UGANDA DOES NOT LEARN FROM HISTORY

Five years ago Kenya was reeling from violence following the 2007 general elections.

President Mwai Kibaki had been sworn in for second consecutive term. According to official results his challenger Raila Odinga had come in a close second, a situation some of his supporters found hard to swallow, triggering an orgy of violence Kenya had never witnessed in its more than 40 years of independence.

It got so bad that the Mombasa route, through which four in every five shillings of Uganda’s trade outside the region transits, was shut down. We were soon experiencing shortages of fuel and other imports on this side of the border.

In the few days that the route was effectively closed by rioting Kenyans we found out what we already knew, that our over reliance on the Kenyan route was unhealthy for our economy.

The last time we had suffered such a disruption on trade on the route was at the end of 1987 when shooting between Kenyan and Ugandan security agencies erupted at the border.

The Kenyan elections will be held again in March. Kibaki steps down from the presidency and the main contenders are jostling for position. A repeat of the violence of the last election has not been ruled out.

In the meantime

"we have made no effort to wean ourselves off the Mombasa route setting ourselves up for a repeat of events from five years ago...

The alternative route for cargo is the Mutukula-Dar es Salaam route. Tanzania have rehabilitated the route over the last five years but Ugandan businessmen do not see it as a viable alternative because of the additional 600 km compared to the Mombasa route.

The railway line via Mwanza, whose use would have led to major cost savings, has fallen into disrepair and Tanzania is looking of the tens of millions of dollars required to rehabilitate it.

Meanwhile Kenyan authorities in an attempt to protect their roads have implemented an axle-load policy that transporters argue is impractical.

The dispute between transporters and Kenyan authorities caused a sit down strike by Kenyan Transporters in December that again caused supply shortages for traders and manufacturers here.

Apart from an overhaul of the infrastructure on the Tanzanian route, traders have proposed some tax relief to be worked out for cargo on that route to encourage usage of that route.

In addition they propose that air freight can be encouraged by not taxing the freight component of the cost making it more viable to import by air.

The government reeling under recent aid cuts, is scrambling for every shilling of revenue it can collect and is unlikely to cede any taxes now. It does not help that the economy is not firing on all cylinders too.

So little has changed from five years ago and were our Kenyan neighbours to descend into another bloodletting orgy – God forbid, disrupting trade, it will be déjà vu all over again. We will have only ourselves to blame.

The challenge for Uganda is that, while we claim that we want to encourage a private sector led economy, we display little sense of urgency in resolving private sector bottle necks...

But that should come as no surprise. There is little incentive for our political elite and bureaucrats to promote the productive sectors of the economies, finding it easier to extort bribes and indulge in rent seeking to sustain themselves.

If for example our elite were involved in major transport or manufacturing concerns, issues like keeping routes to the sea open or ensuring dependable, inexpensive power or ensuring a productive workforce would be a major concern.

Pandering to commercial interest groups has its problems. Policy can be hijacked by these groups to the detriment of the general public, but that is why we have representatives in government, to look out for our interests and keep everybody in check.

On the other hand if the interests of business include,  proper and functioning infrastructure to allow ready access to markets, dependable power and communications;  credible law enforcement to guarantee contracts and ensure safety of person and property; effective social services to ensure they have an educated and healthy workforce we all benefit.

A productive economy would ensure we are more self-reliant.

But maybe

we are so wed to donor money – finding it easier to negotiate loans than engineer and nurture a self-sustaining economy, that the status quo works just fine for us...

Our actions or lack of thereof suggest as much, but we must know that this is an unsustainable course and the chicken will soon come home to roost.

IS 2013 THE YEAR TO MAKE OR BREAK FOR UGANDA'S RULING NRM?

The Golden Jubilee year was a good time for reflection.

I think the consensus would be that after fifty years of independence we as a nation have fallen short of the aspirations of that generation that saw the union jack come down and the new Ugandan flag rise in October 1963.

At the top of the pile people like Milton Obote and Kabaka Mutesa most likely appreciated the enormity of the task ahead. The general public was probably swept along with euphoria of the occasion and were content to believe that now that their own sons were in power things would improve exponentially.

