Sunday, August 5, 2012

On Andrew Mwenda's Review of Prof stiglitz, NSSF and Civil Servants Bank


On Andrew Mwenda's review of Prof Stiglitz, NSSF and 'Civil Servants Bank'.

I read with keen interest and fascination, Andrew Mwenda’s last three articles, under his “The Last Word “column in the Independent Magazine and in more ways than one, they all seem to be interlinked. From his scathing review of Prof Stiglitz presentation at the 20th Annual  Joseph Mubiru Memorial Lecture, to the negative dividend of the democracy on NSSF and finally the Aid cuts to the Rwanda government by western nations France, Netherlands, UK and USA, over alleged support to M23 rebels in the Democratic Republic of Congo. In his rebuttal to Prof. Stiglitz Presentation, the crust of Andrew’s argument is that the distinguished economist and Nobel Peace prize winner did not define the kind of regulation that government should engage in our financial markets and banking sector. He faults Prof Stiglitz for presenting academic and extreme ideological arguments more like his peers back in the academic and political domain in America.  Andrew further argues that the issue is not whether or not states get involved but what specific forms of involvement are necessary for economic and market success. I will attempt to bring into perspective the kind of regulation and state intervention that we need in our current Ugandan context - the kind that Prof Mahmood Mamdani also seems to allude to in his discussion of Prof. Stiglitz’s paper.

For the last 18 months, the most contentious and critical issue in our macro-economic fundamentals has been/ is inflation. The Bank of Uganda and the government by extension fronted three main explanations for the inflation; prolonged drought throught the country that affected agricultural yields and thus caused supply constraints. The food/agricultural produce was not enough for both the local and regional export markets. Secondly were the offshore factors; imported inflation from food and commodity products, high oil prices on the world market and finally the down-side effects of the Eurozone and global financial crisis that hindered our export earnings and thus put pressure on our foreign exchange.

In light of the high inflation the Central Bank adopted a tight monetary policy framework to reduce the quantity of money in the economy and thus mitigate the risks of inflation due to huge private sector credit. Unfortunately this inflation targeting monetary policy also hurt production ventures and manufacturing. The CBR mechanism did not only target private consumption credit but also business communities like traders and manufacturing industries that need credit for expansion and growth. A better approach would have been to have different CBRs for private consumption credit and investment/production credit. (As explained by Mr. Kitamirike, the CEO of Uganda Securities Exchange in his article, Balancing between inflation control and investment growth, Daily Monitor 14th February 2012) Only Central Bank and or government regulation would deliver such a paradigm thus mitigating risks of stifling growth due to high interest rates as evidenced last financial year. The Central Bank Rate, CBR is also a clear indictment that we are not a free-market economy as we would want to believe. Interest rates are simply the price or cost for borrowing, and banks are primarily financial intermediaries. Banks ought to link the spare cash in the economy (savings) as supply with the investors (demand) that want to grow and expand their production lines. Free-market enthusiasts argue that when interest rates are set by Central Banks, they don’t indicate the market fundamentals of supply and demand but they actually send wrong signals. The inconsistencies notwithstanding, we should have social policy and regulation to build huge pools of savings that investors and manufacturers can tap into and access affordable credit for expansion and job creation. The sole reason why the Bank of Uganda is able to control (and in effect distort) the financial and credit markets is because it is the lender of last resort and the chief custodian of money in the economy. (Which is a regulatory provision too).Where does the Central Bank get its money? It is primarily the Government’s banker. Where does Government get its money? Government revenue is majorly from two sources; taxes and borrowing. In some instances, it gets grants and aid from donor agencies and rich western nations – the kind USA, UK and Netherlands have cut from Rwanda.  Taxes, the primary source of government revenue are dependent on the tax base and health of the economy. Government borrowing through taking loans or issuing bonds simply implies government is able to tap the spare cash in the economy (for domestic borrowing) or in its peers’ economy (foreign borrowing). A loan from China simply implies China has spare cash or savings that they are willing to lend out. This leads us to the social policy and regulation that government can engage and use to build our own savings pools to foster indigenous investment and growth, free from the whims of foreign powers and donor agencies. NSSF, with a membership of slightly over 450,000 has monthly collections in excess of Ugx 40 billion and an asset portfolio of Ugx 2.7 trillion. We have a Civil Service of over 320,000 people with an annual wage bill of over Ugx 2 Trillion. If each employee saved just 10% of their monthly income, they’d raise Ugx 200 billion in one year. This is enough to start up a Civil Servants Bank. From the Financial Statements and Reports published by banks for the year 2011, total net profits earned by Stanbic Bank, DFCU bank and Barclays Bank summed up to slightly over Ugx 180 billion. It is clear, financial services sector is lucrative and there is an increasing demand for credit to boost both production and consumerism. Why can’t ordinary Ugandans enjoy these profits and benefits too?  We just need the right pro-people regulatory framework and social policy to harness these opportunities. With annual savings of Ugx 200 billion, the Civil servants can finance the construction and set up of at least one manufacturing or agri-processing plant each year. Nile Breweries Limited is setting up a new beer plant in Mbarara at a total cost of $80m (Ugx 200 billion). In five years (one presidential and parliamentary term of office), Uganda’s Civil Service can finance and own five major manufacturing entities in Uganda. They can also have a Venture Capital Fund that invests in SMEs and other agri-business initiatives. The dividends from these ventures can be an annual reward for the savings. It is clear that with minimum effort, Ugandans can be at the heart of the country’s economic development. Such ventures could also build social cohesion; reduce risks of conflict and democratic contestations. The example of the NSSF Board debacle where we have half the members with no knowledge of finance, equity markets, venture capital and investment, but are propelled by democracy to such executive forums, can be better managed where we engage them on their turf. If workers Unions and Cooperative firms were given means and framework to save and invest in SMEs like agribusiness and commercial farming, you would never see them interested in swimming in the deep waters of corporate financing, venture capital and long-term investments. The neo-liberal reforms of the early 1980s that shut down cooperative unions have not delivered tangible results for the wanaichi. Ironically, the same neo-liberal reforms that championed democracy and elections have propelled the same wanaichi to the complex arena of corporate finance, venture capital and investments.



