BAILOUTS? GOVERNMENT IS DAMNED IF IT DOES, DAMNED IF IT DOESN’T

Last week Standard Chartered Bank got a court order to put Steel Rolling Mills under receivership for their failure to honour their debt obligations.

The Jinja based industry became only the latest casualty in a hostile environment that has been buffeted by rising lending rates, shilling depreciation and an underachieving economy.

The steel manufacturer is facing closure following refusal of the commercial court to issue an injunction temporarily stopping the bank from shutting it down pending the main suit. In the main suit the company is challenging StandardChartered’s bid to put it under receivership.

In 2014 Steel Rolling Mills borrowed two loans of sh18b and $10m (sh35b) to purchase a sponge iron plant, which turns iron ore into steel. However, last year the bank recalled the loan in its entirety but the company argued that the loan was for 96 months and that the 45 days’ notice to repay was unreasonable.

Company officials argue that unforeseen developments in the economy have made it difficult to service the loan properly but point out they have already paid about sh26.5b of the loan.

“A combination of things – a drop in demand form the construction industry, falling steel prices, rising interest rates, currency depreciation and increased cost of production, all unforeseen at the time of taking out the loan have made it difficult,” Steel Rolling Mills’ Sami Alam told Business Vision.

Economic growth is expected to come in at five percent, down from the projected 5.8 percent. The shilling has stabilised in recent months but last year peaked at a historic high of sh3,700 to the dollar from below sh3000 at the beginning of the year. The shilling has since clawed back some value and is now trading in the ranges of sh3,300 to the dollar on the open market.

Lending rates also jumped following the central bank’s raising of its key Central Bank Rate, which serves as a benchmark for commercial lenders. The CBR peaked at 17 percent in February this year from 11 percent twelve months prior, this had the knock on effect of raising lending rates to as high as 25 percent for prime borrowers.

The Bank of Uganda felt it necessary to raise the CBR to head off potential inflationary pressures.

The enterprise under threat is the only one in Uganda which converts iron ore from a company owned mine in Kabale and from artisan miners into steel at their Jinja plant.

The company, which also trucks 250 tons of iron ore daily from Kabale and produces 4000 tonnes of steel a month, also employs about 4,000 people directly and indirectly.

Industry leader Roofings Ltd produces about 350,000 tons of steel products a year from imported semi processed steel.

But the multi-million dollar investment is not the only one creaking under the weight of hard economic terms.

"According to a senior businessman small businessmen who owe sh40b and are failing to pay are in danger of losing up to sh120b in assets pledged as collateral for the loans...

Everest Kayondo the boss of the Kampala City Traders Association (KACITA) could not confirm the figure but said the pain was real.

 “The high interest rates in a situation where business is declining means many of our members have seen their businesses going into receivership,” Kayondo said.

“It is particularly painful when as we predicted the banks are showing healthy profits, but at the same time they are treading on dead businesses.”

Banks, which have released their results recently, have shown that they are bringing their bad loans under control, provisioning less for them last year than the previous year, while profits have mostly come in higher in 2015 than in 2014.

A closure of these businesses would put thousands out of work and compromise the ability of local businessmen to create more jobs.

Already big names like supermarket chain Uchumi have been placed under receivership and WBS TV has been taken over by URA. Meanwhile the classified pages are inundated with properties being auctioned to redeem bad loans as numerous small operators have sunk quietly out of sight in recent months.

Inevitably when such economy wide distress arises calls for government intervention are not far behind.

“This is not a normal situation,” agroprocessor Andrew Rugasira told Business Vision.  “When you are in a situation of recession pressures government has an important role to play in assessing distressed loan portfolios to reduce the stress either by having the financial sector restructure these loans or by injecting liquidity into the economy.”

He argues that the cost to the economy in terms of jobs lost, loss of business to support companies and a general lowering of demand make the case for government intervention important.

Politics will always be a factor in how government intervenes in the economy, benefiting some who may not be deserving of government help to the detriment of those who are but who might be at odds with the establishment or not have the correct connections.

“There will always be politics. There is no perfect scenario. But the discussion must be had and systematic, orderly way for government to lend hand come out,” Rugasira said.

Opponents of government intervention are hard to find.

"The classical argument is that companies should be allowed to fail, that to intervene is to distort the market’s ability to allocate resources efficiently and only serves to perpetuate the inefficiencies that led to the collapse in the first place...

Governments around the world are having to rethink this orthodoxy.

