ELLY RWAKAKOOKO: URA’S BLAST FROM THE PAST

Last week former Uganda Revenue Authority (URA) commissioner Elly Rwakakooko sauntered into our news room to shoot the breeze about the good old days.

I wish.

Rwakakooko had come in to set the record straight about his time at URA and what eventually led to his departure from the tax authority, which last week commemorated its 30 years of existence.

“I declined another term because I didn’t entirely agree with the methodology being used to discipline people not paying tax,” Rwakakooko remembered.

At that time a paramilitary organisation, the Anti-Smuggling Unit (ASU) was constituted to clamp down on smugglers but also apprehend tax evaders.

“ASU was becoming a big military unit. I said no. I even closed their accounts. I even declared the group a security threat and refused them entrance into the URA offices.”

A look back into the papers then shows that there was real tension around the situation reported as a standoff been Rwakakooko and ASU boss Kale Kayihura.

"Rwakakooko, who says he initiated tax education of the public at URA, said it is counterproductive to try and collect taxes by force....

“If you don’t educate people about the value of taxes they have paid, they will revolt and then what will you do?”

He remembers a survey he did of 36 of the then 39 districts and documented cases of the killing of policemen following a nominal increase in the graduated tax rate.

“You can only enforce tax collection if the people broadly agree to pay tax.”

Rwakakooko who worked in Canada and Kenya, was once the chairman of Uganda Commercial Bank and a lecturer at the Institute of Public Administration (IPA), now the Uganda Management Institute (UMI) says the challenge for URA remains the continued informality among business men.

He says up to 80 percent of all taxes collected comes from Kampala as if nothing is happening beyond the city’s suburbs.

The economy is becoming more formalised by the day he recognises, but he frowns at the slow pace of progress.

“This process needs to be supported politically we have no choice we need to raise more revenue urgently.”

Currently Uganda’s revenue to GDP, an important measure of whether enough tax is being raised in a country, stands at about 12.6 percent. Below the Sub-Saharan Africa  average of 13.8 percent but way below Kenya or Mauritius where 18.4  and 19 percent of GDP is collected respectively.

He says there is one other thing that lets us down as a country.

“Strategic planning. If you do not engage in strategic planning you will have problems,” he said. We will be able to identify our priorities and tailor our expenditure with these plans in mind.

“Some politicians – not all, are too selfish. They don’t care about telling lies. We have to tell the truth. If a strategic plan is in place and people want a road and its not a priority tell them,” and he stopped at that.

"He rues that political expediency is dominating our actions, where more strategic thought should be applied...

Lest we forget Rwakakooko was also at the center of a very strategic question about twenty years ago.

“I was opposed to privatisation. Not the principle but the methodology,” he recalls. At the height of the discussion he was the chairman of the committee on the national economy in the National Resistance Council (NRC).

He argued then that if you opened the sale to foreigners who were better capitalised they would come in and drain out the lifeblood of the economy.

What did he propose?

“I wanted the UDC (Uganda Development Corporation) to take the lead.”

The argument against this at the time, was that we didn’t have the managerial capacity nor the capital to resuscitate these companies.

He acknowledges that management was a problem but that this could be contracted from abroad. As for the dearth of capital he says that was not true and if Ugandans were mobilised to take an equity stake in the companies that would not be a problem. More participation by Ugandans too would hold managements accountable.

“You see what is happening at Bugisu Cooperative Union (BCU). Once it is owned by Ugandans they will protect their interests.” But adds the proviso, “If you have the support of the center of course”.

  

The members of BCU have been fending off political interference in its operations recently.

"Does he think his analysis was vindicated at the time? “Oh yes! But my friends complain that the realisation has come too late. But you hear it people are calling for the revival of UDB to unlock some of the issues in the economy.”...

If he had his way he would resurrect the coffee and produce marketing boards as well as our textile industries as trigger for self-sufficiency.

“Nobody owes us a living. We have to do this ourselves.”

Our conversation come to an end. Maybe too soon. So what is he doing with himself now? He wants to retire to his village and push community development. He is already involved with more than 128 cooperatives and ten cooperative unions working to unlock the full potential of the dairy and beef industries in southern Uganda.

