Jeniffer Musisi’s salary of $178,509 (shs.432m) annually is very disturbing
13 Dec 2011 12 Comments
in Corruption, Economics, Politics
Kampala Executive Director, Jennifer Musisi
I have been saddened by the salary that has been accorded the executive Director of Kampala City, Jeniffer Musisi. Apparently, she is to earn shs.432 million (US. $178509.08) annually as a salary excluding other financial privileges. I find this kind of extravagancy so hurting and unbearable especially for one person to earn that much in country where the biggest part of 33 million people are barely having any food.
How does someone doing cleaning or teaching as a job in Uganda feel about this. I don’t know how much exactly people make in these jobs but I equate them to someone flying burgers in Europe or USA. Let’s take a look at a McDonald’s burger flipper. Here they make between £6.50 to £7.50 an hour. That may be what a burger flipper makes next year and the year after, as well. That does not matter if the cost of living does not rise either. In fact, it is to be expected in a non-inflationary economy. The value of any given labor is going to remain the same relative to the overall economy, unless for some reason that particular labor becomes more important.
But why would Jeniifer Musisi get that kind of salary in a country that is clearly facing a financial crisis? Is this selfishness of the highest order or our leaders are just heartless? The simple fact is that the NRM party does not care about poor Ugandans and low-level working people in general. They either seem to be stronger believers of the theory of trickledown economics, by which if we let rich people make more money, jobs would be created, and it would then trickle down to the rest of the society, or they are purposely making people poor to keep them at the bottom of Maslow’s theory of needs. They want them to keep thinking about basic needs instead of changing governments.
Under Gordon Brown leadership here in the UK, when we were in recession, the government was borrowing money and increasing spending where it is necessary.
‘Where is necessary’ here involved pumping more money into the banking system or nationalising some banks but not buying expensive jets for the executives or presidents or increasing the salaries/bonuses of company executives ( as is the case with Jeniffer Musisi’s shs.36m per months[US.$ 14875.76]or other public workers. This is where Uganda has got it wrong. They should not allocate biger salaries to public officials in such a poor country. Even bigger salaries are questionable in developed nations.
All countries or local governments around the world are reducing on their budgets because of global recession. In USA, according to the centre on Budget and Policy Priorities, 44 states have reduced their budgets by more than $350 billion dollars since 2009.
In the UK, bodies such as the Association of British Insurers, the Investment Management Association and Pirc, a consultancy advising shareholders, believe the bonus culture should be reformed during this recession period. Both in Nigeria and Tanzania, there are finding ways of reducing on public spending.
It is also true that different countries deal with recession using different theories of economics which I prefer not to go through today. However, the theory people are familiar with is the Keynesian theory which was welcomed by former UK Prime Minister, Gordon Brown, with open hands, before David Cameron switched to cutting down on public spending. This is where governments advocate for deficit spending.
With Keynesian theory, when you are heavily in debt, the only way to keep spending is to keep borrowing. I supported Gordon Brown but his Keynesian theory was more of a political survival decision rather than anything else. The whole thing was a gamble from the start. Yes, consumer spending is the main driver of the UK’s economic growth but an increase in people saving to pay off their debts normally results in companies’ profits falling. Companies in turn tend to lay off staff, leading to a vicious cycle of people losing their jobs and being unable to pay their debts and mortgages.
The only reason why Gordon Brown could not easily reduce on public spending was basically because he had been on TV telling people that reduucing public spending means worse public services, so he couldn’t turn around and start slashing it. So the only real option for the UK government then was to spend some of the money that was saved during the good times combined with less borrowing to beat the recession. After all, the UK economy had been booming for years. UK had not had a recession since 1992.
But the reality is that any government under financial crisis should be trying to cut debt by trimming public spending. But that is suicide to some political leaders especially if all they care about is keeping themselves in power.
The main downside to Keynesian style of economics is that government borrowing is exactly the same as consumer borrowing. At some point, you have to pay it back. And the way government pays off borrowing is through higher taxes.
One Ugandan wrote on the Ugandans At Heart(UAH) forum in 2009 when recession had hit big nations such as UK: ‘To say that Uganda has recession is like talking of a chicken with a toothache’. Basically, the statement would have been:’ to say that Uganda has got no recession, it is like a man sleeping with a woman with HIV for a long time without a condom, and then turn around and say that he has got no HIV before he even goes for a check up’.
Uganda has been sleeping with the donor countries who have got HIV (recession) for a long time. Uganda is basically married to the donors ( USA , UK , Canada , France, Japan , Dubai ,…) and there have got a lot of children (Ugandans abroad) together. Donors support over 30% of our budget at the moment.
Ugandans abroad gave Uganda about $1.4 billion in 07/08 alone and there are the major source of foreign exchange in the country. Each of these guys looks after a lot of families in the 75% non-monetary sector. So because the ‘’Nkuba Kyeyo’’(unpaid Ugandan ambassadors abroad) or donors are affected financially, less money is being sent back home at the moment, and as a result the following services have been affected one way or the other: Construction boom in Uganda has declined; Quality of life of families is affected especially those depending on Ugandans abroad; Businesses in Uganda cities like the hospitality industry are feeling it because of reduced spending; Uganda’s general export industry has been affected because of less spending in USA or UK . We don’t have enough market within Uganda to consume the goods we produce. Let’s hope that the donor countries don’t shut down their markets from us as was the case in 1930s.
NGOs are already reducing their activities in Kampala because donors have squeezed funds. Tourism industry is already in decline in Uganda and this is directly affecting the so called CHOGM hotels and travel agencies. Foreign investment is in a decline as few foreign investors wish to bring money into the country. Food prices have become high in Uganda such that I was told a sack of charcoal costs over shs.90,000 and I kg of sugar is at shs.4000.
This country needs to make some changes. It has to start with Campaign Finance Reforms, corruption and the excesses there. To get that passed, we need a new Executive leadership, and it certainly can’t be NRM to get this done.
Abbey Kibirige Semuwemba
BESIGYE ”RETIRING”ANNOUCEMENT HAS COME AT THE WRONG TIME
09 Jul 2011 6 Comments
Guys,
Besigye has not been the same since the ‘Arinaitwe Gilbert’ incident and it somehow feels like he was got off the streets by the young man putting on glasses. It just feels like he is rewarding Arinaitwe for spraying tear gas into his eyes and ears. Yes, i don’t wish to see the FDC consitution changed but i think the timing of the annoucement was so wrong.
One may reason that Besigye has decided to move on while he is still popular and capable but there is a lot going on now in the country that needs his attention, and I don’t think he has made the right decision to announce his departure from politics. It’s not like he has been a leader of a party for a long time as president Museveni. He has only been a leader of FDC since 2004.The one big issue bogging everybody’s mind now is the shape of the economy with one strike after another in the country despite president Museveni’s letter in the newspapers that showed that the economy was still in good shape and that the ‘shilling will never collapse’.
Nonetheless; I’m happy that president Museveni is not afraid to put his intellect on the line. He may toss out a few ad hominems from time to time, but at least, unlike some people, that’s not all he does. Personally, I don’t believe there are any fixed markets externally for exporters right now, and therefore an expensive dollar may not benefit the traders as the president seems to insinuate. The economy itself is not anywhere near better management internally as we have all been seeing. For example, the poor in our country can’t get loans, can’t establish any credit, even though they ‘own’ their own homes and property. This means they can’t start businesses, increase the size of businesses, move the economy forward. Imagine if they could.
I’m reading Herando de Soto’s book “The Mystery of Capital”. It is very interesting for people like us who never majored in economics. Anyway, It turns out, and this guy had people in the third world countries researching, that capitalism in poor countries is separated from the population because the capital they have is ‘dead capital’, they can’t prove they own it and therefore can’t get loans based on it, can’t trust anyone but close friends because the honesty of people can’t be figured out since no one really owns anything, etc.
It turns out that the dead capital in poor countries, such as Uganda, is often a hundred times more than all the foreign aid the country has ever received. It’s amazing. Capital exists but can’t be used. I would say that is the case with the land ‘owned’ by people in rural areas, if that land cannot be sold at market value. In other words, if you can’t lose something, you can’t use it to collateralize a loan, show you are honest and going to pay your debts and other obligations. If you don’t own the car, for example, insurance companies won’t let you insure it. You have to have an ‘interest’ in something to get insurance on it.
To be honest, to understand what exactly is going in Museveni’s head is like finding a correlation between the movement of the hair on the tail of a dog and the moons rotation around the earth, but most everyone also knows that the moons gravity has a causal effect upon everything on the earth. He comes up with documents about Libya and Gaddafi; Besigye; economy, e.t.c , send them to the media for publication, but I will never get to know what he’s exactly up to apart from playing politics.
Back to Besigye, I think he will be remembered for a lot of things but most importantly his rare combination of intellectualism, energy, determination and performance. He seemed to have an answer for almost every question asked him by anybody. His name will go down in history as a prominent citizen who expressed what most Ugandans are beginning to feel as important. He is real legend hanging his boots at a wrong time.
I once heard somebody say “you will never get rich making money for somebody else.” Most people find it comforting to let somebody else take the financial risk of owning a business, and so they sell their labour. But we don’t expect Dr.Besigye to seek any employment anywhere else because I believe he has planned for his retirement. He should, however, do us a favour and write a book because we are bored of seeing the president, his son and wife’s books on the stalls. I believe a Besigye book right now would be hot cake compared to that of both Museveni and his wife. As for me, I’m going to start searching for another politician who will take my breath away like Besigye did in 2001. Those who have been rumoured to succeed him may not bend it for me like ‘Beckham’. See you later,Besi!
Abbey Kibirige Semuwemba
Uganda’s Population Should be Controlled because it’s Likely to Bring us Problems in Future
11 May 2011 1 Comment
in Africa, Agriculture, Economics
Uganda is among the ‘time bombs’ that are gonna cause the world problems if the current population growth is not checked. Population explosion, in my view, is going to be one of our biggest problems in the next century, but it’s never discussed in the media which is very unfortunate.
Uganda’s population now grows at an average annual rate of 3.5 percent – the highest ever, despite the war in the north which was going on there for almost 20 years and claimed a lot of lives or the tragedy at Bududa(Mbale) last year. The main questions we should ask ourselves without even going into numbers that may confuse the lay people are: Do we think the world is facing an over-population crisis? Do we think Uganda is/will contribute to this crisis? And do we think Uganda will be so much negatively affected if it does nothing about its population growth?
Clearly there are a lot of Ugandans that live in extreme poverty such that the current rise in food and fuel prices have made the situation worse, and to some degree, poverty is both a cause and an effect of over-population. A cause, in the sense that the country is involved in little industrialization and underutilization of resources which makes most people to work hard on land for food. That, combined with high levels of disease and infant mortality, tends to favor an increased birth rate. For instance, I have interacted with some couples in Uganda who argue that a man should have at least 6 kids such that when on loses 2-3, at least one has got some remaining ones to fall back on, but what if all of them do not die?
Poverty can be considered also as an effect, since in highly populated areas with little wealth being created, each new birth means that the available wealth is distributed among one more person, thus further impoverishing the population as a whole- One more mouth to feed. That is why I argue that men with no enough money or wealth should have less kids with one wife , but if they want to marry or have extramarital affairs(which is immoral but it happens), they should go for either women who are branded ‘KKD’(Uganda street term that means old ladies) or those who are not at all interested in having children or forget about women altogether. There is no point having kids you are not in position to look after.
On the other hand, in developed nations where mechanized and scientific farming has reduced the need for farm labor, and where medicine has improved the health of the people (and made possible artificial contraception), the birth rate is comparatively low, and the demographics of the population shift towards a longer life. The increased opportunities made possible by affluence also cause many women to delay starting their families, and prompt some to choose career over motherhood.
There are 650 acres in a square mile. Each person deserves an entire acre of land unto their very own lonesome but this is not usually the case. The world population is now approximately 7 billion. Hmmmm…. gotchy’all smiling wide now as you break out those calculators, but i’m not gonna do any serious maths because i’m not good at it.But we gonna do some figure analysis.
Uganda is a country covering 236,040 square kilometers (91,136 square miles) with a population estimated to be at 34 million this year. 15.39 % of the total area of the country is water. The population per square kilometer was only 241 in 1999 (93 per square mile) but this has increased tremendously, a reason why land is becoming the most valuable asset in the country.
A certain % of our national land is also allocated to forestry, like for instance, Bwindi National Park which covers over 128 square miles in size; Kibale national park which is about 475 square miles; Queen Elizabeth National Park which is 770 square miles; Lake Mburo National Park- 230 square miles. Basically, because of the rise in the population, all these wetlands and forestry are being targeted by both the government and the landless.They wrongly see them as ‘idle’ land. As a result, the people themselves are creating another big problem called CLIMATE CHANGE.
One could argue that 11.6 million square miles in Africa could fit almost everybody on the continent but the reality is because India and China have already messed up their countries with over population, their citizens are now targeting the less populated regions in the world including Africa. Like, for instance, the last time I was in Busoga(East of Uganda), I saw a lot of Indians now owning land and they are a threat to the locals there involved in sugarcane production. Before you know it, the Chinese will follow them, and there are seriously buying a lot of land in the villages on the cheap. Their respective governments are sponsoring them financially in their endeavors abroad because they want create space. Attempts to reduce the population have also spawned things like China’s One Child Policy. They are going to be staking claims to Africa’s resources more and more as their population grows.There is a serious scamble for land and resources in Africa from Chinise and Indians.
