Given Libya’s tribal cleavages, the contours of conflict will deepen ethnic tensions and threaten the institutional integrity of the state.
Thursday, April 21, 2011
Thursday, April 14, 2011
LESSONS FOR UGANDA FROM THE INTERNATIONAL FINANCIAL CRISIS.
he current financial crisis in the West has exposed many myths that have informed Uganda’s banking policies over the last decade. One such myth was that international banks are well managed; that they cannot suffer a meltdown. This myth has made the governor of Bank of Uganda, Emmanuel Tumusiime-Mutebile, resist increasing local ownership of banks arguing that it would put the financial sector in jeopardy.
Today, Uganda’s commercial banking industry is dominated by Western banks – Stanbic, Standard Chartered, Barclays and Citi Group, Baroda, Orient, Eco, KCB, Equity, etc. Only Crane, Centenary and the National Bank of Commerce are locally owned out of 18 banks. More than 85 percent of the banking assets are in foreign hands.
Under colonial rule, Ugandans were excluded from the banking sector. The banking rules and requirements treated the African with a lot of suspicion. When we got independence, government sought to increase local participation in the banking sector through state ownership of banks. Thus, was born Uganda Commercial Bank and the Cooperative Bank. These were supposed to create a banking sector that was responsive to the needs of Ugandan businessmen and women.
Later in the late 1980s and early 1990s, there was an attempt to establish local privately owned banks. Crane, Sembule, Nile Bank and International Credit Bank (ICB) came to life. Together with state owned banks, they controlled over 80 percent of total banking in the country. However, there were a series of bank failures – largely involving locally owned banks in Uganda and other African countries in the mid 1990s.
Similar bank failures had caused the Asian financial meltdown in 1996. Many commentators, especially in the West, said this was because of “crony capitalism.†In one of its World Economic Reports, the World Bank argued, not without justification, that the major source of these bank failures was weak supervision capacity by central banks in Africa. This, added the Bank, created vent for insider lending, poor risk assessment of borrowers, cronyism and political patronage.
The World Bank argued that to rebuild confidence in the banking system in Africa, it should be its policy to influence our governments to deliberately and systematically eliminate local banks. The report argued that the Bank should encourage governments in Africa to facilitate the entry of multinational banks reasoning that given the experience and reputation, multinational banks would be more effective in supervising their local subsidiaries in Africa than local central banks.
This position found widespread support in Uganda. Within government, it was supported by Mutebile, then Permanent Secretary in the Ministry of Finance. Partly out of ignorance and out of opportunism, President Yoweri Museveni joined the choir. In the press, it was supported by the Editor of The Monitor, Charles Onyango-Obbo and Frank Katusiime, his colleague on Capital Gang programme of Capital FM.
The argument that locally owned banks were suffering from crony capitalism reflected the desire of multinational capital to re-enter Third World markets by displacing local capital. It succeeded because the intellectual pillars of our countries – naively – sided with their argument. Thus, when it was shown that Greenland and ICB financial problems were caused by the involvement of key politicians, a national consensus developed overnight that they should be allowed to go under.
Although I recognised their personal failings at the time, I also understood that it was strategically important to retain a strong local ownership of the banking industry. But in the charged atmosphere of the time, supporting strong local ownership of the banking sector sounded like accepting the wrongs of Patrick Kato and Sullaiman Kigundu. (I faced a similar situation last year when I argued that we should separate the personal/political failings of Amama Mbabazi and Ezra Suruma from the objective substance of NSSF investment in Temangalo land).
Be that as it may, we are now full circle to 1998. The world’s leading banks like Citi Group, JP Morgan, Bank of America, Barclays Bank, to mention but a few are literally bankrupt. They have all collapsed under the weight of mountains of nonperforming assets. The solution by their governments is not to let them go under. On the contrary, governments are pouring trillions of dollars of taxpayers’ money to prop them up.
The lesson is simple but powerful: left alone without effective regulation, the banking market, like all other markets, can cause catastrophic collective harm. This is not limited to Africa but is a shared human trait. In the US, for example, there is a case of a Mexican berry picker in California who could not even speak English. The man was earning US$ 14,000 per year but was given a mortgage worth US$ 720,000.
Yet in spite of these gross failures, people in the West are not arguing that because banks violated rules and are now bankrupt, they should be left to go under. Instead, the main thrust of the economic recovery plan is to save their banks. One hopes that African elites learn not to despise their own people and disregard their potential for self correction. International banks are just as likely as local ones to indulge in cronyism and other forms of risky lending. Bad practices are not a monopoly of Africans.
Foreign banks impose rules here in Uganda that hinder most of our people from getting the necessary banking services. Many business people in Kikubo do not use banks in their transactions because of insurmountable obstacles. Many will tell you that if it were not for Crane Bank, they would never deal with banks in Uganda. This is because foreign banks employ rules in Africa that are designed with a strong bias against Africans. I know this because I have an account with Barclays Bank in London, Wells Fargo in San Francisco, and Chase in New York and the rules there are lax.
The lesson, again, is simple but powerful: banking rules – like all rules – need to evolve organically from within the society. Otherwise, they can be extremely unrealistic and therefore unhelpful. It is important to learn and borrow good practices from others. But it is equally important to recognise that every society has its particular idiosyncrasies, its norms and habits that should inform its institutional design.
amwenda@independent.co.ug
www.andrewmwendasblog.blogspott.com
Today, Uganda’s commercial banking industry is dominated by Western banks – Stanbic, Standard Chartered, Barclays and Citi Group, Baroda, Orient, Eco, KCB, Equity, etc. Only Crane, Centenary and the National Bank of Commerce are locally owned out of 18 banks. More than 85 percent of the banking assets are in foreign hands.
Under colonial rule, Ugandans were excluded from the banking sector. The banking rules and requirements treated the African with a lot of suspicion. When we got independence, government sought to increase local participation in the banking sector through state ownership of banks. Thus, was born Uganda Commercial Bank and the Cooperative Bank. These were supposed to create a banking sector that was responsive to the needs of Ugandan businessmen and women.
