THIS IS HOW DEMOCRACIES ARE BUILT

Tipping point, the term popularized by author Malcolm Gladwell, refers to how an accumulation of small events or actions over time can lead to huge social changes, that when viewed without the context of the build up look spontaneous, are often dramatic and many times irreversible.

As the events are occurring in real time it is hard to foretell their eventual impact or understand their relationship to each other, as they can be separated by time and space as to seem unrelated occurrences.

With the benefit of hindsight historians may make the connections, providing a logical and coherent explanation for why things turned out the way do.

Events in the last few weeks – the appointment of General Aronda Nyakairma to minister of internal affairs, the extension of retired Chief Justice Benjamin Odoki’s term as the fourth in the line of presidential succession and even the maddening news that our honourable MPs are buckling under the weight of their own debt, contrary to the consensus among the chattering masses, are welcome road signs on the bumpy road to democracy.

"There was vocal opposition to President Yoweri Musevni’s nomination of Nyakairima, former chief of defence forces, as minister while he still retained his commission in the army. Those opposed argued that Nyakairima would have to retire from the army to fill the position.  The attorney general however advised that the constitution does not expressly bar a military man from being a minister. A case is being filed or has been filed with the constitutional court to rule on the matter.

It was also reported that Museveni had extended Odoki’s tenure at the helm of the judiciary for another two years. Odoki attained the mandatory retirement age of 70 for his position in March, stayed on till June to hand over. The Uganda Law Society is protesting the development and the suggestion is that they too will challenge this development in court.

With each announcement we started frothing at the mouth, wondering what the president was thinking and mustering our best i-told-you-so voice, we rehashed the line of how Museveni was burying democracy, wants to rule forever, he is treating the country like his personal property blah, blah, blah, blah.

When the 1995 constitution was passed with the provision that the suspension of political party activity would continue, the doomsayers were up in arms wailing how Uganda was finished and democracy had suffered irreparable damage. Now nearly 20 years not only is Uganda still here but political parties are back from the cold and finding their feet.

And like many of the laws on our books today, the 1995 constitution was lauded as a document that had the potential to take the country to the next level. But like many of our laws too, many have lamented that the constitution is hurt by our failures on the implementation side.

Also it should be understood that any constitution provides a broad framework for how society will be governed, with the details of how this is done found in lesser laws and administrative instruments. So often times as in the two appointments an issue of interpretation arises and guidance then has to be sought from the constitutional court.

Which is as it should be. It is impossible to draw up a water tight law that will cater for all possible circumstances that will occur into the future.

"Interpretation of the constitution is then coloured by the politics of the day...

With on one hand the government trying to advance its own agenda, which may or not be in the interest of the general public and the opposition who also want to further their own agenda, which may or may not be in the interest of the general public.

Governments will always try to extend the boundaries of their power and the opposition out of necessity have to make sure this does not happen, with whatever means they have at their disposal.

This is neither bad nor good, it’s just the way it is.

So the two appointments are government flexing its muscle. Going to court may or may not see a reversal of the decisions, but will hopefully bring greater clarity to the subject and one more inch on the thousand mile walk to democracy.

Rounding back to the MPs and their indebtedness. This could easily be dismissed as a case of personal financial indiscipline were it not for the fact that MPS make laws, are supposed to oversee government on behalf of the people and do such things as approve the budget, we have to get concerned.

If there was any evidence that the house could end up selling their allegiance to the highest bidder the reports that overtures have been made to foreign governments to alleviate the honourable members’ plight was proof enough.

This could be a major stumbling block to democracy.

"It is an illusion to think progress will be steady and ever forward or that it will happen in spurts and bursts. Most likely to will be small movements backwards or forwards happening everyday which taken individually don’t amount to much but taken in totality, over years, decades, centuries have far reaching effects....

What we are witnessing now is the messy business of building a democracy. There are no guarantees that it will have a happy ending but we have to wade through the murky morass to have a chance to get to the other side, there are no shortcuts.

Hence the tipping point.

UGANDA MPS ARE A DANGER TO THEMSELVES AND SOCIETY

For the second time since the beginning of this year it was reported that MPs of the NRM caucus ambushed President Yoweri Museveni with a request for him to employ his good office to alleviate their debt burden.

The first time this report came out was in March.

"But last year another report indicated that MPs were up to their necks in debt, with as much as sh20b owed to banks, suppliers and loan sharks. Debt in itself is not bad and is actually critical to wealth creation. But many of the MPs had squandered the contracted debt on high living and risky speculation and were taking home several thousands out of their sh20m a month pay checks...