The population explosion is adding approximately 1billion people to this planet every decade. That’s nearly the entire population of China. So what will happen to Ugandans in the next 20 years if their own population keeps growing the way it is now? If the current president cannot handle a food crisis of a population of about 34 millions, how will they do it when the number doubles in the next 15 years?
So it is both logical and workable to conclude that to make our lives better, we must control the population of a developing Uganda. Obviously, this has to be done hand in hand with an increase in the spread of technology, information, and education in the country, and to work hard to raise the standard of living there in partnership with the local population. Because just handing out and extolling the virtues of birth control while people are still pulling pillows by hand and cooking over firewood is not addressing the underlying problem.
Abbey Semuwemba
Doing Ms Public Health Promotion at Leeds Metropolitan University
United Kingdom
BESIGYE AND MUSEVENI NEED A FOOTBALL GAME NOW
29 Apr 2011 Leave a Comment
in Corruption, Economics, Entertainment, FDC, health, IPC, media in Uganda, Politics, security, UPDF
Gilbert Arinaitwe 'punishing' Dr.Besigye's car for moving to Kampala
Now that calm has temporarily returned to Kampala after some body from ‘’above’’ changed his mind to allow Dr.Besigye to go for treatment in Nairobi, let me try to comment on the most beautiful game called football. My team, Chelsea FC, is out of the Champions League but I couldn’t stop smiling this week on Wednesday when I watched Lionel Messi ”teargassing” the Real Madrid defense in the last minutes. It was a real thriller especially his last goal.I had never seen anything like that since Diego Maradona days. It was a beauty which even brought a smile on Jose Mourinho’s face!
Now, the real question on my mind is that ‘can football be used as a weapon to settle political and economic differences in Uganda too as it has happened in Ivory coast before Gbagbo made a mess of things after clearly losing the election?’’. Let us remember that Ivorian, Didier Drogba, did a lot to bring the two opposing sides together some couple of years ago, by organizing a football game that was played in the country’s capital, and it was attended by both Gbagbo and Quatara. Peace came back into the country and both sides agreed to have an election which Quatara won but Gbagbo refused to concede defeat. The rest is history as they say and I even don’t know where Gbagbo is after watching him on TV caught like a chicken thief by the French forces from his presidential bunker.
Kampala riots on 29/04/11
Nonetheless,with the current riots looking not to end soon in Uganda especially with Museveni swearing that Besigye will never be allowed to walk on foot in Kampala city, it is imperative that we all find a way of bringing the two sides together to find a way forward. So, I suggest that we organize a football game at Namboole stadium and invite both of them to attend. I will be happy to referee the game or be the goal keeper if both sides have got no problem with it and as long as they can meet my flight costs from England. Yes, I’m still annoyed with the way the police and army have inhumanly treated Besigye but , I promise, I won’t give a red card to the NRM side if I’m allowed to referee the game.
Back to the Real Madrid Vs Barcelona game in the champions League, It might not have been beautiful but it was sweeter than the contents of the sugar bowl for those who appreciate Messi’s talent. For me, I think the current Barcelona team is the greatest team in the history of football, and the son of a factory worker and a cleaner remains the world’s best player up to now. I don’t care what Alex Ferguston says about Real Madrid’s Ronaldo Christian because whoever watched that game now knows that Messi is way up there.
Nevertheless, I always ask myself why Uganda have not been able to turn their football into an a big business after years of listening to teams such as Villa FC, Express, KCC and others on our radios. In the UK here, teams such as Aston Villa, Manchester United and Tottenham Hotspur were floated on stock exchanges in 1990s, and they have been realizing considerable profits for the existing shareholders for a long time.Actually, it is fair to say that football became a business model in England officially in the 1990s when I was still doing my O’levels at Kibuli Secondary school. The media industry played and it still does the biggest part in helping the clubs make money out of football.
Football’s profitability is interlocked with that of the media industry here in Europe and it is greatly associated with football celebrities. So the simple business plan I’m giving to Ugandans back home interested in this kind of business, like my OB Kasule Mujib, is that in order for a club to be successful, one needs: to go into partnership with the media, create a celebrity footballer in the country, allow fans to buy shares into the club if the owner hasn’t got enough money and get good coaches. The stadium should also be located in a populated area to target more customers. The only populated area of any size in England where there are no clubs is Cornwall, which has a strong rugby tradition.
The people running football clubs at community level in Uganda should get serious as well. It is so disappointing to hear that the football club we used to watch as kids at Kangulumira is still in the same ‘ill’ shape. Football is a joint business production that requires a lot of clubs for anybody to make money. Instead of people just concentrating on about 6 big clubs we have got in the country right now, they should also find a way of developing the smaller clubs in the rural areas. For instance, The English Premiership was formed by top clubs in 1992 because they wanted a bigger slice of the available revenue, particularly television revenue (which they were able to increase), and a bigger say in how the game was run. All clubs make money regardless of what position they finish under at the end of the season. For instance, Chelsea may finish 2nd this season but there won’t be a bigger difference with Manchester United in terms of TV money shared at the end of the season.
So may be, we should follow this formula too in Uganda and increase the number of clubs involved in the top national league. This system can, in the long run, also help the clubs to identify talent at community or village level. I’m sure there are a lot of boys in villages who are capable of becoming the next ‘Messi if given a chance to develop their talents.
Our government should do everything in its power to help people who intend to invest in football business. I don’t know what the Ministry of Sport and Culture does about this but I have a few suggestions of my own. They could subsidize the costs of stadium construction and maintenance. They could invest money in community led projects especially sports at village level.
Abbey Kibirige Semuwemba
United Kingdom
Cuban Experiment Should be Adopted to Divert the Food Crisis in Uganda
31 Mar 2011 13 Comments
in Africa, Agriculture, Economics, international, International Issues
Dear Ugandans,
The current rise in food prices is a problem which we are capable of solving ourselves especially if all the stakeholders are committed to the cause. The food crisis problems go well beyond the Uganda borders as it is also a marginal problem even here in the UK where i live such that I have registered with several supermarkets online to help me compare prices before I do my home shopping.But with fertile Uganda soils, surely we can do better with the support of the current government.
The causes of the sharp price rises in 2007 and 2008 seem to be almost the same as those in 2010: increased global demand, rising fuel prices, biofuels production, export restrictions, crop failures, financial speculation and dwindling stockpiles. Biofuels, for instance, has been adopted by several governments as a way of reducing dependence on fossil fuels and cut greenhouse emissions by providing subsidies for crops used in biofuels. Some of these governments include: Brazil’s use of sugar for ethanol, Europe’s use of oilseeds for biodiesel and increased US production of corn-based ethanol since the 2005 Energy Policy Act.As a result, the bill for global food imports will top $1,000bn this year according to the United Nations figures.
With China and India now trying to live a standardised western life, the consumption of meat has increased tremendously worldwide considering that both countries have got more than 2 billion people to feed. International figures show that about eight kg of feed is required to produce 1kg of beef and 2kg for every 1kg chicken. This diverts grains from human consumption and forces up prices. The US Department of Agriculture estimates that using an acre of land to raise cattle produces 20 pounds of protein, compared with 356 pounds for one sowed with soybeans. So, one can imagine how the farmers doing cattle rearing in areas like western Uganda balance up food production with animal keeping at the same time.
The Chinese and Indian populations alone consume more food than the whole of Africa. A global conference on food security in Rome a couple of years ago noted that China had been a net exporter of cereals since the late 1990s, and India a net importer only during one year in the same period. Both countries have increased imports of oilseeds, meat and oil in large numbers. So their populations are basically starving the rest of the world. So I hope the government does not give away our land to the Chinese and Indians when they come knocking on our borders whatever the deal they bring to us because we also gonna need that land with a higher population growth in our country.
The problem in Uganda is that many youths have moved into cities because farming is being looked at as a non- starter. So there is a lot of idle land in rural areas, and I think the government needs to do what fidero Castro did during Cuba’s oil and food crisis. The Cuban government facilitated all families with seeds and also set up markets where people can sell their produce. Farming became more paying or profitable than even a job in the president’s office. Food was grown everywhere including the home gardens. Farmers all of a sudden became the rich men and women of Cuba. The government provided credit, research, and extension for low-input agriculture to a well organized rural population.
The government should not to be attempted to starve off Small farmers from their land in an attempt to solve this crisis. Before the 1959 revolution in Cuba, only 8% of landowners were controlling more than 70% of the land, with U.S. owners controlling 25% of all Cuban land. But the revolution changed all this and when the food crisis set in, Castro was never attempted to reverse this process. He instead empowered the small land owners and facilitated them in areas such as provision of fossil fuels, fertilizers, and pesticides. So basically, subsistence farming is not the problem here, after all, Subsistence farmers make up 75% of the world’s poor and they often gain less from price increases than they lose to increases in the price of inputs and other costs of production.
The UN calculates that 22 people can be fed per hectare of potatoes, 19 per ha of rice, and just one or two for beef or lamb raised on 1ha. So what I suggest is that those with idle big land in Uganda should get into some form of temporary agreements with the landless to allow them to grow food. Such agreements can be administered by LCs and other local leaders to save time. For example, when the 2008 food crisis set in, rising food imports cost Cuba over $1 billion. In response, Cuba’s National Assembly of Popular Power enacted Decree Law 259, which authorizes municipal Agricultural Commissions to distribute idle lands to state entities, cooperatives, and any individual Cuban citizen physically fit for agricultural labor. Landless individuals can now request and receive up to 33 acres of land, while those who already participate in agricultural production in some form can receive up to 99 acres. An Associated Press report ( 13 August 2010) cites major progress made as it relates to Cuba’s cutting of agricultural imports: having spent $710 million in U.S. food imports in 2008, this figure was reduced to $528 million in 2009 (a 26% reduction) and for the first half of 2010 this figure has been reduced to $220 million (a 28% reduction if it stays on course).
Obviously, the Cuba government has also spent a lot in agricultural scientific research institutions to produce those admired results. But our government is not so much bothered about this area such that one of my younger brothers who graduated with a first class degree in Agricultural science at Makerere university- a couple of years ago, is now doing network marketing with some company in Kampala because he reckons he could make better money there.I unsuccessfully tried to persuade him to go for his postgraduate studies and i have given up.
Anyway, because of the above policies, Cuba has become one of the few countries with the capacity to implement food sovereignty despite experiencing three catastrophic hurricanes in 2008 alone, and the persistent U.S. hostility towards its national interests.
So unless the government stops wasting money in stuff such as aircraft jets and presidential pledges, and diverts most of this money to agriculture and education, we have not seen the end of this problem. If the government does not address the food shortage in the country urgently, we are likely to see the start of food rebellions in sub Sahara Africa. For instance, violent protests broke out in many countries in 2008, resulting in nearly 200 deaths and helping to unseat governments in Haiti and Mauritania. Families should also be encouraged to produce fewer kids. Why should a man with no house or land produce more than 2 kids when still in that situation? With due respect to polygamists, men with no money should not attempt to marry more than one woman or women who want more kids if they have already got some.
Abbey Kibirige Semuwemba
United Kingdom
Libya’s Investments in Africa aren’t a threat to the West, unlike the Chinese and Indians
23 Mar 2011 Leave a Comment
in Africa, Agriculture, Economics, international
Libya investments in Africa are not really a threat to the west. There are only concentrated in a few countries that are friendly to Gadaffi and his sons, and some of these countries are not so strategic in terms of western investments and interests.Gadaffi’s investment in Africa will not even sadly help him to remain in power because Libyans just want political freedom. Everybody wants to feel free in their countries which is not the case in most African countries. It’s China and India investments that are a threat to the west. Actually, even India is not yet a real threat but China is a bigger threat. China is now the 2nd biggest economy in the world after overtaking Japan. USA still remains the biggest economy and superpower and it is likely to remain so for another 10-15 years.
China in Africa and elsewhere
The Chinese are giving out loans to Africa without conditions unlike the west. China would have been already a great nation if they had not disconnected themselves from the rest of the world. Their earlier kings had a great vision for the country but those who came immiediately after them had no vision.
Economist used to predict that China would need to wait till 2026 to overtake Japan as the 2nd biggest economy but the Chinese have officially done so in 2011. Please look at the statistics. They are now telling us that China will overtake USA by 2020 but we don’t know this for sure. It is also believed that China will overtake USA in terms of scientific research by 2020.
Japan knew that China were at their arses all the time and that is why they stopped loans to China out of fear, but also at the instigation of the US. They knew that they had a serious competitor at the side. It has already beaten Japan to Brazil and Russian oil. So a Europe- Japan- USA partnership Vs China may slow down the Chinese if it works.
The Chinese are everywhere directly or indirectly. For instance, most UK and USA manufacturing companies have moved either to India or China. I used to buy a party dress for my 3 year old daughter for £19 in the ‘’NEXT’’ when it was still made here. Now I pay £8 for the same dress made overseas from this high street shop called ‘’PRIMARK’’. Actually, even in your USA, Examples are all around you. All you need do is look at the products to see where they are made. Walmart has lots of people buying the stuff because it can sell for less.
