driven by the profit motive is best suited to leverage the process of experimentation and inevitable failure that comes with identifying products and markets. Governments on the other hand are often driven by other motives than operational effectiveness and market efficiency.

Which brings us full circle to why Uganda is not yet manufacturing safety pins 26 years after Museveni identified this a singular failure of our economy.

One, Uganda probably does not need to produce safety pins – who uses them anyway? Two, there are no related industries from which we can launch our safety pin factory and therefore we are not the best suited to produce suited to produce safety pins – one can probably get them cheaper from China anyway.

But it was not our inability to manufacture safety pins that was at issue, but that the economy was not diversified enough.

And Hausmann’s work suggests start with where you are but warns against getting fixated with agriculture.

He says developing agriculture and its related industries is not sufficient to ensure sustained development but that in addition we need to be making other things as well. Agriculture can as well serve as a launch pad.

He gave the interesting example of the Finland whose major natural resource is its forests, so the Finns developed wood-related industries.  But they also developed industries that specialised in making the cutting tools for felling trees. But since cutting is cutting they extended this technology to cutting tools for anything else. And then they automated these tools. And they made them more precise using high technology. To cut—pun intended, a long story short the unintended consequence of the development of the lumbering industry was the creation of mobile telephone technology that led to  Nokia.