SAVE US THE STRESS, DISBAND UGANDA'S NSSF

For the umpteenth time the management of NSSF has been hauled before a parliamentary committee.

Parliament wants to probe the NSSF’s investment in Umeme shares and also alleged irregular recruitments into the fund. For good measure they asked finance officials for the results of the ongoing recruitment of a new managing director. Finance officials had the presence of mind to tell the snoops the process was ongoing and therefore they were unable to speak on the subject. As if the MPs didn’t know, or did they?

Reports of the proceedings show the probe is in danger of degenerating into a farce.

Whenever MPs institute a probe I feel sorry for the people under probe, lament the lost tax payer money that is going to go into it and I am certain that nothing good comes of these probes, oftentimes the committees over stretch their mandate, making recommendations allowing for no useful action to be derived from the whole fanfare.

Of course the drama during the probe makes for good reading, but little else.

"As a member of the NSSF, looking forward to benefiting from all the savings I have made during my working life, I do not appreciate the MPs unnecessary interest in the Fund...

It would be ok if they knew what they were probing but when an MP jumps up and criticises the buying into Umeme as risky venture, I really wonder. All investment is risky. The question when getting into the venture is, are the perceived benefits large enough to make the investment worthwhile in spite of the inherent risk.

In fact, I think NSSF and government officials for the benefit of the MPs, are being simplistic in touting the juicy returns NSSF has already seen in terms of appreciation and dividend payout. MPs if they knew anything about investment would be scrutinising NSSF’s investment policy and the process of choosing investments, because after all, a good investment can lose money at first and for long periods of time, before showing its real potential. Ask anyone who bought Safaricom shares in 2008.

This unwarranted scrutiny has the unwanted effect of making the NSSF management second guess their processes. What will end up happening is that the Fund’s management will end up piling their money in lower yielding fixed deposit accounts and government paper just so they fly under parliament’s radar.

This will be disastrous for the returns that I expect on my hard earned savings.

Ideally NSSF should be run by us the savers. We should choose the board, which will choose the management. We own it. 

As it is now government oversees the Fund on our behalf. It is understandable why Government wants in on the action, this is a huge pool of resources and the political fallout could be massive were the management to collapse the Fund. They are not necessarily thinking of us.

In an effort to prevent this worst case scenario government wraps the Fund’s management in so many layers of bureaucratic red tape often to the point of paralysis.

In the process, just like the MPs incessant sniping, the eventual returns on my money suffer, if for instance NSSF fails to get in on a time bound investment because it is having to jump through hoops to get government approvals.

"Given the current environment whoever heads the Fund will always be operating in less than an ideal environment. It is unfair for us the savers to expect NSSF’s management to show world class returns or for government to expect them to play the transformative role in the economy they are capable. In fact when liberlisation comes around NSSF will be so badly hobbled as to offer little to no real competition to the new private players...

So the unintended consequence of allegedly trying to safeguard our savings and also not have too much money repatriated abroad will be to cause loss of the earning power of our savings and send our money abroad to develop other countries.

The solution is obvious. 

Liquidate NSSF, disband the Fund. 

Pay the workers what is due to them or if we are so concerned about the workers’ social security (never mind evidence to the contrary), parcel out the savings directly to benefit schemes of their choice and regulate those at arm’s length.

Put us out of our misery, spare us the grandstanding of the MPs -- who are not savers with NSSF.

Incidentally what’s good for goose is not good for the gander. While the MPs private provident fund was pigging out on Umeme shares they think us NSSF savers should not invest in the power distributor. Clearly they are not raising these objections for our benefit.

OF UGANDA'S SHARKS, WOLVES AND THE MAFIA

Being a civil servant is not for the feint hearted and a politician more so. This impression was cemented last week, when we learnt that government has been overrun by wolves, is being patrolled by sharks and that the mafia are running around with unfettered abandon...

During the launch of his latest book “A tale of two wolves in Sheep’s clothing”, gender ministry permanent secretary Pius Bigirimana alluded to people in government intent on frustrating the fight against corruption and not averse to throwing the champions of the anti-corruption fight to the wolves.

Bigirimana, formerly a PS in the Office of the Prime Minister where billions of shillings went missing during his tenure there, has protested his innocence on the matter. He is in fact feted as the whistle blower who triggered off the investigation which has come to be personified by former principal accountant in the same ministry Godfrey Kazinda, whose case(s) are winding their way through our courts.

The irony seems to have been lost on Bigirimana though, that it may not be safe to recommend his son for a job in the government.

