SOUTH SUDAN'S IMPLOSION IS OUR WAKE UP CALL

The flare up in fighting in South Sudan is disheartening for the disruption and loss of lives that it entails but also for the economic loss to Uganda that it signals.

Clearly the recent peace deal between the South Sudan government of Salvar Kiir and the rebels led by former vice president Riak Machar has failed to hold.

This only serves to strengthen the argument that our northern neighbours need to fight until a conclusive winner is determined, never mind how much blood letting this will cost or how long it will take.

By the time the world's newest country descended into civil war at the end of 2013, our trade with 

South Sudan had risen to $200m officially. It's hard to tell how much more trade went on informally.

"Before South Sudan attained independence in 2011, fighting there was routine. But since independence South Sudan assumed added importance as the neglected land mass, which is nearly thrice Uganda's size with only 100 km of tarmac road, demanded everything from eggs to iron roofing sheets. In addition the massive aid inflows helped shore up our shilling, inflate our real estate bubble and lit up our night life...

There are two morals to this story that leap to mind immediately.

That a nation is not a nation just because the international community wills it. A nation is more than a people cobbled together within boundaries on a map.

Secondly a scarceness of resources and sparseness of economic opportunity are a signal for chaos.

And maybe for Uganda the lesson should be that whereas exporting ourselves out of underdevelopment is an attractive option, the more sustainable thing is to focus on growing our own market to develop and sustain our companies and economy.

Economic history shows that the more sustainable development comes from launching from local markets rather than trying to first develop foreign markets.

On the continent South Africa is a classic example.

Ostracised as pariah state in the last half of the last century, the state worked on growing local demand to support its industries. Granted that the increases in income were concentrated in the hands of the minority white population, but also the development in their financial sector meant they are way ahead of the continent on access to credit, which has seen further growth since the abolition of apartheid.

Those same industries -- SABMiller and Standard Bank, leap to mind, unshackled, refocused their businesses and now compete internationally with a solid local market as their bedrock.

South Sudan was a boon for Ugandan industry while it lasted and it will again one day, hopefully soon, but in the meantime let us focus on growing our own markets.

Our macro economic policies have shown themselves to be effective in producing general growth, without which development is impossible.

However we struggle to translate that into equitable improvements in living standards for the masses.

"For starters someone has to bell the cat and tackle corruption more decisively. On many levels corruption is hurting any efforts to grow local demand...

Not only does it concentrate resources in a few hands, it affects service delivery and distorts the market for genuine business men and other economic actors.

When a handful of individuals appropriate a few billion shillings that is money government budgets for thousands of out patients or primary school children or a few kilometers of feeder road it's hard to justify.

In denying thousands healthcare or education you deny them the tools to climb out of poverty, with the funds a few technocrats use to school their own mediocre offspring abroad or on lavish holidays or lavish lifestyle in the midst of poverty.

Just as devastating is that these same officials in an effort to launder their money dabble in agriculture, real estate or general trade. Their free money distorts the market as they undercut the genuine businesmen who soon go out of business or fail to scale up their operations.

Of course the corrupt officials once they are out of government see their businesses collapse but the damage will already be done.

We can skirt around the issue but the truth is that if corruption is brought under control or eliminated all together every other challenge putting the brakes on our development will be sorted.

"It is a delusion to think that by allowing corruption we shall build a middle class that will carry the rest of the country along. The nature of corruption is that it's never enough. For its practitioners every corrupt act is a stepping stone to the next act in an never ending cycle that can only end in doom...

Eventually of course they murk the whole environment even for themselves but the pain is felt more by the masses.

Let the general global economic depression, the slowdown in China and the implosion in South Sudan wake us up to our responsibility to improve incomes at home before we looking abroad for markets.

THE OIL PIPELINE:ITS ALL ABOUT THE OIL, OR IS IT?

Last week Uganda decided that the oil pipe line from the western oil fields will go south through Tanzania rather than through Kenya, as was earlier expected, a decision that served to open up old wounds and threatens to shift the region’s economic center of gravity.

