UPE AND THE FLIGHT FROM POVERTY

Getting out of poverty follows a simple formula.

But first what is poverty? Poverty generally, is the inability to meet your basic needs. The opposite of which is being rich, where you can not only met your basic needs, but have surplus income that comes from your assets.

"The formula of getting out of poverty is to trade value for income and with that income create more value and therefore more income. A virtuous cycle. A simple formula but not easy to execute...

The trick is to have something – a good or service, of value to trade. It is possible to have value and fail to trade it, either because there is no market for it or that the market is not aware of your value, but that’s a discussion for another day.

At the heart of the challenge for most anti-poverty programs is how do you create value and then get it to market, and do this sustainably over time.

The reason you are poorer than the richest man in your town is because he knows something you don’t. What he knows that you don’t, makes him behave in a way that ensures he earns more than you.

So invariably creating value often comes with mindset change.

Last week the education ministry commemorated the 25 years of Universal Primary Education (UPE) program. What started off as a response to a campaign promise by presidential candidate Paul Ssemogerere in  1996, was a good idea that was long overdue. Since then primary enrollment has jumped to  about eight million today from two million in 1996 and seen literacy levels  almost double to 75 percent from 43 percent in 1986.

As suggested above education, which by definition entails a mindset change and therefore creation of value, is a useful first step to lift people out of poverty.

There are questions about the content of our education system, but if one is literate can overcome these shortcomings with continuous learning.

It should come as no surprise that Kenya and Tanzania, which in the case of the former has had bigger enrollments at primary school or in the case of the latter started UPE in 1977 are bigger economies than Uganda. Their literacy levels reflect the earlier adoption of UPE with Kenya at 82 percent and Tanzania 81 percent.

"The thing with such social engineering initiatives is that it takes time to see tangible results, which may discourage people with shorter electoral time spans. But the benefits are there, its just that they may just creep up on you.

What value can you put on being able to communicate in one language all around the country? How much easier is trade? How much easier is it to mobilise populations? How much market do you create when more of us are educated or at least literate?

It’s happening already. While ideally we should be communicating in an indigenous language other than English, you can now go anywhere in the country and manage just fine with English, as most people now have studied English to some basic level. Hopefully with the introduction of Kiswahili at primary school, in another 25 years we should more improved communication around the country.

That being said there is a lot to be done. The education ministry reports that there is no government aided school in 1,617 of the more than 10,000 parishes in the country.

The ministry estimates that it will need sh1.89trillion or about sh1.2b per school to bridge this gap. Apart from questions of value for money there really should not be any hesitation in releasing these funds.

The best investment a nation can make is to invest in its people, and providing education as well as health services should be key.

A country like Singapore with a tenth of our population and for all intents and purposes, a rock in the sea has a GDP of about $400b.  Beyond basic literacy Singapore’s education system is ranked in the top 20 in the world. It helps of course that there has been an education system in that country since 1823.

Coming full circle to poverty eradication, there are two ways that I know of for an individual to create value, either through education or experience.

UPE has its issues. The idea is sound but the execution may be wanting.

"A previous generation, which did the proverbial 10 mile trek to and from school, have countless stories about how education made a difference. In single families there are siblings who had climbed out of poverty and others who were wallowing in poverty, the difference being one sibling went to school and the other did not.

Interestingly they started their schooling writing in the dust using sharpened pieces of wood (we call them stylus these days), often under trees and many times there was no school when it rained.

They came out fine and many of them lead or have led this country.

 

 

 

 

MTN AND THE FUTURE OF THE ECONOMY

Last week telecom company MTN released its 2022 results.

Revenues, profit were up and for investors in the company they will be paying out their final dividend for the year, which will have seen shareholders pocket a total of sh15.9 per share for 2022.

Everybody has their favourite numbers, I am always interested to see how the data and fintech subscribers and revenues are moving, especially against voice numbers.

First of all in 2021, it was the first time, that revenues from voice – what we pay to call, fell below half the companies total revenues. While these grew by 3.6 percent, data and mobile money revenues grew in double digits upsetting the status quo.