We had had no time to recover from these jaw dropping revelations than state minister for works John Byabagambi told parliament that his decision to cancel a tender awarded to a Chinese firm to build a standard gauge railway from Malaba-Kampala was in the best interest of the country. That his action forestalled a dubious plan to steal money from government, before revealing that being in government was not unlike swimming in shark infested waters.

And while we were still catching our breath Byabagambi’s senior minister, Abraham Byandala, distanced himself from stories that he had a hand in the botched Mukono-Katosi road tender. He claimed that the stories were being fuelled by his rivals in government who were envious of him and wanted his job. He however might have thought references to wild animals were becoming a well-worn cliché and called his conniving colleagues, Mafia.

And a few days later President Yoweri Museveni weighed in on the subject and reported that government is full of extortionists, who held back the crucial fertiliser plant in Tororo.

What is going on?

The picture being painted of our government by members of government is one of cut throat rivalry between the ministers and unashamed competition for public resources.

"Clearly the general public serve only as a stepping stone for the honourable ladies and gentleman to rise to the high table where they can set upon public funds with animalistic alacrity and to hell with rest of us.

It does not take a rocket scientist to tell that the government is now being held hostage by thieving technocrats, opportunistic politicians, slimy conmen and gluttonous businessmen and it does not take a biblical prophet to see that this progression cannot end well.

Air supply; the practice of winning tenders to supply government with goods and services but not delivering and still getting paid.

In those days one of the biggest scams, was not supplying reams of papers. A cursory look through the press 30 years later shows that our tricksters are now way past stealing stationary, they are now gobbling roads, factories and machinery.

How did we come to this?

It’s no secret that when the NRM marched on Kampala in 1986, whereas they may have been a formidable fighting force they were very thin on the ground politically. They built up their political base in two ways, they coopted politicians of different shades into their ranks and two, they left the civil service largely intact. It seems in order to keep these Johnny-come-latelies onside, the NRM, looked the other way as they gorged themselves on public funds.

If the calculation was that these officials would be reined in when they had “eaten” enough somebody seemed to have forgotten the deadline.

So not only have they become more insatiable, they have grown in sophistication, become emboldened by the tacit approval of their primitive accumulation and spawned a new generation – or two of ever more eager “eaters”.

But the chicken are coming home to roost.

There are huge demands on public finances now, the donors are pulling back their support and there is only so much the good people at the Uganda Revenue Authority (URA) can wring out of the tax payer.

"Expect that some hard decisions are going to have to be taken in coming days, months and years to feed a few officials to the baying public. Unfortunately there might not be much science to the coming purges and good men may give way before or with the crooks....

However there is still room for optimism despite this bleak picture. 

Notice that all the revelations have employed predators – wolves, sharks and even the Mafia, as a metaphor for the corrupt, suggesting this “animal” being hunted down may still be swift and nimble needing specialised skills to run it down.

"The time to be really afraid is when the metaphors shift  to scavengers – vultures, hyenas and marabou storks, you will know the “animal” is a carcass and we maybe best advised to head for the hills to avoid the stench...

MUKONO ROAD SCAM, IS THIS THE WAY THE UGANDA GOVERNMENT OPERATES?

The Mukono-Katosi road scam is like a bad itch that will not go away.

The story’s continued dominance of this newspaper’s headlines has variously been right in our face or hovering just under the surface but never far from our collective conscious.

The tender to construct the 74 km road has fallen foul of questionable procurement procedures at the Uganda National Road Authority (UNRA). UNRA failed to do adequate due diligence on the winning contractor Eutaw Construction Company, which it has been found out apart from being a briefcase company, uttered forged documents in support of its bid and has indulged in even more questionable manoeuvres to salvage the deal.

"In addition to several technocrats in the roads authority, several ministers past and present, have been sucked into the deals evil vortex. All of whom protest their innocence...

What is clear from the reports that have been running is that this deal was an intricate scheme fashioned over five years and would have gone unnoticed hadn’t a forged insurance bond purportedly from Statewide Insurance Company (SWICO) come to light.

Judging from the smoothness of the execution and the impunity with which the key players went about their business it is not farfetched to believe that these were seasoned operators.

Which raise the larger question – is this the normal way government business is conducted?

Last year it took presidential intervention to get the construction on the 600 MW Karuma dam going. 

This was after determined action from government officials and middlemen around town delayed the one billion dollar project for almost two years. The saboteurs used every trick in the book and even went as far as ignoring lawful court orders, cabinet decision and even presidential directives in their single-minded ambition to have their favoured candidate win the deal.

