Uganda's Budget Strategy for 2OO7/08 Fiscal Year

Below are the priorities identified for the FY 2007/08 Budget.
By Ultimate Media Consult
First published: June 14, 2007
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4.1 Main Challenges
4.1.1 Population Growth
Uganda has one of the highest population growth rates in the world. This creates an economic opportunity, as the current cohort of young people under the age of 15 (half the population) enters the labour-force. But the existing numbers of young people are putting an enormous strain on the Government's ability to deliver services, and this problem will continue so long as the high fertility rate persists.
4.1.2 Energy Crisis
By the end of FY 2004/05 and leading into FY 2005/06, the supply ofelectricity was in a crisis. Water levels in Lake Victoria were at the lowest since the construction of Owen Falls Dam in 1954. Use of water for energy generation had to be regulated to avoid draining the Lake to an environmentally dangerous level. Power generation fell from a peak of 380 MW to 135 MW in mid-2006. This resulted in frequent load shedding, which in turn reduced the rate of growth of GDP in 2005/06.
4.1.3 Conflict in Northern Uganda
After 20 years of conflict in Northern Uganda, peace talks opened in 2006 between Lord's Resistance Army/Movement (LRA/M) rebels and the Uganda Government in Juba, South Sudan. Many stakeholders regard the talks as the best opportunity in 20 years for peace in Northern Uganda. A Cessation of Hostilities Agreement signed on 26 August 2006 between the Government of Uganda and the LRA is seen as a major break-through. However, the talks have faced serious challenges. This carries the implication that security in the region may continue to remain uncertain.
4.2 Budget Strategy for 2OO7/08 Fiscal Year
Government strategy will continue to sequentially align all expenditures towards the priority areas as identified in the PEAP and the Prosperity for All Programme. Increasing incomes beyond the subsistence level and stimulating growth require a sustained orientation of Government's expenditures towards effective programmes for infrastructure and rural development, together with critical interventions for human development. The FY 2007/08 Budget will therefore focus on those critical actions, which have a direct bearing on increasing productivity, household incomes and overall economic development. The interventions that the Government will prioritize are as follows:
i) Investments in Energy and ICT
ii) Development and Maintenance of Transportation Infrastructure
iii) Rural Development
iv) The Rehabilitation of Northern Uganda
v) Science, Technology and Industrial Development
vi) Universal Secondary Education
In order to achieve these objectives, the above interventions will have priority access to the available resources in next year's budget. Other priorities that have been identified outside these areas will therefore require efficiency gains to be implemented within their respective sectors and ministries. Below are the priorities identified for the FY 2007/08 Budget.
4.2.1 Infrastructure Development
Development of infrastructure is a critical ingredient to competitiveness and private sector investments. The private sector will increasingly be the driver of Uganda's economic growth, and impediments to its growth will have to be carefully addressed. The continued growth of the private sector needs to be supported with public investments and a sound business environment. This includes an efficient reliable infrastructure base where there is adequate and reasonably priced electricity, well-maintained roads and a sound railway system for movement of bulky commodities. The FY 2007/08 budget will therefore focus on improving the business climate by developing productive infrastructure in energy, roads and information and communication technology.
4.2.1.1 Energy
Energy is a critical component of all economic programs, but particularly industrialization and value addition for increased overall competitiveness of the economy. The present constraints to the generation of reasonably priced and adequate electricity have negatively affected growth of the economy over the last few years. Government has therefore prioritized the immediate construction of the Bujagali Hydropower project in order to ensure that the expensive thermal power generation is replaced with a cheaper alternative in the shortest time possible. While the construction of the Bujagali Hydro Project is led by the private sector, Government intends to support whatever interventions are necessary to expedite the completion of the dam.
Construction of the Karuma Hydro Power Project will also need to be started as soon as the necessary preparatory studies are complete because it is evident that the demand for electricity will outstrip supply even after the Bujagali Hydro Project is completed. The Government cannot afford to return to the crises of early 2005 when the economy faced the possibility of shut down.