CONGRATULATIONS URA!

This week tax collector Uganda Revenue Authority (URA) celebrated 25 years of its existence, a laudable milestone not only because of the passing of the years but of how the institution has developed over the years.

After years of decay the old revenue office at the finance ministry had collapsed and would have been unable to meet the challenges of a society in urgent need of funds to for recovery. That being said it still had some human resource many of whom continued into URA and formed the initial backbone of the now autonomous tax collector.

The atmosphere at the time was a new government trying to find its feet.

The tussle between the command economists – mostly bush war veterans and the liberal economists – mostly technocrats in the finance ministry and central bank had only just been decided in the latter’s favour.

"Among many urgent reforms needed – breaking up government monopolies, liberalising the markets in everything from produce to currencies, was the urgent need to collect revenues...

The tax man has never been a popular member of society. It did not help that improved revenue collection was a condition for engagement for the donors especially the World Bank and IMF – the favourite punching bag for the post-colonial administrations on the continent.

As a condition for support it made sense to insist on better revenue collections, otherwise how would the donors get their money back?

In its first year of operation they collected sh180b or just under $180m, which figure is up to sh11.2 trillion in the last financial year or about $3.4b.

"The more than 60-fold jump in collection during the period is laudable in itself and reflects not only the growth in the economy but the increasing effectiveness and efficiency of the Authority....

Interesting too is  how we in those 25 years we have shifted away from reliance on taxes from external trade to domestically generated revenue. Can you believe that coffee exports were our biggest source of revenue at one time?

These improvements have not come without sweat, tears and even blood. Tax payers have fought the URA on the introduction of VAT, resisted the paying of road licenses and continue to weave and dodge against paying any number of taxes.

While there is cause for chest thumping about how much more tax we collect as ratio to GDP, which comes in at 13 percent, it below the Sub Saharan Africa average of 13.8 percent, and well behind Kenya at 18.4 percent, Mauritius 19 percent and South Africa 26.9 percent.

Increased revenue collection is critical to finance infrastructure, health and social services. But more importantly to wean us off aid, allowing us to determine and follow up on our own priorities.

"A need to collect more domestic resources will also improve our politics. As it has been because government was being financed externally – at one time more than eight in every ten shillings in our budget was from donor assistance, they did not have to negotiate with the population raise revenues. ..

As long as you could tick off some perfunctory targets like reducing the number of people living on a dollar day the aid taps would continue to flow. But to raise taxes there has to be a negotiation with the locals and they need to see some return on their money before they willingly pay up, that takes greater negotiation skills than is needed with dealing with donors, which leads to democracy.

So clearly URA is at the center of determining the future of this country.

Of course URA has little leverage over what goes into the tax code and is often criticised for doing their work in the classic case of shooting the messenger. There is really little scope for introducing new taxes, future progress will be determined by how effective URA is in roping more and more people into the tax net.

Despite some unwelcome sounds from our political elite it is safe to say that URA’s foundations are solid enough that it is possible they will be here to celebrate their golden Jubilee in 2041.

INTERVIEW -- WAPAKHABULO IS REARING TO GO AT UGANDA OIL COMPANY

Josephine Wapakhabulo was last month appointed the Chief Executive Officer of the Uganda National Oil Company (UNOC). Dr Wapakabulo sat down with Business Vision’s Paul Busharizi to discuss her company’s role, her plans and the prospects for oil in Uganda, below are the excerpts of the interview.

1.       What prompted you to apply for the job?

a.       The first thing was a strong interest in the sector. Whilst studying for my PhD I looked at the adoption of data-exchange standards and knowledge management technologies in the oil, gas and defence sectors and since then I have always had interest in that area. One of things I also enjoy is setting things up, all my jobs at Rolls Royce plc were new roles where I had to set entities up and set the standards. A combination of the sector, being able to set something up and more importantly a chance to come home and make a contribution, those I would say are the three main reasons why I applied for this job.