China is now a ‘friend’ of almost all African countries. Sudan supplies 3% of China’s oil needs and as a result, China has invested more than $3b in the country. Chinese are friends of Zimbabwe and Congo such that they are exploiting almost all minerals in those countries as Africans are looking on. In Uganda, for instance, the Chinese have built a lot of buildings for the state-e.g. Nambole stadium, Presidential State House, Presidential offices under construction behind the National parliament, ministry of foreign affairs building, e.t.c
Chinese Population
The problem with China is its population which is likely to put pressure on all of us. Food supply is critical, as for any nation with a huge population. We only see starvation now when the place has degenerated into the most obscene levels of civil war and civil chaos, but people should stop having lots of kids. This is something the President Museveni should also look into in his next 5 years if he wants to be remembered as ‘somebody’.
Because of Chinese and India huge population, both countries are now leading pioneers in land grabbing in all developing nations. They buy land in small nations and gazette it for food production. Already some Ugandans living in Busoga region are feeling the pressure on their land from Indians who have started up a sugar-making factory in the area. The huge populations of China and India, and elsewhere, will also demand a Western standard-of-living as their countries develop more, putting more pressure on “growth”.
Chinese and Indian populations are a problem to all of us. Because of their populations, the demand for basics such as food, oil, water, transport, ….. is exceeding the supply. China, for instance, are now 1.3 billion (1320 million people) and they consume more oil and drive more cars than anybody else on earth apart from USA. The more China develops, the more their population will demand to have a standardized-USA lifestyle, which will mean more demand for cars and oil. Let’s us remember that USA is only about 300 million people compared to China’s 1320 millions. China and India’s massive consumption of resources is already having a huge impact upon the environment and food production, and all these are population-induced.
Yes, and there was a whale oil shortage last century which threatened America’s energy needs. This promoted USA to go into cooperation with any country in the world regardless of the autocratic nature in these countries. Actually, it made the west realize that oil is one item that mainly controls the world economy such that it is in their unwritten policy to do anything necessary to get it, using all means at their disposal, a reason I believe Gadaffi will not survive whatever he is doing now.
China itself knows that their big population is a real problem such that they have come up with measures to control it, and these include: mandatory abortion and sterilization, female infanticide, and incarceration of uncooperative parents. I think they have also started taxing parents that have more than 1 child in urban centers.
Yes, a big population has its advantages but the disadvantages outweigh them. One of the advantages is the near-limitless supply of slave labour. All western companies are moving their manufacturing base to India and China because they pay peanuts to the workers there compared to the people in their own countries. One could argue that this creates jobs for the people in those countries but at the same time, these countries where manufacturing is done are affected environment-wise and also become dumping grounds for toxics.
Ironically again, China’s not being a democracy gives it advantages over the U.S and western nations. It is not hobbled by laws which govern human rights or environmental degradation.
Overall, we need to control our populations because the disadvantages they come with outweigh the advantages. Food production in Uganda does not match the population increase in the country. We are now 31 millions and this is likely to double in the 20 years if it is not checked, but how many of us have bought land in the villages to start serious farming? Just think about it. If any disaster strikes Uganda at the moment, we may find ourselves begging the Kenyans for food because there is less food in the country
The Law of Diminishing Returns is starting to operate in many areas of human activity, so take heed of, eg., extreme and erratic weather, as one indicator that all is not well. The recent earthquake in Japan has so far sadly reduced the world population by more than 20,000 people. It is always sad to lose human life but things like wars, conflicts in Africa(e.g,Libya,Egypt,Yemen,Kony, Darfur), man killing man daily, ……… may be happening for a reason. May be God is telling us something we don’t know.
Anyway, USA is doing everything possible to stop China from overtaking them, but will they be successful? Nobody knows for sure but we should never underestimate the Americans. They have always got something up their sleeves. Well, all great powers and leaders thrash around at the end; the trouble is they never see it coming, like an old boxer.
Abbey Kibirige Semuwemba
Mwenda and his Team selectively applied the Kotter’s Model in their Analysis of Besigye’s Performance
13 Mar 2011 3 Comments
in 2010-2011 elections, Corruption, Economics, FDC, IPC, parliament, Politics
Dear Ugandans,
I like the owner of the Independent Newspaper, Mr.Mwenda Andrew, but as of recent, he has been either soiled in the banana or ‘bogoya’ republic or he has accidentally lost his touch. He nowadays tries so hard to impress those with power yet he used not be that kind of person. Anyway, let me try to use my little time and respond to some of the issues published by his editor, Weere, in his article entitled: ”How Museveni gained 10% and Besigye lost it” , views which Mwenda seems to have supported at Capitalfm political show immediately after the elections.
‘’Did Besigye make Ugandans want a change from Museveni desperately? There are three questions that answer this according to Kotter’s model’’ His paper, the independent, reported or asked.
Kotter’s model is mainly essential in transforming organizations rather than implementing changes or showing the urgency for change. Jick’s tactical ten step model is the one that deals with implementation while General Electric (GE)’s seven-step change acceleration process model deals with showing the urgency for change. I have attached a pictorial version of the Kotter’s model below to this message. Clearly, anybody can manipulate it and make an argument either in favour or against the opposition in Uganda as the Independent did, but im not gonna do what Mwenda and his team did. I’m just gonna show that some of these theories are not applicable in a situation such as Uganda.
Kotter's Model
One of The major lessons from the Kotter Model is that change process goes through a series of phases, each lasting a considerable amount of time. So how does Mwenda expect Besigye to ‘win over outside stakeholders like other opposition leaders, the army, foreign diplomats and governments’ in a specific period of time in a situation , like that in Uganda, which does not allow change to take place any level. The way Uganda is now it is impossible to get rid of Musevenism evenif Museveni died today or lost power in an election.
Mwenda’s team rightly quotes Kotter’s model which explains that Creating short-term wins motivates employees during a long change effort, but he wrongly looks at the short term wins Besigye failed to have as :’’failure to dislodge the Electoral Commission(EC), opposition coalition, et.c. These should not be the short term wins to judge any political leader because all those were not in Besigye’s control. He could not have done more than he did before the elections.In any case, Besigye’s short term wins should be those wins he had in both 2001 and 2006 elections before the 2011 elections. I also think Kotler was particulary looking at managers of organisations who seem to be in control of the situations around them, which was not the case with Besigye. Nevertheless, I think Besigye’s failure to win the youths in elections was his own making, as this was in his control and we pleaded with FDC executive to persuade Besigye to come up with a song that would conteract Museveni’s ‘Mpekoni’, but all in vain. There was some bit of excitement created among Ugandans including myself- by listening to Museveni’s rap.
It seems that “change” is just poorly understood by some people, based on misinformed assumptions or some management theories, poorly executed or all of these. Besigye was expected to meet resistance at all levels of Kottler’s model by trying to bring change to the institutions he does not control. Besigye does not control or appoint the EC, so what better could he have done to get the EC disbanded? What better could he have done which he has not done before to win the army support? What better could he have done than what he did to unite the opposition and bring the Baganda to his side?
There were some people in the population who saw/see the need for change but they don’t want it out of fear and survival. For instance, some Ugandans fear that president Museveni will plunge our country into violence if anybody, other than him, wins an election. As Lewin( 1958) explained change happens if Ch = f(D x V x P) > Co. Change (Ch) takes place if the Dissatisfaction (D) with the status quo, multiplied by a Vision (V) of the future, multiplied by agreed Processes (P) that remove obstacles blocking access to the desired state is greater than the Cost (Co) of change. The way things stand change cannot come to Uganda through so called elections because the ground for free and fair elections is not there at all. There are some countries in East Africa,particulalry Kenya, that have moved a step to better elections because the institution such as the EC are fairy independent.There is nothing like a Kenyan president appointing the head of the EC as is the case in Uganda.Rigging in Kenya might have ended with the Kibaki presidency going by the way the Kenyans have set up their system now.
Therefore, when one deeply analyses all these theories, one finds that Dr.Besigye actually tried to do exactly what the models are telling managers of organizations to do. He could not have done it in any better way. Those criticizing him now have got their own intentions but could not have done better. Most of these management theories are a fallacy when it comes to practice and I normally compare them to love making between a man and woman. Theoretically, everybody has got an idea on what they are supposed to do in the process of lovemaking but practically the results tend to differ among different couples. So, it would not be wise for any of us to go on a blame game just basing on theory without looking at the reality of the situation.
Money in the campaigns
Money is a big factor in any election anywhere in the world. A candidate with money has higher chances of winning the election. The returns from such an investment are undisputable. However, president Museveni clearly used national coffers to campaign and that itself is not only illegal but it is immoral. It was a clear sign that the incumbent was not ready to hand over power and was willing to operate outside the law to achieve his aims. That’s why some of us called this election a ‘remote control’ election where the incumbent was capable of ‘organizing the event, choosing the dancers and master of ceremony’ throughout the process, with the inner knowledge that the situation was favoring him more than his opponents.
Opinion polls
An opinion poll is something that should be taken seriously in any free and fair election. I’m saying ‘free and fair’ because I don’t think this was the case with the just concluded presidential elections in Uganda. For instance, in USA, during the first two years of the Reagan administration, information from opinion polls was discussed in more than half of the senior staff meetings of the White House. Richard Wirthlin, the pollster met with Reagan more than 25 times just to discuss polls.
Actually, almost all USA presidents had their own pollsters: Roosevelt had Cantril, Kennedy had Harris, Johnson had Quayle, Ford had Teeter, Carter had Caddell, Reagan had Wirthlin, while Nixon used most of them. This is because the opinions of the population are something that leaders of the developed nations take seriously before they make any decision.
But in Uganda’s case, with or without opinion polls, president Museveni is not bothered with the opinions of the people of Uganda. For instance, removing presidential term limits was unpopular policy among Ugandans, even within his own party, but he went ahead and removed them. He has been sending our troops to fight on foreign soil regardless of how people feel.
So what is the meaning of holding opinion polls in an environment where the incumbent has got no respect for people’s opinions? So the Afrobarometer polls might have been a reflection of a society that is still caught in fear and survival rather support for president Museveni. Secondly, opinion polls tend to be manipulated by some leaders depending on what they want out of the situation, and they tend to do it differently. For instance, In the 1970s, Harris and Gallup were the giants of the polling industry. Because of their prominence, they attracted Nixon’s interest and became prime candidates for attack and manipulation by the administration. Therefore, I would not be surprised if president Museveni or his team had a hand in the Afrobarometer polls one way or the other, and may be that is why the opposition did not take them seriously and ‘’ buried their head in divisions’ as reported by Andrew Mwenda and his team. Who can blame them, anyway?
The truth is that we shall never know who genuinely won the 2001, 2006 and 2011 elections because the ground for elections was not free and fair. Yes, Uganda is not like Belgium for us to have totally free and fair elections, and this alone is enough for us to discard all arguments made by some people showing that Museveni won the 2011 elections fairer compared to the 2006 elections- just because there was less violence in them. Text-book theories, such as those put forward by Mwenda and his team, are totally inapplicable in this case. We cannot work out the percentage of rigging based on assumptions of violence and nonviolence when the ground for free and fair elections was not there in the first place.
Abbey Kibirige Semuwemba
NRM’s 10 point program and UPC’s Common Man’s Charter were Just Political Propaganda
07 Feb 2011 7 Comments
in 1980 Uganda elections, 2010-2011 elections, Economics, history, Obote and UPC, Politics
Dear friends,
I recently had an online debate with Mrs. Nina Mbabazi Rukikaire, who also happens to be the NRM secretary General’s daughter, where she said that her political life has been influenced by both the NRM 10 point Program and the UPC’s Common Man’s Charter(CMC). I asked her to explain this and she came up with a lot of emotional explanations which had nothing to do practically with the two documents in question. So. I felt I should alert other Ugandans who may fall into the same trap and let them know that the two documents were just political propaganda than anything else. Propaganda simply means the systematic propagation of a doctrine or cause or of information reflecting the views and interests of those advocating such a doctrine or cause. It doesn’t have to be lies. Actually, the best propaganda is indeed true, but it is up to us to question its applicability in a situation such as Uganda.
Propagandists employ tactics that dehumanize those who support the opposing viewpoint through suggestion or false accusations. They influence public perception by disseminating negative and false information. For instance, Obote’s CMC wrongly portrayed most of the existing systems in the 1962 constitution as ‘inapplicable’ in Uganda. The document was more, for instance, against issues such as: kings, hereditary leadership, federalism or anything of that sort. For me, this kind of stereotyping by Obote and his CMS was not something that would have a lasting foundation in Uganda. Stereotyping is normally used by propagandists to arouse prejudices by labeling the object of the propaganda campaign as something the target audience fears, hates, or finds undesirable, and this is what late Obote and UPC were doing. This is what NRM is tactically doing now by starting a debate on cultural institutions in the country by presenting documents such as the traditional leaders Bill that are meant to humiliate cultural leaders and eventually lead to the abolishion of kingdoms. This means that even if that bill had not gone through, president Museveni’s propaganda against Kabakaship or traditional institutions had already been germinated, and it will not go away as long as he is in power.
