THE UGANDA ECONOMY 2025, GET A GRIP ON DOMESTIC ARREARS

Various observers predict good things for the Uganda economy this year. The Bank of Uganda maintained their projection of a 6.5 percent growth for the financial year, but ballooning domestic arrears, monies owed by government to the private sector, could dampen these and future prospects for the economy.

With the budget cut by at least 25 percent and the date for first oil pushed back at least another year, one can expect that government will not have its huge stock of domestic arrears, touching sh7trillion at last count, at the top of the agenda.

We all need to appreciate that domestic arrears are not just a number, but have real implications on people’s lives and livelihoods.

"While the economy is reported to be going from strength to strength, suppliers to governments are having to jump through hoops to stay alive, as payments are often delayed for months and even years. It is so bad now that many banks will not accept invoices to government for working capital facilities...

 In the daily workings of business, one may not have all the money at hand to meet various obligations. The banking industry can however provide working capital against invoices for work done. Basically if someone has done work and is due payment of say sh100m in future the banks can lend you money against that promise of future payments.

So if banks are not taking government invoices you can imagine how squeezed our businessmen are for liquidity.

This has the knock on effect of limiting businesses ability to invest, expand or even just stay alive. Given that government is the biggest client to the private sector most, if not all businesses are affected by this ever increasing inability of government to honour its obligations.

The deafening silence around this issue in government communication makes one wonder.

"An economy is only as vibrant as its private sector, as the former communist countries showed us, government’s mounting debt to the private sector in contravention of all measures to guard against this can, only spell doom for the private sector and by extension the economy...

But one can not help but wonder about certain contradictions in the economy. Given how government is squeezing life out of the private sector, it came as a surprise when Uganda Revenue Authority (URA) reported it had beaten the half year revenue collection targets by sh300b.

This should be welcome news for any economy. It suggests that revenue administration is improving, that URA is not only plugging the holes but also widening the tax base. The worry may be as the domestic arrears continue to bite even URA will struggle to collect.

The worrying thing for URA and the economy as a whole is that many of these businessmen will not just roll over and die. They will seek to survive by any means necessary. It is not a stretch to imagine that many of them will revert to informality if only to stay one step ahead of the tax man.

But beyond that these unmet obligations will erode confidence in government with far reaching implications for things like the cost at which we can contract loans in the open market. Lenders will not be averse to adding a point or two on interest rates to provide for government’s risk of default.  

Again this rising number is not one we can hide under the carpet.

The remedies seem obvious. For starters government really needs to rein in its accounting officers. The Public Finance Management Act not only provides a legal framework for managing government resources, but in addition in the Charter of Fiscal responsibility mandates timely payments to avoid arrears accumulation.

The government’s laissez faire attitude to accumulating domestic arrears flies in the face of this and clearly no one is being held accountable...

With that we can at best stop the accumulation of domestic arrears or at worst slow down their accumulation.

Which still leaves is with almost $2b of domestic arrears to grapple with.

 A policy needs to be drawn up if it hasn’t been, to prioritise the clearing of these arrears and regular audits to confirm and validate outstanding obligations. And there need to be credible sanctions against officials who ignore these initiatives. Up to now it seems they are not even getting a slap on the wrist for their impunity.

It is inconceivable that government can clear these in one budget cycle. However, government can go to the bond market and borrow money to be paid over years. While this will increase our domestic debt, which now stands at about sh55trillion, it would revitalize the private sector and the economy. We can not continue hoping for first oil in the hope it will give some much needed impetus to the economy.

Last week government raised sh990b from the bond market. Imagine we could ring fence a bond auction a month for clearing domestic arrears, we would have done commendable progress by the beginning of next year.

The privatization of the state enterprises and the liberalization of the economy starting in the 1990s, unlock individual initiative making the economy more robust and vibrant. As a result we have been able to shrug of many shocks – local, regional and international.

It is in our best interest to make sure our private sector is strong and able to continue bringing us through these tests.

Resolving our domestic arrears issues would be a good place to start.

 

LETTER FROM A FRIEND

Dear Paul,

 

Be grateful for making it through 2024 in relatively good order. But we are back on the tread mill and yet another year is ahead of us.