2.       Have you had prior experience in the industry?

a.       Yes, I did my PhD in a consultancy called the LSC Group which specialises in the defence and energy sectors. I was working on oil & gas and defence projects.

3.       So what is UNOC and what do you see your responsibility as?

a.       The Uganda National Oil Company Limited (UNOC) was established by Article 42 ofthe Petroleum (Exploration, Development and Production) Act 2013 and incorporated under the Company’s Act 2012. It is a fully registered limited liability company wholly owned by the Government of Uganda. The overall function of UNOC is to handle the State’s Commercial interests in the Oil & Gas industry and ensure that the resource is exploited in a sustainable manner. The way that works very specifically in relation to recent events, is that the Ministry of Energy and Mineral Development has issued production licenses to the three companies – Tullow, TOTAL and CNOOC. Now UNOC will come into an operating agreement with the three companies to manage the government’s 15 percent stake. So the production license was a big milestone, the next big milestone is getting that operating agreement so that we can work together towards first oil. UNOC also has a key role in the refinery and pipeline activity and we are looking into additional commercial opportunities. It is an exciting time for Uganda in this sector and as CEO of UNOC I believe our main responsibility is ensuring maximum return for our shareholders, the Ministry of Energy and Mineral Development (51%) and the Ministry of Finance and Economic Development (49%), and ultimately the people of Uganda. 

4.       So what will be your priority over the next five years?

a.       The priority now developing our strategic plan and getting to first oil, production licenses have been issued and we have willing International Oil Companies working with us. So for me that is the immediate priority and in conjunction with that is the refinery and the pipeline activity, and also equally important over the next five years is local content development and ensuring we are developing local capacity, local skills and local suppliers. Those for me would be the main areas we need to focus on over the next five years.

5.       What challenges do you forsee?

a.       The promise of the oil & gas sector always has to be tempered with the uncertainties of the global economy and the fluctuating price of oil, and these are factors we must always be cognisant of. Where I forsee more challenge is on two levels, firstly, ensuring we build confidence with the public and with our partners that all the activities driven by UNOC will be transparent, well governed and at world class standard and we meet their expectations. The second challenge is in relation to how we handle the revenue we receive from the sector, which is currently estimated at $1.5billion a year. We must learn the lessons from other countries and not spend our revenues before we start earning them, ensure we save a portion of that revenue and most importantly spend the revenue on capital investment projects and not consumption.

6.       But UNOC will not be involved in spending the money?

a.       Part VIII of the Public Finance Management Act 2015 details the collection, deposit, management, investment, and expenditure of petroleum revenue and UNOC will have a role to play along with other government bodies. The important factor again will be transparency in the process and the investment decisions.

7.       What price do we need a barrel to be at for the industry to be viable?

a.       I have seen a 2015 World Bank study which showed that even at $50 a barrel we could be earning approximately $800m annually and if you go up to $90 you could be earning $1.2b. It is something we have to continually analyse.

8.       How can we ensure this has wider impact on Ugandan society?

a.       Industry estimates have put the figure of potential jobs created in the sector and beyond at between 100,000 and 150,000, very impressive numbers but a drop in the bucket of what we need to pull millions of people out of poverty. Therefore, what is critical will be spurring greater economic activity in the key fields of infrastructure, agricultural production and tourism development. Its potential lies not in availing the populace with cash handouts alleviating them from the need for hard work as some nations have mistakenly tried, but in its ability to provide the nation with a source of independent funding which if steered to the sectors representing Uganda’s' best potential will help spur the nation to the next level.

9.       How do you see the Oil & Gas sector fitting into our middle income nation ambitions?

a.       When you look at the middle income agenda I always say to people no one sector will take us there, every sector has to play its part. Having said that, the oil and gas sector will have a big part to play, and we therefore need to continue our domestic revenue mobilisation drive to complement the flow from oil and gas. We should not be excited by the flow of oil revenues and start to eliminate/abolish some taxes, reduce tax rates and subsidise some sectors like in some oil producing countries. We also need to ensure that we comply with our tax obligations to spur revenue growth and consequently meet the objectives on the National Development Plan II, Vision 2040 and our drive to middle income status.

