RWANDA, BURUNDI: A TEST CASE FOR DEMOCRACY

The killing of key opposition leader in Burundi served as an exclamation mark in an already turbulent situation in the small east African nation. Across the border however the opposition made a call for a lifting of presidential term limits in their own constitution.

With Pierre Nkurunzinza safely reinstalled in his seat after a failed coup attempt earlier this month, and the worst of the Burundi crisis seemingly behind them, despite continued protests in the street, opposition leader Zedi Feruzi was gunned on the street on the weekend.

No one has been arrested for the assassination but no one doubts that such an event further inflames affairs in Burundi. That Nkurunziza is determined to run for a controversial third term does not help matters.

Things couldn’t be more different in Rwanda. Dr Vincent Biruta leader of the Parti Social 

Democratic (PSD) called for the lifting of term limits. Biruta is also the natural resource minister of Rwanda. When we were still trying to digest this brilliant political manoeuvre, hundreds of rural Rwandans streamed into the capital Kigali and presented their petition to parliament calling for a constitutional amendment to lift presidential term limits.

With two million petitions parliament will now debate the issue for the next two months before deciding on whether to upset the status quo or not.

"The speed of developments in Rwanda has got our heads reeling and has observers of the country impressed by the political sleight of hand there...

Rwandan President Paul Kagame has always said he will respect the constitution but has also added that the fate of Rwanda will be determined by its citizens.

The term limits were adopted in various countries two decades ago, promoted as an answer to bad governments and as a way to achieve civil transfers of power. The opposers of term limits have argued that they shackle good leaders, a hard argument to rebut when the affected leaders still have the popular vote on their side.

Both cases provide some cause for head scratching for the champions of democracy.

On the one hand in Burundi there are “mass” demonstrations against Nkurunziza’s attempt at a third term, but he courts have ruled that he is within his rights to contest the coming election. Do you pander to the mob and compromise the institution building process – never mind that you suspect that judges may have been leaned on to rule favourably for NKurunziza? And if there is enough opposition surely an election will put paid to NKurunziza’s third term bid.

On the other hand in Rwanda there is no ambivalence in the constitution about term limits but there seems to be a groundswell of support for a lifting of these limits. So do you tinker with the constitution to cater for the political circumstances of the time or ignore the voice of the people and maintain that the constitution is inviolable.

"How the next few weeks play out will provide useful fodder for political thinkers...

It could very well be that Nkurunziza goes to the polls and his flattened to reflect the opposition crowds we saw on TV. Or that after two months of deliberation the Rwanda parliament dominated by the ruling Rwanda Patriotic Front (RPF) comes to the conclusion that term limits should be upheald and begin a process to replace President Paul Kagame.

Of course both outcomes seem unlikely but whatever the outcome precedents will be set that will inform the democratic process going forward.

It will not be the end of the world either way.

UGANDA MAKING PROGRESS ON NUTRITION BUT A LOT REMAINS TO BE DONE

All the economic growth in world will count for nothng if the man on the street does not get to eat in his diet and feel it in his health.

In Uganda with nearly three decades of economic growth, albeit from a low base, there has been some progress made on the wellbeing of the country's citizens. A lot remains to be done but at least the trajectory is upwards and foward accourding to the Global Nutrion Report.

IMF: LIES, LIES AND STATISTICS

The International Monetary Fund (IMF) recently concluded their latest country assessment of Uganda in which they concluded that Uganda continues on a growth path and despite concerns about external factors and inflation that the trend will continue.

They reported that “economic growth is projected to expand by a robust 5.3 percent in the current fiscal year and 5.8 percent in FY2015/16 (compared to 4.5 percent in FY2013/14), led by scaled-up public investment and a recovery of private consumption supported by stronger credit growth.”

The IMF also opined that “Strong growth and subdued inflation, alongside high international reserves (about 4 months of imports), a sound financial system, and relatively low government debt (currently at 30 percent of GDP) continue to provide buffers to shield the Ugandan economy against shocks.”

But they warned that “Nonetheless, there are risks to the outlook posed by domestic and regional uncertainties.”

"In a nutshell, that the ship is holding steady, an opinion the finance ministry was content to interpret as a clean bill of health.

That was the big picture, down on the ground a different story is unfolding.

Business is slow. Shops are shutting down. Property prices are sliding.

This should not come as a surprise. Two events in particular have conspired to generate the current situation.

After 2011 election related inflation shot up, peaking at 30 percent in October of that a year. In a bid to rein inflation the central bank signalled an increase in lending rates, issued more government paper and sold more foreign exchange. The aim to suck out any excess cash in the economy not backed by production. After all inflation is caused by too much money chasing too few goods.