According to the Ministry of Finance Planning and Development’s Performance of the Economy Report June 2012, for the financial year 2011/2012 (May 2011 to May 2012), Uganda imported goods worth over $4.8 billion compared to export earnings of $1.8 billion. Some of the goods on the import list include Cereal and cereal additions worth $220m, Sugars, sugar preparations and honey worth $193m, Vegetable fats and oil (crude, refined and fractioned) at $200m, Furniture, beddings and, mattress materials at $16m, Footwear at $32m, Fish, beef, meat, eggs, dairy products, vegetables and fruits collectively imported to a tune of $25m an equivalent of Ugx 62.5 billion shillings. Uganda on an annual basis imports goods worth over $700m that can easily be produced locally, if only we’d engage the right regulation and appropriate social policy. We would eliminate the downside risks of supply constraints and imported inflation if we are able to produce some of these imports. Trade Unions, Cooperatives, SACCOs, Uganda Prisons, Women Groups, Local communities, Secondary schools, vocational institutions etc. can be supported with farm inputs, fertilisers, machinery and extension services to produce the cereals, vegetable oil, animal fat, cotton, fish, milk, eggs, poultry etc. instead of importing them.

We all seem to be fascinated and impressed by the Asian/China mode, but we are not willing to walk the talk. The china-model is premised on pro-people regulatory framework and social policy. It is anchored on indigenous ownership of key sectors of the economy e.g. banking, production and export markets. It is built on a strong savings culture and low consumption but high investment paradigm. Here in Uganda particularly, it’s the complete reverse. All the integral sectors of the economy are owned and or controlled by foreign companies and multinationals, and that in more ways than one doesn’t cushion us from capital flights, FDI reductions, foreign influence etc. Kenya and Tanzania, our regional peers have strict and pro-national regulation to foster indigenous ownership of the economy and production sectors. Tanzania has restrictions on purchase of stocks and financial products by foreigners. No IPO or rights issue in Tanzania has been unsuccessful because of such regulation. Kenya has strong local banks that started out as cooperatives and micro-finance institutions e.g. Jamii Bora, K-Rep, Family Bank and Equity Bank. In 2008 Equity Bank bought Uganda Micro Finance Uganda LTD at $25.3 m (Ugx 64 billion), and has now extended to Rwanda and Sudan. If all the 320,000 civil servants in Uganda had contributed just Ugx 200,000 each, they would have raised the Ugx 64 billion to buy Uganda Micro Finance LTD. With their monthly salaries, savings and deposits, they would be able to grow its cash assets and thus create a huge pool of savings to provide credit to SMEs and individuals.



Professor Mamdani in his discussion of Prof Stiglitz paper captured the right mood for a bold paradigm shift in his concluding remarks and I quote “Not only has the market wrenched itself free from society, so is the state trying to do the same. Not only do market forces threaten to colonize society, the state too threatens to devour society. Free markets are not a solution for poverty; they are one cause of modern poverty. State sovereignty is not a guarantor of freedom; it threatens to undermine social freedom. The challenge is not how the state can regulate the market, but how society can regulate both the state and the market.”

With the above indicated initiatives and socio policies, it is clear society and wanaichi will be at the heart of the integral facets of the economy e.g. banking, financial markets, manufacturing and production and thus be able to engage, regulate and partner with the state for economic growth that is all inclusive and sustainable.



Agaba Rugaba

Civil Engineer and Socio-political /commentator.


Monday, June 18, 2012

The FY 12/13 Uganda Budget, the Devil is in the Details!!

Owing to the prevailing economic situation today and for the last 18 months, the theme of this year’s budget, Priorities for Renewed Economic Growth and Development is rather ambiguous. It is debatable whether the budget in its current architecture shall deliver any substantial economic growth in the short term and or form the foundation for economic development in the long-term. For starters, it is a deficit budget! The planned expenditure is Ugx 10.88 trillion while the total Revenue and Grants are estimated to be at Ugx 8.65 trillion (Ugx 7.25 trillion from URA, Ugx 160 billion from Non-Tax Revenue and Ugx 1.24 trillion from Grants (AID)). It is clear, with grants, the deficit stands at Ugx 2.24 trillion, and at Ugx 3.47 trillion without grants. Government plans to cover the revenue shortfall by borrowing the Ugx 2.24 trillion of which Ugx 1.25 trillion (55%) will be sourced from foreign and international market players, while the remaining Ugx 990 billion (45%) shall be sourced locally. With the recent policy pronouncement and tax amendment of increased withholding tax on treasury bills and bonds, we wait to see whether investors, mainly institutions both local and foreign will still have appetite to invest in government debt. The government may not raise all the funds it needs to plug the deficit and in effect some ministerial work plans and projects planned for in the budget may and won’t be implemented.

The other fundamental question is whether this budget really endeavors to achieve economic growth and development as enshrined in its theme. Ugx 2.14 trillion is estimated to be spent on wages and salaries for the over 300,000 civil servants!! This is equivalent to 20% of the planned total expenditure, and 25% of total revenue from URA and grants. Of the planned Ugx 10.88 trillion total expenditure, Ugx 5.58 trillion (51%) will go to recurrent expenditure e.g. wages, non-wages, statutory, and interest payments for both foreign and domestic loans acquired by government. Only Ugx 5.28 trillion (49%) of planned total expenditure will be spent on Development Expenditure. Ugx 2 trillion, 38% of planned Development expenditure shall be on Donor Funded Projects, while ugx 3.28 trillion (64%) shall be Domestic Development Projects. The total recurrent expenditure on wages, non-wage, statutory and interest payments on government loans is 75% of the estimated total revenue to be collected from URA and Non-Tax Revenue. This implies that without grants and donor support, we would be left with a paltry of Ugx 2 trillion for our development expenditures on socio-economic transformation projects! It is clear we are banking a lot on donor support and grants (AID) for implementation and funding of our development programs and that exposes us to downside risks of the Eurozone crisis and international financial systems.

