UMEME EXIT A LESSON

This week the controlling shareholder of power distributor UMEME announced it would be disposing of a significant portion of their interest in the company to pursue another venture in Cameroon.

British private equity firm, Actis Capital owns 60 percent of UMEME having sold 40 percent to the public in 2012.

Earlier this year parliament voted to cancel the UMEME concession citing irregularities in the way the concession was procured. Thankfully the resolution was not binding on government or UMEME.

"With news that Actis Capital was divesting itself of a major portion of its holdings understandably led to speculation that the parliamentary action prompted the move. Umeme denies this but it is not inconceivable that the political risk that came with the resolution played a part...

It takes time to organize such a sale and the parliamentary debate that resulted in the recent resolution started three years ago, must have been factored in.

Since UMEME took over the concession their customer base has doubled to 574,000, with the amount of power going the same way doubling to 2118 gwh in addition the company was collecting all the revenues due to it, including from government. Last year revenues came in at nearly a trillion shillings.

These improvements have come at a cost with the concessionaire investing more $150m (sh390b). This number is interesting on two fronts. One, its a reflection of how derelict the network they inherited was and secondly, this is money would have been ploughed into the system by government were it the owner, money badly needed for infrastructure and social services but also knowing how government works would not have produced the efficiency improvements UMEME has shown during the same period but would have instead enriched a few individuals.

Whereas Actis says it is shifting its attention to bigger projects in Cameroon, its hard to see how an investment in a more stable market can beat the growth potential of the Uganda market where the supply constraints are being sorted out and there is only one person in every ten Ugandans with access to power.

"The truth is that while Actis has done well for themselves--not as well as they would have hoped had they seen out the full concession, Uganda was becoming a hazardous place to do business. Not only were they battling the small power thieves, well connected people, companies and government departments were in on the action too. As if that was not enough they had a government driven by political rather than economic considerations, that was often reluctant to back their business plan...

In addition they suffered rear guard action from regulators and parliamentarians who hung them out to dry or were hell bent on the throwing them out, regardless of the cost to the economy in lost momentum or compensation.

It is difficult to have sympathy for Actis. Capital is a coward and this is what they do. They provide capital, bring together the management expertise and develop projects with a clearly defined exit number in mind.

Two lessons emerge from this experience. 

"One, in the absence of local comparable investors we need to be more supportive of investors like Actis. Secondly, that we need to have a more strategic vision of how we mobilize our own resources to be more meaningful players in our own investments. To illustrate of the ten largest shareholders in the UMEME share sale two years ago only NSSF and maybe the employees and directors and shareholders of UMEME represented Ugandans. Who is to blame when, the juiciest of our investments are snapped up by others?

UGANDA IN THE PRESS FOR THE RIGHT REASONS ...SORT OF

Last week Sister Rosemary Nyirumbe was named  on the TIME 100 list, an annual list of the most influential people as determined by a panel brought together by the magazine.

Nyirumbe was named for her work with women and girls affected by violence. She has set up a home in Gulu to aid in this effort.

She is in illustrious company. Among those named are the usual suspects Barack Obama, Pope Francis, Angela Merkel and Xi Jiping ... The list is about influence and not popularity so Abu Dua (a terrorist with a $10m prize on his head) and Kim Jung Un -- not your regular dinner guests, found their names on the list.

The nominees are drawn up by alumni of the decade long list, TIME magazine's editors and international writers. It comes as no surprise that the award is heavy with US nominees or people who champion causes that the US public can relate to.

"The Lord's Resistance Army (LRA), who have carried out a 20 year insurgency in northern Uganda, were forced into the US public's conscience when the video Kony2012 went viral. Up to that point despite killing hundreds, abducting thousands of children for use as soldiers and sex slaves and bringing the region's economy to its knees, Kony and his band of killers got only passing mention in Washington's corridors of power...

Last week a few LRA rebels snuck back into Uganda and surrendered in West Nile. That there is a chance the LRA will make a return is enough to make stomachs turn and hairs stand on end in northern Uganda.

I am sure Sister Nyirumbe did not lobby for this accolade, but the unintended consequence of it, is that the LRA-story is kept current, not far from the surface ensuring pressure is maintained on the remnants of the deadly group.

