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.