The government has prioritized the following sectors to form the basis for socio –economic transformation; Roads, Energy (Electricity), Water, Agriculture and Education. The Roads sector, managed by Uganda National Roads Authority has been allocated Ugx 1.28 trillion, for this financial year. Of this Ugx 795 billion (62%) is from Donor Funded Projects while Ugx 450 Billion (35%) shall go to Domestic Development Road Projects. The remaining Ugx 35 billion (3%) shall cover the wage bill and non-wage recurrent expenditure at UNRA. Again we are seeing a lot of Donor Support at the heart of our infrastructure development programmes clearly indicating we are still exposed to possible shocks from the Eurozone and global financial markets. Secondly, the funds for these projects may not be released in time by the donors thus work plans won’t be implemented on schedule and within desire time frames.

The other worrying paradox in the FY12/13 budget is the allocations to two ministries – Agriculture and Education. It is agreed that over 75% of Uganda’s 34 million people work and survive on agriculture though it’s largely subsistence. Since time immemorial, the argument has been made for us to tap into our competitive advantage of good climate, vast arable land etc. to develop our agricultural sector and be the food basket of the East African Region and probably the Great Lakes Region too! However, we seem to be putting even our meager resources on the non-productive ventures like USE and UPE, continuously churning out half-baked students and pupils with minimal literacy and numerical skills. Better resource allocation and utilisation would foster better agricultural production and thus improve on household incomes and social-economic well-being. The Education Sector was allocated Ugx 1.62 trillion for this financial year. Over 882 billion (54%) of this will be spent on wages and salaries for teachers , lecturers in universities and other education institutions, civil servants at the ministry and education service commission. Another Ugx 373 billion (23%) was allocated to Non-Wage recurrent expenditure on rent, utilities, vehicles, conferences, office logistics, fuel etc. This leaves a paltry Ugx 362 billion (23%) for development programmes that ought to drive better standards and quality in the Education sector.

Strangely, the whole Agricultural Sector has been allocated Ugx 378 billion only for the FY 12/13. This is equivalent to Non-Wage Recurrent Bill (rent, utilities, fuel, office logistics, training, travel, vehicles, and conferences) in the Education Sector. It is clear we are putting our minimal resources into non-productive and consumption ventures. This is the paradox that this year’s budget and more budgets to come throw in our faces. Unless we engage radical and robust structural reforms in the public service to reduce the cost of public administration, our budget, which should be one of the fundamental tools for development planning, programme implementation, monitoring and evaluation, shall always be a ritual that does not resonate with the aspirations of the wider Ugandan Society.

Agaba Rugaba

Socio –Political Commentator

Thursday, May 10, 2012

FINANCIAL INDEPENDENCE FOR UGANDA - CIVIL SERVANTS BANK.

Financial Independence for Uganda at 50 – Indigenous Banking.

I was fascinated by Joseph Lutwama’s article titled Harnessing People Power to develop Kampala which appeared in the Daily Monitor of 8th May 2012 in the Prosper Magazine. He brought to the fore an interesting concept of retail bonds to help finance big investments that will aggregately foster Uganda’s socio-economic transformation. Two particular facets of his argument stand out that I wish to allude to and build a case for indigenous economic development. One is the simple magic and power of numbers and secondly the notion that investors in Uganda are always thought to be foreign e.g. Americans, Britons and Chinese. Mr. Lutwama highlighted the plight of the traders in Kiseka market that need Ugx 800 billion to develop the market into a world class one but have only managed to raise ugx 75 billion, and thus are still Ugx 165 billion short of at least 30% of the total project cost. We have a lot of opportunities at our disposal that social policy can tap into, to build huge pools of savings to provide investment capital for both large scale projects and Small and Medium Enterprise initiatives.

Uganda has a Civil Service of over 320,000 people with an annual wage bill of Ugx 1.8 trillion. If all the civil service saved 10% of their monthly salary and put these savings in one pool, they would raise Ugx 180 billion in one year! Ugx 180 billion is all that our KACITA traders in Kiseka market need to top up on their Ugx 75 billion to kick start the project and secure long term financing from banks and investment firms. It is clear with minimal saving, civil servants can provide equity or credit to the traders project. Such an initiative would go a long way in creating social and economic linkages between different groups in the country thus fostering nationhood and patriotism too. Ugx 180 billion can be used to start a Civil Servants Bank. All they need is Ugx 25 billion as Bank of Uganda capital requirement and Ugx 55bn to open up bank branches and cover administration costs, and then they have a whole Ugx 100 billion to provide loans and credit to SMEs, traders and farmers. The recently released bank financial statements for 2011 indicated that total net profits earned by Stanbic Bank, DFCU bank and Barclays Bank summed up to slightly over Ugx 180 billion. It is clear financial services sector is lucrative and there is an increasing demand for credit to boost both production and consumerism. Why can’t ordinary Ugandans enjoy these profits and benefits too? One of the facets of the NRM ten point programme was to build a strong and self- sustaining economy. How are we building self-sustaining and independent economy when we are chronically dependent on foreign capital? We need to be cognizant of the fact that foreign capital is taxes and or savings form our foreign peers. Our leaders always find it appropriate to quote the China economic model and the Asian success story but don’t seem to translate this talk into pragmatic framework and social policy to finance investments, boost incomes, and create indigenous ownership of key economic sectors. Our regional partners Kenya have strong local banks that started out as micro-finance institutions e.g. Jamii Bora, K-Rep, Family Bank and Equity Bank. In 2008 Equity Bank bought Uganda Micro Finance Uganda LTD at $25.3 m (Ugx 64 billion), and has now extended to Rwanda and Sudan. If all the 320,000 civil servants had contributed just Ugx 200,000 each, they would have raised the Ugx 64 billion to buy Uganda Micro Finance LTD. With their monthly salaries, savings and deposits, they would be able to grow its cash assets and thus create a huge pool of savings to provide credit to SMEs and individuals.
The Ministry of Finance, Planning and Economic Development in their Annual Economic Performance Report 2010/2011 noted that the potential comparative advantage of cooperative microfinance institutions lies in their low-cost member-based management and governance, their not-for-profit social mission, their additional services apart from savings and loans, and their intermediary role in a local context. The report further notes that Ugandan SACCOs and Micro Finance institutions will have to make major strides in order to make this potential a reality and become sustainable financial institutions. As we celebrate 50 years of Independence, we need framework and policy to tap into the dividends of Uganda’s growing middle class and wage earners to create savings pools to finance investment and socio-economic projects.