You had a good year in 2024, despite being retired and the trick now is not to rest on our laurels (we may do that in 10 years’ time) but maintain commitment to our financial discipline. We have got to keep at the fore of our mind that our financial health in coming years will depend on the balance between consumption and savings/investment. The process should see you consuming less and less, while investing more and more of your income. That will be your measure of success.

At the risk of sounding like a broken record, here is what you should be doing in the New Year to ensure we end it on a high, like we did last year.

1.       It is not how much you make but how much you keep

We all want to be paid. Being paid is always sweet. But what will improve our financial fortunes is how much we keep of our income through saving and investing than how good we look spending our money. Easier said than done. They say save your money today so it can save you in the future.

Saving 50 percent and investing 25 percent of all your income is a good start. We should maintain that discipline with a view to pushing up your investing ratio in 2025 to between 30 - 40 percent. We will only be able to do that if we stay the course in 2024.

 

2.        Shed your ego

There is no amount too small to save or invest. Us “corporates” we dream of investing big numbers and therefore miss the chance to build over time. No wonder we are so corrupt. We are waiting for the big deal. Hence the story of the big boss and his driver, who when they were both retired, the driver was well off because he was not afraid to put aside a bag of cement when he could. A bag of cement is not even drinking money for the big boss. But because of not taking care of the cents through his career the big boss finds himself with few shillings from his investments, with huge expenses built up during the good old days.

 

3.       When you see risk, seek  knowledge

Everything you do will come with risk. In the face of risk you can choose to back off and not give yourself a chance at good returns or research the deal before you turn it away. Knowledge is the greatest mitigant against risk. Money is being made everyday in this economy. The ones who are making the money are silent, allowing the ones not making money to be the loudest. But if you paused and looked  harder there is opportunity everywhere. The problem is that when you are not in the deal, you don’t know the deal, and think everyone is gnashing their teeth like you.

But about risk. You would think nothing of driving from home to town – you have been driving for 30 years, the risk is minimized by your knowledge and experience. How much riskier does the same trip look if you had the car keys to your ten year old child?

Go further than copying your neighbor in researching new opportunity.

 

4.       Don’t overestimate what you can achieve in a year

The cliché that the race to your financial freedom is a marathon not a sprint, bears repeating. This time next year you should be better off than you are now or not. But expect to be only marginally better. But seen against the rest of your life, that small gain will be the foundation for the gains of the next 20 years. Stick to the process, the results will take care of themselves. If you can grow your portfolio just 10 percent a year, at the end of 20 years it would have grown nearly sevenfold and the ensuing income with it. Think about that. You need to be in bed with compounding rather than at war with it.

5.       Guard against lifestyle creep

Maybe I should have started with this. With increased income the temptation to consume more will be your biggest battle. If you are consuming 25 percent of your income now, let it remain at that percentage but preferably lower as your income increases. A wise man once said he makes ten shillings eats one and reinvest nine, repeat until rich.

We have talked about this before all of the above is simple but not easy to do. No enterprise of real value is easy. The battle is really with yourself. We are seduced by complexity but its really simple and we should not be suspicious because the process is simple.

Low income, bad investment environment, your friends blasting while you are lying low like an envelope, are all outside your control. You can only control your attitude and effort. Focus on that.

Otherwise Happy New Year, wish you the best  and see you on the other side.

 

Sincerely

$

 

 

CORRUPTION: THE MORE THINGS CHANGE, THE MORE THINGS REMAIN THE SAME

Looking through the end of year columns of the last decade a consistent theme was for the wish for the end of corruption.

In November 2010 this column pointed out that the fight against corruption was a joke as long as civil servants were being paid a pittance

“As long as the Government continues to pretend to pay, people will continue to pretend to work while devising other means to meet their basic needs. It is blindingly obvious.”

The column continued to point out that, “The lowly paid civil servant lives in Nakasero, Bugolobi and Ntinda, is building in Namugongo and Buwate and is unstintingly loyal, racking up five, ten, 15 years in the civil service.

This would be an illusion if they were conjuring this lifestyle out of their payslips.”

In 2011 while reporting about the passing of two new pieces of legislation – The Whistle Blowers Act and the Anti-Corruption Act, noted the vice will always be difficult to fight.