Later in the late 1980s and early 1990s, there was an attempt to establish local privately owned banks. Crane, Sembule, Nile Bank and International Credit Bank (ICB) came to life. Together with state owned banks, they controlled over 80 percent of total banking in the country. However, there were a series of bank failures – largely involving locally owned banks in Uganda and other African countries in the mid 1990s.
Similar bank failures had caused the Asian financial meltdown in 1996. Many commentators, especially in the West, said this was because of “crony capitalism.†In one of its World Economic Reports, the World Bank argued, not without justification, that the major source of these bank failures was weak supervision capacity by central banks in Africa. This, added the Bank, created vent for insider lending, poor risk assessment of borrowers, cronyism and political patronage.
The World Bank argued that to rebuild confidence in the banking system in Africa, it should be its policy to influence our governments to deliberately and systematically eliminate local banks. The report argued that the Bank should encourage governments in Africa to facilitate the entry of multinational banks reasoning that given the experience and reputation, multinational banks would be more effective in supervising their local subsidiaries in Africa than local central banks.
This position found widespread support in Uganda. Within government, it was supported by Mutebile, then Permanent Secretary in the Ministry of Finance. Partly out of ignorance and out of opportunism, President Yoweri Museveni joined the choir. In the press, it was supported by the Editor of The Monitor, Charles Onyango-Obbo and Frank Katusiime, his colleague on Capital Gang programme of Capital FM.
The argument that locally owned banks were suffering from crony capitalism reflected the desire of multinational capital to re-enter Third World markets by displacing local capital. It succeeded because the intellectual pillars of our countries – naively – sided with their argument. Thus, when it was shown that Greenland and ICB financial problems were caused by the involvement of key politicians, a national consensus developed overnight that they should be allowed to go under.
Although I recognised their personal failings at the time, I also understood that it was strategically important to retain a strong local ownership of the banking industry. But in the charged atmosphere of the time, supporting strong local ownership of the banking sector sounded like accepting the wrongs of Patrick Kato and Sullaiman Kigundu. (I faced a similar situation last year when I argued that we should separate the personal/political failings of Amama Mbabazi and Ezra Suruma from the objective substance of NSSF investment in Temangalo land).
Be that as it may, we are now full circle to 1998. The world’s leading banks like Citi Group, JP Morgan, Bank of America, Barclays Bank, to mention but a few are literally bankrupt. They have all collapsed under the weight of mountains of nonperforming assets. The solution by their governments is not to let them go under. On the contrary, governments are pouring trillions of dollars of taxpayers’ money to prop them up.
The lesson is simple but powerful: left alone without effective regulation, the banking market, like all other markets, can cause catastrophic collective harm. This is not limited to Africa but is a shared human trait. In the US, for example, there is a case of a Mexican berry picker in California who could not even speak English. The man was earning US$ 14,000 per year but was given a mortgage worth US$ 720,000.
Yet in spite of these gross failures, people in the West are not arguing that because banks violated rules and are now bankrupt, they should be left to go under. Instead, the main thrust of the economic recovery plan is to save their banks. One hopes that African elites learn not to despise their own people and disregard their potential for self correction. International banks are just as likely as local ones to indulge in cronyism and other forms of risky lending. Bad practices are not a monopoly of Africans.
Foreign banks impose rules here in Uganda that hinder most of our people from getting the necessary banking services. Many business people in Kikubo do not use banks in their transactions because of insurmountable obstacles. Many will tell you that if it were not for Crane Bank, they would never deal with banks in Uganda. This is because foreign banks employ rules in Africa that are designed with a strong bias against Africans. I know this because I have an account with Barclays Bank in London, Wells Fargo in San Francisco, and Chase in New York and the rules there are lax.
The lesson, again, is simple but powerful: banking rules – like all rules – need to evolve organically from within the society. Otherwise, they can be extremely unrealistic and therefore unhelpful. It is important to learn and borrow good practices from others. But it is equally important to recognise that every society has its particular idiosyncrasies, its norms and habits that should inform its institutional design.
amwenda@independent.co.ug
www.andrewmwendasblog.blogspott.com
Uganda soars even if its leadership sinks.
A few weeks ago, a Western diplomat invited a couple of us to lunch to discuss the major challenge facing our nation and what the West “should do†(I would have preferred “should not doâ€) about it. As I listened to Ugandan colleagues speak, I got worried. They denounced our lack of good leadership and poured scorn on the quality of our government. Here I agreed with them entirely. Then they moved beyond this to a more generalised attack on Ugandan society as being ignorant, lazy, complacent, cowardly, and more. This failure to separate the failures of the Yoweri Museveni regime from the wider Ugandan society concerned me deeply.
Apparently, many people turn their legitimate anger against the corruption, nepotism and incompetence of the Museveni government into anger against Ugandan society. It is here that Museveni has registered his greatest success – to make us lose faith in ourselves and even question our ability to shape our destiny. A cynical elite is what Museveni needs because it cannot be a vehicle for progressive change.
So I intervened in the debate arguing with passion that Ugandans are not stupid and lazy and our society is not dysfunctional. Our nation is full of innovative and vibrant people who are creating immense opportunities for themselves and their fellow citizens to work and trade and earn ever more incomes. I meet them every day when I am shopping, dining in a restaurant, visiting an office, selling advertisement, banking a cheque, negotiating land prices – everywhere.
Of course this is not to say Ugandans are without weaknesses. Our agrarian structure has given us a poor work ethic and its attitudes and habits stand in the way of the necessary capitalist behaviour that facilitates market exchange. Rather, my argument is that seeming liabilities can be turned into great assets and that while the cards we are given by history are important, how we learn to play them is more important. Although our present obstacles appear to be structurally obdurate, there is room to change our environment. The challenge is to identify change agents.
During the late 1980s, Museveni and NRM carried out vital economic reforms. They withdrew government from most economic activity, thus paving way for the private sector and markets to allocate resources in a more efficient way. They liberalised the economy, privatised public enterprises (with a lot of graft of course), deregulated prices, disbanded state monopolies and controlled inflation. This unleashed our private entrepreneurial energy and creativity that has been the driving force of our economic success.