Just when the Bank of Uganda was coming to grips with inflation, at the end of 2013 South Sudan imploded into civil war. This was bad because not only was South Sudan our biggest export market up to that  point but it was also a source of tens of millions of dollars, dollars  that were artificially holding up our local real estate market and retail consumption.

The double whammy of central bank anti-inflation policies and the drying up of Sudanese dollars are what is causing he pain at the micro level.

But also at that time the bursting of corruption scams in the public service ministry and prime minister’s office dealt a further blow to the easy money that used to keep our business afloat and water Kampala’s night life.

As if that was not enough the donors in reaction to these scandals, in righteous indigination closed the taps sucking out more easy money from the general economy.

But we are not done yet. The progress on the oil production slowed as government and the exploration companies negotiated themselves to a near standstill on the issue of production licenses.

So how then does the IMF give Uganda the nod on its future prospects?

According to classical economics growth comes from the sum total of consumption, investment, government expenditure and the net of exports and imports.

"Given the government’s massive outlays in roads and ongoing investments in energy and other infrastructure it is safe to say the overall picture could show that these are more than adequate to account for the dips in consumption in the general economy...

The investments in infrastructure are not expected to have an immediate impact but their returns will come much sooner than the returns from the UPE and USE investments that started a decade and a half or so ago.

We have been here before. In the early 1990s when government first determined to take a grip of inflation, the drop in economic activity with the wholesale wiping out of industries like the kibanda market, the air suppliers was just if not more staggering than what we were experiencing now.

But those were hard decisions that had to be made then so that we could enjoy the subsequent good times that followed.

With rehabilitation of the economy complete these new investments again are what are needed to take us to the next level of growth and development.

It serves as little consolation when making ends meet today is getting harder and harder but that is what it is.

Consider it a case of taking one step back to jump three steps forward.

"Seen in that context the IMF report is a good thing. It means that we are at least moving forward on a macro level. The hope is that sentiment on the micro-level catches up too....

However it is no reason to rest on our laurels. The feedback loop can be from the micro to the macro level – that the local depression can filter up rather than the macro growth trickle down, if for example these huge investments don’t come through on time or at all.

KCCA TRAIL BLAZING AGAIN

Last week it was announced that Kampala Capital City Authority (KCCA) had been given a clean bill of health to start issuing bonds to finance some of its projects.

The South African based Global Credit Ratings (GCR) has certified KCCA’s credit worthiness following a World Bank funded audit of KCCA.

At the bare minimum it means that KCCA has access to one other means of financing its operations, beyond government contributions, its own revenues, donor loans and grants.

"But beyond that, it means that KCCA’s management practices have met the bare minimum required for money managers to take an interest in it. To be cleared to issue bonds, which is borrow from the public, it means you have verifiable sources of income and a management that can put whatever monies lent to good use. That’s the bare minimum investors want...

This development may have passed unnoticed by the general public but it is a heartening vote of confidence in the three-year old authority.

It means that they have been vetted on an international standard the big money men know and appreciate. This means that KCCA now has access to massive pools of money, that if captured and used judiciously can transform the city beyond recognition.

Of course there is still a lot of work to do. KCCA needs to streamline its operations even further, collect all the money due to it and resolve the niggling political question surrounding the mayor’s seat.

No country ever developed without the prudent use of debt.

One of the reasons our countries, and individually, we fail to develop, is because of an uninformed fear of debt and the unempowering overreliance on cash. That being said it takes a superior financial intelligence to make debt work.

The best use of debt is to increase your capacity to earn and not your capacity to spend. So for instance the investment in markets may provide additional income for KCCA or the building of roads in the suburbs will increase property rates and therefore the ground rates the authority can charge on properties as would the building of schools, hospitals and other amenities that make it pleasant to live in the city.

However, splurging on a new fleet of 4WDs or on raising allowances for councilors  may show no return but would just ensure higher expenditures.

Essentially you want the activity for which the debt is committed to pay its own way.

"KCCA would do well to take a leaf from the Bank of Uganda issued treasury bills and bonds. What started off tentatively, in the late 1980s, as a mechanism to damp down inflation by mopping up excess cash from the economy, is now viewed with more confidence by local and international investors.  Beyond its anti-inflationary role, has in recent years helped finance the budget, especially when the donors threw a fit a few years ago about our corrupt practices and pulled the plug on their aid....

The government paper issues came under a lot of criticism initially when they were exclusively for managing money supply and at the cost of hundreds of billions of shillings to the tax payer, but its proponents argued that was the cost of maintaining macro-economic stability. Without that stability, the economy as we know it today – with all its limitations would not exist today.

One can expect that KCCA will start slowly one, because they need to build confidence in the markets and because their absorptive capacity of these funds may still be limited. But if their bond program is run well in a decade in two KCCA will be a power onto itself and hopefully will pull the rest of the country along with itself.

Other towns could follow suit.