During the global financial crisis that started in 2007, the US, European and Japanese governments pumped money into their respective economies and partially nationalised some of their biggest financial institutions as a way to climb out of the crisis.

Only last week The Financial Times reported that the UK government was going to re-nationalise up to a quarter of distressed Tata Steel and lend them hundreds of millions of pounds to the firm which had threatened to close down after suffering substantial losses  for years.

The UK government cited the 40,000 jobs under threat and the strategic importance of the steel industry to the economy as the reasons for interventions.

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.

MEASURE HAPPINESS NOT GDP

Uganda’s economy has grown at a steady clip over the last three decades or so.

So much so that the economy has grown five-fold during the same period. Aside from a rebooting of the economy, experts say the country can credit this fact to the low base from which we begun, but which results would have been so much better if, during the same period, the population had not doubled in size.

What is also clear, is that not everyone has benefited from these statistics. In fact the figures show that the benefits of this exponential economic growth are being enjoyed by a few and the majority are getting poorer.

Clearly something is wrong.

"To paraphrase the great teacher, “GDP was made for man, not man for GDP”...

The question then is are we measuring the wrong thing by emphasizing GDP growth?

They say what you focus on grows, which explains the growth in the economy in the last 30 years. We have really focused on that number.

Last week the World Economic Forum on its twitter handle, released five other measures that work better than GDP growth – good jobs, well-being, environment, fairness and health.

They are not the first. In 2011 the United Nations passed a resolution calling on member states to measure the happiness of the people as a way to guide policy.

Prior to that there was the Human Development Index, also by the UN, which measured individual countries ability to improve standards of living of their people by measuring against such things as infant mortality, life expectancy, literacy and access to water.

It is an interesting debate that has been thrashed out in the deepest annals of economic theory, but has only burst into the fore in recent years, as people have put the aid industry’s record under closer scrutiny, especially in Africa.

How is it that tens, even hundreds of billions of dollars have been poured into Africa over the last few decades with little or nothing to show for it in the way of the improved livelihoods for the continent’s people?

"The obvious answer seems to be that the overemphasis on growth, which wold inevitably trickle down to the masses, is a fallacy...

So maybe we should focus more on the improving the citizen’s well-being, which sounds like the obvious end product that politicians and planners strive for.  Then why didn’t it happen?

To paraphrase another former Kenyan president Jomo Kenyatta in responding to his Tanzanian counterpart Julius Nyerere’s call for a move towards socialism for the region, “So what are you going to distribute? Poverty”

The logic is irrefutable.

The trick clearly is to see GDP growth as a means to an end – improved well-being for everybody, and not an end in itself.

But what one can see how the technocrats got so enamored with GDP growth.

How is economic output and hence growth measured? It is the sum total of consumption, investment, government expenditure and the difference between exports and imports.

"So to move the GDP growth needle government can just spend more, like they are doing now on roads and dams and there will be a corresponding growth in the economy...

However imagine if our targets, which we tracked monthly or annually were such things as the social indicators listed above and celebrated them as widely and as much as we announce improvements in GDP growth, one would expect more dramatic improvements.

Interestingly all these targets are there but as has been mentioned we don’t trumpet them from the rooftops like our macroeconomic gains and secondly, and as a consequence of the first, we don’t place much emphasis on the outputs from investments in the things that will have an enduring effect on people’s living standards – health, education and other social services.

So we have statistics flowing out of our ears and noses on how inflation or monetary aggregates or balance of payments are progressing or not, but nothing comparable in terms of quality of the outputs of our education and health facilities. There we are content with such amorphous figures as enrollment, literacy and life expectancy and not quite into the finer details of curriculum relevance to the environment or preventative medicine.

Again what you focus on is what expands.

"The problem with focusing on the outputs – improved quality of life rather than input – classrooms or health center built, is that it is too hard. The interventions needed for example to increase academic achievement across the board, needs more interventions than form only the education ministry. You would have to rope in the works, health, energy and all other ministries at once to achieve meaningful progress....

So we take the short cut and focus on GDP and may the devil take the hindmost.

In the last three decades we have demystified growth. Our planners know what to do to keep the growth machine going even in their sleep. A legacy not to be frowned upon.

To cement their legacy they need to learn how to translate that growth into meaningful development for the majority.

In trying to do that they may even realise that five percent economic growth is nothing to write home about.

DEMOCRACY IS ALWAYS A WORK IN PROGRESS

Makerere’s Dr Stella Nyanzi dominated the headlines this last week.