You do not need to be a Museveni supporter to recognise the positive results of these reforms. The economy has sustained average growth rates of 9% for over 20 years, a rare achievement by an economy in Sub-saharan Africa. This growth has brought prosperity to many and reduced the number of people living in poverty from 56% in 1992 to 31% in 2006. Of course there are those in the 31% who have grown poorer, many who have not improved and there are also questions of equity in our growth. But these negatives do not erase the said achievements.
Indeed, a lot of the dysfunctions we see are a result of our economic success rather than failure. For example, traffic jams are caused by more people getting richer and therefore buying cars faster than government is expanding the size of roads. And because we drive more cars today, our roads suffer faster wear and tear than if we were using bicycles – although poor quality construction due to corruption plays an important role. We have constant load-shading of electricity because more and more firms and households are getting unto the grid and using more machines.
Therefore, the major failure of the Museveni administration has been inability to build state institutions to provide public goods and services to citizens – effectively and efficiently. That is why roads are a sea of potholes, hospitals are death chambers, schools (if they are not burning or collapsing) are producing half-baked graduates. Yet there are still a few islands of probity, efficiency and competence in our public sector, which is a sea of corruption, incompetence and nepotism.
Therefore, the failures of the Museveni government should not be mistaken to represent dysfunction in the wider Ugandan society, although they contribute to it. For example, the private sector is filling many of these gaps with better schools, hospitals and supplying electricity. Neighbours from Rwanda, Tanzania and Kenya are flocking to our schools. Museveni may have control over part of our lives but he does not control all our lives.
Monitor Publications Limited began in a basement 16 years ago with hardly any capital. Now, it has a gross turnover of over US$ 10m. MTN launched in Uganda only 10 years ago with limited capital. Now it is valued at over US$ 1billion; its profits last year were over US$ 100m while it paid taxes worth over US$ 120m. My friend Lucky has moved from being a taxi driver to owning a fleet of 52 Kilita buses.
These successes are not accidents. They have been produced by the ingenuity of the people of this country working singly on jointly with foreign investors. Of course an enabling macroeconomic policy environment put in place by the government has been critical too. But most of our achievements have been realised in spite of bad government.
Having made this case, I was shocked (but certainly not surprised) when some in the group accused me of having “sold out.†There is a section of the Ugandan political class that wants to deny any credit to Museveni. Some even take this argument further and seek to deny the progress Uganda has registered under his leadership – even if it was achieved in spite, rather than because of him.
The problem with this group, however, is that when someone disagrees with their assessment of Uganda, they do not respond to the substantive arguments made. Instead they seek to attack one’s moral character - like in my case, accusing me of having “sold out.†This tactic of avoiding the substantive debate and shifting to attack the personality of the individual making an argument undermines the platform for honest debate of public issues in Uganda.
Continues next week
amwenda@independent.co.ug
Apparently, many people turn their legitimate anger against the corruption, nepotism and incompetence of the Museveni government into anger against Ugandan society. It is here that Museveni has registered his greatest success – to make us lose faith in ourselves and even question our ability to shape our destiny. A cynical elite is what Museveni needs because it cannot be a vehicle for progressive change.
So I intervened in the debate arguing with passion that Ugandans are not stupid and lazy and our society is not dysfunctional. Our nation is full of innovative and vibrant people who are creating immense opportunities for themselves and their fellow citizens to work and trade and earn ever more incomes. I meet them every day when I am shopping, dining in a restaurant, visiting an office, selling advertisement, banking a cheque, negotiating land prices – everywhere.
Of course this is not to say Ugandans are without weaknesses. Our agrarian structure has given us a poor work ethic and its attitudes and habits stand in the way of the necessary capitalist behaviour that facilitates market exchange. Rather, my argument is that seeming liabilities can be turned into great assets and that while the cards we are given by history are important, how we learn to play them is more important. Although our present obstacles appear to be structurally obdurate, there is room to change our environment. The challenge is to identify change agents.
During the late 1980s, Museveni and NRM carried out vital economic reforms. They withdrew government from most economic activity, thus paving way for the private sector and markets to allocate resources in a more efficient way. They liberalised the economy, privatised public enterprises (with a lot of graft of course), deregulated prices, disbanded state monopolies and controlled inflation. This unleashed our private entrepreneurial energy and creativity that has been the driving force of our economic success.
You do not need to be a Museveni supporter to recognise the positive results of these reforms. The economy has sustained average growth rates of 9% for over 20 years, a rare achievement by an economy in Sub-saharan Africa. This growth has brought prosperity to many and reduced the number of people living in poverty from 56% in 1992 to 31% in 2006. Of course there are those in the 31% who have grown poorer, many who have not improved and there are also questions of equity in our growth. But these negatives do not erase the said achievements.
Indeed, a lot of the dysfunctions we see are a result of our economic success rather than failure. For example, traffic jams are caused by more people getting richer and therefore buying cars faster than government is expanding the size of roads. And because we drive more cars today, our roads suffer faster wear and tear than if we were using bicycles – although poor quality construction due to corruption plays an important role. We have constant load-shading of electricity because more and more firms and households are getting unto the grid and using more machines.
Therefore, the major failure of the Museveni administration has been inability to build state institutions to provide public goods and services to citizens – effectively and efficiently. That is why roads are a sea of potholes, hospitals are death chambers, schools (if they are not burning or collapsing) are producing half-baked graduates. Yet there are still a few islands of probity, efficiency and competence in our public sector, which is a sea of corruption, incompetence and nepotism.
Therefore, the failures of the Museveni government should not be mistaken to represent dysfunction in the wider Ugandan society, although they contribute to it. For example, the private sector is filling many of these gaps with better schools, hospitals and supplying electricity. Neighbours from Rwanda, Tanzania and Kenya are flocking to our schools. Museveni may have control over part of our lives but he does not control all our lives.