The Energy Investment Fund will therefore be supplemented annually over the medium term to provide enough resources to fund the construction of these dams and also provide for the necessary investments in the transmission and distribution systems if the private sector is not able to do so.
Thermal power generation will only be used to mitigate the energy shortfall until the installation of new hydroelectric generation capacity is achieved. Government has also completed the procurement of a permanent 50 MW Heavy Fuel Oil (HFO) thermal plant that will be used over the next decade to deal with temporary electricity shortfalls.
4.2.1.2 Road Infrastructure
Road infrastructure continues to be a major impediment to economic activity, both in rural agricultural activity and modern urban commerce and manufacturing.
Two critical activities in the management of road development need to be addressed. First, there is an inadequacy of institutional capacity for the effective and efficient development and maintenance of road infrastructure. This has led to delays in the implementation of new road projects and associated cost overruns. The second inadequacy arises from the insufficiency of funding to undertake road infrastructure maintenance.
Two interventions have been designed for dealing with the institutional weaknesses that have been identified. The first is the newly operationalized, Uganda National Road Authority, which will be responsible for new road development, the management of road maintenance, road machinery management and axle load control, among others. With the Road Authority in place, the Ministry of Works and Transport will only have the responsibility of providing strategic management and oversight functions such as monitoring the performance of the Authority.
The second institutional remedy that has been designed relates to the financing for road maintenance. The Road Fund, which will come into force in July 2007, will allow the direct link between payment of road user charges and provision of road maintenance services, thereby increasing the overall operational efficiency of the road sector. The funding for national roads maintenance through budget allocations has consistently proved inadequate leading to the accumulation of the maintenance backlog.
While other qualifying expenditures for a Road Fund could include rehabilitation and new works, road maintenance will have the first call on resources from the Road Fund. The extent to which road rehabilitation and new works can be financed will depend on the total resources available within the Fund. The Road Fund will be financed through road user-charges includinga fuel levy, annual vehicle license fees, weight distance charges, and international transit fees. The selected stream of revenues will be directly placed into the Road Fund without being subjected to the budget process. This will serve to ensure that road maintenance receives adequate funding and will enable the backlog of road maintenance to be cleared.
4.2.1.3 Information and Communication Technology
Uganda has made great strides as a result of the steady reform of the telecommunications sector in the 1990s. Telecommunications has been the most promising infrastructure sector and has contributed greatly towards improving welfare. Despite these positive trends, the performance of the sector remains below the international average. While the penetration rate has increased significantly from 0.4% to 4.4% of total population between 1990 and 2002, 80% of the country's digital phone lines and modern switching technology is found in Kampala. In rural areas, access to ICT is restricted by inadequate and sparse infrastructure. Fixed line technology is almost non-existent. Mobile penetration rates of 2% remain low due to the high cost of airtime and handsets, and a lack of electricity for charging the handsets.
Government has therefore commenced the construction of a National Data Transmission Back Bone in order to provide greater communication capacity at a lower cost and also satisfy the growing demand for modern fiber optic networks. This will increase international connectivity and lower high Internet connection tariffs, and will also facilitate increased capacity, quality delivery of voice, data, and image services and applications that cannot be reliably met by simple dial-up and ISDN technologies. By the time this project is completed, Government will have developed the necessary infrastructure to support E-Government.
4.2.2 Rural Development
The Prosperity for All Programme (PfA) has developed a special intervention to raise the incomes of households through the identification of viable economic activity and ensuring that household output can be marketed at better prices. The programme entails the combination of measures to increase output, improve storage and marketing and processing capabilities. As a response to constraints households may have in obtaining inputs, the programme will develop rural financial services through savings and credit cooperatives.
Over the short to medium term, households will be facilitated in a sequential manner to access basic production inputs such as planting materials, breeding stock and extension services, marketing infrastructure and rural financial services required for effective implementation of selected viable livelihood strategy.