Unfortunately the British, on the brink of bankruptcy after the second world war couldn’t leave fast enough and in the process left a lot of unresolved issues. Issues which quickly returned to bite us and trigger a downward spiral into political instability and economic chaos...

So lately we have been picking up the pieces. Trying to mend this entity called Uganda, which in all fairness, was formed under dubious circumstances to begin with.

In 1986 when the NRM came to power it inherited a country whose economy was on its knees and which had become ungovernable, in no small measure due to the “bush war” but also because of government infighting. In addition you had a largely incapable, diseased population that was lurching from one day to the next without hope or purpose.

And as fate would have it one challenge would not wait for another to be resolved before it raised its head, putting added pressure on the NRM, which not only had to run the affairs of state but also work at widening its legitimacy as a political force.

Fast forward to the present.

As the first tentative steps are made into the New Year, one would be forgiven for being pessimistic about the country’s prospects.

Economic growth is expected to slow down as donors suspend aid over revelations of corruption in the Office of the Prime Minister and in the public service ministry. We have adequate power but not for long as demand rises quickly to suck up Bujagali’s extra 250 MW. The delayed construction of the 700MW Karuma dam meanwhile is tied up in the courts.

"Politically, the ruling NRM continues to look like a house divided, as internal snipers hold the government ransom at every turn. A good thing in the sense that government has to watch its step, as its overwhelming majority in parliament does not guarantee that its every whim will be supported. On the other hand for reasons rather than ideological differences or patriotism – one suspects, this rear guard action is proving a stumbling block rather than an enabler to the smooth running of government.

Whether a country develops or not is determined by its politics. Political boundaries make a difference.

Uganda, like many countries on the continent has been set a tough political paper.

We are expected to develop, raise the living standards of our populations, while operating as full democracies. It has never been done before.

The process of development while empowering is also a disruptive process.

Unpopular decisions have to be taken, from the minor things like forcing people to use pit latrines to the contracting of major infrastructure projects like communication, transport and energy networks to the decisions to wage war or even put a man on the moon.

These endevours require a singleness of purpose.

As the dominant political party and given the huge decisions the country has to make in the coming years, something has to give.

"The NRM is the only political organization with a credible nationwide presence, which is its greatest strength. But it shows weakness and a lack of organisation when it struggles to take advantage of its numerical strength in the house or fails to rein its errant troops...

In the absence of credible opposition the internal heckling serves to show up the NRM as a liberal organization that tolerates dissent, but this playing to the gallery has its limits and has debatable long term value.

A line has to be drawn in the sand.

The NRM has been entrusted with the mandate to lead this country to a better place, its internal bickering is compromising this mission, the sooner they realize this, the better for all.

Is 2013 the year of reckoning?

UGANDA'S PARLIAMENTARY TYRANNY IN THE MAKING?

 

If recent reports are to be believed, Members of Parliament pushing for a recall of parliament from their current recess to discuss the issues surrounding the death of Buteleja MP Cerinah Nebanda have secured the required numbers and are seeking an audience with the speaker to effect the recall.

Nebanda died under mysterious circumstances and was allegedly abandoned by her “friends” at a local clinic apparently after they realized she was in bad shape.

A report released last week showed that the MP was getting medication for pre-existing conditions but may also have ingested illicit drugs.

Subsequently a government pathologist was arrested at the airport on his way to South Afica with samples from the deceased MP, that he was taking  for independent tests. The police say he had no authority to do that and are set to charge with abuse of office among other things.

The strange sequence of events have raised suspicion and understandably so.

The MPs claim to have raised 133 signatures, a figure more than the third of the 388 member house required by law to cause the house to reconvene.

The proposers of the recall want the house to discuss the recent arrest of MPs for utterances they made following the arrest of the Nebanda.

The MPs arrested were Chris Baryomunsi and Meddie Nsereko who were detained separately and released.

In addition some MPs seem intent on discussing the happenings around Nebanda’s death. MP Geoffrey Ekanya speaking on a local radio station said that they had lost faith in the government process following similar mysterious deaths in the past that he claims have gone unresolved.

The ruling NRM do not support the house’s recall from the festive recess.

That the MP’s death was unfortunate is an understatement.