Monitor Publications Limited began in a basement 16 years ago with hardly any capital. Now, it has a gross turnover of over US$ 10m. MTN launched in Uganda only 10 years ago with limited capital. Now it is valued at over US$ 1billion; its profits last year were over US$ 100m while it paid taxes worth over US$ 120m. My friend Lucky has moved from being a taxi driver to owning a fleet of 52 Kilita buses.
These successes are not accidents. They have been produced by the ingenuity of the people of this country working singly on jointly with foreign investors. Of course an enabling macroeconomic policy environment put in place by the government has been critical too. But most of our achievements have been realised in spite of bad government.
Having made this case, I was shocked (but certainly not surprised) when some in the group accused me of having “sold out.†There is a section of the Ugandan political class that wants to deny any credit to Museveni. Some even take this argument further and seek to deny the progress Uganda has registered under his leadership – even if it was achieved in spite, rather than because of him.
The problem with this group, however, is that when someone disagrees with their assessment of Uganda, they do not respond to the substantive arguments made. Instead they seek to attack one’s moral character - like in my case, accusing me of having “sold out.†This tactic of avoiding the substantive debate and shifting to attack the personality of the individual making an argument undermines the platform for honest debate of public issues in Uganda.
Continues next week
amwenda@independent.co.ug
NSSF : Next MD will be a worse Museveni stooge.
Finally it has happened; National Social Security Fund (NSSF) managing director David Jamwa and his deputy Prof. Mondo Kagonyera have been fired. The use of the word “suspension†is meant to keep them on Katebe till their contracts expire. And the reason for this is not the irregularities during the investment in (or procurement of) Amama Mbabazi’s Temangalo. That will be one of the official excuses. The actual reason is to pave way for the political takeover of NSSF by State House.
That President Yoweri Museveni defended the architects of political pressure on NSSF against censure but sacked its victims should not be surprising. But to that we shall return later.
For now, I have met Jamwa twice in my entire life. When I did, I found him intelligent and insightful. A background check revealed many unsavoury things about him. So I cannot vouch for his integrity. Yet the debate on Temangalo has been ill-informed, lacking in perspective and full of partisan rancour.
Over the last 10 years, four NSSF MDs have been fired amidst investment scandals. This means that average life expectancy of management is 2.5 years. The exit of managers is often characterised by a lot of political buccaneering. This has haemorrhaged the Fund of any capital in the market for professionals with skills, experience and the integrity to manage it well. Thus, even if government wanted a competent person and advertised the job, only crooks would apply; Jamwa’s successor can only be worse.
It is for this reason that in spite of the question marks around his reputation, I was willing to let Jamwa serve his term. This would preserve some name for the Fund to be able to attract competent people. I wrote a series of articles defending NSSF and its decision to buy Temangalo because I remain convinced that the price was good and the project has potential to yield good returns on workers’ savings in spite of the irregularities with which the purchase was done. In such matters, my advice is consistent: punish the political culprits, don’t kill the project.
Many people responded to this by accusing me of defending Mbabazi. While I could understand their frustrations with government corruption in Uganda, it was also clear they were mixing NSSF with Mbabazi. This mix-up armed Mbabazi’s political adversaries with sufficient public support to settle scores with him. Yet in doing this (which is a legitimate political action) Mbabazi’s opponents cared little about what happened to NSSF. The public jumped onto the bandwagon out of ignorance, gullibility or (for our chattering class) a desire to score political points.
NSSF’s reputation was so badly battered. As always happens, it provided Museveni with the justification to change management. Yet Museveni is not going to appoint anyone competent but someone loyal to him. Therefore the result of any changes is not going to be the optimal one the public wanted i.e. competent management. It will be the political one i.e. subjecting NSSF to the whims of the president.
I am very sceptical of many of the fights against corruption in Uganda because corruption is the grease that turns the wheels of our politics. The grand don of corruption in Uganda is the president himself. If anyone sought to fight it, they need to begin with him. Short of that, we are deceiving ourselves. That is why I am always reluctant to expend my energy fighting a minister who, when fired, is replaced by yet another corrupt minister. The reader should now understand why I have not written an article on why I think Ezra Suruma and Mbabazi should be fired. Recycling thieves in government cannot be a formula for creating accountability.
I have met few Ugandans who appreciate the crisis in NSSF in the context of our nation’s political economy. Over the last ten years, the Fund’s portfolio has grown from under Shs 200 billion to over Shs 1.3 trillion in a country with total revenues of Shs 3.6 trillion per year. It is probably the only institution that can easily sign a land-purchase cheque of Shs 20 billion. Were this cheque to go to someone who can finance the opposition, Museveni’s candidacy can suffer a severe beating at the polls.
I was therefore not surprised by Museveni’s prolonged silence during the saga. I am sure he was trying to internalise the real meaning of NSSF in Uganda’s politics. His reaction to it would aim at two things: First, he would ensure that the next manager is a political cadre directly loyal to him – a Noble Mayombo of sorts. He or she would ensure that all decisions at NSSF protect Museveni’s political interests. NSSF would only buy land from a seller who is amenable to Museveni’s political interests.
Secondly, Museveni realised that NSSF has a lot of money that can be used to advance his politics. For years, Museveni has restrained himself on putting his fingers in NSSF coffers. Now he is going to. The next managers he appoints will be guys who can use the Fund’s money to promote the president’s campaign and even build a headquarters for the NRM.
So we have come full circle again: a genuine debate on accountability being used as an opportunity to extend Museveni’s personal control over institutions previously independent of him. It began with the police in 1999. As Justice Julia Sebutinde attacked police officers, she won the admiration of the public. I was lonely in criticising her. When the dust settled, Museveni used the weakened reputation of the police to appoint an army general to manage it. Now he has the police under his thumb.
Then he came to Uganda Revenue Authority (URA). Again, Sebutinde made headlines and won public acclaim. I was again lonely in warning that Sebutinde was laying a foundation for State House takeover of URA. When dust settled, Allen Kajina was appointed to head URA. Although she has proved to be a competent manager, her primary goal is to advance and protect the interests of Museveni over and above those of Uganda. Please watch who the next managing director of NSSF is going to be.
amwenda@independent.co.ug
That President Yoweri Museveni defended the architects of political pressure on NSSF against censure but sacked its victims should not be surprising. But to that we shall return later.