At the community level, Government is already building an effective and supportive community infrastructure in the form of roads, water, education and health facilities. This will be complemented by the Community Information System (CIS) to enable the communities themselves to generate information for use in planning and service delivery.
4.2.2.1 Sub-County Development Strategy
To strengthen the delivery of services under the Prosperity for All Programme Government will work directly with the Sub-counties. The Sub-county Development Strategy (SCDS) will therefore aim at ensuring that there will be a link between household production needs at the lowest level of Government and the outcomes and development results targeted by Government at the national level.
The value and appropriateness of implemented activities and outputs of local communities and households will be of primary importance to this strategy. The SCDS will therefore attempt to optimize development results in all Sub-counties through uplifting household incomes, marketing, access to rural financial services and effective use of the CIS.
4.2.2.2 Agricultural Extension Services
The NAADS programme has been successful in providing essential agricultural advisory services to farmers; establishing strategic partnerships with private sector operators; and directly linking farmers and Farmer Associations with key market actors. The FY 2007/08 budget will continue to support NAADS and enable the sub-counties to uplift household incomes through improved organization, productivity, value addition, marketing, increased access to rural financial services and the establishment of the CIS.
Financing will therefore be made available in the budget for the provision of inputs for the production of coffee, tea, cotton, fish farming, and fruits. In addition, funds will be provided to facilitate Sub-county Chiefs and technical officials (e.g. Sub-county veterinary doctors, agricultural officers and community development.
assistants) to sensitise households and enable planning, monitoring and evaluation of NAADS programmes to be enhanced. These change agents will be responsible for identifying to households the most viable commodities to produce and also coordinate their activities with Savings and Credit Cooperative Organizations (SACCOs) to provide the necessary credit to households and cooperatives to ensure increased market access.
4.2.2.3 Rural Financial Services
As part of the Sub-county Development Strategy, Government will continue to assist the micro-finance sector in rural and urban areas by supporting the establishment, strengthening, expansion and consolidation of both Micro Finance Institutions (MFIs) and SACCOs. This should provide the necessary credit lines to households and cooperatives to increase production, and improve their access to markets.
4.2.2.4 Marketing
A good marketing system is expected to link producers to consumers, both domestic and foreign, combined with strategies for processing to add value, reduce bulk and increase shelf life. Government's approach to marketing and agro-processing is set out in the Marketing and Agro-Processing Strategy. Priority actions to address marketing constraints include: trade policy/negotiations and finance, producer support, infrastructure, and export competitiveness.
Investment and strategic exports promotion, with emphasis on value addition through cluster development, will be among the priorities to ensure competitiveness. This is spelt out in the Competitiveness and Investment Climate Strategy (CICS 2006-2010), which seeks to operationalise Pillar II of the PEAP with the aim of enhancing access to markets and attracting of investors. It is in this strategy that a framework for harmonizing initiatives under PMA, Rural Development Strategy (RDS) and PfA is hinged through the promotion of Public Private Partnerships (PPP) among the productive sector.
4.2.2.5 Water for Production
Table 4.1 shows that progress with physical construction of water facilities in 2005/06 was satisfactory in most outputs. Work on the feasibility study for bulk water supply countrywide, and the development of guidelines for water for production needs to be undertaken.
Active implementation of the program for small-scale irrigation for at least 27 districts will start. Additionally, the rehabilitation of irrigation schemes at Mubuku, Doho, and Olweny will be expedited to prepare them for the necessary hand-over to user farmer groups in their respective areas. Funds to address rain stressed areas through implementation of low-cost rain-water harvesting technology will also be specifically provided.