The happenings around her and Professor Mahmood Mamdani would be fitting fodder for this week’s column. But we shall desist. If only because we think the people around the good doctor are doing her a disservice and would be best advised to seek professional help for her.

She may have provided much grist for the printing presses, material for our wagging tongues and itching whatsapping fingers, but we need to see it for what it is, a tragic meltdown being played out in full public view.

Our attention diverted we might have missed the New York Democratic Party primary on Tuesday.

The US is deep into nominating its presidential flag bearers for the Republican and Democratic parties. There are currently winding their way through the primaries and on Tuesday the state of New York was voting.

Hillary Clinton annihilated her rival Senator Bernie Sanders in an election that was marred by closed polling centers, missing voters on the register – 54,000 by some counts and broken voting machines, the equivalent of tampered ballot boxes here.

"It was interesting how the reporting on these incidents gave the electoral officials the benefit of doubt, reporting the incidents more as incompetence than a deliberate ploy to gift Clinton the victory. And no one blamed Clinton for the chaos...

At what point is it election rigging and at what point does it become unbiased incompetence or system malfunction or, even better, just bad luck?

And at what point do you decide that one person’s intentions were noble and the others not?

There was a lot of snickering on social media at this turn of events.

But the events in New York should have come as no surprise to long term observers of politics around the world.

The classic definition is that politics is the management of society, but in analysing politics we might be better served if we focused on power – the ability to influence events, people, the environment.

"Politicians strive for power and even the best of them are not averse to disregarding society’s moral code to attain power and once there to hang for as long as is possible under the law or even in total disregard of the law...

That probably explains why we look at all politicians with a jaundiced eye.

With a politician what you see in not necessarily what you get. There is always an angle, an ulterior motive, a hidden agenda.

So how is it that the failures of New York's electoral officials were not placed at Clinton’s feet? After all she is an establishment figure, well embedded with the power brokers of the Democratic Party. And there have been several allegations, all unproven of her sharp practices as a lawyer in her previous life and questionable decision making as the US’ top diplomat in Obama’s first administration.

It helped of course that Sanders slunk off once he determined how badly he had been trounced.

But what if he had gone to court and challenged the result – as is his right? Never mind that it is unlikely It would be overturned in his favour, but maybe he might have won a repeat of the election.

Or what if he just started a narrative that the vote has been stolen and he never had a chance anyway and kept shouting it from the rooftops and twitter?

You do not say these things in polite company but isn’t it that “These things don’t happen in the west” because the people would not allow it? Because their politicians are not like ours?

Mbu they are ethical politicians. An oxymoron if ever there was one.

SOMEBODY NEEDS TO REIN IN OUR MPS

Last week the honourable members of parliament passed a law which exempted their allowances from tax.

In 2013 a whistleblower sued the attorney general because the parliamentary commission was not paying tax on MPs allowances. In February the commercial court ruled that the MPs allowances should be taxed and that the parliamentary commission, which handles their payments, should remit taxes on these from 2004.

During the Kyankwnazi retreat a few weeks ago President Yoweri Museveni said there would be no salary increments for public servants including MPs.

Now usually reliable sources are warning that MPs are planning to amend the Income Tax act to place them among those group of workers listed there that are exempt from taxation on their incomes, like soldiers, who risk life and limb so we can live in peace.

"MPs have to have the best job in this country. Not only can they decide how much they will get paid but they can also decide that they need not pay taxes...

I would love to hear why the honourable members believe they are worthy of a tax exemption on their income.

Off the top of my head, you sue for tax exemption if you are going to create jobs, set up a totally new industry from scratch or going to boost economic activity in a remote area. There are many other reasons of course including that you are unable to be gainfully employed or in the old days,  you could be exempt from graduated tax if you were impotent.

This is an important discussion for this county on many fronts but two immediately leap to mind.

One of the slogans against colonialism was that there would be no taxation without representation. The agitators argued, and rightly so, that how could a group of people collect taxes and appropriate funds ostensibly in the people’s benefit, when the people have no say not only about the spending of the money, but also the taxes to be levied.

Never mind that the colonialist – many of whom were genuine dogooders, believed they knew what was best for the colonies.

Similarly these MPs who think they are above paying theirtaxes are not representing us. They could argue that they are representing the 80 percent of us not paying taxes but then again where would they be leading us. Retrogressively into the pre-industrial age or progressively into a more developed nation?