In regular society a person who cannot meet his credit obligations is avoided like the plague and his day of reckoning – when he has dug all the holes he can to fill other holes, comes soon enough.

But our MPs are not normal members of society.

To begin which they are referred to as honourable, a title which bestows upon them a certain halo of uprightness and dignity. The human brain tends to cut corners in its decision making processes, so if society has bestowed that title on you we take it at face value and treat you as such – until we find out different.

And in relation to this they can seek refuge in the precincts of parliament and no one can find them there. For anyone who has had creditors on their necks for payment they can understand the benefits of such a safe haven.

But more importantly MPs are tasked with the carrying out such serious tasks as making laws and approving the government budget.

For this reason alone we cannot leave the MPs plight to discussions over a beer.

"Given their important role, it is not inconceivable that a person with deep pockets can “buy” that house and have them singing their bidding. After all sh20b or about $8 million is pocket change for someone wanting access to the vast mineral resources this country possesses or to ok a loan request or make laws that would be detrimental to the general public...

This week it was reported that already overtures were made to a foreign nation to clear this debt. I have my doubts about that, suspecting it was a ploy to arm twist the executive to pay up, but it still raises some ugly possibilities.

But also that our MPs can find themselves weighed down by such debilitating debt speaks volume about our society’s failures.

At the core of the problem is our general financial illiteracy. We generally believe that money will solve all our problems and that we are not obligated to repay our loans.

So sometimes when we happen on financial bonanzas – like the MPs have we take a rural approach to urban excitement and quickly find out having money comes with obligations, though it might take us a few more collapses to learn the laws of money.

"For the health of their own business the creditors may consider having these politicians declared bankrupt. In one fell swoop we would have rid the house of these MPs who are a danger not only to themselves but to society at large and this would also act as an example to their contemporaries and aspiring politicians....

It would be wrong for government to bail them out as it would deny them the lesson and encourage moral hazard. That would be the right thing to do, the political solution maybe very different.

Whichever way it falls this situation has to be resolved soon before our legislative process are mortgaged to the highest bidder.

AT NSSF, NO GOOD DEED GOES UNPUNISHED

Let me start by declaring my interest in the subject.

I am a contributing member of the National Social Security Fund (NSSF) and have been most of my working life. I don’t care what the fund does as long as it can grow my money year after year.

The management team led by Richard Byarugaba, paid me 10% on my savings and pledged to hold my returns above the average inflation rate of the previous ten years. They managed to do this thanks to improved returns in their investing and a restructuring of their operations that has made them leaner and more cost effective.

Having been in office for the last three years (why do they have three year contracts and not five like everybody else?) – the first two of course spent cleaning up the mess they found there, and having performed well during the period, my jaw hit the floor when I learnt that the finance ministry was not going to renew their contracts. In fact finance minister Maria Kiwanuka was going to advertise the top management jobs and the current crop are free to reapply!

“After due consultations within the ministry, I strongly recommend [that] all senior positions up to and including the managing director should be advertised internationally,” Kiwanuka wrote to the NSSF board.

I am sure it’s within the minister’s right to do what she has done but knowing what disruption happens when there is a change of management, particularly at NSSF, I wonder whether she is acting in my best interests.

According to media reports the minister was taking this action in light of recent allegations of mismanagement leveled against the current management and lodged with the IGG.

I have seen the allegations by the anonymous whistleblower, which range from alleged fraudulent land acquisitions to charges that management set its own salary to questioning the mobile phone bills.

Interestingly certain actions that are being investigated are not the fault of the current management.

The disposal of a piece of land in Namirembe is a case in point. The half-acre piece of land, which was bought at sh650m, a price significantly above the valuation price when it was bought in 2008, has no access road and is surrounded by the land of a prospective buyer. Management with the approval of the board approved the disposal but unfortunately current valuations have only just caught up with the price at which the fund bought it five years ago.

On the surface of it the decision is between selling it now and make a real loss but unlock the cash for use on alternative investment or retain the plot until it appreciates so you can record a profit. If you are a prudent businessman you would opt for the former but if you are a politician the latter would be more favourable.

The IGG should and must investigate the allegations and get to the bottom of the matter. But to use the IGG’s investigation as a reason to not extend the NSSF’s management’s contract seems to me like overkill. What happened to being innocent until being proven guilty? For a bystander the automatic assumption is that while the IGG might still be investigating or compiling the final report, the minister knows something the rest of us don’t.