The Kenyan route through Lokichar and onto Lamu, was discarded on account that it would be more costly to develop due to expensive land compensation claims, its passing through environmentally sensitive areas and the state of unpreparedness of the Lamu port, which was deemed too shallow and exposed to high tides, less than ideal conditions for oil tankers to operate in.

The route through Tanzania to Tanga port was shorter – though not by much 1500 km through Kenya as opposed to 1,410 km through Tanzania. This would be factor though as the waxy nature of Uganda’s oil which solidifies below 40 degrees centigrade necessitates heating plants every so many kilometres. In addition because all land belongs to the state in Tanzania compensation would be kept to a minimum and leases secured faster.

It also helps that Tanga port is already up and running unlike Lamu. This would mean Uganda’s first oil exports have a better chance of being realised before 2020 using the southern route.

"And it did not help that Kenya has not established commercial viability of their oil finds in the north...

This was important for both countries but more so for Uganda, because if Kenya didn’t have viable quantities to ship out Uganda would find itself carrying a disproportionate portion of the piping costs.

While Tanzania has no oil deposits of its own to share the pipeline there gas reserves are convenient as heating fuel for the length of the pipeline. In addition the development of infrastructure through southern Uganda as a plus given the unexploited iron ore deposits in the region.

Of course Kenyan officialdom and the business community were left unamused at the latest development. Some commentators went as far as to accuse Uganda of playing off its neighbours against each other, sticking it to Kenya over some unresolved and unclear past slights and threatening to jeopardise the joint multi-billion dollar Standard Gauge Railway(SGR) project.

The Mombasa to Nairobi leg of the SGR is already underway and will cost about $5b while the $8b has been earmarked for the Malaba-Kampala leg.

The economics of the project were lost in the hysterics.

It is understandable that Kenya Inc should be concerned.

"Fashioned as a colony the British never saw themselves ever leaving, like South Africa or Zimbabwe, the other territories around it were fashioned to feed into Kenya’s industries, leading to its regional economic dominance, a situation that persists to date...

However with Uganda’s economy finding its feet over the last three decades and Tanzania’s embarrassing wealth in natural resources – natural gas, gold and other minerals, means Kenya is increasingly having to see itself as first among equals rather than the 800 pound gorilla straddling the region.

Channelling Uganda’s oil, the fourth largest reserves in sub-Saharan Africa, through Tanzania threaten to redress historical regional economic imbalances. Uganda’s reserves are estimated at 6.5 billion barrels of which about 1.5 billion are recoverable.

It is not unreasonable to believe too that the accompanying improvements in infrastructure along the pipeline will make the much neglected Tanzanian route to the sea more attractive for Ugandan, Rwandan and Congolese commerce, a worrying situation for Kenyan transport interests.

And finally with tensions in South Sudan beginning to ease off -- rebel leader Riak Machar was sworn in as Salva Kiir’s  vice-president, the issue of an oil pipe line to the coast will be revived, only this time there will be an alternative through Tanzania to the Kenyan route.

"It is safe to say that when history is written the events around the evacuation of Ugandan oil to the sea will be seen as an inflection point in the region’s geopolitical alignment...

It is not only about the oil, but then again it is.

REGION SORELY NEEDS POPE’S CALMING PRESENCE

The more things change the more it seems they stay the same.

The last time a Pope visited Uganda a genocide was bubbling under the surface in Rwanda, an intractable war continued in South Sudan, and in Somalia Mohammad Farrah Aidid was trying to strengthen his grip on a country which was in the throes of implosion after the overthrow of Siad Barre two years previously.

Fast forward to today and Pope Francis is visiting a troubled region grappling with civil war, disease and poverty.

The Somalia peace process flatters to deceive, South Sudan is squandering its promise, Burundi is on the edge of the kind of wanton violence, a throw back to Rwanda two decades ago and in the Central African Republic --- Pope Francis’ final stop on this tour, the center is failing to hold as marauding gangs make the country ungovernable.

In the interim Uganda has fashioned itself into a regional enforcer with campaigns in the Democratic Republic of Congo, Central Africa Republic, South Sudan and Somalia. It has participated in peace missions further afield in Liberia.