"In 2022 data and fintech revenues continue to gallop ahead while voice revenues slipped 0.5 percent, the first time in the company’s history that voice revenues did not grow...

The writing is on the wall voice is out and data and fintech are in.

It reminds me of former Safaricom CEO Bobby Collymore’s prediction when he took over the reins at the Kenyan telecom firm, that one day voice will be an add on, given away for free, that the action will be in data and fintech services. I could not relate at the time but it is coming to pass every day.

When Airtel lists its shares – they were supposed to do so by July last year, we will be able to tell whether this is an industrywide trend or restricted to MTN. I bet it shows across the industry.

This is an important, even critical, to the development for the economy.

Beyond the ever-increasing access to information that come with improved and more widespread data services is the fact that credible business transactions can be done quickly and safely using data.

The spoken word has its limitations. Information transmitted via this medium – unless recorded, can be dismissed or refuted in the future. The written word is more easily verifiable, hence the need for written contracts.

While its possible that most of our data is consumed by entertainment, it just as likely that its use in business is expanding.

"The efficiencies to the whole economy will creep up on us, because it is easy to take these new services for granted, but let us look back to an earlier time.

There was a time when there when we did not have mobile phones ( for those born after 2000, just believe it) and the country was good for about 50,000 landlines, many of which were down anyway.

So things we take for granted now like making and confirming appointments, deliveries, calling a cab these were all none existent activities. How did we go about these things? We did not. Booking appointments was done in person or by mail (if you had a post office box), deliveries? How! And you walked to where the special hires (do you remember those guys) to get a ride. The explosion in boda-bodas has been largely facilitated by the mobile phone. There were no bodas, expect maybe at the border.

Efficiency is the ability to do more work per unit of input. The input may be time or money or effort. So we are now doing more work than we used to because we can communicate better.

Taken to the next logical conclusion is the rise of mobile money or fintech as a sector. The efficiencies here are obvious ( at least to me). To give my friend or relatives money I had to meet them in person, send someone with their money or they send someone to pick the money Now for the cost of less than a return taxi fare I can move money around at the speed of light and the other minutes, which would have been spent going to and fro can be used for something else.

Some stoneagers would rather stand in line at the bank to pay their bills than pay the transaction fees charged when they pay online. They cannot be helped.

And these our most basic transactions in a day scale it up now to companies, schools and traders and the numbers begin to bogle.

In June last year it was reported that the total number of mobile money transaction stood at sh145trillion in the first six month so last year. To put this in perspective the national budget was about sh48trillion for the whole of 2021/22.

"By definition when money moves it moves to where is needed from where it less needed, broadly speaking. These trillions of monies a large part of it, was probably doing nothing under our mattress, in our socks and bras. It has taken mobile money companies to liberate them from those dark, smelly corners into the light of day...

MTN reported that last year fintech users grew about ten percent to 11 million users. Assuming they show the same rate of growth (my feeling is it will actually accelerate) we will be doubling mobile money users ever seven years. What seemed like a pipe dream a few years ago, becoming a cashless society,  is happening before our very own eyes.

The more of us who are signed on to mobile money and other fintech applications the faster transactions will be done in the economy. And if time is money it follows that the economy will be the better for it.

It probably explains why you can turn up at a bar on a Monday night in Kampala and it seems like the weekend – money is flowing more efficiently boosting consumption and inevitably production.

 

 

THE POWER OF COOPERATIVE SYNERGY

BOOK: MAKING COOPERATIVES WORK

AUTHOR: CHARLES KABUGA

I have long held the view that Uganda and Africa in general, is poor because of our inability, unwillingness or external schemes that prevent us from aggregating our resources be they land, capital or labour.

We try to got it alone as individuals, communities or countries preventing our ability to take advantage of economies of scale and the synergies that come with. I have seen synergy defined as one plus one equals 11 not two.

"The point is, when we come together we can unlock potential that is greater than the sum of our individual parts...

That is why I am a big fan of the cooperative movement and the book “Making cooperatives work: Optimizing development through social capital” by long time cooperator Charles Kabuga could not have come at a good time in the history of our country.