International opinion is fickle, driven by a media forever seduced by the latest spectacle and less by altruism. The truth be told, Kony and the LRA is not the story, and not just because he is committing atrocities far from the camera lenses. The real story is the societal disruption and economic devastation, the after effects of his murderous campaigns.

Hopefully, but it is unlikely, recognition for people like sister Rosemary will swing the LRA story towards how to manage the aftermath.

"On the other hand it might be a good thing that the mass media has moved on to the next story. Nothing makes for good news like bad news. Media attention takes on a life of its own, often focusing on the symptoms rather than the causes, the immediate rather than long term effects of events. They play a useful role in raising awareness however caricatured...

But also with the media away, more credible help can come through rather than the self serving kind that often shows up in the heat of the moment looking for photo opportunities.

The bottom line though, as has been shown many times is that the final responsibility for remedying the ills of society lies with us. External assistance is often transient and easily withdrawn from the recipient for reasons other than his need.

It is a moot point that there is great need for psychosocial help in northern Uganda. Just as important is the need for economic empowerment that would make the population -- most of whom were displaced from their homes for nearly 20 years return to being productive. They do not need charity but a chance to reactivate their lost skills or learn new ones, greater access to markets and temporary help to get them on their feet.

It does not help that aid to the north is being stolen hand over fist, but this aid is at best temporary and will not guarantee a permanent solution to the north.

It helps little too that the region's political representatives have come to Kampala and been sucked into the smash-and-grab antics of their contemporaries and have "forgotten" their people.

"What the north -- just like the rest of the country, needs is leadership. But there is a particularly dire need in the north because of how the society's structures have been degraded. They need people to lay down a vision, to provide example and to mentor the youth the majority of whom have never known better than terror, deprivation and disruption...

If for nothing else Sister Rosemary is being recognized for the leadership she is providing to that community, a fact that cannot be denigrated by a media house which had long forgotten the northern conflict.

GOVERNMENT SHOULD STAY COURSE ON PUBLIC SERVICE PAYROLL REFORMS

Last year the finance ministry instituted a series of changes in its payment systems aimed at plugging the holes that were causing major leakages of public funds.

Among the changes instituted were the consolidation of accounts and devolution of the payroll to the districts.

The measures are still being test run and teething problems are being worked out.

Previously a ministries, government departments and agencies (MDA) would open numerous accounts for payment to the payroll, suppliers of goods and services. Because these numerous accounts were difficult to track they were employed for siphoning money out of the ministry. The ultimate plan is to have one central account for all government transactions which will make it easy for the finance ministry monitor transactions in real time. In addition no expense can now be authorised without a previously approved work planned.

In an extension of this push for more transparency in government accounts the finance ministry now pays salaries direct to the accounting officers of districts according to a verified payroll by the Chief Administrative Officers (CAO) and his respective headmasters for instance. This way the cut out the public service and education ministries through which payments would be made, effectively reducing the surface area for theft.

A by-product of these changes is that some civil servants have gone without salary since the beginning of the year.

Last month Finance ministry permanent secretary and secretary to the Treasury Keith Muhakanizi placed an advert twice in the papers reminding 37 districts that had not handed in the verified payrolls of their teaching staff by the 15^th and again by the 23^rd April. It’s as if suddenly after all these years the respective accounting officers don’t know how to draw up a payroll!

The reason is not very hard to fathom. In many cases officials have padded the payrolls with ghost teachers, to now submit a much lower payroll numbers would raise eyebrows and even lead to prosecution.

Hence the reluctance in many cases to submit a cleaned up payroll. Or this maybe an attempt to create pressure on the politicians so they may direct a reversion to business-as-usual.

In one central Uganda district the payroll has now shrunk from 2,900 teachers to 900.

A cursory look over the budget performance for the last three quarters display a dramatic drop in the capacity of government to absorb the money when it is available. At the same time last year all ministries but one, had absorbed most of the money released to them, fast forward to today and these same ministries are struggling to utilise half the money  released to them.

If you are wondering how come there is no money floating around like it used to be, these initiatives maybe at the heart of the matter.

This raises some interesting issues not only about government operations but on the general economy. It is evident that billions – no hundreds of billions of shillings have been lost to government finding their way into the pockets of greedy officials. So failure of government delivery was not for lack of government funds but because of people working from the instance to subvert programs by stealing money. But maybe that is putting too high a premium on their motives, the simple truth seems to be that these people stole money for their own aggrandisement but not out of any allegiance to a higher power.

