Analysis: Museveni’s Latest Actions: Genius Strategist or Impediment to Growth?

By Daniel Bwambale B. Mutahunga

The final IDA19 Replenishment meeting took place in Stockholm, Sweden from Dec 12-13, 2019.

They agreed for the period 1st July, 2020 to 30 June, 2023, a record $82.

The International Development Association is the lending arm of the World Bank.

It has 173 countries as shareholders, including Uganda. Now, this all seems stuff for economists.

But, you will get to realize, as we read on, that the pothole on Sixth Street, the ponds called a road along Kinawataka, are all connected to this.

Daily Monitor, on 12th July, 2017, carried a story that was easy to miss.

The Presidency doesn’t necessarily excite.It was about the economy. A boring subject at best.  

The Speaker of Parliament, Rebecca Kadaga, informed the members that going forward, all loans would be approved by the President.

The President, out of 27 multi-lateral support requests(both loans and grants) had rejected 11.

He explained that some loans were unnecessary such as the $200m for fiscal transfers and management, “you don’t need a loan to learn how to transfer money”.

Some, such as the rejection of a $200m ADB loan to construct the Kampala-Jinja Expressway, stumped even his fiercest critics. The explanation was that the “loan lacked clarity”, and that the KJE should be tolled, and whoever invests money in the project should collect it from the tolls!

10 days to the end of the second decade of the 21st century, the highway is largely dysfunctional with some of the worst infrastructure in Uganda.

In total, the President rejected $944 million of which, $318m was grants! That is free money.$318m is Shs 1.17 trillion. $626m was loans. Including the one meant for the KJE.

Now, it isn’t that President Museveni is indecisive.

Perspective

No. He is a seriously disciplined individual whom you underestimate at your own peril.

Let us look at his past decisions that turned strategic successes. There is the Luweero Triangle war. The decision to restore kingdoms. Buying half a squadron of Sukhoi Su-30MK2 jets, which in light of what this region offers up, seems a masterstroke of epic proportions.

Uganda Airlines is another win.

Others, such as getting oil out of the ground; fighting Kony as a conventional enemy rather than a mercenary that needs to be assassinated; enactment of a set of PPDA rules that has all but brought government infrastructiral development to a halt or ensured that all projects get delivered over time and budget; some may even add the Constitutional Amendments since 2005.

But, like we have been counselled before, it’s the economy, stupid.

The Judiciary, and Ministries of Health, Works, Energy, the Ministry of Finance, Planning and Economic Development (MOFPED), plus the agencies it supervises has, arguably, the largest concentration of brain power in the country.

They can’t fathom why Entebbe has chosen this time in history to go-slow on IDA funding. IDA funds have the best terms of any money on the market.

Chinese loans are onerous to say the least. The inexplicable bit, that makes all the MOFPED guys gall, is the $318m in grants.

This is money that can cause a whole lot of change in the economy.

Entebbe, has refused to approve. MOFPED, has tried its best. The economy suffers constrained demand, but the refusal to budge at Entebbe makes everyone angry.

The worst bit, is the Chinese, too, think that they will not be the only ones to bankroll a regime that fails to tether itself to capital that is well structured.

Understandably, in light of their trade wars with US President Donald Trump, which could stretch on an extra 4 years, lower growth in their GDP, and with many countries in their Belt and Road Initiative looking more likely to default, what they wouldn’t want is to bankroll an economy whose managers cannot even provide counterpart funding to most projects, whose EVERY project is beset by, in Chinese lenses, stupid human rights concerns, weird PPDA rules leading to all manner of disputes, restless indigenes without any work ethic but with all manner of entitlement, and of course, the big question, political transition.

These are Capitalists first, despite their misnomer as the Communist Party of China.

On 30 June, 2020 the WB/IDA will take back all the money unutilised from IDA18.

Countries that are already asking for money from IDA19 shall then use this additional money NOT used by Uganda as top up to that applied for.

Uganda is NOT ready for IDA19! Kenya, has already got $750m to help pay off loans. Ethiopia will get $3 billion as a loan to help with structural reforms in its economy.

Rwanda, has finalised its application for $300m from the $944m that will NOT have been used by Uganda on June 30, 2020.

Their project; Commercialization and De-Risking of Agricultural Transformation.

KCCA tabled a request for $300m to build at least 300km of tarmac in the city.

The request gets dusty on the shelves at Entebbe.

Meanwhile, money to buy lead cars to push us off into the trenches is got from the taxpayers, but not that to aid the taxpayers to make more money such as money to build roads to make Kampala city functional cannot be approved! Never mind that Kampala and its metropolitan area account for 65% of GDP.

The potholes in the city, the lack of traction on the most impirtant highway in the country, the KJE is tied in to this.

Kampala Jinja Expressway

For the KJE, the story is actually tragic. The EU, AFD & ADB all indicated interest in the road.

In fact, they have committed $400m as viability gap funding for the 95 km $1bilion project. The investor and government need to get $600m.

Entebbe, proposed China Railway 17th Group, which promised to construct the 95km highway in 3 years, using own money, as long as other “preparatory works” are finished ahead of schedule.

This came after UNRA was in the final stages of a bid that saw 4 consortia selected.

It emerged that CR17 had actually bid through two subisidiaries, CCECC and CRCIG, who were disqualified on 3 grounds, among which was failure to show how they would raise the $1billion in a PPP.

A meeting to establish where CR17 would get money from flopped, when CR17 representatives, despite a letter from the President to the relevant minsitries and agencies to hear them out, failed to make a presentation alleging that they had been intimidated by government officials!

As farfetched as that is, it is laughable that any one in their right mind would intimidate a Chinese group backed by Entebbe.

To the technocrats, this was expected.

CR17 has no capacity to raise that money, and would make the toll road unnecessarily expensive.

The ghosts of the 51.5km Entebbe Expressway project, which a Value for Money Audit by the Auditor General in 2015 found to have been over priced at $9.3m per km, as a result of single sourcing CCCC, making it the world’s most expensive, albeit unlit toll road, were beginning to rear their ugly heads.

It is one of the worst times to be a planner in MOFPED. The Treasury function is basically taken over by Entebbe.

The pain being caused by these decisions or lack of them on 42 million souls is devastating. For every lead car given to an overfed politician, a pothole swallows up a child going to school. A Boda-Boda gets knocked.

A police officer commits suicide as a result of unattended to mental health issues.

The people of Eastern Uganda cannot be as productive when the main highway to the economic heartland of the country is treated as a pawn in a game of chess that leaves Uganda in a losing position the longer it takes. Government infrastructural projects stall and their ROI diminishes.

Capital flees to more predictable climes. Uganda is predictable, too, but only in its incompetence and procrastination presided over by Entebbe.

Tullow, CNOOC, Total, WB, EU,ADB, IMF, etc all these cannot be wrong and you are right.