It is an opportune time because there is a rush to start savings & credit cooperatives (SACCOS) around the country, to take advantage of the Parish Development Model (PMD) funds. When the dust settles there will be a handful of cooperatives left standing, hundreds of others set up opportunistically will have fallen by the wayside. Which will be sad but inevitable.

Hopefully the failed SACCOS will not discourage people from staying the course and joining the more viable SACCOS.

In his book Kabuga does a commendable job of charting the history of the cooperative movement, internationally and in Uganda, outlining the theoretical framework on which they operate, the oftentimes uneasy relationship with state and what he sees as the future of the movement.

In Uganda the cooperative movement was severely weakened by the economic troubles of the 1970s and 1980s. Structural adjustment of our economy, which required a cut back on public expenditure, privatization and especially liberalization of commodity marketing dealt a near deathblow to the cooperatives.

He points out that cooperatives relied on the commodity marketing monopolies the government put in place and the cooperatives were the main suppliers to these marketing boards. When these were disbanded and private players begun exporting commodities, the cooperatives whose management failed to move with times found themselves adrift at sea with the inevitable collapse following soon after...

The closure of the Cooperative Bank in the late 1990s sounded the death knell for the cooperatives as we knew them at worst or forced a reset of how they had to operate in the future. Few cooperatives survived this carnage.

Kabuga has some time-tested advice on how sustainable cooperatives can be set up and some thoughtful ideas about how they may have survived the structural adjustment period.

I agree wholeheartedly with him that cooperatives need to make a deliberate decision to build their capital base. The practice now is that cooperatives tend to distribute a lot of their profit to the members annually. While this is good for morale and endears the leadership to the members it counterproductive in the long term. Weak capital bases is a major reasons why the cooperative movement failed to overcome recent economic upheavals.

That being said the relevance and the importance of the cooperative movement is needed now more than ever before.

Despite decades of economic growth the wealth inequalities are widening and the cooperatives Kabuga maintains may be just the mechanism needed to help bridge or at least slow the rate of inequality.

The beauty of the cooperatives is that they do not need any one’s permission to begin. While to legally operate in the country one needs to register with the trade and cooperatives ministry, the will to cooperate has to be self-generated. This is an important point because cooperatives are not about positioning for handouts but a tool for building self-reliance in our communities, leveraging the power of numbers to advance society.

"For those with cold war hangovers he says cooperatives are not a socialist tool. That in fact there are cooperatives even in the most capitalist of societies albeit going by different description....

The book is potentially a powerful reference for the industry a critical resource in a world where the reality is settling in that we are going to have to develop ourselves and not rely on foreigners with  alternative agendas that do not necessarily rhyme with ours.

It is written in very accessible language and is must read for any leader political or otherwise who has a genuine desire to uplift his people.

 

OF NSSF, BONUSES AND DUBAI HOLIDAYS

The NSSF parliamentary probe is done and dusted. Parliament upheld the report’s recommendations, which among other things called for the resignation of the minister, scrapping of the board and the suspension of management.

"The report – a 562 page tome, is an amazing (I am trying to be polite) piece of work. If it was supposed to unearth impropriety of the management, it failed dismally and instead started clutching at straws. Parliament conducted a fishing expedition that came up short but decided to make drastic recommendations that made for sensational headlines but little much else....

The net effect is that they so muddied the waters, that it is inconceivable how gender minster Betty Among can continue to work with the board or management. Though to be fair, the relationship was already toxic and the committee only served to bring it into the public glare.

One thing that has become apparent to me is that NSSF has become too big for us. The magnitudes of money being delt with in NSSF we clearly do not have the band width to comprehend.

Two incidents come to mind.

In the report the committee was alarmed at sh33.3b bonus payment to staff and aghast at how 85 staff went to Dubai for a team building exercise that cost sh200m. In respect of this the committee said, “That the board should be cognizant of their core responsibility, which is to ensure a secure, profitable and effective financial management for the benefit of the workers …. Desist from such unnecessary expenditure, which will occasion loss to savers’ Fund.”