Agaba Rugaba

Socio-Political Commentator.




HOMOSEXUALITY: HOW RIGHT IS IT?

HOMOSEXUALITY: HOW RIGHT IS IT?

By Joseph Tumwebaze

 
The constitution of Uganda states that ‘Every effort shall be made to integrate all the peoples of Uganda while at the same time recognising the existence of their ethnic, religious, ideological, political and cultural diversity’.

Chapter 21 (1) states that ‘All persons are equal before and under the law in all spheres of political, economic, social and cultural life and in every other respect and shall enjoy equal protection of the law’.

Chapter 29 (2) further states that ‘Without prejudice to clause (1) of this article, a person shall not be discriminated against on the ground of sex, race, colour, ethnic origin, tribe, birth, creed or religion, social or economic standing, political opinion or disability’ implying that under our constitution, the gay are part and parcel of our society and there is no reason as to why we should discriminate against them.

However, I would like to appreciate that there are two perspectives relevant in such a case; the legal perspective and the moral perspective. I have come to understand that currently, there is no clear law in Uganda that can be used in a litigation case against homosexuality specifically. So, I’ll base my argument, not on a legal perspective, but on a moral perspective. This perspective encompasses our conscience too.

Under this perspective, I will use the guidance of two books namely the Holy Qur’an and the Holy Bible. The Bible in Leviticus 18:22 says ‘’Do not lie with a man as one lies with a woman. That is detestable.’’ Romans 1:27 also says ‘’in the same way, men stopped having natural sex with women and began wanting each other all the time. Men did shameful things with other men, and in their bodies they received the punishment for those wrongs’’ I don’t think this can get any clearer than that! The Bible thus pronounces itself on homosexuality! As for the Holy Qur’an, I have not been able to avail myself a copy, but my Islamic friends could help me here and shed more light about this.

If there is anyone who can quote me a bible verse where homosexuality was practiced in any Bible scene, please let me know. Or if we were to consider our core African value; Does any of our African teachings encourage homosexuality? Did our fore fathers really carry it out? Where did it originate from? Has it been imported from out? Should it really be promoted or discouraged?

While having a conversation with one of the gay activists in Uganda, I asked him how he became gay and he told me that he was born that way and realized it during his Primary School level. I don’t concur with that because I believe feelings and emotions are determined by what we believe and no one is born with a specific attitude towards anything. The attitude anyone has about anything is due to the influence of the surroundings. This may include films, friends, family norms and many more. We only may be born with specific physical attributes that we may not be able to change (though recent technology has proved this otherwise)

Personally, I disagree with David Bahati’s bill because I think it is too harsh and it spells out punishments which I think are too excessive and need some revision. For example rather than a death sentence, I would rather a rehabilitation programme be put in place (i.e if homosexuality acts are finally declared illegal)

I don’t intend to violate anyone’s human rights but I think that however much homosexuality may be legal in some countries, is it morally right?

When someone argues that we should leave what happens in people’s bedrooms to those in that bedroom, does he realize that that is impossible because it will finally be translated onto the streets and even into schools (primary, secondary and even university) where young people may be swayed by immaterial objects and recruited into this vice. If I were to ask, how many of you would accept and encourage your 15 year old child if he/she told you he/she is gay?

More to that, let’s look at the sexual perspective of this; The Bible says sex is existent for pro-creation purposes and not re-creation purposes. Feel free to enlighten me if there is any pro-creation that takes place between homosexuals. The sex between gays even goes against all natural (and biological) laws.

My personal take on homosexuality is that till it is declared illegal by means of a legislation, no one should segregate against them. However, on a moral point of view, I totally discourage this vice and would appreciate it if a rehabilitation programme would be put in place to help the people engaged in it. Killing them (or giving them a life sentence) will not help them reform but will drive the rest of them into hiding thus won’t stop the vice at all. Encouraging them to come out, giving them a welcoming atmosphere and accepting them into the society as measures are being put in place to try to revert their sexualities would be much more welcome. In the fight against STD’s, monitoring their actions would help in curbing the spread of this disease.

@jobaze (on twitter)

jobaze@gmail.com

Thursday, April 26, 2012

TERM LIMITS DEBATE - A MIS-DIAGNOSIS OF UGANDA'S FUNDAMENTAL CHALLENGES.

TERM LIMITS DEBATE – AN UNFORTUNATE MIS-DIAGNOSIS OF OUR SOCIO-ECONOMIC CHALLENGES.
I have followed the term limits debate with tepid interest because I believe it offers nothing fundamental to our country’s efforts towards socio-economic transformation. However, its crusaders ranging from the opposition political parties, Members of Parliament, Civil Society and church leaders, all seem to suggest that our political and social economic challenges come down to one man-President Museveni and thus the need to restore term limits to bar him from prolonged stay in power. As per the Presidential Elections ACT 2005, Article 4 Section 1(b), President Museveni can’t stay in power beyond 2021 considering he will be above the 75-years age limit. Restoration of term limits today, or two years from now, won’t bar him from contesting in 2016 unless the amendment specifically targets him or makes mention of his previous terms after 1996. And for us put this at center stage is an unfortunate misdiagnosis of the challenges we face as a country.