“Unlike murder or even outright theft, in corruption cases, bribery for instance, both parties are guilty of a crime, witnesses are hard to come by and paper trails can be obscured. The aggrieved party is a faceless government or a far removed public, neither of whom maybe aware a crime had been committed or an unable to do anything about it for legal or bureaucratic reasons.”

The column which was published on 12 December 2011 ended on a hopeful note, “Corruption is everywhere the challenge is to relegate it to the fringes of our daily lives, current evidence suggests we maybe on our way.”

In December 2012 the column reported an aid pull out following corruption scandal in the Office of the prime minister but were skeptical the action would provide a lasting solution or even accelerate the momentum in the fight against corruption.

The column explained that due to the individual agendas of donor countries, a lot of it to do with maintaining influence over the Kampala government, the pull out would be shortlived.

“The recent aid suspensions amount to a slap on the wrist and one can expect we will be back to business as usual by this time next year. This is not thumbing our noses at the donors, it’s just the way the world works.

 "It is bad enough that we continue to rely on donors to cover our budget shortfalls. But it is bad upbringing to expect the donors to come in and clear out our mess.”

And of course in 2013 we wondered whether our honourable representatives were looking out for our best interests,

"Honourable MPs, with your sh20m salaries, hundred million shilling four wheel drive guzzlers and billion shilling car park, you make us – the down trodden of the earth, wonder whether you are  irredeemably stupid or that you have ulterior, self-serving motives that we are not privy to, that motivate your actions.”

And in 2014 we brought home what the real cost of corruption was,

"So instead of 1,000 inpatients being treated at Mulago, one man buys himself a Toyota Land Cruiser VX or sends his four children to a top international school locally for a year or organises a week long holiday for his five-member family plus nanny to the Maldives or Seychelles.”

If recent reports about monies stolen from the treasury or people forging the president’s signature, are anything to go by, no space is sacred to the white-collar criminals we are breeding.

Not to belabor the point, but corruption remains a thorn in our side, slowing down growth, hobbling development and hurtling us inevitably to social unrest and political instability.

Looking back it is hard to say that there has been meaningful progress in slowing down the corruption juggernaut, if the apartments sprouting out of every wet land in the suburbs are anything to go by, I am afraid corruption has only picking up pace.

We at Shillings & cents would love to be wrong, because this is our country and we hope to bequeath our descendants a better place than we found. But the logic is inescapable. And every year that we do not implode in an orgy of social upheaval, is one more year to be worried.

Merry Christmas & Happy New Year

 

BOOK REVIEW: BEFORE WEALTH, FIRST A MINDSET CHANGE

Book Review: Rich Dad's Guide to Investing

Author:  Robert T. Kiyosaki

 

                                                

 

I have been a fan of Robert Kiyosaki and his “Rich Dad” series since I bought my first book  -- “Retire Rich, Retire Young”, 20-odd years ago.

Up to that point in my life (blame it on my Catholic upbringing) I believed that wealth accumulation was for a select few, which is true, but not for the reasons I thought. I thought some people were genetically predisposed to be rich, that wealth accumulation was based on the genetic lottery and not a learned behaviour.

I thank Kiyosaki for that shift in mindset.

Lately with time hanging loosely on my hands, I decided to go back “revise” Kiyosaki. To my mind “Rich Dad’s Guide to investing” is the one the series which speaks most to shifting mindset as a starting point to eventual wealth.

Kiyosaki begins with the foundation of financial success—education. He argues that most people are trapped in a cycle of earning and spending because they lack the knowledge needed to make money grow. Unlike traditional education, which often prioritizes job readiness, financial education teaches individuals how to manage, grow, and invest their earnings effectively.

He underscores the concept of assets versus liabilities, a cornerstone of his philosophy. Kiyosaki’s rich dad—the inspiration behind his financial lessons—taught him early on that financial literacy involves understanding the difference between what puts money into your pocket (assets) and what takes money out (liabilities). The book stresses that true investors focus on accumulating assets like real estate, stocks, and businesses, which generate ongoing income.

Kiyosaki’s emphasis on financial education isn’t limited to theoretical knowledge. He advises readers to actively seek opportunities to learn—whether through books, mentorship, or hands-on experience. Investing without understanding the market, he warns, is akin to gambling.

“The more you know, the less risk you take.”

This quote hit me the first time I read it, understanding it to mean that more knowledge is key to mitigating against risk.