Table 4.1: Water for Production: progress against plans for FY 2005/06
Plan Achieved %
Wind-powered systems installed 2 2 100%
Valley tanks constructed 9 10 110%
Valley tanks commissioned 43 26 60%
Dam reconstructed 1 1 100%
User committees trained 43 44 102%
Staff trained 8 5 63%

Source: Ministry of Finance, Planning and Economic Development
4.2.3 Northern Uganda Reconstruction
With the renewed peace and security in Northern Uganda as well as ongoing peace talks, the FY 2007/08 budget will focus on the reconstruction of Northern Uganda. To improve coordination of rehabilitation and reconstruction of Northern Uganda, the Government has launched the National Peace, Recovery and Development Plan (PRDP) for Northern Uganda. Strategic interventions will be undertaken through 14 priority programs over the medium-term, and spread over four key areas namely:
i) Consolidation of state authority involving the cessation of armed hostilities, re-establishing the rule of law, protection of human rights, strengthening local governance and expanding the road density in the area as insurance against any future malign elements;
ii) Rebuilding and empowering communities through improvement in conditions and quality of life in the IDP camps while facilitating the return and re-integration of the displaced populations;
iii) Revitalisation of the economy by paying special attention to re-activating and strengthening production, marketing, processing and services;
iv) Peace building and reconciliation between the victims and perpetrators of the crimes.
A Joint Monitoring Committee (JMC) has also been established to address security and humanitarian issues. The Northern Uganda Social Action Fund continues to provide assistance in the area and community based interventions have been introduced in 119 projects. The Northern Uganda Youth Development Centre has also been established, and the Northern Uganda Rehabilitation Program has been completed.
4.2.4 Universal Secondary Education
Investment in human capital by providing quality and affordable education is essential for Uganda to attract foreign investment. In January 2007, the implementation of the Universal Post-Primary Education and Training (UPPET) commenced. UPPET will serve to absorb the increasing numbers of pupils completing primary education as a result of the UPE initiative and will aid in the transformation of our economy.
4.3 Sectoral Allocations
The allocations in the MTEF reflect the projected increase in resources and the identified budget priorities. Accordingly, allocations to the Works and Transport, Education, Agriculture, and Economic Functions sectors increase in nominal terms to cater for the priorities under these sectors. The share of the health sector will decline on account of a reduction of donor project aid that cannot be fully compensated for by *GoU resources. Despite the decline in overall share however, the health sector registers a 3.5% growth in the GoU resource allocations.
CHAPTER FIVE: Medium-term Fiscal Outlook
5.1 Overview
On the domestic revenue front, the main focus in the medium term is to ensure continued stability of the tax system and improve the collections from other revenue sources, especially Non-tax Revenue (NTR). Government may also make modest adjustments in tax rates or propose new taxes in order to finance Government programmes in the medium-term. However, the scope for this option is very limited.
The projected tax revenue in the medium-term assumes stability of the tax system. This implies that any pressures to destabilise the tax system must be resisted. Important to note are pressures to raise the PAYE threshold, which would result in a revenue loss of U Shs. 93 billion. In addition, there are pressures to provide more tax incentives which will also adversely affect tax revenues. It is important to resist these pressures if we are to achieve the Tax Revenue/GDP ratio target of 0.5% growth per annum, which is essential to ensure long-term fiscal sustainability. There is also a need to carry out proper analysis and evaluation of the impact of tax proposals on revenue, equity and attraction of investment before their implementation. In addition to the above pressures, there are challenges to revenue mobilization. These include the existence of large subsistence and informal sectors; also the current energy crisis has resulted in enterprises across sectors requesting duty-free diesel for the use in their business operations.
5.2 Resource Envelope Projections
The sources of funds for the Government budget comprise domestic tax revenue, non-tax revenue, external donor grants and loans, less the financial requirements of external debt repayments and the domestic financing requirements needed to accommodate the monetary policy and foreign exchange reserve objectives.