I would like to think that the motivation of NSSF staff in principle is a good thing. And I would like to think as well this motivation has to have a monetary value.

The trick with designing worker incentives is to link them to performance, in this case improved return for the members. Ideally if the enterprise does better than the previous year your bonus should be better, if you don’t it will be less. And the bonus should be a proportion of the improvement in performance. That sounds like a good enough principle.

So if for example you work for the Vision Group, which last year managed a billion shilling profit and say worker bonuses are set at five percent of profit, then we would share sh50m according to a predetermined formula.

Using that logic NSSF made surplus of sh1.26trillion in 2021/22 assuming like the example above worker bonuses were five percent of profit, then NSSF workers would be sharing sh63b among themselves.

What does sh63b look like?

For one it is more than half the Vision Group’s total revenue of sh100b in 2021/22. So, the knee jerk reaction at the Vision Group maybe “Shaaa! How can they get all that money as bonus?” But that would be us at Vision Group thinking from our small perspective.

In short NSSF has become too big for us. It has become so big that when we view its numbers against our smaller puny reality we think they must be up to something fishy.

Just to remind you NSSF has almost sh18trillion in assets under management. To stay with the Vision Group as an example, which has sh122b in assets, NSSF is nearly 150-times bigger than Vision Group. Basic logic would dictate that everything – wage bill, profitability, bonuses would reflect this reality. This is not the fault of the NSSF workers; Ok maybe to the extent that they worked to make these numbers happen and should therefore should be renumerated accordingly. You have a problem with that apply for a job at NSSF.

"Incentivising workers is a normal cost of business. The slave trade ended in the 19^th century. The MPs should have put aside their shock at the “huge” bonus, asked how it was derived and maybe suggest a change in the formula to fit their perspective, which would be unfair to NSSF workers....

And then my pet peeve is the cost of houses at Lubowa. To their credit the committee restricted themselves to recommending a value for money audit of the project. But minister Amongi on the floor of parliament in her defence brought it up.

She outlined the cost of a three-, four- and five-bedroom bungalow and asked the house gleefully how a house can cost sh3.2b. She clearly couldn’t wrap her head around the concept. The speaker Anita Among asked her whether she had alternative prices for the same properties and the minster had no clue. Someone helped her with a note, which showed that comparable properties at the Royal Palm Estate in Butabika were better priced – though they too are outside the range of the majority of NSSF members.

There are many things that can be faulted with this comparison not least of all that the locations are different – have you driven on the Port Bell road lately; that  Royal Palm was launched 12 years ago – have you tried buying a bag of cement today, you can tick off the differences. 

Somehow the committee queried the unit price of the houses, the total scope – 2,417 units and cost -- $400m (Sh1.5trillion) was probably too much for them to handle.

In hindsight maybe NSSF should have anticipated this need for cheap houses and built the ugly lifeless high rise apartment blocks, which we see in western capitals, which would have increased the number of units and maybe brought unit costs down.

NSSF however decided to build high end properties on the prime Lubowa land and the more affordable housing, which will complain are still too expensive in Temangalo and eventually Nsimbe estate.

MPs may want to use the opportunity to lower the cost of mortgages – now not below 10 percent anywhere, lower the cost of development – infrastructure takes up at least 30 percent of the price and urge government to underwrite the infrastructure costs of such massive projects, all within their power to do.

"The truth is we need to upgrade our reality to manage NSSF. And this is a serious issue we have to address ourselves to. NSSF is a modern institution in a pre-industrial country. Either we cut it down to size, since it has galloped far ahead of our reality or we elevate ourselves to appreciate not only what it has become but the Fund’s strategic vision as well to better oversee it well into the future....

I say this on the assumption that our motives are noble and their no ulterior agendas at play.

DO NOT THROW OUT THE BABY WITH THE BATH WATER

I am not a big fan of parliamentary probes. They tend to be high on drama and low on substance.

Last week's parliamentary report on the National Social Security Fund (NSSF) probe did not disappoint in this regard.

The probe which took two weeks in February, was called in response to gender minister Betty Amongi's allegations of mismanagement at the fund that were preventing her from renewing former managing director Richard Byarugaba's contract.