"Leading from that, have they forgotten that they are leaders? Okay it’s a bit hard to remember that when you are dozing during parliamentary sessions or heckling the front bench or just plain behaving dishonourably --- even us the onlookers, forget they are leaders, seeing as the evidence is often hard to come by...

Taxes are the cost we pay for development. Of course in countries like ours where grubby fingered, public servants help themselves to a disproportionate portion of our taxes it is a hard argument to make, but the principle still holds. And besides you do not fix the problem by not paying taxes altogether.

Taxes pay for security, physical and social infrastructure which goods allow us to generate more revenues to build more infrastructure --- a virtuous cycle, which if handled properly should lead to improvements in living standards for everybody.

So when MPs plot to abdicate their responsibility what are us mere mortals – who also happen to be their employers, supposed to do? The slippery slope of massive tax evasion beckons. And who will call us to book? The MPs?

Somebody needs to rein in the honourable ladies and gentlemen of parliament before the hurt themselves (which may not be a bad thing) but more importantly before they hurt us (if they are not already doing so).

For starters someone has to bell the cat.

Let us have an independent commission to determine MPs salaries. Unfortunately MPs may have to put this structure in place and we all know that monkeys are incapable of passing judgement on the forest.

Secondly, we need to cut the MP numbers. The fallacy that the MP is a benefit to his community has been demystified. MPs themselves after promising their electorate the 67 moons of Jupiter, then turn around and plead that bringing services to the people is not their job – by that time of course, they are pulling down sh20m a month and in the near future, God forbid, tax free income.

"It’s hard enough to build a nation with low revenue collections, an epidemic of corruption in the society and stone throwing allies doing so, from the comfort of their glass houses, without our very own MPs fighting for slobbering rights at the trough of the national treasury....

I know it’s a lost cause appealing to the MPs altruistic natures but somebody has to say it:

STOP! Honourables. In the name of all that is good and right, before you pull us all down into the mud with you.

THE CANCER MACHINE: HOW DID WE COME TO THIS?

The debacle of Mulago hospital’s radiotherapy machine, used in cancer treatment, has had Ugandans frothing at the mouth for a week now, and who can blame them.

To be worried about this country given these details would count as the biggest understatement of all time.

This story is wrong on so many levels all of which cannot be examined here.

Over the week it has emerged that the machine was in service long after it was supposed to be in operation. It had been chugging away for 21 years yet it should have been decommissioned a decade ago. That the hospital is trying to coax a few more months, years or even decades from the aging machine as they wait for the replacement, which according to health officials has already been paid for. That officials are lobbying government to release the sh30b needed to build a bunker to house the machine because questions have been raised about the current banker’s fitness to do the job. And finally that the earliest the new machine can go into service is in two years!

Meanwhile that there are more than 40,000 new referrals for cancer treatment annually, three in four of whom would need radio therapy.

I remember a book on my dad’s shelf many year’s ago whose title was “You have got to cry to laugh”.

The instances of irresponsibility, negligence and planlessness are hard to miss in that quick summary of the facts.

"How is it that when the machine was donated and we were aware that  it can only serve for 10 years that we are only just now – 10 years after it was supposed to be decommissioned, getting around to replacing it? How is it that with such a work load we still have one machine at Mulago and not at least 10 by now? How is it that we continued to operate a machine which most probably has been irradiating everybody within a 100 meters of itself and the people who were supposed to raise an alarm are only just doing so, almost five years after they new it?...

This story is infuriating and mind boggling in equal measure. As Ugandans we shouldn’t be surprised by this “circus” we have seen so many more cases of poor service delivery.

One of the sad things about these incidents is that no one, for a minute, thinks our public servants are incompetent or even out of their depth, the default position is that someone by letting things get out of hand is trying to make quick buck.

"As you can imagine with the public uproar over this machine the procurement manual will be thrown out of the window and no expense will be spared to alleviate the situation, always a recipe for overcosting and contracting dodgy suppliers...

How did we get to this point?

Where public officials run down public services safe in the knowledge that when they have a medical emergency they will be whisked off to Nairobi or Johannesburg or Chennai.

Cynical? Maybe but that is what we have come to expect and with a shrug of our shoulders we let it go on.

Public officials throw their hands up in the air and complain of poor funding “How can we serve meat when you gave us beans”, which is fair but which flies in the face of the money stolen annually – at last count at least sh500b annually, which would have gone quite a way had it been put to its intended use.

"Even sadder is that the beneficiaries of these inadequacies are not seating on their hands waiting to be picked off but are actively working to perpetuate the mess so they can continue stealing. In addition in entrenching themselves in position they are not only holding the government hostage but the very citizens of Uganda...