 

The Power of Long-Term Thinking

 

Unlike many who are swayed by the lure of quick profits, Kiyosaki stresses the importance of building wealth over decades. He highlights that true investors aren’t focused on the next big stock tip or speculative trend but are instead committed to steady growth through well-chosen assets.

Kiyosaki’s perspective on patience is particularly relevant in today’s social media soaked reality, where the temptation to “Keep up with the Jones” is strondger than ever before.

This approach also involves resisting the temptation to sell assets prematurely for short-term gains. Kiyosaki emphasizes the importance of reinvesting returns to compound growth, a strategy that has been key to the success of wealthy individuals.

By prioritizing sustained growth over instant gratification, Kiyosaki offers readers a mindset shift that is crucial for successful investing.

 

The Role of Leverage in Building Wealth

 

Another crucial lesson in the book is the strategic use of leverage. Kiyosaki introduces leverage as a tool that amplifies financial outcomes by utilizing resources beyond one’s own. Expanding its meaning beyond borrowing capital, to leveraging expertise, or using other people’s time and skills to maximize returns.

While leverage has its risks, Kiyosaki argues that educated investors know how to manage these risks effectively. For instance, in real estate, he demonstrates how borrowing money to purchase property can yield substantial returns when managed wisely. Similarly, building a business involves leveraging the skills of a team to achieve results that would be impossible for an individual to accomplish alone.

Kiyosaki warns that without the requisite financial knowledge, over-leveraging can lead to disastrous consequences, such as unmanageable debt or poorly performing investments. He encourages readers to approach leverage with caution, ensuring they have a solid understanding of the associated risks and benefits.

But my key takeaway when I first read the book and again more recently, is that our expenses determine whether we will accumulate wealth or not. More than our income.

There are only two ways to spend your money either to invest it or eat it. If your expenses tend toward one side or the other will determine whether you have a chance of being rich or not. There is really no way around that.

So when we are struggling financially regardless of our income let us look to ow we spend.

As if I could forget "Rich Dad’s Guide to Investing" excels in its ability to simplify complex financial concepts without diluting their significance. The lessons on financial education, long-term thinking, and leverage are not only practical but also timeless, providing a strong foundation for anyone eager to embark on their investment journey.

“Rich Dad’s Guide to Investing” is an empowering guide for those who want to take control of their financial futures. By emphasizing the importance of financial education, the value of long-term thinking, and the strategic use of leverage,Kiyosaki provides readers with a roadmap to achieving financial independence.

I think this book is good reading for even financial experts who have forgotten or never knew, that before any action first the thought. The actions can only be as good as the mindset dictating those actions.

 

LOOKING TO A PRESIDENT YOWERI MUSEVENI SUCCESSION

The succession of President Yoweri Museveni, who has governed Uganda for nearly four decades, is one of the most significant political events looming on the horizon. Museveni’s tenure, marked by a blend of revolutionary zeal, economic pragmatism, and strategic regional diplomacy, has left an indelible mark on the country’s political, economic, and geopolitical landscape. As Uganda anticipates a future without its longtime leader, the questions surrounding his succession involve not only the mechanics of transition but also concerns about the stability, direction, and identity of the country going forward.

This essay explores the political, economic, and geopolitical concerns surrounding Museveni's succession, considering historical examples of African leadership transitions, as well as potential succession models for Uganda. It also highlights how Museveni's personal history and political journey complicate the process of his succession.

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1. Political Concerns

A. Institutional Weakness and Political Polarization

Uganda’s political system, though formally structured by the 1995 Constitution, faces significant challenges when it comes to ensuring a smooth and peaceful succession. While the Constitution specifies that the Vice President should step into the president’s shoes temporarily before elections are held, the system has been weakened by years of political centralization under Museveni. The executive has often dominated Uganda’s political sphere, undermining the independence of institutions like the judiciary, Electoral Commission, and Parliament.

This centralization of power has made it difficult for democratic institutions to function independently and efficiently, raising concerns about their ability to fairly manage the succession process.