It also explains the real estate boom in Kampala in recent years. On a wider plane official figures show that the main drivers of growth have been construction and services.

One can expect that the beneficiaries of this scam are not going to take this lying down but will fight tooth and nail to maintain the status quo, we can only hope the finance ministry can stay the course regardless of the short term pain we are feeling now.

WHY WE SHOULD ALL CARE ABOUT PRESS FREEDOM

Saturday, May 3^rd is Press Freedom Day. It maybe just another day were it not for the fact that freedom of the press touches on every sphere of our lives and – not to over exaggerate, makes the difference between us living lives of increasing affluence or wallowing in quiet desperation and poverty...

I will start by quickly admitting my bias on the subject.

My ability to do my work to the best of my ability is determined by the degree of press freedom in this country. The more the better.

But the importance of press freedom goes well beyond my improved wellbeing or that of any individual journalist or media house, press freedom is critical for the advancement of democracy in Uganda.

And why should we care about democracy or an increasingly inclusive political system? Because politics determines whether we will enjoy ever improving standards of living or not.

"The difference between the general well being of a Ugandan and South Sudanese or Kenyan or Rwandan is a function of the politic practice in the respective countries....

It is attractive to believe that if you have good leadership then the politics will follow suit.

But good politics, democracy comes from a constant interaction between the elite and the citizens where the interaction goes beyond elections every so often but also an ability for the citizens to question government policies, demand accountability and even have a realistic chance of proposing alternative policy.

Leaders good or bad, practice good politics, that is beneficial to the majority of people, only to the extent that they are held accountable for their actions by the people.

The main power centers in a political system are the government and business. But often times these two are in cahoots, conspiring against the ordinary person. Civil society then becomes a necessary third center of influence to check governments and business.

Enter the media.

At the basic level access to information is a tool for survival. In prehistoric times it might have been information about which plant to eat or not, which places to go or not or when to plant or not. In more recent times information that will further our chances of survival can be about job and investment opportunities, new findings in health research or even where to find a mate.

With all these benefits the importance of the media seems a moot point.

But it is as a result of these numerous benefits that the attacks on media freedoms are persistent and unrelenting around the world and not necessarily from the powers that be.

"Just because in Uganda we are not jailing or killing journalists or shutting down media houses at the rate that its happening in other countries does not mean media freedoms are not under attack. The attacks on the media may take the form of intimidation, commercial boycotts or anything that prevents the media house or its journalists from doing their job.

Whereas when we talk of press freedom the knee jerk reaction is to examine government’s record on this front, the general public are also guilty of compromising press freedoms.

Last year when two media houses were shut down, some activists called for a boycott of the New Vision, which is 53% owned by government. These “defenders” of press freedom had their reasons for this call all muddled up but it boiled down to since government had shut down these other newspapers, their media house should also suffer.

This playground logic would be all very well if not for the fact that it would still be curtailing press freedoms and would not necessarily resolve the issue of reopening the other media houses...

Unfortunately for the media they deal in an intangible service, whose benefits while they lead to a better standard of living are easy to underestimate.

Fear is a function of a lack of knowledge. To dispel fear you need to reduce your ignorance. To the extent that the media is free to go about its business is the extent to which people feel safer going to bed at night.

Of course the argument can be that the media can be used to inflame passions and fuel paranoia but if you look down history, the times when media have been able to do that is when they has been no press freedom. Where the information coming to the public is controlled and alternative views have been quashed...

Many perspectives even on the same story are useful in helping the public not only keep abreast of developments but also make informed decisions on what actions to take in given circumstances.

While the professionals who work in the industry are the direct beneficiaries of an improved media environment, it’s the everyday citizen who is the ultimate beneficiary of a free and fair press.

The US has had the debate on media freedoms for much longer than many in 1961 John F Kennedy while addressing the American Newspaper Publishers Association probably took the debate a notch higher when he said,

“Without debate, without criticism, no Administration and no country can succeed — and no republic can survive. [...] And that is why our press was protected by the First Amendment — the only business in America specifically protected by the Constitution — not primarily to amuse and entertain, not to emphasize the trivial and the sentimental, not to simply "give the public what it wants" — but to inform, to arouse, to reflect, to state our dangers and our opportunities, to indicate our crises and our choices, to lead, mold, educate and sometimes even anger public opinion.”

Enough said.