10.   Other countries have failed spectacularly despite finding oil how should we guard against that?

a.       By learning as much as possible from the countries that have had these challenges and those that have done better. UNOC is not the first ever national oil company and thankfully many NOCs are willing to share experiences and our role will be to take these on board and apply them as quickly as possible. But as I previously stated, I believe the key will be our discipline in how we handle the oil revenues – ensuring we save some of the revenue, not mortgaging our future by borrowing against future earnings, and expenditure on capital investments not consumption.

11.   Are you concerned that there will be interference in your job that will prevent you from performing?

a.       Right now I am working with the Board to develop a very clear vision and strategy so we know where we are going and how we will achieve that vision. We plan to recruit, and once we have a solid team and the momentum has been set we should be fine. But I know we are not in a bubble, there will be external factors that influence things and we will deal with them as we go along. However, if I felt they were insurmountable I would not have put myself up for this job!

OF CAPPING LENDING RATES AND MARKET FORCES

As if by clockwork once our Kenyan brothers passed into law a bill to cap commercial bank lending rates, we started falling all over ourselves to copy them.

Kenya’s President Uhuru Kenyatta signed into law the act which caps lending rates at four percentage points above the Central Bank of Kenya’s indicative rate, which stands at about 10.5 percent currently.

The champions of this cause in Uganda, Civil Society Budget Advocacy Group (CSBAG) went one better than the Kenyans, not only calling for five percentage point cap above the Central Bank Rate (CBR) for lending rates but also calling for deposit rates to be raised to 50 percent of the CBR. The CBR in august was announced at 14 percent.

With one fell swoop they intend to lower bank revenues while increasing their cost of money, a major element in the cost of their doing business!

"For anyone with even a rudimentary knowledge of business this is a preposterous proposition. But we all know how when even the most reasonable things come up against politics – anywhere in the world, things can go south...

We all agree that lending rates in this country are ridiculously high. What kind of business, playing according to all the rules can manage to repay the banks at 30 percent and still make a decent return? 

Maybe only the banks and the drug pushers!

So therefore you will not find any arguments for a continuation of the status quo.

Where proposed solutions differ is how we go about it.

Understandably we reach for the easy solution. Mobilise the politicians to pass a law that caps lending rates and voila! All will be well.

But like in many other such dilemmas the more sustainable route to resolution would cost us too much, in terms of personal comfort, take longer to show results and will just not serve our purpose to play to the gallery and posture as the champions of the masses.

Neither in Kenya nor in Uganda is there any explanation of how we come to the cap rate. As best we can see it is an arbitrary number pulled out of a hat without any thought to the reality.

The reality should be based on how banks determine lending rates.

Like any other businessmen they consider their costs, which in this case include how much they pay depositors, the risk of default by lenders, at what rate the government is willing to borrow and finally their own margin. Something like that.

The argument has been made often that for the low rates banks pay on deposits – you will be lucky to get 3 percent, they should charge lower for loans. But we also know that their fixed deposits attract as much as 14 percent in some incidents, raising the cost of their money.

This is before you factor in the cost of running the huge branch networks and ATMs, we demand as customers, the huge salaries and bonuses they pay their managements and the profits they need to repatriate in dollars to their shareholders.

Then the government – the safest bet around is borrowing in double digits. The benchmark 91-day treasury bill goes for 14.92 percent, this the rate to which banks look to price their loans.

"If I lend the government, which is not going anywhere, at 15 percent what is the realistic rate I should lend to a person who can die, relocate or get fired from his job? Twice? Three times as much?..

Some people argue that government should be borrowing at five percent, given how they are such a sure bet. But we know that even governments have a risk of default attached to themselves. You will not lend to the Swedish government at the same rate as you would lend to Kampala.

Politics may prevail and try to straight jacket the banks. And the banks will react by cutting their costs – reduce branches, cut staff, lend less and discourage deposits!