For now, I have met Jamwa twice in my entire life. When I did, I found him intelligent and insightful. A background check revealed many unsavoury things about him. So I cannot vouch for his integrity. Yet the debate on Temangalo has been ill-informed, lacking in perspective and full of partisan rancour.
Over the last 10 years, four NSSF MDs have been fired amidst investment scandals. This means that average life expectancy of management is 2.5 years. The exit of managers is often characterised by a lot of political buccaneering. This has haemorrhaged the Fund of any capital in the market for professionals with skills, experience and the integrity to manage it well. Thus, even if government wanted a competent person and advertised the job, only crooks would apply; Jamwa’s successor can only be worse.
It is for this reason that in spite of the question marks around his reputation, I was willing to let Jamwa serve his term. This would preserve some name for the Fund to be able to attract competent people. I wrote a series of articles defending NSSF and its decision to buy Temangalo because I remain convinced that the price was good and the project has potential to yield good returns on workers’ savings in spite of the irregularities with which the purchase was done. In such matters, my advice is consistent: punish the political culprits, don’t kill the project.
Many people responded to this by accusing me of defending Mbabazi. While I could understand their frustrations with government corruption in Uganda, it was also clear they were mixing NSSF with Mbabazi. This mix-up armed Mbabazi’s political adversaries with sufficient public support to settle scores with him. Yet in doing this (which is a legitimate political action) Mbabazi’s opponents cared little about what happened to NSSF. The public jumped onto the bandwagon out of ignorance, gullibility or (for our chattering class) a desire to score political points.
NSSF’s reputation was so badly battered. As always happens, it provided Museveni with the justification to change management. Yet Museveni is not going to appoint anyone competent but someone loyal to him. Therefore the result of any changes is not going to be the optimal one the public wanted i.e. competent management. It will be the political one i.e. subjecting NSSF to the whims of the president.
I am very sceptical of many of the fights against corruption in Uganda because corruption is the grease that turns the wheels of our politics. The grand don of corruption in Uganda is the president himself. If anyone sought to fight it, they need to begin with him. Short of that, we are deceiving ourselves. That is why I am always reluctant to expend my energy fighting a minister who, when fired, is replaced by yet another corrupt minister. The reader should now understand why I have not written an article on why I think Ezra Suruma and Mbabazi should be fired. Recycling thieves in government cannot be a formula for creating accountability.
I have met few Ugandans who appreciate the crisis in NSSF in the context of our nation’s political economy. Over the last ten years, the Fund’s portfolio has grown from under Shs 200 billion to over Shs 1.3 trillion in a country with total revenues of Shs 3.6 trillion per year. It is probably the only institution that can easily sign a land-purchase cheque of Shs 20 billion. Were this cheque to go to someone who can finance the opposition, Museveni’s candidacy can suffer a severe beating at the polls.
I was therefore not surprised by Museveni’s prolonged silence during the saga. I am sure he was trying to internalise the real meaning of NSSF in Uganda’s politics. His reaction to it would aim at two things: First, he would ensure that the next manager is a political cadre directly loyal to him – a Noble Mayombo of sorts. He or she would ensure that all decisions at NSSF protect Museveni’s political interests. NSSF would only buy land from a seller who is amenable to Museveni’s political interests.
Secondly, Museveni realised that NSSF has a lot of money that can be used to advance his politics. For years, Museveni has restrained himself on putting his fingers in NSSF coffers. Now he is going to. The next managers he appoints will be guys who can use the Fund’s money to promote the president’s campaign and even build a headquarters for the NRM.
So we have come full circle again: a genuine debate on accountability being used as an opportunity to extend Museveni’s personal control over institutions previously independent of him. It began with the police in 1999. As Justice Julia Sebutinde attacked police officers, she won the admiration of the public. I was lonely in criticising her. When the dust settled, Museveni used the weakened reputation of the police to appoint an army general to manage it. Now he has the police under his thumb.
Then he came to Uganda Revenue Authority (URA). Again, Sebutinde made headlines and won public acclaim. I was again lonely in warning that Sebutinde was laying a foundation for State House takeover of URA. When dust settled, Allen Kajina was appointed to head URA. Although she has proved to be a competent manager, her primary goal is to advance and protect the interests of Museveni over and above those of Uganda. Please watch who the next managing director of NSSF is going to be.
amwenda@independent.co.ug
African leaders still held hostage to stone age politics.
Presidential pledges in Uganda today stand at a record Shs 120 billion. These are promises of assistance the president makes to different groups, individuals and institutions and are paid for by the state. They have been accumulating over the years, some for over a decade. Intended beneficiaries have waited for years only to see their hopes frustrated.
Presidential pledges are a primitive system of patronage. If a sub-county lacks a clinic or school, it should get it as a personal favour from the president. That should be a function of government policy through the national budget. Yet President Yoweri Museveni is not alone in sustaining this system. It is practiced by many of his contemporaries across Africa. These pledges reflect the neo-patrimonial nature of politics on our continent.
The word “neo-patrimonial†comes from Max Weber’s concept of “patrimonial ruleâ€. Weber was referring to governance in small and traditional pre-capitalist European principalities where decision-making was highly personalised and arbitrary. The state in Africa is neo-patrimonial because it combines the formal structure of a modern bureaucratic state with informal and highly personalised rule where informal practices trample over formal rules; presidential donations disregard the budget.
Karl Marx argued that the way people organize themselves to solve their basic economic challenges – how to clothe, house and feed themselves – requires a “superstructure†of non economic activity and thought. The superstructure cannot be picked randomly, Marx reasoned, but must reflect the foundation on which it is raised. For Marx, therefore, no hunting community could evolve or use the legal framework of an industrial society and similarly, no industrial society could use the conception of law and government of a primitive hunting village.
From this perspective, many scholars on Africa have argued that presidents on the continent are captives of the social forces around them. By presiding over largely agrarian societies, presidents cannot avoid ruling like African chiefs of old – for example Nyungu ya Maawe of the Nyamwezi, Jaja of Opobo or Kabaka Junju of Buganda. Museveni is only a reflection of his society’s level of social development.