For now we shake our head and pray we do not contract any cancer. A sorry way to exist.

FOLLOWING KENYA BANK CRISIS, BANK OF UGANDA MOVES TO STRENGTHEN SECTOR

The Bank of Uganda has ordered banks to strengthen their balance sheets to improve their capacity to face up to any upheavals in the industry.

The move, while it has been three years in the making, comes at a time when across the border three Kenyan banks have folded under the weight of unregulated insider lending and general economic stress.

The collapse of several banks at the end of the last century, mostly due to an accumulation of bad debt, prompted the Bank of Uganda to raise minimum capital requirements to sh4b in 2005 from the previous one billion shillings for foreign banks and sh500m for local banks. This was further raised to sh25b in 2010.

The banks that folded included International Credit Bank (ICB), Greenland Bank, Cooperative Bank and Trust Bank. More recently the National Bank of Commerce and Global Trust Bank closed shop.

By raising minimum capital requirements allows the banks to absorb higher losses were the bank was to be distressed.

In the latest move the Bank of Uganda has ordered a minimum capital requirement of 10.5 percent of risk weighted assets – cash, loans and government securities from the previous eight percent. In addition banks will be required to provide for an additional 2.5 percentage points as a capital conservation buffer, bringing capital requirements to 13 percent of risk weighted assets.

"And for the big three banks which are judged to have huge systemic risks – what happens to them affects the whole industry, an additional 1 to 3.5 percent of risk weighted assets will be required depending on the central bank's discretion...

This counter cyclical buffer will apply to Stanbic, Standard Chartered and Crane Bank.

“The Banks are already informed and they should comply by the end of the financial year we expect,“ Deputy Governor Dr Louis Kasekende told Business Vision.

“Think of these actions as a longer term effort to strengthen our banking sector not triggered by anything happening here or abroad.”

Due to their unique financing structure, funded mostly by client deposits it is imperative that a bank’s capital keeps step with is growing operations. Bad debts can mean a bank failing to honour savings withdrawals and lead to its closure a bigger capital base means they can absorb more losses and keep the bank afloat.

According to the central bank documents deposits in the industry grew to sh13.2 trillion by the end of 2014 compared to sh1.04trillion in 1999. Industry assets also grew to sh19.6trillion from sh1.35trillion during the same period.

The Kenyan banking industry is reeling from the closure of Chase Bank last week, the third bank to collapse in the last six months. Imperial Bank was taken over by the regulators while Dubai Bank Kenya Ltd run out of money.

The banks have been plagued by bad debts but also improper lending to its shareholders and managers, which forced the lenders’ insolvency.

"The central bank’s regular adjustment of capital requirements and continued improvements in bank supervision has spared the industry much of the turmoil of the global financial crisis that started in 2008 and distressed many foreign banks....

Except for a spike in bad loans to about 5.6 percent in 2013 the industry has managed to contain the bad loans to under five percent, with the n umber coming in at 4.1 percent in 2014.

Industry sources said the changes have been a long time in coming.

“In 2015 bad debts have been rising, this is the central bank’s way of saying “Don’t take as much risk!” a senior banker said on condition of anonymity.

He said the increase in bad loan provisioning in 2015 suggests that banks continued to lend aggressively in a slowing economy and their clients are failing to honour their obligations.

The bigger banks have had it good for a while, accumulating billions in reserves and these new requirements shouldn’t cause much trouble, he said.

“The smaller banks may struggle especially if their head offices are under stress,” he said in reference with the goings on in Kenya.

The banks see the move as positive for the industry but also will be good for their clients.

“From the clients perspective the banks will be more resilient to external shocks so they will have additional comfort about the safety of their savings,” Stanchart’s finance director Kevin Musana told Business Vision.

For the bigger clients, he said, the bank will be able to lend them even more as the limits, currently not more than 25 percent of capital lent to a single client, will rise.

He agreed that it would be much easier to manage raising capital this way rather than fresh capital from the banks’ owners. However shareholders may have to take a cut on their annual dividends this year.

The local banks listed on the Uganda Securities Exchange include Stanbic, dfcu and Bank of Baroda, whose shareholders may be affected.

Banks are currently reporting annual results an exercise whose deadline is the end of April when a more clearer picture of how the industry did last year will emerge.

Seen against the historical issues of the sector the latest move by the central bank should be seen as an extension of previous moves aimed at strengthening the sector and hopefully making ot more competitive.