Maybe the prudent thing would be for the IGG to investigate and report on the matter and if the management is found lacking then action can be taken against them even if it’s on the second day of their new contract.

Given too that the management have explained themselves to the board who have recommended and extension of their contract … Frankly it all doesn’t add up.

NSSF is the biggest financial institution in this country with more than three trillion shillings under management, the interest in controlling it should come as no surprise. But this musical chairs of management teams, whichever way you look at it just doesn’t augur well for the continuity that is badly needed in the management of long term funds.

NSSF’s it seems will retain its reputation as the graveyard of careers. Unnecessarily so this time, I think.

But what do I know, I am just a lowly saver trying to get the best deal for my hard earned savings.

REVIVING UGANDA AIRLINES IS MONEY DOWN A BLACK HOLE

I see that a move to revive the defunct Uganda Airlines is gathering momentum in certain circles.

There are all the well-worn arguments for the plot; that the airline will bring pride to Uganda or that it will increase tourist numbers to the country or that passenger numbers into Entebbe have increased and this will make another airline more viable or (the most childish of the lot) that everybody has one so we should have one too!

None of these answers even begins to answer the critical question, “What would a government backed Uganda Airlines do for travellers that is not being done for them now?”

Uganda Airlines was wound up in 2001 after a failed privatization attempt and the unsustainability of the huge cost of keeping it afloat – about $10m a month at the time. Incidentally the privatization of the airline was subverted by incessant sniping by a parliament which also put paid to several other projects like the initial Bujagali power project.

At the time the airline was running a single Boeing 737 on the Entebbe-Nairobi route, with little to no hope of the fleet being expanded.

In the period since its closure travellers in and out of Entebbe have more than tripled to 1.2m last year. These are being ferried by the 20 or so airlines that now operate out of the airport.

One would like to believe the promoters of this scam – sorry scheme, would like to build a world class airline (otherwise where is the pride in a slap dash operation?) that will eventually reach as far and wide as the Ugandan traveller flies.

"Apart from the fact that government doing business is a bad idea, it is that government would spend billions of dollars (not shillings) not only in setting such an airline up but baby seating it to profitability over many years even decades...

In a country like Uganda’s where health and education services are inadequate to the point of hopelessness and our infrastructure is in dire need of repair and expansion, it does not take Nobel prize in economics to see there are better, if not more profitable ways to employ those billions. For us opportunity cost is real not just a theory in the text books.

We have been without an airline for a decade and Ugandan pride has not fallen as a result. People have continued to fly into the country, more so than when we had an airline and we do not need an airline to keep up in the mine-is-bigger-than-yours boyish games with our neighbours.

Ali Adel knows a thing or two about setting up airlines, having set up the award winning budget airline Air Arabia, and his experience is that it takes $50 to $200m to set up a budget airline. Setting up a regular airline therefore would cost multiples of that.

When asked what he would tell someone trying to start an airline he said, “I would say don’t do it,” going on to explain that an airline is more than just airplanes, having seats and ticketing.

“Your number-one challenge is to gain credibility in the marketplace from the customers because there are a lot of airlines and you’re coming in new, so why should people travel with you or trust you? That’s always going to be the biggest challenge. Second, is traffic rights. Traffic rights are already allocated to all the airlines, people on the slot and everyone else, so why should you be getting a share of that cake when you don’t have it now? Another challenge is the ability to bring in so many different components of this business under one roof. One other challenge is finding the right talent to help you run the business. You need a very strong team to take this forward.”

But I am sure the people at Civil Aviation Authority and the Transport ministry know all this and that I should be preaching to the converted. But apparently not.

Somebody once said something to the effect that in explaining the reason for war there is always the stated reason and then the real reason. The stated reasons for this enterprise do not stand up to scrutiny – the proposed airline will add no value to the passenger experience at Entebbe, the real reasons we can only guess at.

On Wednesdays within thirty minutes of each other six airlines make arrivals, two of them being the larger airbuses of Emirates and Qatar airlines. There are massive delays as our rudimentary airport struggles to process the passengers at lunch time on Wednesday. Clearing through Dubai airport, which sees more passengers going through it in a week than Entebbe sees in a year, is comparatively quicker experience on any day.

"If the government feels that money is burning holes in its pockets, let it beef up Entebbe airports capacity to handle the increasing number of passengers (And we are not talking about the perfunctory rehabilitation that was done for CHOGM), improve regional airports and market Uganda as a choice destination to attract more visitors...