But Marx was broader in his grasp of these issues. Although many people consider him a structuralist – a lot of his arguments reflect this tendency – he also recognised the role of agency in social change. He noted, for example, that when economic conditions change, so do social institutions through the catalytic function of ideas. Although Africa has remained largely agrarian, a significant part of our economic, political and intellectual life has changed. We should be able to register some change.
Only President Paul Kagame of Rwanda has attempted to banish this neo-patrimonial politics from his leadership style. He makes pledges but only of a symbolic nature. Thus, when Kagame attends a fundraising, he will make a token promise – say of a goat or of US$ 200 – only to meet social expectation. If a community has no clinic or a school has fewer classrooms, the matter is addressed through government policy and the national budget. This way, Kagame has avoided the Nyungu ya Maawe mentality.
President’s office is under clear instructions to meet his pledges within 60 days of making them. Everyone around the presidency in Kigali will tell you that failure to do so has serious consequences. Thus, there are no communities, individuals and groups in Rwanda frustrated that a presidential pledge was not met.
Rwandans therefore consider their president an honest man and trust his word. Even his worst enemies will admit this. Save for his authoritarian style, Kagame has defied many retrogressive African political practices. The lesson: although Africa’s agrarian social structures are obdurate, there is room for agency i.e. a committed leadership can alter them and modernise our continent’s governance.
One gets the sense that Kagame has a highly cultivated sense of shame. He is clearly afraid to be seen to say one thing and do another. Possibly he falters sometimes. But there is a clear and sustained effort to exhibit a high level of integrity in his actions. Yet the opposite seems the case in Uganda. Museveni makes little or no effort to ensure that his promises are fulfilled suggesting the president is a liar. Even the people of Luwero who financed his guerrilla war with promises of compensation still gather outside parliament – 20 years later – to claim their money.
The inability of Museveni to keep his word speaks volumes about his moral character. The list of his empty promises goes beyond presidential pledges. In 1986, he promised to rule for only four years and hold elections. Instead he extended his rule by another five years which later turned into six. People began to question his integrity. In 1996, he made an unequivocal promise not to run for a second term, which he breached without apology or explanation. In 2001, he promised that he was running for his last term in order to organise “peaceful succession.†Instead, he amended the constitution to remove term limits and ended up succeeding himself.
This deficit in Museveni’s moral character will have powerful consequences on his legacy and on Uganda’s progress. Julius Nyerere presided over a declining economy and an authoritarian state in Tanzania for 24 years. Yet Tanzanians hold Nyerere in high esteem. Reason: whatever mistakes he made, his citizens felt Nyerere made them in an honest attempt to do good for Tanzania. On the other hand, Museveni has presided over a fairly democratic government and a rapidly growing economy that has brought prosperity to many. Yet he may not enjoy Nyerere’s status. Why?
Museveni’s sustained failure to project a high level of integrity has undermined his moral standing even among those closest to him. Many around him indulge in theft possibly because they have no moral bar against which they can hold themselves. The public too have limited faith in the integrity of our president. When he gives an investor a piece of land or forest purely for developmental reasons, people suspect he is doing so out of some pecuniary interest. They resist. The lesson: It is not the so much that leaders do, but what the public thinks were their motivations, that makes them great.
amwenda@independent.co.ug
www.andrewmwendasblog.blogspot.com
Presidential pledges are a primitive system of patronage. If a sub-county lacks a clinic or school, it should get it as a personal favour from the president. That should be a function of government policy through the national budget. Yet President Yoweri Museveni is not alone in sustaining this system. It is practiced by many of his contemporaries across Africa. These pledges reflect the neo-patrimonial nature of politics on our continent.
The word “neo-patrimonial†comes from Max Weber’s concept of “patrimonial ruleâ€. Weber was referring to governance in small and traditional pre-capitalist European principalities where decision-making was highly personalised and arbitrary. The state in Africa is neo-patrimonial because it combines the formal structure of a modern bureaucratic state with informal and highly personalised rule where informal practices trample over formal rules; presidential donations disregard the budget.
Karl Marx argued that the way people organize themselves to solve their basic economic challenges – how to clothe, house and feed themselves – requires a “superstructure†of non economic activity and thought. The superstructure cannot be picked randomly, Marx reasoned, but must reflect the foundation on which it is raised. For Marx, therefore, no hunting community could evolve or use the legal framework of an industrial society and similarly, no industrial society could use the conception of law and government of a primitive hunting village.
From this perspective, many scholars on Africa have argued that presidents on the continent are captives of the social forces around them. By presiding over largely agrarian societies, presidents cannot avoid ruling like African chiefs of old – for example Nyungu ya Maawe of the Nyamwezi, Jaja of Opobo or Kabaka Junju of Buganda. Museveni is only a reflection of his society’s level of social development.
But Marx was broader in his grasp of these issues. Although many people consider him a structuralist – a lot of his arguments reflect this tendency – he also recognised the role of agency in social change. He noted, for example, that when economic conditions change, so do social institutions through the catalytic function of ideas. Although Africa has remained largely agrarian, a significant part of our economic, political and intellectual life has changed. We should be able to register some change.
Only President Paul Kagame of Rwanda has attempted to banish this neo-patrimonial politics from his leadership style. He makes pledges but only of a symbolic nature. Thus, when Kagame attends a fundraising, he will make a token promise – say of a goat or of US$ 200 – only to meet social expectation. If a community has no clinic or a school has fewer classrooms, the matter is addressed through government policy and the national budget. This way, Kagame has avoided the Nyungu ya Maawe mentality.
President’s office is under clear instructions to meet his pledges within 60 days of making them. Everyone around the presidency in Kigali will tell you that failure to do so has serious consequences. Thus, there are no communities, individuals and groups in Rwanda frustrated that a presidential pledge was not met.