The recently released State of East Africa Report 2012 by the East African Community Secretariat and Society for International Development clearly highlights the major political and socio-economic challenges Uganda faces today and in the next two decades. These include Poor infrastructure, Energy deficiency, Population explosion, Climate Change and Environmental degradation etc. Uganda’s population is slightly over 34 million today. According to the United Nations Development Programme Report 2011, this is expected to hit 60 million in the next two decades (2030). This is in light of the fact that Uganda has the highest fertility rate in the East African region at 5.9 children per woman. Over 60% of Uganda’s population today is is below the age of 15 years and this number will rise to 35 million in the next two decades too. Imagine this, in the next 20 years; Uganda will have as many teenagers as its population today. Urbanization is another major challenge for Uganda before it makes 75 years. According to the United Nations Population Division, World Urbanization Prospects 2009, Kampala is one of the 20 fastest growing cities in the world. Kampala’s population will double in the next 15 years. All this population explosion and urbanization creates an urgent need for infrastructure e.g. roads, Oil, energy, water systems, railways, housing, education facilities etc. These are the issues that should be at the center of debate and discourse in the Parliament, mainstream media and Civil Society forums.
The current state of public infrastructure in Uganda especially the road sector is appalling. Despite huge budget allocations to Uganda National Roads Authority to implement road projects, UNRA has for the second time been unable to utilize all the budget allocations despite the sad state of our roads. According to the African Development Bank Infrastructure Data 2008, Uganda with over 71,000km of road network, only 4% is paved (2330km) and 96% is unpaved (68,670km). Furthermore, only 15% of the paved roads are in good shape and only 1% of the unpaved Roads network is in good shape. This translates to high transport costs, road accidents, delays in transport of goods and services, high production and maintenance costs for manufacturers. Parliament and Civil Society should be concerning themselves with how best to improve capacity of Uganda National Roads Authority, PPDA, relevant ministries and local governments on how best to absorb and utilize these budget allocations optimally. The structural and capacity deficiencies at UNRA, PPDA, Ministry of Works, KCCA or District Works Departments have nothing to do with the Presidency!
Youth unemployment, poor agricultural production and poverty are the other major challenges that threaten survival and development of both urban households and rural livelihoods respectively. These challenges are undoubtedly intertwined; one leads to the other or exacerbates the other. The notion that the solutions to these challenges lies in removing President Museveni is misguided and unfortunate. We need to engage pragmatic framework to combat and address these socio-economic challenges. Parliament and Civil Society should be at the heart of such framework. The closest, government came to engaging a robust framework to address these challenges was the formulation of the National Development Plan in 2010 with a vision of transforming Uganda from a peasant to a modern country in the next 30 years.  It has a comprehensive analysis of the current situation, desired goals and objectives, and strategic actions to address our socio-economic challenges.  The NDP was to address issues to do with energy, agricultural production, housing, roads and railways, commercial farming, etc. The latest media reports indicate that Rt Hon Amama Mbabazi, the Prime Minister and Leader of Government in parliament has admitted that the National Development Plan is not working. This should now be the concern of our parliament, civil society and general public to go back to the drawing board and draw action plans that can be implemented and deliver tangible results for both the short term and long term. The mandate to implement the National Development Plan majorly lies with technocrats and Senior Managers in ministries, government agencies and local government authorities. The failure of the NDP and other programmes is not entirely a political problem. It is not a problem of the Presidency too.
A study on the performance of National Agricultural Advisory Services, NAADS Programme (by far the most ambitious attempt to transform agricultural production in Uganda) by the Economic Policy Research Centre, Makerere University indicates that the failures of the NAADS programme are not on the part of  Central Government or the Presidency  for that matter. It highlights lack of monitoring and supervision by district officials, lack of capacity for districts to absorb all NAADs funds, poor quality farm inputs, nepotism – political heads at districts select their relatives for model famers, etc. All these are flaws at the local government and grass roots level -  so any attempt to stream line leadership and service delivery in this country has to cut across board not just the Presidency.
For us to shelve the current socio-economic challenges upon us and engage into political battles is an unfortunate precedence. We risk wasting the next ten years engaged in the political contests that don’t deliver any tangible results for the common people. We must engage government on how best they can implement programmes and projects that deliver public goods and services to the people, and that is the hall mark of democracy. It’s the best way to build both sustainable development and democracy. Unless we concern ourselves with these issues, whoever succeeds President Museveni will also inherit the same structural inefficiencies and capacity deficiencies. Without a clear and robust framework on how best to address these challenges, we shall continue to move around in political circles like the proverbial dog chasing its tail but with nothing to show for it. We need a Parliament that engages the executive on matters of policy, planning, programme implementation, monitoring and evaluation. The next 10 years could still see President Museveni at the helm, we may decide to engage him on how best he delivers public goods and service or we continue the political contests on when he retires and who succeeds him. The latter seems to be what some of our Members of Parliament and Church leaders have gone for. I pray the general public and wanaichi go for the former. Considering the corruption scandals and infrastructure breakdown that have dogged President Museveni and his government for the last 10 years, it is apparent he is a man intent on redeeming his reputation and legacy before he heads off into retirement. We have never been in a better position to engage him on how best his government can deliver public goods and services. The term-limits debate is a step in the wrong direction on this note.
For God and My Country.

Agaba Rugaba
Socio-Political Commentator

Wednesday, February 22, 2012

MPs Ugx 103m CAR Scheme - An Exhibition of Patriotism -Deficiency


So, our dear legislators are asking for money to acquire new cars for their use. This money is being termed as ‘CAR GRANTS’. I agree they do a lot of work and keep travelling upcountry to serve us and therefore they need facilitation to carry out their duties. A grant is defined as ‘’give formally, transfer legally’’ meaning without interest.