The probe hearings served up a lot of sensation and ended up besmirching the reputations of the minister, board and management. Given the tone of the probe its recommendations for minister Amongi to resign, scrapping of the board and suspension of the entire management should not have come as a surprise.

Its former US President Barack Obama who said that democracy is messy. And in the exercise of that messiness a lot of good can get thrown out with the bath water.

"When you strip away all the dazzle and razzmatazz I came away feeling that the good performance of the NSSF management over the last decade was overshadowed and unfairly so by what I thought were some administrative lapses...

These lapses while quite shocking were often seen out of context and blown out of proportion.

First of all the fund has shown consistent growth since 2011 growing to sh17.5trillion last year from sh1.7trillion. A tenfold growth that has been independently verified and speaks to the progress the management has made for its members.

And while it is true that some investments have not shown much growth during the period, it is unrealistic to expect uniform growth in a basket of assets and to pick certain parts of the portfolio, which are under performing to damn the entire portfolio.

In fact, to objectively judge the Fund one should look at their 10 year strategic plan that was drawn up in 2015 and expected to expire in 2025.

In this plan they had set a target of growing the fund to sh20trillion,  a target they seem to likely to achieve ahead of target; to improve customer satisfaction to 95 percent, a figure which stands at 83 percent today; growing staff satisfaction to 95 percent by 2025, which is currently at 92 percent and finally to reduce turnaround time for processing of benefits to one day from the average of 26 days in 2015. Today this figure stands at nine days.

"This progress shared publicly with the members annually, suggest that more has gone right than wrong at the Fund. To lose sight of this would be to unfair to the management and demotivating for future leaders of the Fund....

One issue that was particularly unfair was the committee's criticism of the sh16b and sh17b bonuses paid to staff in 2021 and 2022 as excessive and uncalled for.

In any other organisation in this country those figures would seem outlandish, but in both cases this was in recognition of the funds creation of sh2.3trillion and sh1.7trillion in additional value. Simple arithmetic would show this was one percent or less of the value created and well with in a realistic range.

The number looks big if not viewed in its proper context.

The parliamentary probe was a good one to the extent that it gave everybody a hearing, the challenge was the conclusions it arrived at, which painted the management and staff in a less than fair light.

I know that the attraction to control or at least influence the goings on at the sh17trillion Fund can be hard to resist for even the most upright saints. But we need to recognise that the Fund is on a positive trajectory and it  should be helped to maintain this for the benefit of its members and the economy as a whole.

I have been a member of the Fund since my first paycheck in December 1995, I have an obvious bias to see NSSF continue progressing in its positive direction for at least the next five years. Beyond my own selfish needs it will do me good if it continues being profitably run well into the future so my sons and their children after them can benefit.

"This has been the longest stretch of good performance of the Fund in living memory and  compares favourably with other funds in the region....

The Kenya's NSSF, which has been in existence longer than our own, lags behind our Fund in performance. By one measure, their assets have grown an average of eight percent annually over the last five years compared to 17 percent per year for our NSSF. And  this despite our Fund being bigger than theirs.

As we go into the debate of the report by the whole house of parliament, we  would do well to keep this perspective in mind.

Again to paint this period black would be a great disservice to the management and the future prospects of the Fund and if the house cares anything about the members of NSSF they will do well to keep this in mind.

UCB; FLOGGING A DEAD HORSE

Easily half of all Ugandans alive today were born after 2000. This is a source of great opportunity for the country in that if managed well, this young population will deliver a boom in the economy in coming years as they become productive citizens. On the flip side it also gives opportunities for revisionists to confuse the youth about the country’s history.

In the last week the fate of the defunct Uganda Commercial Bank (UCB) and the role of former central bank governor Emmanuel Tumusiime Mutebile in its demise came up. It was suggested, no, forcefully declared, that Mutebile’s closure of the UCB was part of an imperialist plot to weaken the economy.

I personally reported on the UCB privatization process, but before that the seeds of its destruction were laid by bank and government officials who thought they could suspend the laws of economics, politics and good sense to keep the bank afloat, accelerating its demise instead...