One of the challenges of our societies is our low saving culture. This is a problem because it means compared to the money in circulation, we have not enough of it aggregated into meaningful sums for use by the productive sectors of society.

In the western economies for instance as little as ten percent of all money in circulation is physical cash or just hanging around in the pillows, pocket or under their mattresses. The largest percentage of the money is held in financial institutions.

In Uganda according to Bank of Uganda figures this was as high as 24 percent at the end of December 2013 is not in the formal financial system.

And finally KCCA is proving a truism in finance, that money follows good organisation or management. We do not have access on favourable terms to the large pools of cash sloshing around the world because we do not manage our affairs in such a way as to instill confidence in possible lenders or investors.

BARYAMUREEBA’S CANDIDATURE OWES A LOT TO NRM

This week Professor Venansius Baryamureeba threw his hat into the presidential race.

For those who know him, this has not come as a surprise. While on the face of it Baryamureeba is not a front runner, his action is an interesting one given our country’s political history.

This running on individual merit is a “creation” of this administration.

"When the NRM took power in 1986, while they were militarily credible they were politically thin on the ground. This is not to say that they did not have a lot of good will.

In order to redress this imbalance NRM suspended political party activity and introduced the individual merit phenomenon – where people need not be sponsored by a party to run for any political office...

This decision had two major effects.

One, it made it possible for thousands of people who were previously locked out of the existing party structures, to vie for office loosening their allegiance to existing parties.

Secondly and related to the above, it allowed the NRM to build up its political base with the new comers to politics and by coopting some of the existing political operators. The strategy was so successful, so much so that the NRM has been in power longer than all the previous governments before it combined.

A return to multi-partyism in 2006 however failed to make the break from this concept of individual merit causing much headache in the political parties and even the NRM.

In a multi-party set up the party’s agenda overshadows individual ambition. If one falls out of line, disciplinary measures by the party can be brought to bear on the culprit, which may very well lead to an end of a political career at worst or a stint in the political wilderness.

What this has done in more established democracies is to restrict political contest to a handful of parties, with independent candidates being an aberration.

Which brings us back nicely to Baryamureeba.

At the moment Baryamureeba’s candidature can best be seen as an announcement of his arrival on the political scene rather a credible challenge of President Yoweri Museveni’s three decade long tenure as the country’s CEO. Baryamureeba could only do that in a system like Uganda’s where independent candidature is common enough that it is not an anomaly.

Independent candidates are important in any political system because they are not burdened by the baggage of incumbency or the reputation as barefaced opportunists that opposition parties are often saddled with.

That being said the independents lack the networks that established parties have, making their chances not unlike casting ones bread upon the waters and hoping it comes back buttered.

In the last election Norbert Mao and Olara Otunu the flag bearers for the Democratic Party (DP) and the Uganda People’s Congress (UPC) between them failed to muster five percent of the vote in the presidential elections. Their party’s showing in the parliamentary polls was just as dismal.

The Forum for Democratic Change (FDC), managed 26 percent of the presidential vote and have the most seats in parliament of any opposition party. The FDC have grown due to the charisma of their flag bearer Kiiza Besigye in the last two elections and as seen as the home of the former NRM who see it as comfortable landing ground between the NRM and the traditional opposition parties.

"In the less than 12 months within which Baryamureeba has to muster a realistic challenge against Museveni, he needs to build a nationwide network and ratchet up his charisma quotient...

The latter is easier to do than the former, but heck! This Uganda give it a shot prof.

IVAN KYAYONKA, FIRST ABOVE EQUALS

Sport serves as useful analogy for life, more so in how it draws out the character of a man.

"Ivan Kyayonka’s cricketing contemporaries remember him as a solid, stabilising presence for team and country, steady under pressure and unwavering in his concentration on the issue at hand. His only claim to flashiness was that he batted with his right- and bowled with his left hand...

He never captained his beloved Wanderers Cricket Club but he was recognised as having that rare attribute of leading from behind.

The same could be said by his professional colleagues at Shell Uganda and at the end of his career at Vivo Energy, where he worked straight after university until his retirement as CEO and country Chairman at the end of 2013.

Born in December 4, 1958 in Igyeyero in present day Mayuge district, Kyaonka was the last of 11 children born to Ezekiel Kayabya Wambuzi and Faisi Omulokole Wambuzi. He attended Kisoko Primary School in Tororo district before joining King’s College, Budo.

He then studied Mechanical Engineering at Makerere University graduating in 1982. He joined Shell Uganda the same year after a short stint as consulting engineer with M/s Techno Consult Limited.

His three decades of service in Shell Uganda is testament to his steadiness and professionalism. 

During the time Shell Uganda, now Vivo Energy, has grown its market share to stamp its authority on a market that has been increasingly liberalised and where the Shell brand stood for quality and reliability.