Below are the allowances they receive in Uganda Shillings:

Monthly salary 2.3 Million

Constituency allowance 3.2 Million

Subsistence allowance 4.5 Million

Mileage allowance 5.4 Million

Town run allowance 1.6 Million

Monthly gratuity 780.000


The highest paid MP earns about 21 Million and the lowest earns about 15.4 Million. With this amount of income per month, is it possible that an MP may not be able to save some of this money over a certain amount of time depending on his/her current expenses and afford to buy a car in the long run? When campaigning, most (if not all) of them assured their constituency members how they will work hard to ensure that these people get all available services. Have the people gotten all (or even most) of these services? Can a yes answer be evident if one travels away from an urban area to a rural area? Take note that some of these MP’s double as ministers and therefore receive allowances and salaries as ministers and then as MP’s separately. With such an amount of money being earned by someone who claims to be working for the good of the country, is this the right thing to ask for? How many MP’s do not own their personal cars? Most of them have a car for themselves, another for their wives and some of them even have a car that stays home for day-to-day activities like taking children to school and any emergencies that may arise in the absence of both parents! The current plan by leadership in Kampala is to decongest the city. The MP’s should be the first to push this initiative forward by agreeing to own one car and even leave that car in a location outside the city and have one (or two or even three) of the buses that are being brought into the city to transport the rest of us (who may not be able to get a 103 million car grant) be set aside to collect them from these parking spots, rather than have 365 more cars headed to Parliamentary Avenue. This would really encourage the rest of the citizens to do the same.


Alternatively, couldn’t they think of asking for the 103 million shillings and pay back over time with interest thus contributing to the economy? In such a way, those who believe they may not be able to pay back this money would opt out and keep using their personal cars or even public transport to enter the city! Those who would pick the money would pay back over time, with interest, thus contributing more money to the economy through the interest accrued. There should also be a legislation barring MP’s from being Ministers. That way, more employment opportunities would be created and the independence of the Legislature would be preserved.


The enjoyment of different gov’t benefits (including cars, salaries, allowances, offices, et al) by one individual would also be avoided thus contributing to fair distribution of income among the general public. To me, this money being asked is more of a personal investment than a public investment. It is such behavior of using tax payers’ money for personal benefits that must be condemned from our public leaders and instead encourage them to serve without any self interests. If anything, the reasons being given for the failure to increase teachers’ salaries to their request and expectation should be understood by the MP’s as having the same impact across public leaders and civil servants.


Otherwise, I don’t see how the MP’s can get this car grant, drive back to their constituencies and explain to the teachers that there is no money to facilitate increase of their salaries at a much faster rate. It is these same MP’s who take ‘official’ tours to Mulago, other public health facilities and educational facilities in their areas and promise work on these lacking facilities but never get back to fulfill their offers. All they do is blame gov’t for the dilapidated structures and facilities yet it can be in their power to cause a difference of a much higher magnitude. On a daily basis, I read newspaper advertisements of people (usually children) asking for contributions of donations to surgery of major parts of their bodies but on very few occasions have I read of these politicians contributing to these surgeries! I find their request totally lacking in patriotism for the fights they always claim to spearhead in Parliament and I pray they realize the urgency of many more needs by other people than these multi-million personal investments!


@jobaze (on twitter) jobaze@gmail.com

Thursday, February 9, 2012

NINE ALTERNATIVES TO THE 9TH PARLIAMENT'S CAR SCHEME

NINE (9) ALTERNATIVES TO THE 9TH PARLIAMENT’S CAR SCHEME.


Following Daily Monitor breaking the sad story of our legislators in the 9th parliament getting Ugx 103 million each in a generous car scheme, the public and civil society have condemned (and rightfully so) this unfortunate precedence. This story was a bit disheartening, considering that the 9th parliament had in the recent past won the public trust in the fight against corruption and financial indiscipline on the part of the Executive. Until recently, the widely held view in the public was that the current crop of MPs would revamp and redeem the integrity of the institution of parliament. The Parliamentary Commission has attempted to justify this car scheme but to no avail. It is apparent that no logical reason can explain and or justify such financial excesses in times when the economy is punctuated by high inflation, high interest rates, high unemployment and slow growth. I wish to offer nine alternatives which the 9th parliament can use these funds for.


1. Health Care for Nodding disease victims and patients.
Northern Uganda is currently grappling with the nodding disease that has affected over 2,000 children and left over 80 dead. The government is still clueless on how to address the challenges brought by this disease. Ugx 35 billion would go a long way in providing basic health care and welfare support to the over 10,000 households that have been affected by this disease. It is unfortunate for legislators to have the luxury of having Ugx 103m to buy posh cars when their constituents and ordinary people are dying of the nodding disease. Household affected by this disease are unable to engage in any economic activity e.g. farming. Government should direct these funds to the welfare and healthcare of households affected by nodding disease.


2. Primary Health Care to reduce infant and maternal mortality rates.
According to the State of Uganda Population report 2011, it is estimated that between 6,000 and 14,000 women and girls die due to pregnancy related complications every year. Additionally between 13,000 and 40,500 women and girls suffer from disabilities resulting from complications in pregnancy and child birth. Ugx 35 billion, instead of wasting it on highly paid MPs, could be used to provide services that are critical to mothers and pregnant women e.g. antenatal care, emergency obstetric care, family planning, HIV/AIDS services. With such numbers, it implies that by the end of the MPs’ term of office, between 30,000 and 70,000 women will have died due to pregnancy related complications.


3. Police Welfare and Salaries.
According to the East Africa Bribery Index, carried out by Transparency International in 2011, Uganda Police was found to be the institution most-prone to corruption and bribery in the region. One of the reasons for this is the poor remuneration and poor living conditions of police workforce. On average, police men earn a paltry Ugx 200,000 per month. With the dire economic situation and the high cost of living, policemen are most likely and prone to soliciting bribes for some extra cash to afford a decent living, pay for their children’s education etc. The Ugx 35 billion for the MPs car scheme could be used to provide a soft loan/ credit scheme for policemen to help their families engage in small enterprises like farming, shops, bricklaying, fish farming, art and crafts. These entrepreneurial activities would significantly improve the incomes of the policemen and thus motivate them for better professional service.