Furthermore, Uganda’s political landscape remains deeply polarized. The NRM, which has governed the country under Museveni’s leadership, faces substantial opposition from both within the party and from other political groups. Museveni has long been accused of suppressing opposition, restricting political freedoms, and controlling electoral processes to ensure his continued rule. This suppression of dissent has led to a lack of trust in the country’s democratic processes, creating an environment ripe for instability during a leadership transition. Opposition parties, such as the Forum for Democratic Change (FDC) and the Democratic Party (DP), have long been sidelined, and many of their members see Museveni’s departure as an opportunity to challenge the status quo. However, the lack of political plurality and the dominance of the NRM may mean that the transition is fraught with conflict.

The issue of internal party divisions within the NRM also complicates succession concerns. Speculation about Museveni’s son, Muhoozi Kainerugaba, as a potential successor has created tensions within the party. These tensions are fueled by rival factions and by the general fear that Museveni’s personal leadership style, which has consolidated power around him, may result in an overly personalized transition. The question of whether the NRM can unify behind a single successor is central to the stability of the transition. If the party fractures during this period, it could lead to a protracted power struggle, which would likely involve the military, as it has historically played a key role in Uganda’s politics.

B. The Role of the Military

The Ugandan military, particularly the Uganda People’s Defence Forces (UPDF), has played an instrumental role in Museveni’s rule. Museveni himself rose to power through a military rebellion, and since taking office, he has ensured that the military remains a central pillar of his regime. This strong military presence has helped maintain order and stability but also means that the military could play a central role in the succession process. The UPDF has been integrated into the political fabric of Uganda, with key military figures holding prominent government positions. While this has helped the NRM maintain power, it also raises concerns about the possibility of military involvement in the succession process, particularly if rival factions within the party or military feel excluded.

The military’s involvement could also exacerbate tensions within Uganda, as citizens and opposition groups may fear that the military might intervene to ensure the continuation of Museveni’s rule, even if the transition process is peaceful. The presence of Muhoozi Kainerugaba, Museveni’s son, within the military further complicates matters, as it raises the possibility that the military could push for his succession in the name of stability, regardless of broader democratic considerations.

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2. Economic Concerns

A. Resilience of the Economy and Structural Challenges

Under Museveni’s leadership, Uganda has undergone significant economic transformation, particularly since the early 1990s, when the government embraced a free-market, liberalized economy. The economy has proven to be relatively resilient during times of crisis, and Uganda has experienced consistent growth despite political instability in the region. However, Museveni’s departure raises concerns about whether the next leadership will continue the economic reforms necessary to maintain stability and growth.

Uganda remains largely dependent on external sources of investment, with foreign direct investment (FDI) playing a pivotal role in financing development. Although Uganda has seen impressive growth rates, the economy continues to struggle with a narrow base of domestic capital. The development of a robust indigenous capital base has been hindered by factors such as inadequate access to financing, the small size of Uganda’s middle class, and the limited reach of domestic financial institutions. These limitations make Uganda vulnerable to external economic shocks, and any disruption in the political process could exacerbate this vulnerability.

A major challenge is the country’s relatively underdeveloped middle class. While the middle class has grown in recent years, it remains small and vulnerable. The size of the middle class in Uganda is insufficient to drive sustainable, long-term economic growth. Many Ugandans are still engaged in subsistence agriculture, and urbanization has not been accompanied by widespread industrialization. This leaves Uganda in a precarious position, especially given the country’s large, young population, which faces high levels of unemployment and underemployment. The lack of a significant middle class means that there is a limited consumer base to sustain economic growth during times of political transition.

However, there are emerging signs of progress in terms of local resource mobilization. The National Social Security Fund (NSSF) has become a key player in Uganda’s financial landscape, acting as an important vehicle for mobilizing domestic savings and investing in infrastructure projects. Furthermore, the rise of fintech platforms and unit trusts has increased financial inclusion, allowing ordinary Ugandans to participate in the financial system in ways that were previously not possible. These mechanisms could help reduce Uganda’s reliance on foreign capital, but their sustainability will depend on the political and economic stability that follows Museveni’s succession.

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3. Geopolitical Concerns

A. Museveni’s Strategic Acumen

Museveni’s geopolitical influence has been an important aspect of his legacy. Since coming to power in 1986, he has skillfully navigated the complex regional and international landscape, balancing Uganda’s interests with those of its neighbors and key global powers. His diplomatic approach has helped elevate Uganda’s status in Africa, and his role in regional peacekeeping efforts, including the African Union Mission in Somalia (AMISOM) and peacekeeping in South Sudan, has positioned Uganda as a key player in East African security.