These two projects are but that the tip of a very large iceberg.

A cursory look over the news reports over any period of time and one will not fail to recognise the tell-tale signs of corrupt dealings – inflated costs, contracts unfinished, substandard works and in some instances key officials being assassinated.

Corruption has become so endemic that every adult Ugandan has been roped into the evil industry knowingly or unknowingly.

Knowingly by, actual commission of the theft of public funds or by turning a blind eye to the shenanigans or by celebrating these officials even when we know they are enjoying lifestyles way above what their pay scales can afford. Unknowingly we abet corruption by accepting substandard services from the government even when we know better.

The general view on the street is that after the noise has died down nothing will happen. The road will be built anyway. The perpetrators of the scheme will thumb their noses at us and continue to enjoy their ill-gotten wealth in our midst. And we shall presently move on to the next scandal.

I choose to see things differently.

"For every scam exposed even if the deal masters are not brought to book, causes pause for them and their contemporaries in the industry. Exposure chips away at impunity, ever so slowly but surely...

The scam artists should also begin wondering about the loyalty of their political backers. Politicians are very fickle and will go where the wind blows. To save their political careers they may choose to throw a few fraudsters under the bus if only to ease public pressure on themselves.

And finally as a senior official once said, there is no association of the corrupt. You cannot call a meeting of the corrupt and they turn up. It was a variation of the saying that, “There is no honour among thieves.”

We look forward to interesting times.

HOW UGANDA SHOULD SET UP FOR US INVESTORS

In the last two weeks or so, two events help illustrate the challenges our economy faces.

African leaders trooped to Washington at the behest of US President Barack Obama. The highlight of the historic occasion was Obama’s committing $33b to shift the relationship between the US and Africa away from humanitarian aid towards a more equal footing.

The second event is the ongoing saga of the Mukono-Katosi road. The details have been written about extensively but one couldn’t help but come to two conclusions. 

One, that after everyone has taken his cut its amazing how unnecessarily high our projects cost and secondly, that there clearly is a well-oiled machinery, a whole industry that feeds off government projects and procurements their intention, not always to deliver a service.

The more incidents like the Mukono-Katosi road the less likely Obama’s $33b will come through – at least for Uganda.

This is why.

When you look at a breakdown of Obama’s pledge to Africa this is what it looks like; $14b will come from US companies and will include $5b from Coca-Cola to extend its production capacity around the continent, conglomerate GE has pledged $2b, which may go to any number of things from generators to train engines, hotel chain Marriot has ponied up an additional $200m and IBM threw in an  $66m for technology services to a bank in Ghana.

In addition there was $12b for Obama’s Power Africa initiative that will come from the private sector, World Bank and Sweden.

And finally there was $7b targeted at improving trade across the Atlantic which included $3b in financing for the US Export-Import Bank to aid US exports to Africa over the next two years.

The impression these pledges give is that ahead of the summit the US government must have gone around to its captains of industry and said, “Look guys we have to give something. What are you working on in Africa that we can present?”

It’s a learning point for us. The US projects its influence not only by its military might but through its business community.

The rationale for a US military intervention is quite straight forward but for the private sector there has to be a business case. Projects must show a return and must be big enough to justify choosing them against projects in China, Asia or Europe.

See GE’s pledge. At the time of writing this column the giant company, founded by Thomas Edison in 1892 had a market value of $259b or more than twice the GDP of East Africa. Assuming a 10 percent return on investment on the $2b they have pledged in business, this would come to $200m or about a two US cents appreciation on a GE share, which sold for about $25.88 before lunch on Friday. 

This kind of investment does not make or break careers.

It’s obvious that for the US to be more interested in the continent, beyond being dragged kicking and screaming to the table because the Chinese are making determined inroads into Africa, we need to aggregate our markets and pool our resources...

With the East African community we are moving at a handy speed towards merging our markets but there is great opportunity for aggregating our resources through our capital markets.

By reinvigorating our capital markets and with strategic action from government we can fund a lot of our priorities namely infrastructure and human resource development to the point that investors can seat up and take notice.

The explosion in mobile money – grown to sh2.2 trillion from nothing in less than a decade, shows it is a fallacy that we do not have resources, what has been lacking is the mechanism to beyond pooling them together can transform them into long term, lower interest capital that can be channeled to key projects.

A deep and vibrant capital markets industry will also investors to test our market either through buying bonds or investing in listed companies.

The mechanism of doing that will be a story for another day. But it is clear that to deal more evenly with the US we need to scale up everything and then the real money will begin to flow