These contestations and many others before and many more to come, are the teething pains of democracy.

The law may be well laid out as to separation of powers between the three arms of government but one can always expect there will be jostling for space for a longtime before each arm appreciates its boundaries.

It would seem unreasonable to try and inquire into the death of Nebanda by the house,  as it has become a criminal case.

The MPs made statements outside the house, which therefore makes the susceptible to prosecution, but more importantly being honourable men whatever they said, I would like to believe, was backed by fact and could be useful in investigations into their counterpart's death.

It would be strange if MPs in discussing the issue for example demand that charges be dropped against their counterparts, as that would be interfering with the work of the police.

In fact, why the police continue to be understaffed, undermanned, undercompensated and therefore always  several steps behind the criminal elements could be a question parliament may be well placed to answer.

"That there may be a loss in confidence in the police as MP Ekanya suggests, usurping their role would not be the best way to redress the issue, unless the MPs are trying to expand their powers to criminal investigations....

They say that, all tyranny needs to gain a foothold is for people of good conscience to remain silent.

Some MPs knowingly or unknowingly are looking to perpetuate a tyranny of parliament over us. The oversight role of parliament is important, even critical in the smooth running of nations, but even its powers are not unlimited.

Some may argue that executive’s excesses are such that its only parliament that can check it, but two wrongs do not make a right.

MPs putting government on tenterhooks may make for very good drama. But when the drama becomes an end in itself, while ruing the fact that we get the leaders we deserve, we wonder whether we are getting value for money...

ANOTHER THEORY OF DEVELOPMENT?

In 1986 when president Yoweri Museveni came to power he lamented how backward the country was. One of his favourite illustrations of why we remain backward was that more than two decades after independence we did not even manufacture safety pins.

Well 26 years down the road and we still do not manufacture safety pins.

Last month the key note speaker at the 6^th Competitiveness Forum was economist Professor Ricardo Hausmann,

Hausmann’s work on relatedness of products traded in the global economy, the product space, and its predictive value in determining the economic growth prospects of countries is fast gaining traction.

One of the outcomes of this work is the creation of the Economic Complexity Index, which differentiates economies by the complexity of the products they make. The more complex the products and economy makes e.g. jet planes the more developed it is.

In explaining why the US for example, has experienced an explosion in wealth in the last two centuries, unparalled in economic history, Hausmann says that it is down to the country’s ability to produce more and more products.

So the trick seems to be, to produce more and more products and that are also increasing in sophistication. You expand your product range by producing related products and then increase the sophistication of the products and processes.

So for instance since we do fish not only can we go up the value chain in fish processing but we can also branch out into crocodile farming and its related industry maybe, with much greater success than we would if we attempted manufacturing speed boats?

The greater the sophistication of an economy or product the more knowledge is embedded in it – a calculator has much more knowledge embedded in it than a pencil and needs greater organizational sophistication to produce.

For purposes of illustration Hausmann uses the term personbyte to refer to the knowledge in one person.

“To create products with more than one personbyte, you need to aggregate personbytes. This is done by creating networks of people we call firms and networks of firms we call the value chain,” Hausmann said.

Government interventions have been many and registered varying success.

It seems though that the more sustainable interventions by governments would be to enable companies to go about the business of making these products.

Interventions such as charting credible national strategies, efficient provision of public goods – law & order, social services and infrastructure are more effective than government trying to startup companies and create products.

This is because the private sector driven by the profit motive is best suited to leverage the process of experimentation and inevitable failure that comes with identifying products and markets. Governments on the other hand are often driven by other motives than operational effectiveness and market efficiency.

Which brings us full circle to why Uganda is not yet manufacturing safety pins 26 years after Museveni identified this a singular failure of our economy.

One, Uganda probably does not need to produce safety pins – who uses them anyway? Two, there are no related industries from which we can launch our safety pin factory and therefore we are not the best suited to produce suited to produce safety pins – one can probably get them cheaper from China anyway.

But it was not our inability to manufacture safety pins that was at issue, but that the economy was not diversified enough.

And Hausmann’s work suggests start with where you are but warns against getting fixated with agriculture.