In the decade that he led the oil giant’s Uganda unit, Kyayonka was a leading voice in the business community, serving in his later years as chairman of the Uganda Revenue Authority and the National Social Security Fund as well.

While not a reluctant leader, Kyayonka did not go out to seek the limelight, content to be known by his fruits.

Asked once what he attributed his success in management to, Kyayonka replied, “If you sum it all, you could say my strength is being able to work through people.”

His proteges are numerous influenced by the man at school, in cricket and as a manager. At 56 and retired, the boardrooms of corporate Uganda beckoned.

Uganda has lost a valuable business resource.

Three decades of apprenticeship at one of the world’s premier companies, in a highly competitive industry, would have been lent out to many companies in search of board good oversight.

Uganda’s problem do not stem from lack of resources but from a lack of management at every level of society. As a country we are testament to the fact that you can be the best endowed country in the world but still fail to work to the satisfaction of your citizens.

"It is men like Kyayonka, sadly in short supply, who are badly needed to populate, our management suites, our public service and even lead our schools so that we generate more of his kind to unlock the vast potential of our country. Because people are what make things happen and not the other way around....

As a country we will miss this accumulated knowledge and experience that he would have brought to bear on his next assignments, we will miss him as an example of what diligence and consistency to one’s career can result in and we will miss him as an example to our children, of how a hero should live -- with quiet confidence and constancy of purpose.

While he trode softly through life his footprints are bound to endure for generations.

They say those who the God’s love die young. Given the breadth and depth of what Kyayonka still had to offer, he died young but we are grateful for having known him and his contribution to our lives.

Rest in Peace Ivan Kyayonka

IF BUSINESS WORKS, WE WILL BE FINE

Last week Kampala hosted the fifth edition of the Ease of Doing Business Initiative (EADBI), a peer-to-peer review by sub Saharan countries on their progress in facilitating private sector led growth.

The initiative comes out of the World Bank’s annual Ease of Doing Business report, which judges countries public policies and implementation on the subject.

Uganda has lagged in the lower quartile of the 190 or so countries polled coming in at rank 150 last year compared to 152 the previous year.

"The Ease of Doing Business Index which was started in 2001 came after years of development aid history pointed to the fact that for economies to grow sustainably they have to be private sector driven....

But how to facilitate the private sector to drive the economy was the question.

It is all very nice to build transport, energy and communication networks; to improve literacy and health levels; it’s even nice to engineer the breakup of state monopolies and liberalise the markets. This are all necessary, even crucial for economic growth but even more critical is to reduce the red tape that many governments have tied their businessmen up in.

And it makes sense.

According to the latest EDB report Uganda ranks 166 for starting up business – it takes 15 procedures to register a business compared to the sub-saharan average of about eight. IN addition it takes 32 days to start a business compared to the sub-Saharan average of 27 days or the even lower figure of nine days in the western economies.

Uganda does relatively well in enforcing contracts and winding up insolvent companies.

It does not take an advanced science degree to recognise that being 150 out of 189 economies in making life easy for our businessmen means we have a lot of work to do.

But their countries around us who have excelled with some of our most pressing issues. Across the border from us in Rwanda it takes eight procedures and about six days to register a business.

Think about the savings in money and time this comes with, allowing businessmen to do what they are supposed to do, not chasing and buttering up public officials.

During the conference Rwanda also announced that it was coming close to full registration of its lands and by the same time next year they will have streamlined their processes to allow for online transfers of property.

In Uganda where it takes 11 procedures and 43 days to register property would do well to learn from Rwanda, which was the reason for the conference – a sharing of challenges and experiences.

Uganda has made some significant steps in the last decade and a half that the EDB index has been coming out but more has to be done. Peer learning is a good an avenue for this as any.

"Regulating business is necessary even important but with changes in technology and the urgency of having an efficient business sector, we need to constantly re-evaluate whether our regulations are hampering or enabling business. Some regulations are obsolete while others just serve as opportunities for public servants to pad their nests...

Making things easy for business also comes from the realisation that governments are not the major drivers of job or wealth creation. It is the private sector. So government should really confine itself to creating a conducive environment for business to thrive but not at the expense of the general population.

If Uganda for instance can reduce the burdensome regulation around business they may solve another issue.

Uganda has been recognised as one of the most entrepreneurial countries in the world. The rate of opening businesses is here in phenomenal unfortunately very few of these businesses grow to be giant enterprises with a regional or even national presence.

Part of the reason for this is the high cost in time and money it takes to move from informal to formal businesses. What this means is that many of our businesses remain subsistence operations, serving only to sustain its owners lifestyles, with no ambition beyond that.

The loss to the general economy in terms of lost jobs and economic activity is obvious.

So yes, putting easing doing business top of our agenda makes not only economic but political sense as well...