Rwandans therefore consider their president an honest man and trust his word. Even his worst enemies will admit this. Save for his authoritarian style, Kagame has defied many retrogressive African political practices. The lesson: although Africa’s agrarian social structures are obdurate, there is room for agency i.e. a committed leadership can alter them and modernise our continent’s governance.
One gets the sense that Kagame has a highly cultivated sense of shame. He is clearly afraid to be seen to say one thing and do another. Possibly he falters sometimes. But there is a clear and sustained effort to exhibit a high level of integrity in his actions. Yet the opposite seems the case in Uganda. Museveni makes little or no effort to ensure that his promises are fulfilled suggesting the president is a liar. Even the people of Luwero who financed his guerrilla war with promises of compensation still gather outside parliament – 20 years later – to claim their money.
The inability of Museveni to keep his word speaks volumes about his moral character. The list of his empty promises goes beyond presidential pledges. In 1986, he promised to rule for only four years and hold elections. Instead he extended his rule by another five years which later turned into six. People began to question his integrity. In 1996, he made an unequivocal promise not to run for a second term, which he breached without apology or explanation. In 2001, he promised that he was running for his last term in order to organise “peaceful succession.†Instead, he amended the constitution to remove term limits and ended up succeeding himself.
This deficit in Museveni’s moral character will have powerful consequences on his legacy and on Uganda’s progress. Julius Nyerere presided over a declining economy and an authoritarian state in Tanzania for 24 years. Yet Tanzanians hold Nyerere in high esteem. Reason: whatever mistakes he made, his citizens felt Nyerere made them in an honest attempt to do good for Tanzania. On the other hand, Museveni has presided over a fairly democratic government and a rapidly growing economy that has brought prosperity to many. Yet he may not enjoy Nyerere’s status. Why?
Museveni’s sustained failure to project a high level of integrity has undermined his moral standing even among those closest to him. Many around him indulge in theft possibly because they have no moral bar against which they can hold themselves. The public too have limited faith in the integrity of our president. When he gives an investor a piece of land or forest purely for developmental reasons, people suspect he is doing so out of some pecuniary interest. They resist. The lesson: It is not the so much that leaders do, but what the public thinks were their motivations, that makes them great.
amwenda@independent.co.ug
www.andrewmwendasblog.blogspot.com
WHAT IS FREE PRESS IN RWANDA
Laetitia Bader from Human Rights Watch accuses me of justifying restrictions imposed on independent media in Rwanda by the RPF government. I do not know how she came to this conclusion. But I have a fundamental philosophical difference with her. I believe that freedom is not a gift to the governed from their rulers. It is, as Kwame Nkrumah wrote in Africa Must Unite, “the precious reward, the shining trophy of struggle and sacrifice.†Freedom of the press in Rwanda will not come from the magnanimity of the government but from the struggle and sacrifice by its journalists.
I have always argued that the biggest threat to press freedom in Uganda is not the state but the market. The media grave yard is littered with newspapers that closed because readers gave them a vote of no confidence using their wallets rather than because they were shut down by the state. The inability of media institutions to recruit, harness and retain talent has created an exodus of the best journalists from news organisations to other businesses, NGOs, the government, and out of Uganda. This coupled with a small private sector (for advertising) and lack of a large educated middle class (for reading) has greatly undermined the cause of press freedom.
The situation in Rwanda is worse because its intellectual class there is even smaller. The intellectuals outside of the state and the market i.e. in civil society are too few to support a vibrant media. I argued that therefore, government actions against the media should be seen as a consequence rather than a cause of the Rwanda’s democratic deficit. The good news is the Rwanda government is investing in mass education and is promoting private enterprise growth. This will inevitably produce the middle class and a sizeable private sector to support democratic politics.
No where in my article that Bader was responding to did I justify government actions against the press. I have raised my concerns about the treatment of journalists and newspapers with Rwandan leaders including President Paul Kagame. I have found the Rwandan leadership extremely eager to listen to my views on why they should be tolerant even though their journalists can be extremely atrocious.  Bader referred to Beneventura Bizimuremyi who wrote an article with a picture of Kagame next to that of Adolf Hitler. He accused Kagame of committing genocide adding that the Rwandan president will commit suicide like Hitler. When police summoned him, he escaped to Uganda where he has been seeking a visa to be resettled in Netherlands. Apparently, some Rwandan “journalists†have learnt how to exploit their government’s paranoia with the press to create an easy way to get asylum abroad.
Bader knows that no media in the West would do such a thing because they exercise maturity in reporting. In a volatile situation like that of Rwanda, you need even greater care. It should not therefore be surprising that police summoned him.
I am attracted to Rwanda because of its accomplishments, well recognising that it has weaknesses. I know that most outsiders are attracted to our failures rather than our accomplishments. Increasingly, we as Africans have caught this disease. I focus my analysis on Rwanda’s achievements because they can work as lessons for Uganda. But that does not amount to justifying every wrong of its government.
Since 2000, Rwanda has developed the best and most effective government Sub Sahara Africa has produced over the last 50 years. Anyone with knowledge of Africa’s failures would not fail to see how the RPF government has set itself apart from the rest of the region in terms of discipline, hard work, honesty and focus. For the first time in decades, an African government is reconstructing a national vision.
It is not only me who sees this. Leading personalities in politics (Bill Clinton, Tony Blair); academia (Michael Porter, Paul Farmer, Michael Fairbanks); in business (Joe Richie, Bill Gates); in religion (Rick Warren) are flocking to Rwanda. All these people have taken its citizenship and also taken on the role of advisors to Kagame.
This poor and obscure landlocked country had been written off as a failed state only 14 years ago. Today, it has cofounded everybody by initiating one of the successful institutional and economic turnarounds in living memory.
With these achievements to its credit, news comes that a journalist has been arrested or a newspaper has been shutdown. Sometimes, the “journalist†is a fake: one politician paid money to defame his adversary. The paper printed 200 copies that were hardly read by anyone. The injured politician leverages the state to take revenge on the journalist. News spreads internationally that Rwanda is killing “independent media.
†The costs on the government’s reputation far outweigh the benefits which accrue to the individual politician. It therefore seems to me that it is not in the self interest of the Rwandan state to arrest journalists.