I also noticed that Mrs.Nina Rukikairwe, herself, is feeding on old UPC propaganda through old guards such as Mathew Rukiikaire, as if UPC had all the out understanding of Uganda’s problems. The fact is that neither CMC nor the NRM documents were a ‘bible’ of truth on what direction the country is supposed to take. Uganda needs a new leaf from both these parties that seem to be identical twins in one way or ther other.For instance, Andrew Mwenda recently told us, while on capital fm, that Rwakasisi and Museveni used to work together and have been great friends for a long time.Rwakasisi, on other hand, was Obote’s right hand man throughout his leadership. Andrew Mwenda himself is a great admirer of Obote and UPC but also ‘loves’ Museveni in his own way.Nowonder UPC ‘old guards’ are now dominating Museveni’s cabinet than even the NRM historicals.
Propaganda can absolutely promulgate a democratic doctrine? The difference between political doctrine and propaganda is more like the one between Catholicism and Orthodoxy. In most cases, doctrines have been tested elsewhere unlike propaganda. Doctrine is more like regular food on a menu but propaganda is more like a ‘food special’. For instance, ‘Cultural diversity’ is a political propaganda term stolen from theorists of anthropology in the 1970′s. It is effective only to the degree that cultures are not diverse but simply have different appearances and rituals for the same values. It is something that became popular in American during President Johnson’s administration as he made attempts to change parts of American values and encourage more integration.
Nonetheless;Let us also try to find distinctions between the Common Man’s Charter (CMC) and Museveni’s 10 point programme. I’m not a Museveni sympathiser but sometimes I’m forced to defend his paper policies when someone starts ‘sugar-coating’ Obote’s failures or when one starts confusing others by saying that they were influenced by the two documents. Ok, let us see what we know so far about these two political propaganda documents:
Obote’s first administration started off as market-oriented and pluralistic. Then in 1966 Obote changed for the worse as we all know by now. The Common Man Charter(CMC) was a step influenced by what was happening in Tanzania at the time. So basically Obote moved to the left in 1969 and the CMC was adopted by UPC at their delegates conference in the same year.Nyerere had a hand in most of Obote’s changes in Uganda from the 1960s till when his death.
On the other hand, Yoweri Museveni started on the left ideologically. In the 1970s he was virtually a Marxist-Leninist. People like Robert Mugabe were radicalised by armed struggle. Yoweri Museveni was de-radicalised by armed struggle. Robert Mugabe became more and more of a socialist in the heat of the liberation war. Yoweri Museveni became less and less of a socialist in the tensions of armed struggle against the Obote regime.
The CMC buried Obote 1 because it was a threat to both the British and USA interests in the region. The British had about 80 companies in Uganda that faced the threat of nationalisation. On May 1, 1970 President Obote announced that the state would take over foreign enterprises in the famous Nakivubo Pronouncements.So the British through the Isrealis hatched a plan from South Sudan to get rid of socialist Obote. The USA also looked at the relationship Obote had with Nyerere as a threat to their capitalist interests in the region.
On the other hand, the 10 point programme had the blessing of most of the international community. Austria is where the 10 point programme was galvanised from and the movement held a lot of meetings there in 1985. That’s why the International Institute for Peace (IIP) president, Erwin Lanc, Austria’s former internal and foreign affairs minister and his wife, Christianne, were invited to attend the 15th Heroes Day celebrations at Ssembwe-Nyimbwa, Luweero.
The CMC was bound to fail from the beginning because, according to prof Ali Mazrui, the state had entered the market place of enterprise and pushed away the real entrepreneurs. It felt the role of government was to actively control and own business. They felt an equitable and just environment can only be created by government owning and interfering with business. The Government then simply rewarded supporters and chased away political opponents. A bedrock of nepotism and corruption and mismanagement was born. The companies were run down.
In addition, the CMC was introduced to make everyone relatively with money into their pockets to curb down on ‘kondoism’ or thuggery which was going at the time. Instead it just increased ‘kondoism’ as the rich kept being scared of the people. So it was a total failure. Let us also remember that Obote’s CMC was not pure socialism as that of Nyerere. So it was a bit of a confusing document with intentions which only UPC can expain.
On the other hand, the 10 point programme had the support of the masses in Uganda mainly in the south of the country. Museveni’s point No.5 for an independent, integrated and self-sustaining economy, for which he is still fighting for, was and is a better attractive option for Ugandans than the so called CMC.Museveni has now supplemented this with the recently announced 5 year economic plan.
In addition, despite the fact that Museveni has not done much to get Ugandans out of poverty, his 10 point programme is even still popular among the opposition. For instance, DP former president, Sebana Kizito, was on record saying that DP will take up NRM’s 10-point programme and polish it in preparation for the 2011 general elections.Im actually wondering if Norbert Mao is running his campaigns and manifesto basing mostly on NRM’s 10 point program. May be that is why some people are suspecting him of being an NRM ‘mole’ in DP.
As far as I know, if president Museveni had genuinely implemented his 10 point program, then Uganda would have been on a totally different level. He just used the document as propaganda to make Obote unpopular in 1980s and subsequently help himself to an easy way to power. Museveni’s propaganda was sold to both Ugandans and the international community and it worked. There was nothing really serious in it. Time will come when somebody else will also come up with better propaganda than Museveni , and the population will be inspired to throw NRM out for good.
Abbey Kibirige Semuwemba
UK
Healthcare should be a ‘Right’ to all to reduce Social inequality
01 Oct 2010 10 Comments
in 2010-2011 elections, Africa, Economics, health, Politics, social issues
Dear friends,
The news that most of the parts of the Busoga region in Eastern Ugandan are now infested with jiggers is mind blowing and embarrassing to all of us considering that Busoga has been voting President Museveni and NRM in big numbers since 1996. For those who don’t understand what jiggers are, it’s a special pathological condition, caused by fleas of the genus Tunga. A jigger is also called chigoe. A jigger often attacks the feet or any exposed part of the human body, and when it burrows beneath the skin, it produces great irritation. When the female is allowed to remain and breed, troublesome sores result, which are sometimes dangerous. Most people in the developed nations know a jigger as a bartending tool used to measure liquor not as a dangerous insect as it is in Africa and Asia.
Now, as someone who partly grew up at a small village called Kisega( Kangulumira in Bugerere), I saw on a regular basis how jiggers affected people and what a lack of healthcare does to people. The next two major hospitals from Kisega are a lot of miles away at Nagalama and Kayunga towns. Health centers in the area are too ill-equipped to handle major health problems. As such I think health care should be designated as a special ”right” to everyone in Uganda, and probably the whole of Africa.I’m saying that heath care should be as much a right as life, liberty, and happiness because I don’t believe that only people with money should have X number of hours of a Doctor’s time available. Health care should be accessed too by people who can’t afford life-saving treatment because their lives are not worth less than those with a lot of money. Why should health care be any different from police, fire or military protection? Would one want one’s house to burn down because the neighbor paid for fire protection and one did not? Everybody needs a doctor at some time, just as everybody needs roads and schools and fire protection. These are things that only a government can supply to the people they represent.
Yes, I acknowledge that none of those things magically appear just because I say people have a right to them. No one has an unconstrained “right” to as much medical care as they think they need, just as no one has a right to a private public-funded tutor for their kid or a right to have a personal fire truck and firefighter always parked outside their home. But I think the government needs to find a way to make sure that the less privileged can access medical care as the wealthy ones. The picture in the Monitor Newspaper of the woman struggling to feed her kid when they are both suffering from jiggers is so upsetting, yet most of these conditions are treatable and preventable. As UK epidemiologists, Professor Richard Wilkinson and Kate Pickett also said in their book entitled’ The Spirit level: Why Equality is Better for Everyone’, social inequality is one of the causes of the poor health due to a big gap between the poor and the rich. As such, I think health care should be as much as a right as like free speech and like free speech has limits but in general is unrestricted. Cosmetic surgery, for example, might in general not be considered health care. If one wants to look 20 years younger it’s on one’s dime.
A feet affected with Jiggers(image sent by Otto Patrick)
Historically, National health care programs were first instituted by Otto von Bismarck in imperial Germany in 1883 before it later spread to the rest of Europe. In USA, former president, Harry Truman, proposed it to the Congress following World War 11, before it was defeated by a coalition led by American Medical Association. In his message to Congress on Nov. 19, 1945, Truman asked members to support his Economic Bill of Rights which included the “right to adequate.
For the meantime, I advice people in Busoga to put on Leather or rubber shoes which could shod their feet from jiggers at least as we wait for the government to address some of the social inequalities in our society. Jiggers will always be a problems as long there is still a big gap between the poor and rich.
Byebyo Ebyange
Abbey Kibirige Semuwemba
Inter-state economic disparities stand in the way for common market
05 Sep 2010 3 Comments
in 2010-2011 elections, Buganda, East Africa, Economics, international, Politics
Inter-state economic disparities stand in the way for common market
Tuesday, 18 May 2010 06:56 By Abbey K.Semuwemba
There are numerous coalitions, organisations and federations that have been formed regionally and worldwide. Some have worked and others have failed. The difference with the East Africa Federation is that some states are going through serious economic and political reformation particularly Rwanda and Kenya. Uganda appears still politically immature, but is that enough reason not to promote this federation? I don’t think so. An East African Federation is good. Uganda’s problems may never be removed by Ugandans alone. We need a partner to help us fight these impediments.
Having said that, I also support a Uganda federation within an East African federation. This will be a bonus if we achieve the Uganda federation first before the East African federation. Buganda and some parts of Uganda are rightly asking for federalism within Uganda. Like Dr Kizza Besigye explained one time on radio, federalism was demanded by majority of Ugandans and therefore it’s not a Buganda issue alone.
The most important question is, have we learnt any lessons from the East African Community collapse in the 1970s? The East African Community collapsed mainly because of the economics involved. If the current architects can create good economic policies, the East African federation will be a rock for all the member states. Therefore, we need to look at why the East African Common Market or the Community collapsed in and whether those mistakes have been corrected. Otherwise we might be pursuing a futile project.
First, the common market was founded in 1917 and collapsed in 1977. This idea was started by the British colonial government to serve her economic interests and those of the British settlers in Kenya. The aim was to create a free and integrated market, sheltered by selective high tariff walls to simultaneously encourage Kenyan settler- businessmen and expand market for foreign exports into East Africa.
This meant that the gains from the Customs Union were either not reaped or the distribution between partner states was not ‘equitable’. When Uganda, Kenya and Tanganyika got independence, the distribution issue caused instability and led to the collapse of the common market. Will Kenya not again be the top beneficiary at the expense of other partner states?
Secondly, the federation is going ahead without assessment the industrial strengths of the partner states, yet this was a major factor in the collapse of the first East African Community.
Kenya, like before, has an advanced manufacturing and service sector. This industrial imbalance indicates lack of equity in the distribution of integration benefits. These mistakes were neither corrected by the ‘Raisman Commission’ in 1960 nor by the Kampala/Mbale Agreement in 1964/5. The latter was never implemented because the Kenya parliament refused to ratify it and the proposed committee of industrial experts was never set up.
After the failure of the Kampala Agreement, the cooperation became so shaky that the Philip Commission was appointed to save the common market. This culminated in the treaty that established an East African Community consisting of a common market and a wide range of common services. Again in this treaty, most activities had their headquarters in Kenya. Have we taken note of this? Is Kenya going to continue playing the role of the ‘boss’ as it was before?
Let’s take an example of the East Africa Development Bank, established with the aim of promoting balanced industrial development. A differential investment formula was proposed. It was then enjoined on the bank so that it should have loaned, guaranteed or invested over the consecutive five years slightly more than 38 percent of its funds to Uganda and Tanzania and the remaining 22 percent or so to Kenya. This failed for some reasons. Have they corrected them?
However, I’m happy that the architects of the East African Federation are rectifying some of the mistakes that led to the collapse of the first federation on July 1, 1977. For instance, having a single currency among member states by 2012 is a step in the right direction. It will somehow lead to balanced development among member states assuming other factors remain constant. The last monetary policy developed by the 1967 East African Community that involved unified exchange rates led to a situation where the Ugandans and Tanzanians preferred to keep their money in Kenyan currency because Kenya had more industrial goods for consumption. This made the Kenyan shilling a stronger currency, which sparked the creation of a black market. The Kenyan currency continued growing stronger while those of Uganda and Tanzania were becoming weaker. This eventually affected the working of the East African Community cooperation by creating the problem of ‘inter-territorial transfer of funds.’ The policy also led to a decline in reserve positions of both Uganda and Tanzania because of currency flights from these two countries, thus exasperating the need for further exchange controls.
Chapter VII, article 24 of the 1967 Treaty for East African Cooperation, provided for exchange rate harmonisation among the three partner states. Harmonised exchange rate means “the relative per values of the currencies of the member states of the common market remain irrevocably fixed while their absolute par values when changed would change in the same proportion.” The three currencies were to be exchanged without restriction at the IMF parity of shilling 1U = sh1K = sh1T. The rate of inflation was assumed to be equal since the absence of equal rates of inflation would automatically mean that a unified exchange rate situation no longer stood. The three currencies for purposes of parities vis a vis the outside were tied at different times to foreign currencies (British pound, US dollar) and to the IMF special drawing rights.
Considering that the three countries had different economic problems and strategies for solving those problems, the policy of exchange rate unification presents real problems in theory as it did in practice in the past. For example, On February 7, 1967, Tanzanian President Julius Nyerere issued a statement of party principles called the Arusha Declaration which called for nationalisation of banks and large enterprises in agriculture, manufacturing, construction and commerce. In May, 1970, Uganda also announced a leftist policy at Nakivubo. These two policies created uncertainty and hurt business confidence in these countries. Both countries imposed exchange control policies to prevent capital flight. This situation created differences in the three currencies and the policy of unified exchange rates collapsed and contributed to the ultimate fiasco of the East African Community.