People forget that there was a time when banks had only one branch in the whole country, would not touch a loan application unless it was backed by a land title in Kampala and penalised you for saving by mandating high minimum balances. And they were still profitable.

So how do we sustainably reduce lending rates?

To begin with government has to cut back on its borrowing from the public. That means it has to cut back on its own budget by reducing on its education, health and infrastructure projects, its district creation drive and on corruption among other things. Easier said than done, but also detrimental to the country’s long term development agenda.

Lower government costs would mean that it wold borrow less from the public, which would lower the treasury bill and bond rates, preferably below double digit rates.

Banks too will have to re-examine their overheads, do they for instance need the big banking halls they maintain? The size of the banking hall used to be a sign of the bank’s credibility are we impressed anymore? Do we need banking halls anymore when we can do financial transactions off our mobile phones?

"As a way to lower the cost of repatriating profits there is urgent need for a credible, dominant local bank, which by sheer force of its size would lower lending rates industry wide. Our government has failed us in this and our businessmen can’t seem to muster the discipline required to achieve this, but it is something that has to be contemplated...

My challenge with all these calls for capping of lending rates – copycat or otherwise, is that they display a lack of understanding or ignore all together the forces of supply and demand at play.

You cannot play a rugby using hockey rules. You need to know the rules of the game you are playing before you can play, or even break the rules!

MPS FREEBIE AN OMEN OF DOOM

Last week some of our MPs headed stateside for the annual Uganda North America Association (UNAA) convention. While there they indulged in some sightseeing and the now mandatory selfies.

Of course us mere mortals back home struggling to not only make an honest shilling but to stretch it too, were understandably infuriated by this show of conspicuous consumption.

It was reported that all the costs coming to about sh2b for the six day trip, were being footed by parliament, despite loud protestations to the contrary.

"But just to put this in perspective the sh2b the MPs blew on their jaunt across the Atlantic would have been enough to treat 41,492 inpatients at Mulago hospital or 5 million out patients at the same facility. This comparison will replicate itself whether you are talking about building classrooms or health centers or constructing feeder roads...

Pause a moment and let that sink in for a moment.

In effect this means that a handful of MPs – relative to the total population of the country, for a weeklong trip consumed the funds required to cover Mulago’s outpatient budget for six years? And for what? For a convention of questionable value to national development, characterised more by merry making than any constructive deliberation?

Only in Uganda!

Imagine the scenario in a remote homestead somewhere in rural Uganda where the children’s school fees Is due, the granary is empty and there is a disturbing bug running through the family that requires urgent medical attention. Imagine further that the planting season is coming and seed has to be bought, labour contracted to ensure work is done in the fields. With these myriad of emergenices at hand imagine the head of the family then takes a trip to Kampala to cool off from the domestic pressures, patronises some of our choicest night spots and even tries his had at roulette wheel in one or two or even three of our local casinos. As if that is not enough he finds the time to send selfies back to his hunger racked, disease ridden, hopeless family rubbing their runny noses in the good time he is having in the big city.

You can’t simplify it any more in trying to analogise what parliament has done to us hapless tax payers.

It boggles the mind.

And the even bigger scandal is that they shall get away with it. No one, least of all themselves will hold them accountable. It is true what they say, we get the leaders we deserve.

Clearly these honourable men and women are not our servants sent to front our aspirations and champion our causes. We should disabuse ourselves of the notion.

"The reality is that our political elite are there to gorge themselves at the trough of tax payers money and the rest be damned. Did I hear that they now want their car allowance to be raised to sh200m from the earlier sh150m and don’t want the tax man sniffing around this taxable allowance?...

We have said it before in this column but it is something that bares repeating, we are poor not for lack of resources but because one, we don’t know how to mobilise the resources we already have and even if we manage to put together a few coins the allocation of those funds is dubious at best and downright criminal at worst.

The road to wealth for country or individual is quite simple, one only needs to shift expenditure towards investment and away from consumption. A simple plan but not easy to implement, because our base instincts – sloth, greed, envy, lust and hubris make it hard to stick to this formula.

A sign of personal discipline is to be able to override these tendencies, delay gratification and plan for the long term.  This is even more important for a country.