He says developing agriculture and its related industries is not sufficient to ensure sustained development but that in addition we need to be making other things as well. Agriculture can as well serve as a launch pad.

He gave the interesting example of the Finland whose major natural resource is its forests, so the Finns developed wood-related industries.  But they also developed industries that specialised in making the cutting tools for felling trees. But since cutting is cutting they extended this technology to cutting tools for anything else. And then they automated these tools. And they made them more precise using high technology. To cut—pun intended, a long story short the unintended consequence of the development of the lumbering industry was the creation of mobile telephone technology that led to  Nokia.

AID SUSPENSION: DON’T CRY FOR ME UGANDA

A host of countries have suspended aid to Uganda following the unearthing of a scam that saw billions of shillings go missing in the Office of Prime Minister(OPM).

If you have not been around, officials in the OPM helped themselves to billions of shillings in monies meant for the reconstruction of northern Uganda, in a scheme amazing in its simplicity, that it makes you wonder how come it went undetected for so long.

The long and short of it, operations officials' accounts were credited with more monies than were necessary to carry out projects with the surplus being paid back to senior officials. That the ministry was crediting personal account for official work was enough to raise eyebrows, but was explained away as due to the lack of banking services in the Karamoja area of the country.

A good case to subsidise a bank branch in the area to funnel government aid, if ever there was one.

And that is how the aid suspension came about.

Theft is wrong and you cannot fault the donors on pulling the plug. The money they give us is their own tax payers' money and the donor governments' inaction following such revelations of theft can cause them quite a bit of discomfort from their constituencies.

"The suspension was  prompted more by the repercussions that may come from their electorate’s concern than that the people of northern Uganda were not benefiting from their charity...

Harsh yes, but the world of geopolitics pays little heed to moral issues unless there are political consequences.

It is no surprise that corruption runs rampant in Uganda, any aid bureaucrat who has been here six months can’t have failed to come up against it. In fact a few years ago there was a report that estimated that up to sh300b a year goes unaccounted for. So any aid cuts were long overdue, so why didn’t they happen sooner?

Uganda has systematically scaled back its aid dependency over the last two decades, donor budget support accounts for about a quarter of the budget.

The fact that all the money is not put up by one government does not diminish the leverage that comes with these handouts.

But also because there are multiple donors their priorities differ and therefore its unusual to see concerted effort. As often happens if one donor pulls out, the hole can often be filled up by other donors.

That the donors are looking to achieve other aims other than lifting the down trodden of the world is obvious when you look at aid from the EU. Not only does the EU provide support but its individual nations do so as well. The logical thing would for the EU countries to pool all the money they have individually earmarked for aid and disperse as one, getting more bang for their buck, but no it does not happen like that.

"They argue that individual governments have their own pet projects and therefore retain the right to run parallel aid programs. But isn’t it that each donor government wants to be able to exert its own influence on governments and therefore the sometimes uncoordinated troop movements?...

Each government panders to its own constituents – businessmen, pressure groups and even the vaguely quantified “national interest”. These other interests often over ride concerns over the theft of a few million dollars.

The truth be told, Uganda has not been a particularly “bad boy”.

Tearing their hair out at the extent of corruption in the Daniel arap Moi government in neighbouring Kenya,  one diplomat once lamented that corrupt officials there were “eating like gluttons” and “vomiting on the shoes” of donors. 

In private they express similar sentiments about Uganda but they are not so exasperated that they unleash the sentiment for the world cameras – yet.

Again there are greater considerations that inform the actions of governments than moral shortfalls.

"Going by the same logic, the recent aid suspensions amount to a slap on the wrist and one can expect we will be back to business as usual by this time next year.
This is not thumbing our noses at the donors, it’s just the way the world works...

It is bad enough that we continue to rely on donors to cover our budget shortfalls. But it is bad upbringing to expect the donors to come in and clear out our mess.

Government puts more energy into presentations to western capitals for aid than it does in deciding our taxes – a hangover from a time when donors carried more than 50% of the budget.

That needs to change.

Government needs to come around to the fact that Ugandans provide three in every four shillings to the budget and in the wake of newly found donor moral indignation – however tainted, they need to take Ugandans more seriously.

How this can happen is a story for another day.