Uganda sees itself as a peace enforcer than peace keeper, holding the ultimate sanction over warring parties a mission that evolved out of the disgust at the sterility of UN peace keepers during the Rwanda genocide.

"Pope Francis, which name he chose in honour of Saint Francis of Asisi, who famously yearned to be an instrument of God’s peace, may agree on the general principle of seeking regional peace but may disagree with Kampala’s methods...

He will complete the second year of his papacy in March next year, a papacy which has done more to change the perception of his office through his message of compassion and his humble demeanour, than any other Pope since Pope Paul  VI.

Pope Paul VI whose 15-year papacy came to an end on his death in 1978, created more dialogue with other religions and opened the mass to a personal appreciation by millions by allowing the use of local languages. Previously the high mass was said in Latin.

He comes at a time of charged emotions as Ugandans rev up for a crucial presidential election next year, yet another cross roads in this country’s political journey.

A campaign loaded with vitriolic, coloured by past slights and painted with character smears which while we giggle at the name calling we know we are fast reaching a place of no return where resolution will be a zero sum game. And we are only two weeks in to the campaigns.

The main antagonists President Yoweri Museveni, KIzza Besigye and Amama Mbabazi have suspended their campaigns for the duration of the successor of St Peter’s trip, before they go after each other with hammer and tongs again.

"It would be an important interlude during which we as a country can reflect and even take St Francis of Assisi famous prayer to heart, if only to banish our turbulent past and the foreboding signals ahead....

Lord, make me an instrument of Your peace.

Where there is hatred, let me sow love;

Where there is injury, pardon;

Where there is doubt, faith;

Where there is despair, hope;

Where there is darkness, light;

Where there is sadness, joy.

O, Divine Master, grant that I may not so much seek to be consoled as to console;

To be understood as to understand;

To be loved as to love;

For it is in giving that we receive;

It is in pardoning that we are pardoned;

It is in dying that we are born again to eternal life.

OMAR AL BASHIR AND THE QUEST FOR JUSTICE

Last week Sudan President Omar Al-Bashir dodged a bullet.

While in South Africa for an AU summit last week, the high court there barred him from flying out until an application to force Pretoria to arrest him was heard.

This was all in aid of an arrest warrant for alleged crimes against humanity that was issued by the International Criminal Court in 2009.

South African authorities granted immunity to all delegates attending the summit, stalling human rights activists attempts to have him arrested, long enough for him to fly back home on Monday.

"For the rest of us who know how this continent works, we were taken aback that a court could deliver such a ruling, but were never in any doubt that South Africa would not hand Bashir over to the ICC.

It would just have been plain bad manners....

You invite a man into your house and then hand me over to his detractors? Never mind all the high sounding warnings about a drop in South Africa’s standing in the eyes of the international community (read western democracies), it just was never going to happen.

His escape from Pretoria may have been another thumbing of the nose at the ICC, but Bashir knows that he can’t sleep easy.

Earlier this year Kenyan President Uhuru Kenyatta had his case thrown out. Kenyatta and his deputy President William Ruto were charged with being accessories to the post-election violence in Kenya in 2007 where hundreds were killed and thousands displaced.

Which brings us back to the issue of the ICC’s relevance today.

The court’s record in mainly trying African suspects lends it to accusations of bias to the point of racism. Its critics argue that more heinous crimes against humanity have been committed in the Middle East, for instance, than any other house of horrors our blood thirstiest can conjure on the continent.

If that is true, ICC may find it difficult to pick the low hanging fruit on the African continent for a while. If it isn’t true, we can expect that the UN-backed ICC will cast its net further afield and maybe go after human rights abusers in Europe and North America for instance. Good luck!

Away from the geo politics, is the real suffering of people from the Kenyan rift valley to Dafur to  Congo that under the current context are unlikely to see justice for the wrong visited upon them.

It may be convenient to dismiss the ICC as a neo-colonial tool to bring Africa under the thumb of the western capitals, but there are many unresolved issues on this continent which if allowed to fester too long, may force some of our politicians to clamour for their day in court at the Hague, than be lynched locally.

Out political classes actually bring these “embarrassments” upon themselves.