Also with the deluge of dollars that is expected with oil production within a decade, we can only expect this kind of nauseating extravagance to increase rather than the opposite. They say that money does not make one a better or worse person but only magnifies what they already are. So things will only get worse before they ever get better.

These are our leaders, the cream of our society, if this is how they decide matters of national importance it hurts the head to imagine how the rest of us, who follow them like lemmings, will behave.

"When you have a political elite who are hell bent on living for today without a care for tomorrow, does it take a prophet to fortell where we are heading?...

Clearly this parliament, not only because of the sheer amorphousness of it, is surplus to our requirements.

OUR YOUTH HAVE SMELT THE COFFEE, ITS NOT BREWED IN THE OFFICE

A survey of youth opinion on their future prospects and that was of the country was heartening and sad at the same time but there was more scope for optimism than gloom generally.

The survey carried out by the East African  Institute of the Aga Khan University had many findings but the ones which struck a chord were that 48 percent or just under half the respondents would opt for going into business over the more traditional corporate careers.

Hazarding a guess this probably points to the fact that when they look around the people with the lifestyles they aspire, but most especially on TV, are businessmen. It helps of course that they live in one of the most entrepreneurial countries in the world, where everyone around them, including the regular office worker has a side business of one sort or the other.

"It is also the right way to be thinking in a world where job security is becoming more tenuous. The industrial age modes of production which allowed one to have a job for life and enjoy a steady pension in retirement are long dead and buried. Whether that is a good thing or not is neither here nor there, that is just the way things are...

The speed of change now, powered by increasingly quicker communications means companies cannot remain static, but have been forced to react to the market at a moment’s notice or become road kill.

In responding to the market, companies are having to rejig everything from strategy, to processes to human resource. The pressure to keep a job will be higher going into the future, as workers and work forces will have to be in constant state of re-education to keep up with all the changes around us.

And even when you have re-educated, as a unit of production, company owners will have to weigh the benefit of your experience against hiring younger and cheaper workers who know how to manipulate computers, whose processing power has rendered your experience redundant.

As if that is not enough companies are needing fewer and fewer workers to do the same or more work than before. Can you imagine there used to be a pool of secretaries in companies?

"Relatedly it makes sense that the youth would opt for business. In the world they are exposed to, through the media they consume, there is a lot to see, a lot to experience and being tied down to a desk nine-to-five would cramp their style...

All these are within the realm of reality for them given how much value can now be created in the market using the ever advancing ICT opportunities. They not only have a need for speed they are already operating at a higher frequency.

And the nature of business they are looking at are very different from what has been held to be business. Vertical integration, where companies won the whole value chain from production, to manufacturing, to marketing and distribution. They will aim to own one part of the value chain and outsource the rest.

Sporting goods company, Nike, was ahead of its term with this model, outsourcing all the manufacturing and retaining only the design and marketing of their shoes and gear.

They are not looking to won huge cumbersome structures with many moving parts, but will choose lithe and lean operations that can shift quickly in response to the market or can be wound up all together with the minimum of fuss.

The darker side of the survey suggests that the youth have integrity issues. Fifty six percent of them say it doesn’t matter how they make money as long as they are not caught stealing.

That of course is a function of the society in which they live in.

"They see their elders building inexplicable wealth and flaunting it unashamedly with society celebrating rather than shirking them. The message is clearly that the end justifies the means...

But they would be best advised to disabuse themselves of that concept especially if they are going into business.

Due to the rapid changes in technology more and more it is becoming important to be an ethical operator. A disaffected customer, worker or partner can with a few key strokes cause and untold damage to your business that may lead to its eventual windup if you haven’t build enough goodwill in the community the business operates in.

But they will learn that fast enough.

What government and the general society need to do to keep this fire alive is remain open to improving technologies, fast track entrepreneurship programs for everybody not only the youth and keep improving the ease of doing business in the country.