Museveni’s leadership has been marked by pragmatic diplomacy, especially in balancing Uganda’s relationship with Western powers, such as the United States and the European Union, while also courting emerging global players like China and Russia. His ability to extract aid and investment while maintaining Uganda’s sovereignty has been a hallmark of his foreign policy. This diplomatic acumen has helped Uganda maintain relative stability in a region that has seen frequent conflicts.

However, Museveni’s departure could create uncertainty in Uganda’s regional and international relationships. A less experienced successor may struggle to maintain these complex diplomatic and military alliances, especially if they lack Museveni’s political acumen or personal standing. The risk of Uganda’s diplomatic isolation is a significant concern, particularly in light of growing geopolitical tensions in East Africa. Neighboring countries like Rwanda and Kenya, as well as the broader East African Community (EAC), will closely monitor Uganda’s transition to ensure that their interests are not threatened.

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4. Museveni's Personal Historical Context and Its Complications

Museveni's personal history is an essential lens through which to understand his complex leadership and its implications for succession. Born into a poor family among the nomadic Bahima people in southwestern Uganda, Museveni grew up in a rural setting with little in the way of material wealth. His formative years were deeply influenced by the political and social upheavals of colonial Uganda, which, coupled with his exposure to Marxist and anti-imperialist ideas during his youth, played a crucial role in shaping his political ideology. Museveni was swept up by the anti-colonial and anti-imperialist rhetoric of the independence movement, which left a lasting imprint on his worldview.

Museveni’s involvement in the anti-colonial struggle and his subsequent embrace of revolutionary, socialist ideals during the Cold War period played a significant role in his rise to power. Museveni’s early revolutionary activities culminated in the formation of the National Resistance Movement (NRM), which would eventually lead to his victory in 1986 after a five-year guerrilla war. His initial stance was one of ideological purity, rooted in the struggle against dictatorship and imperialism.

However, after the fall of the Berlin Wall and the collapse of the USSR, Museveni shifted towards a more pragmatic stance, embracing the free-market economic model promoted by the West. The collapse of the Soviet Union and the end of the Cold War forced Museveni to adapt to the new unipolar world order, where economic liberalization became a central tenet of governance. This pragmatism, while ensuring Uganda’s integration into the global economy, further complicated the succession debate. Museveni’s transition from revolutionary firebrand to economic pragmatist has shaped his leadership style, leading to a highly personalized regime where decisions often revolve around his own judgment rather than institutional consensus.

Museveni’s personal historical context, marked by his rise from poverty, anti-imperialist revolutionary zeal, and eventual embrace of economic liberalization, complicates the succession process. His personal journey has resulted in a leadership that blends ideological rigor with political flexibility, making it difficult for any potential successor to replicate his ability to navigate both Uganda’s internal political dynamics and its external relationships.

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5. Possible Succession Models

Several African countries have experienced political transitions that provide valuable insights into potential succession models for Uganda. Examining these models, such as those in Tanzania, Kenya, and even a potential reversion to a parliamentary system, helps to frame the possible paths Uganda could take.

A. The Julius Nyerere Model (Tanzania)

Julius Nyerere, the first president of Tanzania, voluntarily stepped down in 1985, ensuring a peaceful transfer of power to his chosen successor, Ali Hassan Mwinyi. This model exemplifies a peaceful leadership transition where the outgoing leader facilitates the succession process. Nyerere’s transition was marked by his continued moral and advisory influence, but he largely refrained from interfering in the new government’s operations. Museveni could adopt a similar approach, supporting a successor and ensuring continuity while avoiding direct involvement in governance. However, Uganda lacks the same level of political maturity and institutional coherence seen in Tanzania, which could make such a transition difficult.

B. The Jomo Kenyatta and Daniel arap Moi Model (Kenya)

Kenya’s experience with succession has been mixed. Jomo Kenyatta’s death in 1978 saw his Vice President, Daniel arap Moi, assume power, albeit with some resistance from Kenyatta’s loyalists. Moi’s rule, though stable, marked a period of autocratic leadership. Museveni could follow a similar model, where a vice president or another figure within the NRM takes over, but this model carries the risk of power struggles and resistance from rival factions.