By the time the NRM came to power in 1986 UCB like the rest of the economy was on its knees. It was the biggest bank by deposits and with 36 branches – a branch in almost every district, was the biggest by branch network as well. But the huge branch network was more a liability than an asset as they were not connected and could not activate the synergies that would come with the branch network.

To illustrate, as recently as 2000 before it was privatized, if you drew a check in UCB Kasese and came to cash it in Kampala, it would take at least a month before your account was credited.

It doesn’t not take a detective to surmise the shenanigans that would go on to speed up the process.

This is important because in the 1988/89 budget, then finance minister Dr Crispus Kiyonga announced the launch of the Rural Farmers Credit Scheme (RFCS), which was supposed to avail credit to small farmers, he however lamented that the UCB network, through which the scheme was being implemented, was too limited. He reported with glee that the Bank was set to open 136 new branches in the coming year to facilitate the scheme.

This was obviously a political decision.  There was no mention of how much government was going to give UCB to aid this project, which would have been necessary to shoulder the four-fold expansion of its network. In the next budget he reported that the bank branches had actually risen to 170.

Bankers tell me that to open a new branch anywhere in the country today would take at least $350, 000 or more than sh1.2b and that’s before salaries and overheads. So even if we reduced the cost of opening a bank by a factor of 10 to about $35,000 the bank was going to lay out at least $4.8m in a year to make the minister’s wish come true. Even the government of Uganda would be hard pressed to come up with these figures at the time. In the previous year government had collected sh17b in tax revenues or about $113m at the official exchange rate of sh150 to the dollar.

So, the bank must have dipped into its already strained resources to meet this commitment and it would not be a stretch to imagine that they used depositors money as well, in the hope they would put it back before customers realized it.

This did not happen, as the RFCS was a spectacular disaster that accelerated the bank's downward spiral. The general economy did not benefit from the scheme , the evidence being that 40 years later we are still a subsistence agricultural economy....

It was no wonder then that one-time UCB boss Professor Ezra Suruma reported in his book “Advancing the Uganda economy” that cash was short in the bank at one time, that to cash your check at the main branch you would be asked to wait as depositors came in and their money given to you. No bank would reach that state of illiquidity now before it was shut down. Which is as it should be.

While the connected types are blamed for borrowing the money and running, the unsustainable expansion of the branch network egged on by armchair economists takes the bigger blame for the bank’s troubles.

And the government tried to save the bank. It swallowed all the bad loans that resulted from the RFCS, and placed them in the Non-Performing Assets Recovery Trust (NPART), filling the ensuing hole in UCB’s books with sh100b.

Finance minister Jehoash Mayanja Nkangi lamented that with those funds, he would be able to build three new classrooms for all schools around the country. That’s the cost of government intervention the critics do not factor in their musings.

But after cleaning the balance sheet UCB went right back into its evil ways, accumulating bad debt and generally acting as a weight around the neck of the industry.

"So to stop further hemorrhage government stopped the bank from lending, with all deposits it got going into buying treasury bills, which in 1992/93 were training at more than 20 percent, explaining how UCB became profitable again just before its privatization...

 But the bank was supposed to lend to the public and not to the government. People in the know discount the profitability of the bank at this time as it was not serving its core function.

In a nutshell that is what led to the privatization of UCB, government could not support it and it was leading to the inefficiency of the entire banking sector.

The government insistence and Mutebile’s eventual disposal of the bank has actually ensured that the bank serves its role. So much so that the UCB, now Stanbic, pays in taxes every year for the last three years, the equivalent or more than $20m. This is the amount Stanbic paid for UCB.

The revisionists want us to believe that selling the bank to foreign capital, has been a disservice to the economy, while presenting no evidence. Its just sexy to abuse foreign capital. The evidence paints a very different picture.

UCB was privatized in 2002 since then across the industry deposits have increased to sh30.2trillion as of June last year from sh1.33trillion in 2000 (I couldn’t find 2002 figures in time for this). But more importantly lending jumped to sh18.3trillion from sh0.53trillion during the same period. This growth is not solely attributable to economic growth, as credit grew by about 17 percent annually, almost thrice as high as the average 6 percent growth shown by the economy during a comparable period.