"If we promoted strong judicial and law enforcement agencies no one would want to create extra-territorial institutions to run around policing the world.
But the truth is, the nature of power is that it concentrates rather than diffuses power away from itself. Faceless, impartial institutions are just not convenient...

For the time being it serves their urge to hang on to power to stifle institutional development but in the long run it is bound to boomerang on them, as those same institution, neutered and detoothed, will be impotent to serve them when they will have moved on into civilian life.

The world is changing. With information being transmitted quickly and widely, hanging on to power unjustifiably will become increasingly difficult. Hence the need for more robust institutions that will operate without fear and favour in the service of the country.

The question then has to be what coincidence of circumstances have to come together so that the political elite can see the value of these?

First off it will not happen out of the goodness of their hearts. Our political leaders have to be compelled to nurture these institutions be it at risk to their absolute power. This calls for leadership not only in government but in the opposition and civil society.

Secondly, enough indigenous capital has to be built up that is credible enough to hold our governments accountable. Multibillion dollar multinationals and their agents have little or no interest in rocking the boat if the status quo aids their business. Local businessmen with a long term stake in the economy beyond yearend bonuses are our best bet.

Of course both conditions among others, will take years, even generations to mature fully but without them it’s unlikely that our political leaders will survive the ignominy of being chased around the world because someone else thought they need to be brought to book for crimes they have committed against their own.

IS SOUTH SUDAN LETTING THE SUN GET TO THEIR HEADS?

Last week South Sudan announced that it was giving all immigrant workers a month within which to leave their jobs for the locals.

According to the notice companies and Non-governmental organisations were directed in the meantime, to advertise all the positions that were due to fall vacant by the 15^th of October.

As we were still trying to wrap our minds around this announcement the government did a quick about face and said the earlier communication misrepresented the official position. The new position is only seeking to take  the non-specialised, menial jobs back from immigrant workers and pass them on to their own citizens.

In the same week our southern neighbour Rwanda, which has the most liberal immigrant worker policies in the region, had its leader President Paul Kagame saying,

"The foundation of all our efforts is good governance, which for us means a relentless focus on delivering the results that citizens want. Building a competitive, modern economy requires smart investments in human capital, and productive knowledge. After all, real wealth is in the head, not in the ground"

Given this perspective it easy to see why Rwanda sees no contradiction between attracting foreign talent and delivering results for its citizens. Of course one can expect that even in Rwanda they will parcel out only the jobs they themselves cannot do. And as their own citizens understudy their foreign bosses it is realistic to expect that they will rise to fill even these jobs.

The South Sudanese are within their rights to do whatever they want with their country. But oftentimes such sweeping proclamations are political statements made to play to a gallery and not necessarily good for the long term benefit of the country.

With oil flowing less copiously than it was two years ago, Juba is under pressure to not only keep the general population happy but to appease supporters and foes alike.

"Expelling foreign nationals who have been fanning feelings of xenophobia by charging around in four wheel drives, living a lifestyle way out of the reach of most locals and generally seeming to be plucking the ripe fruit from right under their noses, can score some much needed political points...

The quick turnaround only serves to placate fears temporarily, but one can expect that whenever tensions erupt it will be a trump card played with disturbing frequency.

After decades of civil war one cannot blame South Sudan for its incoherence, a product of its lack of institutional and human capacity. This is all the more reason, like Rwanda whose middle class was decimated by the genocide, for them to be eager to import the human resource to fill in the gaping holes in its numbers.

Politicians don’t like free movement of people because then they cannot exert influence over them. However good economics suggests that the free movement of people is not only good for trade but for technology transfer or put more simply the exchange of knowledge for greater efficiency.

There is a reason for example that the Eurasia region developed almost in parallel than say Africa where there were pockets of civilisation in north, west, east and southern Africa but no real connections between them.

Because of the alignment of Europe and Asia for east to west, climate was more or less uniform so agricultural practices could be shared from the Atlantic to the Pacific. The similarities in their produce meant shortages could be mitigated by surpluses from across the world using trade if need be, since tastes were similar. Of course other things were then shared, with each innovation building on the previous and being pollinated by advances from elsewhere and voila we have the foundations of word dominance.