Abbey is a Ugandan living in the UK
http://www.independent.co.ug/index.php/column/comment/70-comment/2933-inter-state-economic-disparities-stand-in-the-way-for-common-market
Michael Ezra and Some wealth people in Kampala have got no Class
04 Sep 2010 39 Comments
in Corruption, cultures, Economics, kingdoms, media in Uganda
People,
Michael Ezra’s $3m dollar story ‘showoff’ in newspapers is a very interesting one. First of all, it confirms that Uganda is still a poor country and some rich people have got no class. Worst of all, it shows that the government is not bothered with finding out how the rich got their wealth!
Most Ugandans tend to be deeply offended by such frivolous showoffs and expenditures by the rich and that’s why I’m not surprised that people are sometimes put off with Michael Ezra’s behavior in the press. But the great United States Supreme Court justice Oliver Wendell Holmes once said that the real cost of the rich to the rest of society is what they consume.Therefore, how much is it costing the rest of us that some rich NRM politician, or some Kampala millionaire in his late thirties, is splashing around money on anything? The rich cannot want the same things as the poor though it would make more sense if Ezra could use his money; say to construct a hospital or factory somewhere in Uganda, other than blowing £¼ m on an expensive watch at an auction in Dubai. Because such a project could provide goods and services to millions in Uganda and he would probably be more appreciated.
Ironically, what the rich are often praised for is likely to do more harm than what they are condemned for. For instance, Ezra owes money to the URA, but all this is likely to be water under the bridge after that press conference where he splashed his $3m pocket money to the press.His message was very clear:‘i have got more to clear my debts where this has come from”. The journalists who attended the conference all probably went home with smiles on their faces and murmuring words like: ’Omusajja Abalaze Sente’(the man has showed them money), despite the fact that they were not given any part of the money, but then again, he gave them headlines that probably helped them to make some money themselves in the process.
Some people asked:’’ how could URA be going after Ezra and on the other hand he is being protected by other state agencies?’’ All I can say is that most of these regulations and taxation came from the very rich themselves. They do not want competition! So the common person has to jump hoops to make money but at the end of the day, the system always protect the rich. It’s obvious that the government of Uganda knows a thing or two about Ezra’s businesses but it’s not under any obligation to disclose it to the public.Anway,Why should they do it if Ezra is not hurting anyone?
The fact is that the entire monetary system is based on crime (albeit presumably for a larger good).Most of the money is created as debt, at compound interest. It is a mathematical fact that there is never enough money in circulation for everyone to pay their bills whether in Uganda or elsewhere in the world, leading to a cannibalize or be cannibalized dynamic. That the bad guys can be winnowed out through such a process is a very questionable assertion.
The desperation caused by the continual shortage of money has led to situations where the unconnected are often forced to either take jobs which are basically a form of slavery, or turn to a different criminal structure. It’s all about survival for the fittest. People can do anything to land their hands on a dollar or pound, and morals are the last thing they think of in the process.
In the UK and USA, most wealth is inherent and the rich own factories where unions work for them and get decent wages, but wealth worship is also meticulously constructed by the press in these countries. American and British tycoons are some form of gods and Kings. A majority of population fantasize of being them. The corporations are the kingdoms and tea party is their loyal subjects.
When the USA rejected monarchy in the 18 century, a giant void was left in the American psyche. When the monarch was still around, human beings used to worship individuals better than themselves and aspired to be that individual. Kings and Queens were lauded in fairy tales. Some Americans romanticized the English crown since USA was a British colony? With no monarch now, the people in the USA worship the rich and celebrities. I can see the same trend happening in Uganda especially with increased isolation of traditional leaders by the current government.
Therefore, I request the poor to start minding their business and leave the rich alone. Ezra’s money will only benefit Ezra alone and not you. The current class of rich people only has allegiance to themselves. They do not care about you and never will! The rich generation of 60s and 70s probably would use some of their money to construct a road for everybody but not this lot. Just forget about them and move on!
Abbey Kibirige Semuwemba
Massive Industrialisation in all East African countries will reduce the dominance of Kenya
23 Jul 2010 1 Comment
in East Africa, Economics, federalism in Uganda, history, international, Presidency
Dear people,
The remake of the East African common market or community (EAC) is the utopian dream of all good globalists / global socialists like me. “Community” is sometimes called “space” for everybody to enjoy but the EAC goal is clear: a common economic space for all people in the region, a space in which trade, capital, and people flow freely. Therefore, the EAC’s “integrated” strategy calls for a more open border for the movement of goods and people.
However, it is absurd to believe that suddenly we can create a global free trading area, a common market with, for example, Kenya, without massive changes leading to consequences that we cannot anticipate. For example, in common market countries college education is free but where is the room for this in our EAC recently reborn.
The East African Common market was started in 1917 at a pre-industrialisation stage in the region. It was also started to serve the British business interests and those of settlers in Kenya. Therefore, it came as no surprise that when joint services were established in 1945, Kenya benefited more than Uganda and Tanganyika.
Kenya benefitted in terms of :value added to their Gross Domestic Product(GDP); more employment benefits and revenue. For instance, according to the Common market & Economic Affairs Secretariat, in 1971, the East Africa Railways employed: 55% Kenyans, 33% Tanzanians and 12% Ugandans.Kenya also had a higher manufacturing base than either Uganda or Tanzania, a situation that has not changed up to day. Our system is second rate at best, we are far behind Kenya and Tanzania.
As a way of correcting this inequitable situation the British had created in the first place before independence, the colonial government established the Raisman Commission in 1960. According to Professor Brown, who was a member of the Raisman Commission, Kenya gained most from the common market, Uganda gained marginally and Tanzania broken even. Therefore, fiscal compensation to Tangayika and Uganda through the distribution tool was recommended, as one of the solutions to this inequity. Nevertheless, the fiscal compensation failed to solve this problem because the sums involved were far short of what would be needed to lead to developments of industries in the two marginalised countries(Uganda and Tanganyika), and the sums that would be considered adequate would be too great for Kenya to accept. I’m now wondering what exactly was negotiated recently by the architects of the East African community to solve this problem.
In addition, the experience of the European Union and the World Trade Organization makes it clear that a common market requires a court system, so it will be in order for us to have an East African court as soon as possible where cases of higher magnitude will be settled.
But just as in Europe, where such a Common Market led to a European political union, a hemispheric EAC will mean an eventual end of Uganda’s separate identity and national sovereignty. Much as this is good, how do we integrate ideas such as: Buganda federalism or Uganda federalism instead of dreaming that they will just go away with the East African federation? This is something the architects of the E.A.C need to think about now instead of constantly brushing it under the carpet.
We also need a thought through East Africa Constitution that can, for instance, help with guiding the election process and rigging among member countries.Elections have been rigged in Uganda in 1980,2001 and 2006 and Uganda courts admitted this but nothing really changed.We probably need an East African court that can help such things. For instance, In USA, there was “free trade” or common market between the states from 1787 through 1865, and It was the whole point of the new Constitution.
Overall, the main way the East African common market will economically benefit all the member countries is if they all undertake large scale industrialisation projects, because with appropriate distribution, this can reduce substantially the inequality that mainly led to fall of the community in 1977.If we don’t address all this economic imbalances, Kenya will continue to benefit more than others and the EAC Common market will dissolve in future and every country will return to its everyone against everyone else mentality.
Byebyo ebyange
Abbey Kibirige Semuwemba
United Kingdom
WHAT IS THE WAY FORWARD FOR THE MENGO ADMINISTRATION?
05 Apr 2010 18 Comments
in 2010-2011 elections, Buganda, Economics, federalism in Uganda, kingdoms
Oh Ugandans,
It’s a pity that Buganda’s ‘EDDOBOOZI‘ newspaper is only written in Luganda because the paper writes extremely good stuff which deserves the attention of all Ugandans, not only Baganda. The story about MTN and Kabaka exposes the fear in the central government that an economically viable Buganda kingdom is not an option for those in the state house. Can you imagine how far Mengo would be now if it had been allowed to have shares in such a big company like the MTN, hadn’t been the interference of some people in the central government!
There was also a similar story in the Observer on 24th February this year that the ‘Museveni, Kabaka fell out over NSSF’ .Both deals expose one thing- that the central government does not want Mengo to be financially independent. It wants Mengo to look like a useless administration that cannot add any value to the pockets of an ordinary Buganda because of the limited material benefits it provides to them. The observer explicitly reported:‘President Museveni’s fear of a financially powerful Buganda monarch was responsible for the failed bid by a company in which Kabaka Ronald Mutebi II has interest to build 1,000 housing units near Kampala”.
This leads me to a debate I had with some Ugandans yesterday over a birthday party of one of our friend’s kid. Some Ugandans (Baganda) were saying that Mengo has become useless since it cannot even turn the Lubiri into something worth to look at. They were arguing that ever since the kingdom was restored, the Mengo administration has been farming Matooke in the Lubiri instead of calling on investors to develop it. As a response, I argued that that Mengo has got those plans on a paper as already published widely in the newspapers a couple of years ago but the problem is that the central government always want to have control of what is going on at Mengo. They will never allow a big investor to put money in Lubiri or Bulange unless they have got some sort of control over that investor. And i think i have been exonerated by the two stories in the Eddoboozi and Observer newspapers.
Another gentleman at the birthday party, who happened to come from the same place in Kampala as myself, also mentioned something interesting regarding the Kasubi tombs. He said that Mengo was to blame partly for what happened at Kasubi because some people at Mengo have failed to reason like modernists. He said that when he was still working as a doctor in Uganda, he asked for permission to build rental apartments around the Kasubi tombs which would have helped to build a high security fence around the tombs. The administration was to share the profit margins with him but some guys at Mengo made the whole thing impossible and he had to give up.
I did not respond to this because I did not know what to say, which brings me to another point I want to make. If Mengo has failed to secure international investors (partly due to interference from the central government), to develop some of the land owned by the kingdom, they should not fear the local investors. Some of these people have got Buganda at heart and it pains them to see that their kingdom is mainly surviving on donations and certificates.
It should also be mentioned that the torching of Kasubi tombs has produced a lot of positive things which have left anybody who hates Buganda amazed. It has brought more Baganda together than before when one analyses the masses that flocked Kasubi for prayers last month. It has given religious leaders stamina to interfere in the tension between the central government and Buganda government because they have reaslied that this is nolonger an issue for the two alone. It has energised the opposition in Uganda such that if there was a free and fair election today in Uganda, President Museveni would be history. Most importantly, it has removed the fear among the Baganda Rich businessmen who had earlier on feared being seen publicly donating large amounts of money to the Buganda kingdom. This fear started with the closure of Greenland Bank, whose main shareholder used to be both a personal friend of the Kabaka and one of the biggest contributors to Mengo. The fear was reinforced with the closure of CBS last year such that we all thought that it will take a bull’s eye to see anybody associating themselves with mengo again in public.
Buganda royalists are well aware that a state does not exist which cannot provide for itself by extracting income from the territory and populations it wishes to control. The 1995 constitution prohibits traditional chiefs from taxing or otherwise forcing contributions from their subjects. That is why Mengo has asked for rental arrears from the central government instead of donations to the reconstruction of the Kasubi tombs. Mengo realises that they need to come up with some other viable alternatives to beat the central government in this game.
The closure of CBS fm has put the kingdom two steps back due to the shortage of funds to do anything. The central government knew that Mengo will feel the radio closure and I’m sure they are still surprised that Mengo has not gone down on its knees to apologise- to allow the radio to be reopened. They have tested them by sending guys like Tamare Mirundi to demand for an unconditional apology before the CBS is opened but the response remains the same.
Therefore,If I was president of Uganda, which I’m not, then I should be worried, because it means Mengo have got something up their sleeves which the president does not know about, such that they have come to accept CBS as yesterday’s business and ready to move on. The problem is that nobody in the central government knows how Mengo plans to move on. Mengo has decided to keep the government guessing and that is very dangerous.
Byebyo ebyange
Abbey Kibirige Semuwemba
United kingdom
The UK economy is scaring me right now
20 Mar 2010 Leave a Comment
people,
I’m gonna be honest with you on this one. What is happening on the UK economy has really scared me a lot. The British economy is running down very fast. Yes, what is happening in the world economy right now has happened before but I don’t think I was even born by then. That is why I have to take the forecasting done today very seriously. I had some money saved and I was hoping to use it for something in Uganda in future but with the fall of the pound, I think I need to send it and save it from Uganda before the pound crashes to very low levels.
1. a).I would like to partly agree that spending is the answer to Britain’s current financial problems because there is no any other alternative for any politician at the moment. Gordon Brown explains this on his website or blog when it comes to people that criticise more spending by comparing it to ‘’a doctor not wanting to use the defibrillators on a patient whose heart has stopped for fear of future electricity bills’’. But I’m one of those who never trust politicians and whatever comes out of their mouths. I however trust Uganda’s Dr.Besigye a little bit because of what he has gone through but the role of a modern politician is to persuade people that everything will just go on getting better, without disruption to their lives and with no effort on their part. As a general rule politicians do not lie. They just say what the majority of the population want to hear. Iddil Amin(1979) and Saddam’s former information minister(2003) were prime examples of people who told people what they wanted to hear when it was clear that their governments had reached the expiry date during the wars.