THE BAILOUT LIST IS A HOAX -- BITATURE

(This is an interview that was run in the New Vision last month following the publication of a list of businesses seeking a bailout from government. The businessmen allegedly were arguing that the poor state of the economy was driving them under and to save their investments, jobs created etc government needed to come in to save the situation)

There has been much public outcry about a planned bailout by government of stressed business. Private Sector Foundation Uganda chairman in a recent interview with Paul Busharizi gave the Business Vision his thoughts on the matter.

QN. Is it true that you are leading an initiative to seek a government bailout of distressed companies? If so why?

Ans. As the chairman of PSFU (Private Sector Foundation of Uganda) I have the responsibility to engage with government in different matters pertaining to the Private Sector and economy in general.

I used to be chairman of UIA for over 6years and gained valuable experience and insights on matters which affect our investors both local & foreign and a better understanding of how government works in general.

For the record, I was not appointed Chairman of PSFU by government; I was elected by the shareholders of PSFU at an AGM. This responsibility means I have to engage on behalf of the private sector on cross cutting issues. I declare that I am a member of private sector with interests in a diversified portfolio.

QN Justify the bailout, why don’t you let those businesses that have been careless fail or close. Why do you want tax payer’s money to bailout especially the big ailing ones.  Would you do the same for small ones?

ANS. My agenda was not necessary to bailout a certain number of businesses. No I wanted a solutions for all businesses operating in Uganda because there was a change in the macroeconomic environment.

I wanted to be certain it had not been missed by the government regular “Antenna” or govt and agencies. When the economy is overheating or slowing down, you need to be sure before you prescribe the right medicine; and this must be scientific. A vigilante group had gone great length to establish with facts what had happened lately. To take the pulse of the economy.

This group had a formidable leader that brought this matter to my attention. As I listened carefully to several business owners and challenges that they were facing. I realized that the pressures we were facing in one sector were apparently affecting nearly all sectors across the economy, agriculture, construction hospitality, trade & distribution, manufacturing, FMCG, logistics, oil & gas sector.

This got my attention and I was keen to share this with the central bank and other government officials to see if they have similar concerns consequently I wrote a concept note for the attention of the PM and he very graciously gave me an appointment at short notice  despite his  very busy schedule.

The matter was not entirely new to his office and several meeting had been held at various levels.

"As a consequence of these several meetings 3 requests were made
1.      That domestic arrears owed to the private sector by government be paid. (the PM had already consulted H.E the president  and cabinet decision  had been made. There was a directive to the ministry of finance to priotise this with immediate effect but not later than August 2016.
2.     On the side of traders that had supplied  goods to south Sudan but had not been paid , the government empathized  and would  engage directly  on their behalf in due course with the government of South Sudan but his was little more complicated and we had to realistic about the priorities there. In recent weeks we have seen clearly that there were some more pressing matters and lives were at stake there. Nevertheless the government will commit human and financial resources to this matter within a legal frame work to find a lasting solution for the benefit of Ugandan traders.
 3.     The financially distressed companies that owed money to the banks....

The government is on record about the unusually high interests rates and was looking for ways to signal the commercial banks to bring down the interest rates.

The CBR (Central Bank Rate) has been reduced twice in space of 3months but there is a lag between CBR signal and actual commercial banks rates.

The government sets policies and the Bank of Uganda (BOU) will implement them with autonomy and independence of their understanding of these laws and regulations.  BOU cannot dictate to the commercial banks on interest rates in this liberalized free market model that was developed over the last 3 decades. It has helped Uganda maintain stable growth.

Any direct interference might have far reaching unintended consequences.

Notwithstanding the variance in CBR(monetary policy adjustments)and the Fiscal policy discipline instilled in the government lately, Government has further resolved and budgeted to capitalize Uganda Development Bank as a medium term measure to compete with commercial banks for development projects that require long term less commercially priced funds. Please do not see this as a bail out a bank to bail out ailing businesses. This is a process that the government and several government agencies are working on.

QN. So where did this list that has been floating on social media platforms come from.

Ans. There is no official list from the private sector that has been presented to government or the central bank.

How can we as PSFU or any other body for that matter be given the task of choosing who to bail out and who to leave out if there is no agreed transparent mechanism in the first place?