While credit to real estate development, personal lending, trade and manufacturing are still ahead of agriculture, it is safe to say it is Ugandans who have benefited the most from this trend. Personal lending grew to sh3.7trillion in June last year from an insignificant number in 2000.

The critics seem to suggest that if banks were locally owned we would have done better, suggesting maybe locals would be given favourable rates and managers would look away when they default, is that the kind of banking industry we want? Especially since the beneficiaries would be an even narrower base of connected people as we have seen in the past.

If as Ugandans we are failing to gain funding for our personal projects the evidence shows it is more a function of our poor business acumen than that UCB is dead.

 

WHEN IS ENOUGH EVER ENOUGH?

Many years ago a local paper published a story about how one minister had proposed he be paid a few hundreds of thousands of dollars to organize an audience with the president for the payers.

As soon as the story ran, the minister called the newspaper and in his defence complained that other people had eaten more money than him and that they should go after those ones before rounding in on him. He did not deny he had solicited the funds.

"We have been served up spadefuls of moral relativism over the last two weeks with the revelations about the Karimojong roofing sheets.

According to the story, the Office of the Prime Minister and more specifically the ministry of  Karamoja affairs, has been dishing out iron sheets meant for development in Karimojong to everybody but the Karimojong.

Beneficiary politicians have argued they used the sheets for roofing schools, health centers and even an animal shed. None of these charitable projects are within walking distance of the Karamoja region.

The politicians while sidestepping the question of why they got the iron sheets, clearly marked for Karamoja, have gone on to explain that the sheets were not for their individual benefit – though one minister acknowledged it would help his reelection prospects in 2026.

If you were hoping for a wave of cabinet resignations on this clear abuse of power, do not hold your breath.

One does not know whether to laugh or cry.

The NRM government has not got a patent on corruption.

The colonial project was a corrupt exercise, in which the colonialists  took control of the country, extracted resources cheaply for their industries, while putting back the bare minimum into the local economy, just enough to subjugate the people, train a local elite as their agents and ensure the continuation of the extraction. At independence out of a population of seven million there were 300 A-Level students.

"After independence, to reverse this naked exploitation, government, short on manpower never the less pushed the africanisation of public offices agenda, where the colour of your skin rather than competence was the leading qualification. This w as the beginning of the end of the little meritocracy that the colonialists bequeathed us....

We went beyond the colour of skin to the language we speak, the village we came from and who we married, non of which were a gauge of one’s competence.

When the NRM came to power in 1986, top of the agenda was to broaden their narrow political base. While denials will come fast and furious that it was not official policy for the victors to help themselves to public resources, it is clear at least that the NRM has pointedly looked away when officials have enriched themselves beyond what their public emoluments can justify.

It has not been unusual for senior officials to retort at questions about their wealth by evoking their bush day credentials.

And we are also complicit in this looting. We were so grateful for them saving us from the dark days that a penny pinched here another there, would not raise much alarm.

But as one media personality asked in exasperation many years ago, “Why don’t they give us their invoice and we pay them?”

And that is the crux of the matter. When is enough, enough?

However, corruption does not work like that.

Take a normal working Uganda who is used to a monthly paycheck. Take that away and there will be much gnashing of teeth and renting of cloths. The same with public officials take away their office where they have had unrestricted access to the public kitty and all hell will break loose.

"They have commandeered the public purse – this year’s budget was sh48trillion, and by some moral gymnastics they have convinced themselves they are allowed to plunder the treasury at leisure. You can see it in their replies when they are caught with their hands in the till. There is no remorse, to the point that they wonder what the fuss is all about...

And of course the extent of corruption has grown from year to year. Not only because the resources in the treasury have grown – many years ago one minister resigned because he had appropriated 2000 liters of diesel to himself, compare that with 12000 iron sheets stolen from the Karimojong and you begin to scratch the surface of the exponential growth of this industry.