PM,Gordon Brown
b) Do you honestly believe that the State should spend more than it taxes in order to stimulate investment and consumption because that is what is happening in Britain and USA at the moment to beat this recession? By spending more money, we are increasing the money supply and maintaining inflation. By maintaining inflation, Britain and USA will keep printing more money. USA already used this method (printing more money) in 2001 to stop recession when the dotcom bubble collapsed in 2000 and wiped off over $5 trillion from the value of technology companies. Printing more money and borrowing will keep diminishing the wealth of the UK economy and that is a real worry for us the ‘Nkuba Kyeyo’ or ‘ambassadors of Uganda’ residing in the UK who need to send money back home. Nevertheless, more spending or borrowing can be good for Gordon, politically, in the short run, because this means that Gordon Brown can transfer the current problems to whoever will take over after him. The problems aren’t gonna go away at all. The way that things are progressing at the moment the British Government will soon manage over 50% of the UK economy particularly as it now controls the banking sector.I guess USA will do the same and I somehow feel sorry for politicians because that is what they are supposed to do.
c) I have also heard on news that the UK government plans to lower the interest rates to encourage banks to lend money but this is all a gamble. Obviously they are doing this with the hope that the growth will miraculously restart. Even if this was to work then all that it would do is to keep an unsustainable situation running for a little longer.
Therefore, I don’t think spending or more borrowing is the ‘actual’ answer here in the long term. If UK is to survive this economic problems, it needs to cut down massively on state expenditure, as a percentage of GDP . All budgets in areas of the Health Service, the Civil Service, Social Services, education, the military and all branches of government would have to be cut back drastically. However, I don’t think any politician would be bold enough to do this because whoever does it will cost them politically. I don’t think Gordon or even Cameron when he comes to power will have the courage to do it.
2.a) I think Obama has inherited more trouble than most people know and he is likely to go down because of the dirt George Bush left behind. I will go into this another time because it is a big topic on its own but I wanna talk about the inflation and employment .
b) The inflation that Britain and other countries are experiencing was partly exported to us Americans. They printed more dollars and then sent it to different countries in form of aid and other means as a way of sucking it out of your system. When every one saw US printing off more money, they did the same. If I were President Museveni, I would start refusing the USA aid right now because this is all inflation being exported to us from their countries. This sort of inflation leads to the rise in the cost of things people want to buy. Actually, every country should strive to stand on its own economic legs without borrowing or Aid. Then there is monetary inflation (by Gordon Brown) that is a voluntary act on the part of government to allow the existing amount of money in circulation to increase. The British Government is borrowing so much money now that it has no option but to inflate at an enormous rate. So inflation is already a problem.
3. a)All politicians consider full employment to be vital in a modern economy. That is why they keep giving us false figures of unemployment whenever they are asked. They move those that have been unemployed for more than a few months out of the unemployment figures. They are still unemployed and consuming resources but they are dropped out of the important unemployment statistics. For instance, the total number of unemployed people in the UK now exceeds 6 million, instead of the official figure of 2 million according to independent sources. Like I said above, never trust the official figures of the politicians anywhere in the world. I’m now just waiting for the day the Uganda government will send us the real composition of the UPDF army since they wrote that it represents all kind of tribes and it is not dominated by Ugandan westerners.
b) UK and USA have more inflation than they did before as a result of the Government trying to achieve full employment because they have been spending more than they tax. We have also got a problem of higher wages in this country. High wages cause stagnation accompanied by unemployment and inflation. High wages mean that workers price themselves out of a job. With higher wages it means some jobs cannot be done effectively. When labour realised this problem, they opted to allow a lot of foreigners like us to come and work or study from the UK to do jobs that could be filled by British people who are paid by the State not to work.
Therefore, any one who tells you that inflation will only become a problem in 2-3 years, there are playing politics and not telling the truth. It is already a problem and this is evidenced by a lot of things happening in the country right now. For example, the less skilled workers are often better rewarded than the skilled workers. There is a stream of people to undertake useless jobs as they are not particularly demanding. Many of the jobs created by the British Government in the last few years would fall into this category.The polish and Bulgarians are doing anything they put their hands very cheaply. Unions do not help matters as they suppress competition between one worker and another by equalising wages. They prevent better workers from working better than others and restrain the amount of work done. They often frighten off more vigorous workers. They also prevent the introduction of new more efficient working practices. In the long term they cause stagnation and finally unemployment. The decline and the collapse of the traditional motor industry in the UK was a classic example of trade unions destroying an industry. The collapse of the docks and the coal mines are two more good examples. Even during this recession the unions are, and will, make restructuring businesses more difficult than it needs to be.
Sorry I have written so much.
Abbey
What exactly happened to Kiggundu’s Greenland Bank
19 Mar 2010 1 Comment
in Economics
Dear people,
Dr. Kiggundu is gone for good but there is still hope for the revival of the Greenland bank one day if what we read in the newspapers was true. I’m among the few Ugandans and muslims who are still confused as to why Greenland was closed abruptly like that. My understanding is that General Saleh secretly purchased UCB through Greenland bank. General Saleh himself announced that he took over the bid from the Malaysian investors to keep the bank under local hands and this was in December 1998.Immediately after General Saleh’s announcement, Greeenland bank was placed under state management. Greenland bank had subsidiaries in Tanzania and Kenya (commercial Bank and foreign exchange in Kenya respectively) which were also later closed. Nobody in the government has come up to give us a detailed explanation of why the Greenland Empire was closed and whether this was necessary at the time. It is the kind of pain we have been carrying for ages and it became so much when the death of Dr.Kiggundu struck us.
Secondly, Greenland was closed when the country’s savings were improving. Before the emergency of Greenland, the savings stood at 3% of the GDP compared to 6% of GDP in 1998. At that time, Kenya had a savings rate of 22% compared to the now ill-managed Zimbabwe which had a savings rate of 32% by then. When the savings rate is higher it means there are more funds that can be borrowed for development. Ugandans can borrow money in great number to their things. All this went into decline after the closure of Greenland Bank because so many people were relying on that bank. Was the closure of Greenland an act of a president who loves rapid development in the country?
The only major management error I blame Dr. Kiggundu is the principle of disclosure in the banking sector and he was jailed for 6 months because of some of these errors. Disclosure is about providing information to the outsiders about the organization. This includes corporate social disclosure. This is where the society wants to know what it gets from the business for supporting it. It is when the society and other third parties see such benefits that they see the organization as legitimate. Whereas developed countries have disclosure measures, the developing countries like Uganda don’t have the culture of disclosure. No ends of year accounts are shown! Even banks that should display their financial statements don’t do so! That is why in 1998, Greenland Bank Ltd, and Cooperative Bank Ltd were closed by Bank of Uganda, without any sign of financial weakness being known by the customers. So this was wrong on the side of Dr. Kiggundu but still the state should not have closed the bank. The Gordon Brown government used all the means at its disposal to save the Northern Rock Bank despite the problems they were having because Gordon loves his country and he loves the common man on the ground in the UK.
Other reasons which were given by the economists in the country for the closure are all considered just schools of thought including: failure to meet the minimum capital requirements, insider lending, corruption and mismanagement as the causes. This is all nothing when you are a politician who loves your people.The root cause of commercial banks’ problems lies in their desire to increase profits by rapidly expanding their asset portfolio (by extending loans) for which there are no adequate provisions in the form of a capital buffer. Greenland bank did this by investing in a variety of businesses and lending to people without security, and it would have worked if they had been given a chance with time to rectify their mistakes. Remember, these were long term investments NOT short term investments. Yes, Dr.Kiggundu was running the risk of the inadequacy of minimum capital standards in accounting for the risk in banks’ asset portfolio but so many international banks run this risk. In the UK here, people access credit without any security and there was nothing weid that Greenland was doing in the banking sector. I also heard that a Saudi investor offered to fix the capital problems Greenland was experiencing at the time but still the government declined the offer. All they wanted was to close the damn Greenland Bank.
Lastly, Bank of Uganda (BoU) introduced new banking rules after the closure of Greenland to justify their act but why didn’t they give Greenland more time to operate under the new rules. According to the BoU new policy, all banks will be required to maintain sufficient capital, while those under-capitalised will not be bailed out. Under the revised minimum deposit requirements, all commercial banks – both local and foreign-owned – are required to maintain at least a minimum balance of USh1bn (US$750m). All banks are required to comply with all the provisions of the Financial Institutions Statute (FIS) of 1993. According to the BoU, they will only intervene in banks that either fail to meet the capital requirements or comply with the laws and regulations as stipulated in the FIS Act. ´Where a bank is intervened and closed, the BoU´s commitment to the depositors will be limited to USh3m per depositor, covered under the Deposit Insurance Scheme´, the bank stated. My question is how is a Ugandan in USA going to recover her money now if she wakes up one morning when one of the banks in Uganda is closed particularly if her savings exceed USh3m? Can anybody also convince voters in Uganda that Kiggundu’s Greenland had failed to raise the capital of USh1bn to keep itself in business? Can you also tell voters in Uganda of what the judicial inquiry commission found and recommended after the closure of different banks in Uganda that year? This was a commission set up by Finance Minister Gerald Sendaula. Why isn’t all this information made public up to now?
Abbey Kibirige Semuwemba
United Kingdom
HOW BUGANDA KATIKIRO IS GOING TO PROMOTE COFFE GROWTH
06 Mar 2010 Leave a Comment
in 2010-2011 elections, Agriculture, Buganda, Economics
Dear readers,
I would like to know how the growth of coffee in Buganda is going to be boosted by the Katikilo of Buganda. Uganda particularly Buganda and Bugishu used to be strong coffee growers and I remember my grandfather paying school fees for most of us because of coffee. New records show that Uganda’s Coffee exports jumped by 24% in 2007. According to the Uganda’s Coffee Development Authority, statistics point to a 24% year-on-year (y/y) increase in the volume of coffee exported in 2007 and a further 36% increase in revenues. According to the statement, reported by Reuters, total export volume increased from 2.17 million bags in 2006 to 2.7 million bags, with total earnings increasing from US$21.6 million to US$29.5 million.
A market in Uganda
Uganda’s coffee exports have performed strongly through 2007 on the back of better disease control, stronger prices, and an initiative to double production by 2015. High global coffee prices have helped to drive growth in export earnings for the sector, but poor productivity, a constrained supply of inputs, and infrastructure bottlenecks continue to hamper growth.
Coffee remains Uganda’s main export and its revival is indeed good news for an ailing current-account deficit. The documented, continued rise in production and value through the season marks a strong comeback for the crop and will also, if sustained, benefit the rural population, which relies heavily on this sector. This proves that the government made a mistake of asking people to cut their coffee trees to promote non-traditional crops in the 1990s.
Indeed coffee has been one of the external conditions that have supported Uganda’s strong currency. The continued strength of the shilling is supported by projected stronger export growth, remittances, and a near-60% expected rise in transfers to non-governmental organizations. With strong increases in these foreign-exchange earners and drivers, total foreign-exchange earnings increased by 22% in 2007. Implicit in the finance minister’s budget is strong expected growth in export earnings. Indeed, total exports are expected to rise 21% from US$1.4 billion to US$1.7 billion supported by a 34% increase in coffee export revenues and a 31% increase in non-coffee exports such as cotton, tobacco, tea, soap, fish, and horticultural products. However, the Ugandan shilling experienced some pressure and depreciated through the end of December 2007, but remained fairly level through January 2008.
Kenya is one area that has hampered with regional trade and stability. Kenya’s stock market and exchange rate took a significant, with all financial markets closing early on 3 January 2008, and the postponement of the tea and coffee auctions. The World Bank estimates that around 25% of Uganda and Rwanda’s GDP relies on the trade running through the corridor to the port of Mombasa, with Burundi’s reliance climbing to 33% of GDP. However, if aid flows continue to increase Uganda will expect to receive sizable support, given its favourable position with the international donor community.
It is my hope therefore that the new Katikiro of Buganda strongly supports Coffee growth in his newly availed development program.
Abbey Kibirige Semuwemba
United Kingdom
Have we learnt any lessons from East African collapse?
15 Feb 2010 4 Comments
in 2010-2011 elections, East Africa, Economics
Dear Ugandans,
There are so many coalitions, organisations and federations that have been formed in a dictatorial environment. Some have worked and others have not but the difference with the East Africa Federation is that some states in East Africa are going through serious economic and political reformation particularly Rwanda and Kenya. Uganda is still politically immature and that can be seen by every citizen of East Africa, but is that enough reason not to promote this federation, I don’t think so. An East African Federation is a good idea and I support it whatever the environment. Some times, a man needs to marry a bright, clean, intelligent and hardworking woman to reform himself. That’s why some people say that there is a woman behind every man’s success and it is indeed true. The ghosts disturbing Uganda may never be removed by Ugandans alone. We need a partner to help us fight these bad ghosts.
Having said that, I’m also supporting a Uganda federation within an East African federation. This will be a bonus if we achieve the Uganda federation first before the East African federation. Buganda and some parts of Uganda are rightly asking for federalism within Uganda and there is nothing wrong with this. Like Dr.Besigye explained one time on Ngoma radio, federalism was demanded by majority of Ugandans and therefore it’s not a Buganda issue alone.