4. Improving Teachers’ Salaries and Housing
Teachers have in the recent past been engaging in civil strikes to protest the low pay that has been exacerbated by the high inflation and dire economic situation. Teachers earn like, policemen earn averagely Ugx 200,000 per month and this barely covers rent for decent accommodation, upkeep, transport and education for their own children. With poorly paid and unmotivated teachers, the quality and standards in the government funded UPE program have been low and appalling. According to the Annual Learning Assessment Report 2011 by the Non-governmental Organisation; UWEZO-Uganda on UPE, 9 out of 10 pupils in P3 cannot do English and math of P2 level. In all the districts assessed, the competence in English and math amongst P3- P7 pupils was below 50% .Most actually are in the range of 10% to 35%.These are appalling statics. The Ugx 35 billion intended for MPs cars scheme could be used to improve the salaries and or build staff housing for teachers in rural areas to motivate them for better service delivery in schools.

5. Irrigation and Improved Agricultural Production
It is agreed that among other reasons, the high inflation and high food prices are due to supply shocks. Owing to the long dry season in 2010, agriculture yields were poor thus there wasn’t enough produce to meet the demand both on the local and regional markets in Rwanda and South Sudan etc. It is thus important that in order to improve and sustain agricultural production all year round, government needs to support irrigation and better farming technologies in rural areas. In the FY11/12, a paltry ugx 5bn was allocated to the Ministry of Water and Environmental Protection for irrigation schemes. The Ugx 35 billion intended for the MPs car scheme could go a long way in providing irrigation schemes all across the country, thus a major step towards boosting our agricultural production.


6. Youth Employment, entrepreneurship and Job Creation.
Government recently released Ugx 40 billion to banks (Stanbic, DFCU and Centenary Bank) under the Youth Capital Venture Fund for youth job creation and entrepreneurship. This is meant to provide loans of amounts ranging from Ugx 100,000 to 5,000,000 for youth to start up small enterprises and create their own jobs. At Ugx 5m each, this money would benefit only 8,000 youths. This is just 3% of the estimated youth (256,000) that can’t find jobs every year. It is only rational that parliament should have agitated for the allocation of the Ugx 35bn car-scheme funds towards the youth capital venture fund to increase access to credit amongst youth and thus boost entrepreneurship and job creation.


7. Environmental Conservation and Tree Planting
The challenges of global warming and climate change are already upon us. In 2005, owing to the prolonged dry season, the water levels in Lake Victoria and River Nile went down thus affecting the hydrology of River. This further compromised the ability of power dams to operate at desired capacity thus power shortages and outages. On the global scene, there is increasing legislation and charters to curb emission of greenhouse gases and mitigate the challenges of climate change. Ugx 35 billion could be used for environmental conservation programs like tree planting in areas like Nakasongola and Luwero where in the recent past; we’ve seen big multinationals chase people off their land for commercial tree planting. The government can give incentives, seedlings and other farm inputs to rural communities to plant trees, commercial forests etc. to foster environmental conservation and commercial tree planting which would earn these rural households income.


8. Solar Panels and Renewable Energy for Health Centers and Local Administration units.
The power shortages and the persistent load shedding have not only had a negative effect on the economy but on the health sector too. We have had instances where medical workers can’t conduct certain diagnosis tests and minor operations because of lack of electricity to power small medical equipment and also provide lighting. Ugx 35 billion can be used to procure over 2500 solar power systems/units to be installed at various rural community health centers and sub-county offices. This would guarantee smooth running and service delivery at these health centers and administration units using this renewable energy resource.


9. Fish Farming to boost Export Revenues
In light of the current economic down-turn, Uganda’s exports earnings from the regional markets have gone down from $1.6bn in 2009 to $1.35bn in 2010 according to a UBOS report 2010. The dwindling exports and the increasing import bill have put pressure on the local currency in relation to foreign currencies especially the US dollar. Furthermore, due to the European economic crisis and slow-down in the global economy, our exports have taken a battering. Economists argue that our exports face elastic demand whereas our imports are demand inelastic. A European consumer can afford to forego our flowers but we can’t forego importing oil and other manufacturing inputs. So we need to build competitiveness on exports like fish to keep up our export income. Lake Victoria’s fish stocks are going down due to over fishing, water hyacinth and pollution. So fish farming is one facet of the agriculture sector that can boost our exports and foster higher foreign exchange earnings. Ugx 35 billion is enough to set up at least five (5) fish farming centers and processing factories in various regional centers like Arua, Jinja, Mbale, Gulu and Mbarara. This would also have a multiplier effect of creating jobs and income for the local population.

It is clear that this MPs car scheme is selfish and insensitive on the part of our legislators. More than ever before, it is clear for all and sundry to see that the institution tasked with ensuring that the executive arm of government delivers services and programs that resonate with the needs and aspirations of the wide population is not up to the task. The above suggested alternatives to utilizing the Ugx 35 billion offer opportunities for youth employment, environment and energy conservation, improved agriculture production, better community healthcare, export growth and foreign exchange earning. It is a sad irony that our “Leaders” decide to buy imported posh SUVs using tax payers’ money when they have just applauded the KIIRA EV innovation by the College of Technology, Makerere University.

For God and My Country.

Agaba Rugaba
Social Critic

Tuesday, January 24, 2012

Climate Change and Population Growth are to blame for Power Shortages and Economic Woes.

Climate Change and Population Growth are to blame for Power Shortages and Economic Woes.


There is a modern-management-problem solving tool 5-WHY that is used to conduct comprehensive problem analysis. It aims at solving the problem not fixing the problem. For example, if a UMEME technician got electrocuted while working up an electric pole, the investigation team would take at least five steps back by asking the 5-Whys. Why did the technician get electrocuted? The possibilities could be he didn’t have safety wear, or the sub-station re-switched on power without notice. Then the next question would be Why was power re-switched on at the substation or why didn’t the technician have his safety wear on? The possibilities could be because there was no information at the substation indicating that a team was in the field doing some repair works. This 5-Why tool would help the investigation team to get to the root cause of the death incident by seeking answers on all possibilities, and in essence solve the problem not just fix the problem. This would form a basis for developing mitigation measures to prevent re-occurrence of such an incident.