It goes without saying that we should be worried. These rapacious officials will not suddenly get a moral revelation and stop but instead their appetites will grow and grow. They will become so powerful they will capture the state, making themselves untouchable and woe onto anyone who tries to move on them, they will dispose of that person install their own compliant crony and accelerate the eating.

The playbook is well established, documented and time tested.

 

 

 

OF THINGS LEFT UNDONE AND THE CONSEQUENCES

Last week the finance ministry issued the final instructing on how accounting officers should draw up their budget for the next financial year.

In “The second budget call circular on finalization of the budget estimates for the financial year 2023/24,” secretary to the treasury Ramathan Ggoobi drew the broad outline of the next budget, which has been bumped up to sh50.87trillion from the previously announced Sh47.328trillion.

Despite the increase in spending Ggoobi said there will be no borrowing in 2023/24, there will be no budgetary increases for any ministry, travel abroad will be restricted to the president, vice president, parliaments speaker and deputy, the chief justice and his deputy, the prime minster and principle judge.

He went on to announce the suspension of any salary enhancements in the public service, vehicle purchases, workshops and seminars among others.

"You could almost hear the affected public servants laughing in their beer.

The indiscipline in public finance management of this government is legendary and one can only wish Ggoobi luck...

The constraining of government expenditure is to ensure resources to start construction of the standard gauge railway, fund small scale solar funded irrigations investments, construction power distribution infrastructure, capitalization of the Uganda Development Bank (UDB) and The Uganda Development Corporation (UDC).

That being said the government’s intentions are noble, especially since they are trying to put the brakes on our extravagance, focus on investments and will pay massive dividends in future.

It could have been worse. In Kenya across the border, interest payments account in 2020/21 for 70 percent of their export receipts, while Uganda’s total debt service obligations are less than 10 percent of our export receipts, according to Stanbic Bank’s recent Macroeconomic Outlook.

In addition our eastern neighbour’s total interest payments  as a percentage of tax revenue stood at 30 percent while ours was under 20 percent in the 2020/21.

While we fixate on our debt levels to GDP, which crossed the psychological 50 percent mark last year, the more threatening figure is what portion of budget is going to debt servicing. In the new budget sh23trillion is going towards debt servicing against a budget of sh50.871trillion or just under half the budget.

Everybody knows what happens to you today is a function of something you did or did not do in the past.

Without diminishing the effect of the Covid-19 pandemic on the economy, we are in this tight squeeze partly due to things we did not do in the past.

The presidential directive especially on the railway is one of those things we should have done along time ago. It should have been obvious to me but a few years ago – before Covid, someone involved in the railway told me that industrialization can not happen if we continue depending on the roads. That the history of industrialization shows that railways and water transport are major drivers of industrialization. I remember having flashback about the Ruhr industrial region in Germany, named after the Ruhr river, that was used to ferry coal, iron ore and steel, similarly The Great Lakes industrial region of north America.

Interestingly to make resources available we are cutting back on the consumption budget of the government.

"Observers have cried their voices hoarse arguing that the ever expanding public expenditure would catch up with us one day. I guess our day of reckoning is here...

Another project that comes to mind is the 600 MW Karuma dam. Construction of the dam begun in 2013 and it was supposed to be commissioned in 2018, five years down the line and not a watt of power has been generated.

In a country where only a quarter of the population has access to the grid, the demand for power can not be denied. People may argue about effective demand – those who can pay for the power, but we know that there is still suppressed demand – not to mention some industrialists can not turn up here for lack of reliable power. So imagine if the 600 MW had come online in 2018, government coffers would be richer from the experience – not only from taxes from the operations but from all the new businesses that would have spouted as a result. The current cash squeeze might not have been so bad.

"Part of the reason the Karuma dam is so delayed is the flawed procurement process. It was so bad that it took President Yoweri Museveni to decide who gets what in an almost Solomonic judgement that also involved Isimba, which is dogged by its on structural issues....

Go around any sector of he economy and you will hear tales of woe, of things left undone, which have come back to haunt us.

Do we have the discipline to go through with the current measures? I hope so.