The most important question here is ‘Have we learnt any lessons from East African collapse? Let us look at the economics of the East African Federation. This federation collapsed once mainly because of the economics that were involved. If the current architects can create good economic policies, the East African federation will be a rock for all members involved. Therefore,we need to look at why the East African Common Market or the federation collapsed in the first place and if those factors have been corrected. If not, we are in danger of not learning from history.
First, the common market was founded in 1917 and collapsed in 1977. This idea was started by the British colonial government to serve British business interests and those of the British settlers in Kenya. The aim was to create a free and integrated market, sheltered by selective high tariff walls to simultaneously encourage Kenyan settler- businessmen and the expansion of foreign manufactured exports into East Africa.
This meant that the gains from a Customs Union were either not reaped or the distribution between partner states was not ‘equitable’. When Uganda, Kenya and Tanganyika got independence, the distribution issue caused instability and led to the collapse of the common market. Will Kenya not again be the top beneficiary at the expense of other partner states? Are the British still having a hand in this idea or it’s an independent one among member states?
Secondly, the federation is going ahead without assessment in the industrial bases of the partner states, yet this was a major factor in the first collapse. Kenya ,like before,has a higher manufacturing and services sector. This industrial imbalance indicates lack of equity in the distribution of integration benefits. These mistakes were neither corrected by the ‘Raisman Commission’ in 1960 nor by the Kampala/Mbale Agreement in 1964/5. The latter was never implemented because the Kenya parliament refused to ratify it and the proposed committee of industrial experts was never set up.
After the failure of the Kampala Agreement, cooperation became so shaky that the Philip Commission was appointed to save the common market. The commission resulted in the treaty that established an East African Community consisting of a common market and a wide range of common services. Again in this treaty, most activities had their headquarters in Kenya. Have we taken note of this? Is Kenya going to continue playing the role of the ‘boss’ as it was before?
Let me give you an example of the East Africa Development Bank, established with the aim of promoting balanced industrial development. A differential investment formula was proposed and enjoined on the bank so that it should have loaned, guaranteed or invested over the consecutive periods of five years slightly more than 38 percent of its funds to Uganda and Tanzania each and the remaining 22 percent or so to Kenya. This failed for reasons well known to some architects of this federation. Have they corrected them?
However,I’m happy that the architects of the East African Federation are rectifying some of the mistakes that led to the final collapse of the federation on July 1st, 1977. For instance,having a single currency among member states by 2012 is a step in the right direction. It will some how lead to balanced development among member states considering other factors remain constant. If we look at the last monetary policy developed by the 1967 East African Community that involved unified exchange rates, it led to a situation whereby the residents of Uganda and Tanzania preferred to keep their money in Kenya currency where there was greater availability of industrial goods for consumption. This made the Kenya currency to emerge as the stronger currency and the development of a black market situation whereby sh.1U ≥ sh.1 T < sh.1 K. Over time the Kenya currency grew stronger while those of Uganda and Tanzania were becoming weaker and this eventually affected the working of the East African Community Corporations by creating the problem of ‘inter-territorial transfer of funds’. The policy also led to a decline in reserve positions of both Uganda and Tanzania because of currency flights from these two countries, thus exasperating the need for further exchange controls.
Chapter VII, article 24 of the 1967 Treaty for East African Corporation, provided for exchange rate unification between the three partner states. Exchange rate unification means a situation where ‘‘the relative per values of the currencies of the members of the common market remain irrevocably fixed while their absolute par values when changed at all would change in the same proportion’’. The three currencies were to be exchanged without restriction at the IMF parity of shilling 1U = sh.1 k = sh.1 T. The rate of inflation was assumed to be equal since the absence of equal rates of inflation would automatically mean that a unified exchange rate situation no longer stood. The three currencies for purposes of parities vis a vis the outside were tied at different times to foreign currencies (British pound, US dollar) and to the IMF special drawing rights.
Considering that the three East African countries had different economic problems and different strategies for solving those problems, the policy of exchange rate unification which is inconsistent with the pursuance of different monetary policies present real problems in theory as it did in practice with East Africa. For example, On 7 February 1967, Nyerere issued a statement of party principles called the Arusha Declaration in Tanzania that called for nationalisation of Banks and large enterprises in Agriculture, manufacturing, construction and commerce. In May, 1970, Uganda also announced a leftist policy at Nakivubo. These two policies created uncertainty and adversely affected business confidence in these countries in the long run. Both countries imposed exchange control policies with the other partners to prevent capital flight. This situation created differences in the three currencies as viewed by residents and non residents of the common market, seeking to invest in East Africa. Hence the policy of unified exchange rates does not seem to have worked well for East Africa.
Abbey K. Semuwemba,
United Kingdom
Coffee in Uganda
30 Oct 2009 Leave a Comment
in culture, Economics, Politics
Traders selling matooke in Markets in Kampala
Dear Ugandans,
Could some one do us a favour and send a detailed programe which was unveiled by the new Katikiro,J.B .Walusimbi. We would like to know how the growth of coffee in Buganda is going to be boosted. Uganda used to be a strong coffee grower and I remember my grandfather paying school fees for most of us because of coffee. New records show that Uganda’s Coffee exports jumped by 24% in 2007. According to the Uganda’s Coffee Development Authority, statistics point to a 24% year-on-year (y/y) increase in the volume of coffee exported in 2007 and a further 36% increase in revenues. According to the statement, reported by Reuters, total export volume increased from 2.17 million bags in 2006 to 2.7 million bags, with total earnings increasing from US$21.6 million to US$29.5 million.
Uganda’s coffee exports have performed strongly through 2007 on the back of better disease control, stronger prices, and an initiative to double production by 2015. High global coffee prices have helped to drive growth in export earnings for the sector, but poor productivity, a constrained supply of inputs, and infrastructure bottlenecks continue to hamper growth.
Coffee remains Uganda’s main export and its revival is indeed good news for an ailing current-account deficit. The documented, continued rise in production and value through the season marks a strong comeback for the crop and will also, if sustained, benefit the rural population, which relies heavily on this sector. This proves that the government made a mistake of asking people to cut their coffee trees to promote non-traditional crops in the 1990s.
Indeed coffee has been one of the external conditions that have supported Uganda’s strong currency. The continued strength of the shilling is supported by projected stronger export growth, remittances, and a near-60% expected rise in transfers to non-governmental organizations. With strong increases in these foreign-exchange earners and drivers, total foreign-exchange earnings increased by 22% in 2007. Implicit in the finance minister’s budget is strong expected growth in export earnings. Indeed, total exports are expected to rise 21% from US$1.4 billion to US$1.7 billion supported by a 34% increase in coffee export revenues and a 31% increase in non-coffee exports such as cotton, tobacco, tea, soap, fish, and horticultural products. However, the Ugandan shilling experienced some pressure and depreciated through the end of December 2007, but remained fairly level through January 2008.
Kenya is one area that has hampered with regional trade and stability. Kenya’s stock market and exchange rate took a significant, with all financial markets closing early on 3 January 2008, and the postponement of the tea and coffee auctions. The World Bank estimates that around 25% of Uganda and Rwanda’s GDP relies on the trade running through the corridor to the port of Mombasa, with Burundi’s reliance climbing to 33% of GDP. However, if aid flows continue to increase Uganda will expect to receive sizable support, given its favourable position with the international donor community.
It is my hope therefore that the new Katikiro of Buganda strongly supports Coffee growth in his newly availed development program.
Abbey Kibirige Semuwemba
United Kingdom
CREATING JOBS STARTS FROM LOWER END
27 Apr 2009 Leave a Comment
in Economics
bank of uganda
As Ugandan living abroad, if we are to do anything back home to help our brothers and sisters in Uganda, the most critical question is how to create quickly hundreds of millions of jobs for the poor with limited purchasing power and limited capital for investment. The idea that most of these jobs could be created in the corporate sector or by government-sponsored activities has already been put to rest- because it has been tested and it has not worked out in several developing countries.
For any strategy to be successful, it must give central importance to self-employment and entrepreneurship, with emphasis on agriculture, agro-industry and small firms in the informal sector. Actually Edward Mulindwa’s egg business proposal has already been implemented by some Ugandans I know who have made their money from simple ‘kyeyo’ in the UK and went back home and it has made their lives ok. The most important thing is to encourage people to become self employed instead of moving from one job to the other. Secondly, we must start by creating jobs which are agro based rather than putting more emphasis on the so called corporate world. By the way, there is money in anything somebody wants to do as long as one plans very well and put their mind to it. People like Mukwano, Mulwana and most Kampala genuine tycoons did not make money by starting with corporate business plans. They started with something small and representing local interests. They are actually richer and more useful to Uganda than those Ugandans you listed in your message below.
The professionals abroad can help us to lobby their organisations to give outsourcing contracts to fellow Ugandans at home because that’s how Indians and Chinese have benefited from globalisation. Most corporate companies in USA and other big economies can now outsource jobs that can be performed remotely such as website creation, link building, article submissions, Blogs, data entry, programming, virtual assistants and many other online tasks. Let those guys you mentioned help Ugandans at home win such kinds of contracts instead of wishing to look like ‘kings’ among fellow Ugandans.
Those Ugandan professionals abroad can also help us in developing new ideas within the existing industries or attract more foreign investment in agro-based industries. For example, we have got a lot of ‘KASASILO’ or ‘rubbish’ that can be turned into bio-fuel. Bio-fuels in Brazil have created about a million jobs and there are plans to expand bio-diesel production to benefit hundreds of thousands of smallholder farmers. China has a large-scale programme to reduce methane emissions from animal husbandry which is creating a whole new industry of biogas equipment manufacturers and producers. In South Africa, energy upgrading of housing in slum areas avoids emissions and creates more than 100 new skilled jobs for every 100 units of buildings renovated. Such projects could expand to large-scale operations because they can attract significant funding from industrialized countries through the Clean Development Mechanism created by the Kyoto-Protocol.
Nze bwendaba
Abbey.K.Semuwemba
Uganda Govt Should cut down on Public Spending
19 Feb 2009 Leave a Comment
in Economics
Folks,
I have been saddened by the salary that has been accorded the executive Director of Kampala City, Jeniffer Musisi. Apparently, she is earning shs.432 million (US. $178509.08) annually as a salary excluding other financial privileges. I find this kind of extravagancy so hurting and unbearable especially for one person to earn that much in country where the biggest part of 33 million people are barely having any food to eat.
How does someone doing cleaning or teaching as a job in Uganda feel about this. I don’t know how much exactly people make in these jobs but I equate them to someone flying burgers in Europe or USA. Let’s take a look at a McDonald’s burger flipper. Here they make between £6.50 to £7.50 an hour. That may be what a burger flipper makes next year and the year after, as well. That does not matter if the cost of living does not rise either. In fact, it is to be expected in a non-inflationary economy. The value of any given labor is going to remain the same relative to the overall economy, unless for some reason that particular labor becomes more important.
But why would Jeniifer Musisi get that kind of salary in a country that is clearly facing a financial crisis? Is this selfishness of the highest order or our leaders are just heartless?
The simple fact is that the NRM party does not care about poor Ugandans and low-level working people in general. They either seem to be stronger believers of the theory of trickledown economics, by which if we let rich people make more money, jobs would be created, and it would then trickle down to the rest of the society, or they are purposely making people poor to keep them at the bottom of Maslow’s theory of needs. They want them to keep thinking about basic needs instead of changing governments. That way, NRM stays in power forever!
Under Gordon Brown leadership here in the UK, when we were in recession(though we are officially back in it again), the government was borrowing money and increasing spending where it is necessary. ‘Where is necessary’ here involved pumping more money into the banking system or nationalising some banks but not buying expensive jets for the executives or presidents or increasing the salaries/bonuses of company executives ( as is the case with Jeniffer Musisi’s shs.36m per months[US.$ 14875.76]or other public workers suhc as the NSSF boss who earns even more than Musisi. This is where Uganda has got it wrong. They should not allocate biger salaries to public officials in such a poor country. Even bigger salaries are questionable in developed nations.
All countries or local governments around the world are reducing on their budgets because of global recession. In USA, according to the centre on Budget and Policy Priorities, 44 states have reduced their budgets by more than $350 billion dollars since 2009.
In the UK, bodies such as the Association of British Insurers, the Investment Management Association and Pirc, a consultancy advising shareholders, believe the bonus culture should be reformed during this recession period.
Both in Nigeria and Tanzania and other African countries, there are finding ways of reducing on public spending.
It is also true that different countries deal with recession using different theories of economics which I prefer not to go through today. However, the theory people are familiar with is the Keynesian theory which was welcomed by former UK Prime Minister, Gordon Brown, with open hands, before David Cameron switched to cutting down on public spending. This is where governments advocate for deficit spending.
With Keynesian theory, when you are heavily in debt, the only way to keep spending is to keep borrowing. I supported Gordon Brown but his Keynesian theory was more of a political survival decision rather than anything else. The whole thing was a gamble from the start. Yes, consumer spending is the main driver of the UK’s economic growth but an increase in people saving to pay off their debts normally results in companies’ profits falling. Companies in turn tend to lay off staff, leading to a vicious cycle of people losing their jobs and being unable to pay their debts and mortgages.
The only reason why Gordon Brown could not easily reduce on public spending was basically because he had been on TV telling people that reducing public spending means worse public services, so he couldn’t turn around and start slashing it. So the only real option for the UK government then was to spend some of the money that was saved during the good times combined with less borrowing to beat the recession. After all, the UK economy had been booming for years. UK had not had a recession since 1992.