Bader is hostile to Rwanda’s laws on genocide and divisionism. A nation’s laws are shaped by its experience and history. If you form a Jihad in Palestine or Afghanistan you would be seen as a liberation fighter. If you formed a Jihad in New York, you would be smoked out by the FBI as a terrorist. If you said that you wanted to commit suicide just before boarding a plane at Entebbe, officials there would laugh at you. If you did so in Los Angeles, you would be whisked off for questioning by the FBI.
Only 14 years ago, Rwanda lost nearly a million people in genocide. The mobilisation for the genocide was conducted using the mass media. The victims of the hate campaign were the Tutsi who now lead the government in Rwanda. Their experience with the mass media is not as an instrument of democracy but of extermination. It is that psychology that shapes their stance on media freedom. To ignore this reality – their experience – would be naive. In Uganda, the media has historically been an instrument of democracy. That is why press freedom enjoys broad national support. Not so for Rwanda because its experience is different.
amwenda@independent.co.ug
www.andrewmwendasblog.blogspot.com
I have always argued that the biggest threat to press freedom in Uganda is not the state but the market. The media grave yard is littered with newspapers that closed because readers gave them a vote of no confidence using their wallets rather than because they were shut down by the state. The inability of media institutions to recruit, harness and retain talent has created an exodus of the best journalists from news organisations to other businesses, NGOs, the government, and out of Uganda. This coupled with a small private sector (for advertising) and lack of a large educated middle class (for reading) has greatly undermined the cause of press freedom.
The situation in Rwanda is worse because its intellectual class there is even smaller. The intellectuals outside of the state and the market i.e. in civil society are too few to support a vibrant media. I argued that therefore, government actions against the media should be seen as a consequence rather than a cause of the Rwanda’s democratic deficit. The good news is the Rwanda government is investing in mass education and is promoting private enterprise growth. This will inevitably produce the middle class and a sizeable private sector to support democratic politics.
No where in my article that Bader was responding to did I justify government actions against the press. I have raised my concerns about the treatment of journalists and newspapers with Rwandan leaders including President Paul Kagame. I have found the Rwandan leadership extremely eager to listen to my views on why they should be tolerant even though their journalists can be extremely atrocious.  Bader referred to Beneventura Bizimuremyi who wrote an article with a picture of Kagame next to that of Adolf Hitler. He accused Kagame of committing genocide adding that the Rwandan president will commit suicide like Hitler. When police summoned him, he escaped to Uganda where he has been seeking a visa to be resettled in Netherlands. Apparently, some Rwandan “journalists†have learnt how to exploit their government’s paranoia with the press to create an easy way to get asylum abroad.
Bader knows that no media in the West would do such a thing because they exercise maturity in reporting. In a volatile situation like that of Rwanda, you need even greater care. It should not therefore be surprising that police summoned him.
I am attracted to Rwanda because of its accomplishments, well recognising that it has weaknesses. I know that most outsiders are attracted to our failures rather than our accomplishments. Increasingly, we as Africans have caught this disease. I focus my analysis on Rwanda’s achievements because they can work as lessons for Uganda. But that does not amount to justifying every wrong of its government.
Since 2000, Rwanda has developed the best and most effective government Sub Sahara Africa has produced over the last 50 years. Anyone with knowledge of Africa’s failures would not fail to see how the RPF government has set itself apart from the rest of the region in terms of discipline, hard work, honesty and focus. For the first time in decades, an African government is reconstructing a national vision.
It is not only me who sees this. Leading personalities in politics (Bill Clinton, Tony Blair); academia (Michael Porter, Paul Farmer, Michael Fairbanks); in business (Joe Richie, Bill Gates); in religion (Rick Warren) are flocking to Rwanda. All these people have taken its citizenship and also taken on the role of advisors to Kagame.
This poor and obscure landlocked country had been written off as a failed state only 14 years ago. Today, it has cofounded everybody by initiating one of the successful institutional and economic turnarounds in living memory.
With these achievements to its credit, news comes that a journalist has been arrested or a newspaper has been shutdown. Sometimes, the “journalist†is a fake: one politician paid money to defame his adversary. The paper printed 200 copies that were hardly read by anyone. The injured politician leverages the state to take revenge on the journalist. News spreads internationally that Rwanda is killing “independent media.
†The costs on the government’s reputation far outweigh the benefits which accrue to the individual politician. It therefore seems to me that it is not in the self interest of the Rwandan state to arrest journalists.
Bader is hostile to Rwanda’s laws on genocide and divisionism. A nation’s laws are shaped by its experience and history. If you form a Jihad in Palestine or Afghanistan you would be seen as a liberation fighter. If you formed a Jihad in New York, you would be smoked out by the FBI as a terrorist. If you said that you wanted to commit suicide just before boarding a plane at Entebbe, officials there would laugh at you. If you did so in Los Angeles, you would be whisked off for questioning by the FBI.
Only 14 years ago, Rwanda lost nearly a million people in genocide. The mobilisation for the genocide was conducted using the mass media. The victims of the hate campaign were the Tutsi who now lead the government in Rwanda. Their experience with the mass media is not as an instrument of democracy but of extermination. It is that psychology that shapes their stance on media freedom. To ignore this reality – their experience – would be naive. In Uganda, the media has historically been an instrument of democracy. That is why press freedom enjoys broad national support. Not so for Rwanda because its experience is different.
amwenda@independent.co.ug
www.andrewmwendasblog.blogspot.com
FINALLY THE OPPOSITION HAS A CHANCE .
Uganda is now caught up in the contradiction of extreme wealth alongside excessive poverty and extreme luxury alongside mass deprivation.
Thursday, April 7, 2011
HOW BANKS CAN SUPPORT BUSINESS GROWTH.
A great business can close in infancy, not because it is loss making but because it cannot get credit to overcome its initial cash flow constraints.
Friday, April 1, 2011
THE CHALLENGE AFRICA REFORMERS FACE.
An African leader who fights corruption will face resistance from powerful vested interests using democracy to subvert his reforms.
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