The largest component of the resource envelope is domestic revenue, which comprises of 64% of next fiscal year's projected resources. The resource envelope for the medium-term is set out in Table 5.1 below;
Table 5.1 Medium-term Resource Envelope Projections
Uganda Shillings Billion Budget 2006/07 Proj. Outturn 2006/07 2007/08 2008/09 2009/10
A. DOMESTIC REVENUES 2,569.1 2,652.8 3,058.5 3,420.0 3,831.2
URA Revenue 2,524.9 2,555.0 2,961.2 3,329.9 3,749.5
o/w new measures 46.0 - - - -
Non URA Revenue 41.9 95.5 95.0 83.2 74.7
Loan Repayments 2.3 2.3 2.3 6.9 6.9
B. BUDGET SUPPORT 822.3 1,111.0 710.6 691.4 658.5
Loans 561.9 817.7 201.9 203.6 205.2
Grants 260.4 293.3 508.7 487.9 453.3
C. PROJECT SUPPORT 1,039.2 1,128.3 1,124.0 1,358.1 695.5
Loans 557.0 483.4 654.5 918.2 491.8
Grants 482.2 644.9 469.5 440.0 203.7
D. TOTAL RESOURCE INFLOWS 4,430.6 4,892.1 4,893.1 5,469.6 5,185.2
E. EXTERNAL DEBT REPAYMENTS

Amortisation

-215.4

-166.8
-143.7

-99.9
-159.5

-114.3
-152.9

-114.6
-152.1

-120.2
Exceptional Financing -44.9 -40.2 -32.0 -34.2 -32.0
Arrears -3.7 -3.6 -13.1 -4.1 0.0
F. DOMESTIC AND OTHER FINANCING 40.0 -423.4 32.3 -178.1 304.6
G. TOTAL RESOURCE 4,255.2 4,325.0 4,766.0 5,138.6 5,337.6
H. Interest Payments and Domestic Arrears
Interest 258.9 239.0 300.0 300.0 288.2
Domestic Interest 207.6 202.3 248.0 246.0 230.3
External Interest 51.3 36.8 52.0 54.0 57.9
Domestic Arrears 148.9 148.9 280.0 330.0 330.0
I. TOTAL AVAILABLE FOR MTEF 2,808.2 2,808.7 3,061.9 3,150.5 4,023.9
(Net of project support, interest payments and arrears) Source: Ministry of Finance, Planning and Economic Development
5.2.1 Revenue
Domestic revenue is projected to increase in each of the next three fiscal years. It is projected at U Shs. 3,059 billion in the FY 2007/8, which is a 15.3% increase on the current fiscal years projected outturn and amounts to 13.9% of market price GDP. It is expected to rise to U Shs. 3,420 billion, or 13.9% of GDP in 2008/09 and U Shs. 3,831 billion, or 14.0% of GDP in 2009/10. These projections exclude any new tax revenue measures for next fiscal year. If this money cannot be raised through new tax measures or if current revenue levels are jeopardized by tax rate reductions and/or tax incentives, then the budget resource envelope for the next fiscal year will have to be cut accordingly.
It should be noted that the growth in tax/GDP ratio is below the target except for FY 2009/10. This implies that, to achieve the annual revenue growth target of 0.5% of GDP, further revenues need to be raised through additional tax measures. However, there are limited tax handles to fill this gap - Government made important tax reforms in the last decade - introduction of VAT in 1996 and the overhaul of the income tax in 1997 in order to widen the tax base and make the tax system simple, equitable and competitive internationally. The international trade taxes were reformed with the establishment of the EAC Customs Union. Reforms have been undertaken to improve tax administration but the effects on revenue are not spontaneous.
5.2.2 Budget Support
Budget support in the form of grants and concessional loans is projected to be US$ 386 million, equivalent to U Shs. 711 billion, in the next fiscal year. Budget support is projected to decrease by about 3.5% in 2008/09 to US$ 373 million and then decline further to US$ 352 million in 2009/10. The decline in budget support in dollar terms is consistent with Government's drive to reduce donor dependence and the fiscal deficit as a percentage of GDP.