But the reality is that any government under financial crisis should be trying to cut debt by trimming public spending. But that is suicide to some political leaders especially if all they care about is keeping themselves in power.
The main downside to Keynesian style of economics is that government borrowing is exactly the same as consumer borrowing. At some point, you have to pay it back. And the way government pays off borrowing is through higher taxes.
One Ugandan who is a former UPDF officer, wrote on the UAH forum in 2009 when recession had hit big nations such as UK: ‘To say that Uganda has recession is like talking of a chicken with a toothache’. Basically, the statement would have been:’ to say that Uganda has got no recession, it is like a man sleeping with a woman with HIV for a long time without a condom, and then turn around and say that he has got no HIV before he even goes for a check up’.
Uganda has been sleeping with the donor countries who have got HIV (recession) for a long time. Uganda is basically married to the donors ( USA , UK , Canada , France, Japan , Dubai , e.t.c) and they have got a lot of children (Ugandans abroad) together. Donors support over 30% of our budget at the moment.
Ugandans abroad gave Uganda about $1.4 billion in 07/08 alone and there are the major source of foreign exchange in the country. Each of these guys looks after a lot of families in the 75% non-monetary sector. So because the ‘’Nkuba Kyeyo’’( unpaid Ugandan ambassadors abroad) or donors are affected financially, less money is being sent back home at the moment, and as a result the following services have been affected one way or the other: Construction boom in Uganda has declined; Quality of life of families is affected especially those depending on Ugandans abroad; Businesses in Uganda cities like the hospitality industry are feeling it because of reduced spending; Uganda’s general export industry has been affected because of less spending in USA or UK . We don’t have enough market within Uganda to consume the goods we produce. Let’s hope that the donor countries don’t shut down their markets from us as was the case in 1930s.
NGOs are already reducing their activities in Kampala because donors have squeezed funds. Tourism industry is already in decline in Uganda and this is directly affecting the so called CHOGM hotels and travel agencies. Foreign investment is in a decline as few foreign investors wish to bring money into the country. Food prices have become high in Uganda such that I was told a sack of charcoal costs over shs.90,000 and I kg of sugar is at shs.4000.
This country needs to make some changes. It has to start with Campaign Finance Reforms, corruption and the excesses there. To get that passed, we need a new Executive leadership, and it certainly can’t be NRM to get this done. They have failed to turn Uganda into a middle class economy despite being in power for over 20 years and the resources available in the country.
Abbey Kibirige Semuwemba
2009 Recession in the UK
05 Feb 2009 Leave a Comment
in Economics
What is happening on the UK economy has really scared me a lot. The British economy is running down very fast. Yes, what is happening in the world economy right now has happened before but I don’t think I was even born by then. That is why I have to take the forecasting done today very seriously. I had some money saved and I was hoping to use it for something in Uganda in future but with the fall of the pound, I think I need to send it and save it from Uganda before the pound crashes to very low levels.
1. a).I would like to partly agree with you that spending is the answer to Britain’s current financial problems because there is no any other alternative for any politician at the moment. Gordon Brown explains this on his website or blog when it comes to people that criticise more spending by comparing it to ‘’a doctor not wanting to use the defibrillators on a patient whose heart has stopped for fear of future electricity bills’’. But I’m one of those who never trust politicians and whatever comes out of their mouths. I however trust Dr.Besigye a little bit because of what he has gone through but the role of a modern politician is to persuade people that everything will just go on getting better, without disruption to their lives and with no effort on their part. As a general rule politicians do not lie. They just say what the majority of the population want to hear. Iddil Amin(1979) and Saddam’s former information minister(2003) were prime examples of people who told people what they wanted to hear when it was clear that their governments had reached the expiry date during the wars.
b) Do you honestly believe that the State should spend more than it taxes in order to stimulate investment and consumption because that is what is happening in Britain and USA at the moment to beat this recession? By spending more money, we are increasing the money supply and maintaining inflation. By maintaining inflation, Britain and USA will keep printing more money. USA already used this method (printing more money) in 2001 to stop recession when the dotcom bubble collapsed in 2000 and wiped off over $5 trillion from the value of technology companies. Printing more money and borrowing will keep diminishing the wealth of the UK economy and that is a real worry for us the ‘Nkuba Kyeyo’ or ‘ambassadors of Uganda’ residing in the UK who need to send money back home. Nevertheless, more spending or borrowing can be good for Gordon, politically, in the short run, because this means that Gordon Brown can transfer the current problems to whoever will take over after him. The problems aren’t gonna go away at all. The way that things are progressing at the moment the British Government will soon manage over 50% of the UK economy particularly as it now controls the banking sector.I guess USA will do the same and I somehow feel sorry for politicians because that is what they are supposed to do.
c) I have also heard on news that the government plans to lower the interest rates to encourage banks to lend money but this is all a gamble. Obviously they are doing this with the hope that the growth will miraculously restart. Even if this was to work then all that it would do is to keep an unsustainable situation running for a little longer.
Therefore, I don’t think spending or more borrowing is the ‘actual’ answer here in the long term. If UK is to survive this economic problems, it needs to cut down massively on state expenditure, as a percentage of GDP . All budgets in areas of the Health Service, the Civil Service, Social Services, education, the military and all branches of government would have to be cut back drastically. However, I don’t think any politician would be bold enough to do this because whoever does it will cost them politically. I don’t think Gordon or even Cameron when he comes to power will have the courage to do it.
2.a) I think Obama has inherited more trouble than most people know and he is likely to go down because of the dirt George Bush has left behind. I will go into this another time because it is a big topic on its own but I wanna talk about the inflation and employment in your message below.
b) The inflation that Britain and other countries are experiencing was partly exported to us by you, Americans. You printed more dollars and then sent it to different countries in form of aid and other means as a way of sucking it out of your system. When every one saw you printing off more money, they did the same. If I were Museveni, I would start refusing the USA aid right now because this is all inflation being exported to us from their countries. This sort of inflation leads to the rise in the cost of things people want to buy. Actually, every country should strive to stand on its own economic legs without borrowing or Aid. Then there is monetary inflation (by Gordon Brown) that is a voluntary act on the part of government to allow the existing amount of money in circulation to increase. The British Government is borrowing so much money now that it has no option but to inflate at an enormous rate. So inflation is already a problem, WBK. Don’t brush it off, sir.
3. a).you sounded like most politicians by putting employment ahead of inflation .All politicians consider full employment to be vital in a modern economy. That is why they keep giving us false figures of unemployment whenever they are asked. They move those that have been unemployed for more than a few months out of the unemployment figures. They are still unemployed and consuming resources but they are dropped out of the important unemployment statistics. For instance, the total number of unemployed people in the UK now exceeds 6 million, instead of the official figure of 2 million according to independent sources. Like I said above, never trust the official figures of the politicians anywhere in the world. I’m now just waiting for the day Mr. Otto Patrick and Mr. Katerega Ahmed will send us the real composition of the UPDF army since they wrote that it represents all kind of tribes and it is not dominated by Ugandan westerners. Mr.Otto was kind enough and sent us the different organisations that make up UPDF and we did publish this on the UAH Blog for the consumption of those who are non-members.I hope he does the same with tribes and influential positions occupied.
b) UK and USA have more inflation than they did before as a result of the Government trying to achieve full employment because they have been spending more than they tax. We have also got a problem of higher wages in this country. High wages cause stagnation accompanied by unemployment and inflation. High wages mean that workers price themselves out of a job. With higher wages it means some jobs cannot be done effectively. When labour realised this problem, they opted to allow a lot of foreigners like us to come and work or study from the UK to do jobs that could be filled by British people who are paid by the State not to work.
Therefore, any one who tells you that inflation will only become a problem in 2-3 years, there are playing politics and not telling the truth. It is already a problem and this is evidenced by a lot of things happening in the country right now. For example, the less skilled workers are often better rewarded than the skilled workers. There is a stream of people to undertake useless jobs as they are not particularly demanding. Many of the jobs created by the British Government in the last few years would fall into this category.The polish and Bulgarians are doing anything they put their hands very cheaply. Unions do not help matters as they suppress competition between one worker and another by equalising wages. They prevent better workers from working better than others and restrain the amount of work done. They often frighten off more vigorous workers. They also prevent the introduction of new more efficient working practices. In the long term they cause stagnation and finally unemployment. The decline and the collapse of the traditional motor industry in the UK was a classic example of trade unions destroying an industry. The collapse of the docks and the coal mines are two more good examples. Even during this recession the unions are, and will, make restructuring businesses more difficult than it needs to be.
Abbey
Will Greenland Bank ever ressurect from the dead?
29 Nov 2008 Leave a Comment
in Corruption, Economics, Legal issues, Politics, Religion, Uncategorized
Late Dr.Sulaiman Kiggundu
Dr. Sulaiman Kiggundu died but there is still hope in some Islamic quarters for the revival of the Greenland bank one day in one way or the other- if what we read in the newspapers is true. I’m among the few Ugandans and muslims who are still confused as to why Greenland was closed abruptly like that.
My understanding is that General.Saleh secretly purchased UCB through Greenland bank. General Saleh himself announced that he took over the bid from the Malaysian investors to keep the bank under local hands and this was in December 1998.Immediately after General Saleh’s announcement, Greeenland bank was placed under state management. Greenland bank had subsidiaries in Tanzania and Kenya (commercial Bank and foreign exchange in Kenya respectively) which were also later closed. Nobody in the government has come out to give us a detailed explanation of why the Greenland Empire was closed. It is the kind of pain we have been carrying for ages and it became so much when the death of Dr.Kiggundu struck us.
Secondly, Greenland was closed when the country’s savings were improving. Before the emergency of Greenland, the savings stood at 3% of the GDP compared to 6% of GDP in 1998. At that time, Kenya had a savings rate of 22% compared to the now ill-managed Zimbabwe which had a savings rate of 32% by then. When the savings rate is higher it means there are more funds that can be borrowed for development. Ugandans can borrow money in great number to their things. All this went into decline after the closure of Greenland Bank because so many people were relying on that bank. Was the closure of Greenland an act of a president who loves rapid development in the country?
The only major management error I blame Dr. Kiggundu is the principle of disclosure in the banking sector and he was jailed for 6 months because of some of these errors. Disclosure is about providing information to the outsiders about the organization. This includes corporate social disclosure. This is where the society wants to know what it gets from the business for supporting it. It is when the society and other third parties see such benefits that they see the organization as legitimate. Whereas developed countries have disclosure measures, the developing countries like Uganda don’t have the culture of disclosure. No ends of year accounts are shown! Even banks that should display their financial statements don’t do so! That is why in 1998, Greenland Bank Ltd, and Cooperative Bank Ltd were closed by Bank of Uganda, without any sign of financial weakness being known by the customers. So this was wrong on the side of Dr. Kiggundu but still the state should not have closed the bank. The Gordon Brown government used all the means at its disposal to save the Northern Rock Bank despite the problems they were having because Gordon loves his country and he loves the common man on the ground in the UK.
Other reasons which were given by the economists in the country for the closure are all considered just schools of thought including: failure to meet the minimum capital requirements, insider lending, corruption and mismanagement as the causes. This is all nothing when you are a politician who loves your people.The root cause of commercial banks’ problems lies in their desire to increase profits by rapidly expanding their asset portfolio (by extending loans) for which there are no adequate provisions in the form of a capital buffer. Greenland bank did this by investing in a variety of businesses and lending to people without security, and it would have worked if they had been given a chance with time to rectify their mistakes. Remember, these were long term investments NOT short term investments. Yes, Dr.Kiggundu was running the risk of the inadequacy of minimum capital standards in accounting for the risk in banks’ asset portfolio but so many international banks run this risk. In the UK here, people access credit without any security and there was nothing weid that Greenland was doing in the banking sector. I also heard that a Saudi investor offered to fix the capital problems Greenland was experiencing at the time but still the government declined the offer. All they wanted was to close the damn Greenland Bank.
Lastly, Bank of Uganda (BoU) introduced new banking rules after the closure of Greenland to justify their act but why didn’t they give Greenland more time to operate under the new rules. According to the BoU new policy, all banks will be required to maintain sufficient capital, while those under-capitalised will not be bailed out. Under the revised minimum deposit requirements, all commercial banks – both local and foreign-owned – are required to maintain at least a minimum balance of USh1bn (US$750m). All banks are required to comply with all the provisions of the Financial Institutions Statute (FIS) of 1993. According to the BoU, they will only intervene in banks that either fail to meet the capital requirements or comply with the laws and regulations as stipulated in the FIS Act. ´Where a bank is intervened and closed, the BoU´s commitment to the depositors will be limited to USh3m per depositor, covered under the Deposit Insurance Scheme´, the bank stated. My question is how is a Ugandan in USA going to recover her money now if she wakes up one morning when one of the banks in Uganda is closed particularly if her savings exceed USh3m? Can anybody also convince voters in Uganda that Kiggundu’s Greenland had failed to raise the capital of USh1bn to keep itself in business? Can you also tell voters in Uganda of what the judicial inquiry commission found and recommended after the closure of different banks in Uganda that year? This was a commission set up by Finance Minister Gerald Sendaula. Why isn’t all this information made public up to now?
Abbey Semuwemba