C. Parliamentary System Reversion

A reversion to a parliamentary system could provide a more democratic route to succession, reducing the concentration of power in a single individual. In this model, the Prime Minister would be chosen from Parliament, leading to a more collective form of governance. This would require significant constitutional reforms, and the challenge would lie in ensuring that the ruling party and other political factions cooperate to make such a system viable.

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6. Conclusion

The succession of President Yoweri Museveni is fraught with political, economic, and geopolitical concerns. Museveni’s long rule has resulted in a highly personalized system of governance, weakening institutions and fostering political polarization. The question of who will succeed him and how the transition will occur looms large, as the NRM

faces internal divisions, and the role of the military remains uncertain. The resilience of Uganda’s economy, while an advantage, also depends on the continuity of policies that may be threatened by a change in leadership. Furthermore, Uganda’s foreign relations, particularly in East Africa, could be destabilized if the country’s diplomatic acumen is lost with Museveni’s departure.

Complicating these concerns is Museveni’s personal historical context. His journey from revolutionary leader to pragmatic economic manager has shaped his leadership style, making his succession more difficult to navigate. Whether Uganda can manage a peaceful transition will depend on whether political and institutional reforms can be implemented before Museveni’s departure, and whether his legacy will allow for a new chapter in Uganda’s history.

WATCH OUT FOR UETCL

Almost 40 years ago this country was in shambles. One did not know where to start to get it back on its feet. Insecurity was rife, inflation had run rampant and government did not have two coins to rub against themselves.

One of the major deficiencies was power availability. Owen Falls dam  -- now Nalubale dam,  was generating only 60 of its 150 MW capacity. Power was intermittent in the best of times but mostly not available altogether.

When we think of the power sector we think of generation and last mile distribution.

But in the last 20 months the transmission component, which gets power from the generators to the distributors – Umeme, in our case, is beginning to come alive, holds a lot of potential and a major piece of the puzzle of Uganda’s revival may finally be in place....

The most dramatic developments during this period was that West Nile is now on the national grid – for the first time since Independence and so is Kabale, which will be switched on before the year end.

But also as dramatic is the linking of Gulu to Agago, which will finally see power evacuated from Achwa power dam, where government has been paying $2.5m (sh9b) monthly for power that is not consumed.

There was also the long overdue connection of 600 MW Karuma dam to the grid which happened in the second half of this year.

All these and many more projects were stalled often due to bureaucratic red tape, that it took a new set of eyes in Joshua Karamagi, who became CEO in March last year, to unlock the backlog.

“This was a team effort but when you focus on delivering, this road blocks become mere distractions and it is easier to bring all the relevant people around the table to sign off and get the project going,” Karamagi said on the sidelines of an end of year media party last week.

While these are critical I am particularly excited at UETCL’s efforts to participate fully in the East Africa Power Pool (EAPP) with its plans to connect our grid to Tanzania through Mutukula, South Sudan via Nimule and the DRC via Arua.

This is particularly important in view of the surplus we now have, we now generate 2000 MW or about two and a half times our peak demand of 800 MW. Meanwhile our neighbours are all suffering deficits, except for Ethiopia.

This is ironic because 20 years ago when then energy minister Saida Bumba was trying to lock down financing for Bujagali dam, she was made to jump through hoops, flying around the region getting our neighbours to take our power if we failed to consume it. The funders of the dam were not convinced Uganda could consume Bujagali’s 250 MW and were skeptical that the region would either. In hindsight there are many ways to view this, none of which are charitable to our donor partners.

It has been estimated that we have the potential along the Nile to generate 4000 MW, UETCL’s efficient operations will be key to exploiting this potential.

 UETCL reported earlier this year that exports to Kenya had returned to pre-Covid levels of $44m (sh170b) last year and are set to exceed that this year. Already we are selling a million dollars’ worth of power to Rwanda monthly.

The potential to supply to power to eastern Congo and southern Sudan is a mouthwatering opportunity we may only just be beginning to set up for.

It is not inconceivable that in coming years that electricity will become a major export earner.

Locally too the ongoing plans for the electrification of Mbale, Kabale and Kapeeka industrial parks, second phase of a project to support industrial parks around the country, will have far reaching implications for job creation, exports and the general economy.