Let alone identifying a pool of funds that can be used after the budget 2016/2017 has already been passed.

QN. How would you make a list in a fair and transparent manner to bailout ailing companies?

Ans. Therein lies the biggest challenge. 

 Some have sighted US president (Barack) Obama's bail out of big companies in the USA and how he justified it this with taxpayers’ money.

Several other countries followed suite. Uganda’s economy today has indeed slowed down and the government agencies are monitoring closely what measures to use at their disposal to check this and get growth back on track.

Qn Is it true that your Simba Group wants sh210billion from government as bail out money

Ans. First of all that list that is going around on social media is a hoax or fake!Because there is no official list. The Board of PSFU, Executive Director and the management have not been involved in any way in making a list. I don’t think UMA or UNCCI has a list either. It has no author or signatory. I don’t know who is creating it and several people are now calling me to be included on the secret list. There is no list Period....

Debt is a relative thing better described as leverage in the corporate business world.

The bigger your business assets and cash flow the bigger the debt you can access. 

Banks employ very smart people to analyze your debt capacity and more often than not they get it right. You must remember that the banks have a much stronger responsibility to the depositors than to the lenders.

Simba's business with the banks is an internal matter for the banks and Simba group. If the borrower defaults then there is a clear process that makes the matter of public concern if necessary. By advertising in the newspapers or by going to court. So until such a time please let the legal private entity manage its affairs as it knows best. I don’t think Crane bank or any other bank as suggested will give one single customer shs200billion. Twenty billion maybe, but not 200B.

IGNORE COMMUNICATIONS TO YOUR OWN DETRIMENT

This week three events cemented in my already convinced mind that communications should not be taken for granted by people, companies or countries.

Last week state water minister Ronald Kibuule kicked up a storm for his alleged mistreatment of female security guard who deigned to search the minister on his way into a bank. If the social media crowd had their way the youthful minister would have been quartered and hung out to dry by now. Never mind that they did not have all the information about the incident.

While the minister was being “virtually” pummeled a court in Ireland ordered social media giant Facebook to reveal the identity of Tom Voltaire Okwalinga (TVO) to lawyer Fred Mwema, who is seeking to sue him for defamation.

And finally and even further afield online  retailer Amazon reported that it had sold stuff – books, clothes, CDs, DVDS, home appliances worth $59b in the quarter that ended in June. This figure is big enough in itself -- three times the size of the Uganda’s annual economic output, but was more telling was that this figure was six times the size of the next biggest retailers sales in the same period. Retailers like Walmart which employ 2.4 million around the world.

One might think it’s a stretch to have a minister’s woes in little Uganda placed alongside  Facebook’s woes and Amazon’s rising fortunes but the thread that runs through these events is power of communications or the storage, analysis and transmission of data and how it is taking, or has taken center stage in everything we do.

Down the ages the evolution of power has gone from being possessed by the strongest man in the cave to the man who could marshal the largest armies and now to the man who can leverage the flow of information.

But beyond possession of information is how a person, company or country leverages the networks that this information goes through.

Think about it if information is power the easier it is to tap into those networks where the information is the more powerful you become. So a person without a mobile phone today is worse of than a person with a 2G phone, who in turn is worse off than a person with a smart phone or other smart devices.

"The greater challenge with this new power is that it is not centralised like the traditional forms of power. It is complex and diffused which makes it difficult to control...

More recently see what happens when a message is taken over by social media and how it takes on a life of its own be it Zimbabwe’s  President Robert Mugabe stumbling or President Yoweri Museveni taking a call on the road side or even Usain Bolt smiling his way to another sprint win.

Two things are clear these networks while rallying people are around a cause are at the same time diffusing power over the message to thousands of clicking thumbs. As a result the old methods of repression or stifling revolution cannot work.

Kibuule’s woes, the need to muzzle the faceless TVO or the exponential rise of the online retailer 

Amazon are just a variation of the same theme and the question for all of us is how to operate in this brave new world which will celebrate you or chew you and spit you out on to the dung heap of history.