It is this regard that we may want to be deeply reflective and analytical on the economic challenges upon us today. And unfortunately, our economic experts and technocrats have not been honest to communicate to us the root causes of the current economic turbulence that we face in Uganda. Governor Mutebile and team have indicated before, that supply shocks are to blame for the high inflation, implying we are unable to produce enough food for both the local and regional markets like South-Sudan, Rwanda and Kenya. One of the reasons blamed on the supply shocks is the prolonged dry-season mid-2010 that affected agricultural production in the country side. Unfortunately, that is as far they take it. On deeper reflection, Uganda’s current economic woes and energy/power outages are borne of the climate change and global warming phenomenon.


The State of the Environment Report for Uganda-2006/07, noted that population growth is cited as a major contributing factor to shortages of agricultural land, the loss of forests and wetlands, and poverty. Over 80 per cent of Ugandans rely directly upon land, agriculture, and fishing for their livelihoods, but environmental indicators reveal trends of degrading agricultural lands, soil erosion, deforestation, drainage of wetlands, loss of bio-diversity, reduced range land capacity, and increased pollution. So among other reasons it is clear that we won’t be able to boost our agricultural production if we do not address issues of population growth, access to land, modern farming technologies, irrigation and access to affordable credit and capital. Population growth pressures have also fanned the Climate Change and Global warming phenomenon.

The increased power costs and low power supply that economic experts predict will affect the business environment and drive up costs of production in the manufacturing and industrial sector can be traced to climate change. The long drought in 2005 affected the hydrology of Lake Victoria and thus affected the capacity of power plants to operate optimally and generate hydro power. Owen Falls Complex with installed capacity of 380MW is only able to generate 173MW because of low water levels. The shortfall in generation forced government and development partners to go for emergency power generation using heavy fuels generators managed by Aggreko, Jacobsen etc. This in effect pushed up the governments costs on subsidies and power generation. This subsidy cost, in excess of $200m per year thus presenting a tricky fiscal management challenge. It is on the basis of this bloated subsidy cost exacerbated by the depreciated shilling and high oil prices on the world market that government has been forced to scrap off these subsidies, thus worsening the already fragile economic environment that Uganda finds itself in.

We need to think of green economy and green development by tapping into green energy technologies e.g. solar energy and wind farms to power residential houses, small business, local administration centers etc. Electricity Regulatory Authority estimates the annual power demand growth to be at 10%. This high demand growth rate coupled with a high population growth of 3.2% (the third highest in the world) requires us to engage robust and pragmatic framework to tap into the rich sources of green energy in our midst. Agricultural production and farming also need to engage eco-friendly and sustainable technologies that improve production and protect the environment too. Climate Change and Global warming will not affect us tomorrow; they are already affecting us today.

Agaba Rugaba
Social Critic



Wednesday, January 11, 2012

Prosperity is not for all, we can only take turns. NO! I DISAGREE

Reference is made to my colleague Dun Tukwase’s article in the Daily Monitor 11th January 2012, Page 11. “Prosperity is not for all, we can only make turns”. The author raises some issues and questions that we need to reflect upon in our quest to fight corruption and foster social-economic transformation. He exhibits an intoxicating air of cynicism that is rising amongst the youth and general citizenry at large.


The Youth parliamentarians that are demanding the release of the Ugx 46 billion allocated in the budget and their colleagues fighting corruption are both supported by our Constitution that defines the functions of parliament; 1. To pass laws for the good governance of Uganda. 2. To provide, by giving legislative sanctions taxation and acquisition of loans, the means of carrying out the work of Government. 3.To scrutinize Government policy and administration through the following (a)pre-legislative scrutiny of bills referred to the Parliamentary committees by Parliament (b) Scrutinizing of the various objects of expenditure and the sums to be spent on each, (c) Assuring transparency and accountability in the application of public funds, (d) Monitoring the implementation of Government programs and projects. 4. To debate matters of topical interest usually highlighted in the President's State of the Nation address. 5. To vet the appointment of persons nominated by the President under the Constitution or any other enactment. (Adopted from www.parlianment.go.ug).

The budget for financial year 2011/ 2012 under the theme Promoting Economic Growth, Job Creation And Improved Service Delivery, the government had five priorities amongst them is employment creation especially amongst the youth, women and small medium enterprises. Furthermore, in her budget speech, Hon Maria Kiwanuka, the Finance minister noted that one of the major constraints in our economy is lack of access to financial services especially for small and medium enterprises. To address this challenge, government allocated Ugx 44.5 billion towards Youth job creation and employment strategy. Ugx 25 billion was intended to be deposited with DFCU Bank under the Youth Entrepreneurship Venture Fund that would help youth start and expand businesses with loans ranging from Ugx 100,000 to ugx 5,000,000. Another Ugx 4.5 billion was allocated for Enterprise Uganda to conduct Youth entrepreneurial training programs, business development skills clinics etc. A further 16.5 billion was allocated for the Job stimulus program to create dedicated work spaces for youth and small scale manufacturers in established markets.


Now, considering that the economy is facing hardships and loans are expensive because of high bank interest rates, it is a major challenge for youth to acquire capital to finance their business ideas and small enterprises. We are six months into the financial year and these budget allocations and youth job creation programs haven’t kicked off! What Hon.Karuhanga and Hon.Amoding are doing is the step in the right direction – to demand government to keep its promises, implement the budget allocations and thus help youth and other small and medium enterprises access affordable credit to start-up and boost their businesses. It is unfair and dishonest to fault them on this when it is their fundamental obligation enshrined in the constitution and mandated by their constituents.

Finally, whereas I agree with my colleague that the MPs that are championing the fight against corruption may harbor personal and selfish interests, we need to put a caveat to this argument. The way our politics has been structured, we are increasingly having less public-spirited/service oriented individuals and having more personal-spirited fellows. To build and entrench his hold on political power, President Museveni has used a vast patronage system that placates the interests of various groups e.g. tribes, religious groups, individuals and businessmen. The individuals co-opted are his power brokers in the various groups and voter constituencies. It is a cancer we can only stamp out if we demand for leadership that thrives on service delivery at grass root level not soothing the interests of a few elites in ethnic groups and communities. And I pray that we applaud the Youth MPs for their efforts in this regard.

Agaba Rugaba.