We have learnt through hard experience that availability of power is critical to economic growth and development. 

"The increase in generation capacity on one hand and the improved efficiencies that Umeme brought to the distribution sector, has played a major part in the unbroken string of economic growth even during Covid lockdown...

The power sector is currently on the brink of a major transition, with the exit of power distributor in March next year. With UETCL beginning to live up to its full potential may just help to smoothen the transition.

 

STANDARD CHARTERED, NSSF A SIGN OF THINGS TO COME

Recently National Social Security Fund (NSSF) unveiled its long awaited voluntary saving product, SmartLife. The product linked to their already existing app, will allow people to save voluntarily with the fund, earn compound interest and help plan for medium to long term goals.

Similar to the unit trust funds we have become accustomed to, except that your funds will be locked in for a predetermined duration as way to encourage long term savings. This product is in aid of the Fund meeting its target of covering 50 percent of the country’s working population by 2035 and may very well have far reaching consequences for savings rates in the country and eventually lending rates.

Following hot on the heels of this development, was the announcement last week that Standard Chartered Bank was winding down its retail banking and wealth management operations in Uganda, a process that will be finalised over two years.

It is hard to believe this was a spur of the moment decision, given how the bank has been aggressively reducing its branch network over the last five years, shifting most client interaction online.

It make sense, following behind Barclays Bank, which sold its continental operations to ABSA about three years ago. And in another industry, the sale of petroleum company Shell’s regional assets to Swiss trader Vivo energy about a decade ago.

The reality is that these multinationals, among other things, are finding their margins cut to the bone, as the cost of their high compliance standards, make it difficult to compete with the Johnny-come-latelys, who in many liberalized markets are willing to cut corners and undercut the big players.

This in addition to developments in technology mean, for instance in the case of banks, that branch networks, or even what constitutes a branch, are dated concepts. Carrying the overheads that come with these, while competing with more nimble, virtual competition does not make sense.

The big boys are shedding their bottom of the pyramid operations, to better serve their bigger clients, where the returns per transaction dwarf dealing with the unwashed masses.

These moves are not unique to Uganda or this region, but are part of larger movement that has been unfolding since the beginning of the century.

More than a decade ago NSSF set upon improving compliance among employers liable for NSSF. They did this by beefing up their manpower and opening new branches. But today with greater phone penetration and internet coverage, NSSF does not need as much manpower or a large footprint to do the same job.

When I left university my attempts at opening a Stanchart account fell flat. Because they required a sh300,000 opening balance and a commitment that my bank balance would not fall below sh100,000. My gross salary at the time sh600,000. Those days a bank account was a privilege and not a right.

Fast forward to the present and I can not only open a bank account off my phone or laptop, paying next to nothing, but also I need not open it with a bank. It is safe to say that currently and into the future, most people’s first “bank” account will be with their mobile phone company...

These are part of the accelerating global trend towards digitization, miniaturisation and dematerialization...

Right now all information has been digitized making it easier to transmit and process, quicker than any time before. Which explains why banks are now open 24/7 compared to the old days when they closed for business at 1 pm and did not open on the weekends.

Older people would remember a time when an IBM 256 (the 256 means it had a storage capacity of 256 MB) would cover the better part of a desk. My phone now has a storage capacity of 64 GB and fits easily in my shirt pocket. In effect, I have the storage capacity of 250 IBM 256s at my finger tips. I imagine Stanchart may not have had those many PCs in 1995.

And then, because of the previous two, a lot of what used to be is no longer.

Younger people may find this funny, but there was a time when a calculator, diary, clock, telephone, computer, camera, video  game console etc were all different things, taking up a lot of space. Demateriliastion.

Essentially the big multinationals’ competitive advantage that came with their access to global pools of capital, huge size and global reach are being whittled away thanks to technology. They are retreating to areas where their competence is best suited, the bigger deals where transactions are markedly fewer but the returns are much bigger per deal.

"While the economy may not be at its best right now, these multinationals have operated under worse economic circumstances here and made tons of money, thank you very much. So the state of the economy is not the major driver of these moves...

The pull outs are part of a wider rearrangement of the global economy driven by the aforementioned trends.

In the new world managers will not be able to get by on just size and momentum, but will have to sharpen their strategic focus and execute efficiently.

 Expect this to accelerate in coming years.