Africa aligned from north to south just could not replicate these benefits and hence its relative backwardness.

The point is, while immigrant labour is an easy political target, hobbling it is often bad economics.

And South Sudan, which is thrice the size of Uganda but with barely a 100 km of tarmac road, is in desperate need of some good economic thinking.

The people in charge in Juba need to come fast to the realisation that people are what make the difference.

You can choose to use nationality over competence as a criteria for recruitment and it might for a while keep your people happy, but it will come around to bite you when your government is unable “to deliver the results that your citizens want.”

The pressure on government must be overwhelming but this is where leadership comes into play. Juba needs to pander less to political expediency and more and more to the bigger picture, the long term view, if it is to have a chance of lifting the war torn country into the 21^st century.

WILL THE PEACE IN SOUTHERN SUDAN HOLD?

This week the warring factions of the Sudan People’s Liberation Movement /Army (SPLM/A) signed a ceasefire deal in Addis Ababa.

The latest deal paves the way for a government of national unity, which will be in place for two and a half years after which an elected government will take over the reins of power.

This agreement was consummated on the sidelines of the 27^th extraordinary summit of the Intergovernmental Authority on Development (IGAD).

The deal comes almost nine months since fighting erupted in the world’s youngest nation in December.

It is feared that hundreds lost their lives during the fighting and hundreds of millions of dollars were lost in trading revenue before the two parties fought themselves to a standstill.

As is often the case with these senseless conflicts, pragmatism prevailed over sentiment, forcing the two rival leaders --- South Sudan’s President Salvar Kiir and rebel leader Riak Machar to the negotiating table. 

It would not be a stretch to say that Uganda and Kenya were key to the resolution of this conflict. 

"Last weekend while Kenyan President Uhuru Kenyatta was in town, he along with his host President Yoweri Museveni met Kiir in a private meeting. This was only days after Machar met Museveni.
Kenya and Ugandan businesses have been the hardest hit by the fighting and it is not unreasonable to assume that the two governments were keen to resolve the issue urgently...

In addition billion dollar rail and oil pipeline projects that need to be signed off, in which south Sudan is a key player were being held  up by the uncertainity in our northern neighbour.

Add to that the receding but ever present, spectre of Joseph Kony and his Lord’s Resistance Army (LRA) fleeing the pressure in the Central Africa Republic, taking advantage of the chaos in southern Sudan to reoccupy their bases, is a possibility Kampala cannot stomach.

Have the issues that took our northern neighbour to the brink of disaster been resolved? It’s doubtful.

The fighting came as pushback against Kiir’s need to take greater control of the government. A reshuffle that saw Machar and his allies shown the door, was straw that broke the camel’s back.

We can expect an uneasy peace over coming months as the two erstwhile rivals circle each other warily and position themselves for the elections. Not an ideal situation but might just be what is needed for tempers to cool and good sense to prevail.

The stability of nations is best guaranteed by a critical mass of middle class citizens, who are more likely to settle conflict by peaceful means than taking up arms. They will have created the requisite institutions to do this.

In 2007 when Kenya erupted into post-election violence, apart from the US’ gunboat diplomacy it was the business community which prevailed on President Mwai Kiabaki and his rival Raila Odinga to calm down. The real issues that sparked the fighting were not totally resolved, festering under the surface threatening to erupt, but the compromise has given East Africa’s largest economy some breathing space for its citizens to re-examine themselves and be wary of triggering anymore bloodshed.

"South Sudan does not have a middle class or the institutions to stabilise the situation. Even the army is not a coherent force as we know armies to be, but a hodge-podge of militias whose allegiance is to their respective war lords than to the government....

In the absence of these two, a regional commitment to maintaining peace will be critical but even this can only have limited impact. If the warring parties decide to go at it once again there is little Uganda or Kenya can do.

"Redemption may come from unlikely sources.

Both warring parties have had a taste of the oil money. One can only hope they will behave themselves if only to ensure they can continue to partake of it. A slim proposition but an indicator of the desperateness of the situation.