Or maybe we should look deepper into the real reasons for this renewed clamour for the revival of Uganda Airlines?

OBAMA’S AFRICAN TOUR IN A CHANGING WORLD

Last week US President Barack Obama made a three nation tour of the continent.

His trip to Senegal left us scratching our heads in wonderment at the visitor’s manners, as he went out to bat for the gay cause – a subject that is still anathema on the continent. While unable to see former South African president Nelson Mandela, who is battling for his life in a Pretoria hospital, he managed a visit to the anti-apartheid hero’s Robben Island prison cell.

Then he got down to business pledging US help in building 10,000 MW of electricity generation capacity on the continent, a new trade initiative with Africa – to replace or work alongside the Africa Growth Opportunities Act (AGOA) it was not clear, a new fellowship for up to 600 young African leaders and pledged support for the fight against poaching of the continent’s big game animals among other things.

"Of course he found time to launch some broadsides at the Democratic Republic of Congo’s neighbours (read Uganda and Rwanda but maybe not Sudan) for meddling in the giant central African nation...

In recent years two US presidents – Bill Clinton and George W. Bush have made the trip to the continent in widely differing contexts.

Clinton’s March 1998 trip to the continent was the first of a seating US president in 20 years up to that date, was just months before the twin bombings of the US embassies in Nairobi and Dar es Salaam. This was 10 years after the fall of the Berlin wall, the crumbling of its cold war nemesis the USSR and the home of the free and brave was just settling into its role as the policeman of the world. Though Clinton at the time, would have been forgiven for being a bit distracted, seeing as the messy affair of Monica Lewinsky was not going away.

Bush did two trips in 2003 and 2008. The world by this time had changed dramatically with the US flailing away at all and sundry in its “War against terror”. In 2001 Osama bin Laden’s Al Qaeda had flown commercial jets into the twin towers of the World Trade Center and the Pentagon, the heart of the country’s defence establishment.

By the time Obama came around, the war on terror is winding down in terms of intensity and the African continent, which was previously a hopeless place deserving of pity and not much else, is becoming the new battleground – in a commercial sense.

"The US finds itself playing catch up not only to the former colonial powers but to China, which since Obama’s last trip to the continent in 2004, has become the second largest economy in the world. It’s an old story now, but China has been making determined inroads on the continent in search of the natural resources it badly needs to fuel its growth, while accumulating influence by dotting the continent with trophy projects – white elephants or otherwise...

To illustrate, US trade with Africa came in at $100b last year half of China’s $198b during the same period.

It is not difficult to see why Africa is the next big thing. Despite the global economic decline of the last five years the continent has continued to post impressive growth figures, the average age of its population is the lowest in the world, a source of huge future markets and the continent seats on a bounty of natural resources whose extent no one really has a grip on.

It has been estimated for instance, that the DRC has untapped mineral wealth amounting to about $12 trillion or about the size of the US economy.

So it’s not out of any altruism that the US invested upwards of $100m to fly the leader of the free world to our shores. And he has already promised to return before his term is done.

We are like the ugly duckling who is turning into a beautiful swan.

We are the flavour of the month. But like all fads we better enjoy it while we can, but know that it may take year or a generation but everyone will soon move on to the next hot thing.  The trick is to make maximum advantage of this new popularity.

With him on his trip Obama came along with the head of General Electric Jeffrey Immelt, who observers say is looking to benefit from the $7b earmarked for power projects on the continent.

GE is a $243b company or three times the size of the East African Community. The company is a conglomerate of many companies that  manufacture, all number of power plants from nuclear to solar power, railway and aircraft engines, water processing, medical imaging and because they have tons of cash lying around are also into finance.

To move the needle on GE’s financials they will be looking for multi-billion dollar projects – Karuma does not cut it. The East African Community has gone a long way in merging its markets and therefore would be attractive for the multi-billion dollar infrastructure projects in power, railways and communications that would make it attractive to US business.

"A cursory look at how world geopolitics has changed in the last 20 decades, makes it clear that change will always be there and seen against the wider  context of eternity, we need to position ourselves in such a way that we will always be the princess at the ball....

Obama may have a little emotional attachment to the continent but the US state for which he is a functionary does not.

A lot has to be done. We cannot go it alone. We need to accelerate our processes of regional integration to not only ensure our relevance in world affairs but to guarantee our very existence.