5.2.3 Project Support
Project support during next fiscal year is projected to be US$ 611 million, or U Shs. 1,124 billion, in the next fiscal year. It is projected to increase by about 20 % in FY 2008/09 to US$ 733 million before declining to US$ 372 million in FY 2009/10. The increase in project support over the next two years can be attributed to additional funding for infrastructural projects, most notably roads and energy.
5.2.4 Financing
External financing consists of amortization, exceptional financing and arrears payments. Amortization of external debt is projected at US$ 62 million, equivalent to U Shs. 114 billion in FY 2007/08, US$ 62 million or U Shs. 115 billion in FY 2008/09 and US$ 64 million or U Shs. 120 billion in FY 2009/10, while exceptional financing will roughly remain constant at US$ 17 million or U Shs. 32 billion over the next three years. Exceptional financing refers to money set aside to repay creditors whose debt is due but have not agreed to the HIPC repayment terms. External arrears payments in the next fiscal year are projected at US$ 7 million, equivalent to U Shs. 13 billion and they are projected to decline to US$ 2 million or U Shs. 4 billion during the FY2008/09.
Domestic financing is projected at a net Government borrowing from the banking system of U Shs. 32 billion in 2007/08, a net saving of U Shs. 178 billion in 2008/09 and a net borrowing of U Shs. 305 billion in 2009/10. Domestic arrears payments are projected at U Shs. 280 billion next fiscal year and thereafter increase to U Shs. 330 billion over the two following years.
5.2.5 Interest Payments
Interest payments on Government contracted debt are projected at U Shs. 300 billion next fiscal year, of which U Shs. 248 billion is interest on domestic securities (Treasury bills and Government bonds) while the rest is interest on external debt.
This overall figure represents an increase of 26 % over the projected outturn for this fiscal year, and constitutes 9 % of total resources available to the GoU budget. The figure is projected to remain broadly constant in shilling terms over the medium term, while falling slightly as a percentage of the resources available to Government (7 %) in 2009/10.
The high level of Government expenditure on interest payments, particularly domestic interest payments, is a consequence of the size of the Government's fiscal deficit, which has necessitated an increase in the number of Government securities issued by BolJ to control inflation. Government's policy of deficit reduction will help scale back interest costs in the medium term as can be seen by the declining share of interest payments as a percentage of the GoU budget.
5.3 Budget Outlook for FY 2007/08 and the Medium-term
Tax revenue outturn for FY 2006/07 is projected at U Shs. 2,555 billion. This represents a tax revenue/GDP ratio of 13.2%. Tax revenue is projected at U Shs. 2,961 billion on FY 2007/08, U Shs. 3,230 billion in FY 2008/09 and U Shs. 3,749 billion in FY 2009/10, representing tax revenue/GDP ratio of 13.4%, 13.1% and 13.7%, respectively. The projected tax revenue in the medium-term assumes stability in the tax system. This implies that Government must resist any pressures to destabilise the tax system. For instance, pressures to raise the PAYE threshold will result in a revenue loss of U Shs. 93 billion while pressures to provide additional tax incentives will also undermine tax revenue.
The total resources projected for Government expenditure, including interest and domestic arrears payments, in FY 2007/08 is U Shs. 4,766 billion. However, Government's domestic arrears payments of U Shs. 280 billion inevitably takes priority on the resources because these are commitments for which government has already consumed goods and services. Arrears payments also include retirement benefits (pensions) for senior citizens.
Consequently, when domestic arrears are deducted from the total resource envelope of U Shs. 4,766.0 billion, the amount available for expenditure next FY is U Sh.4,486.0 billion. This translates into an increase of U Shs. 379.7 billion above the FY 2006/07 expenditure of U Shs. 4,106.3 billion, an increase of approximately 9%.
Whereas the additional amount available for expenditure in FY 2007/08 is U Shs. 379.7 billion, the fact that donor project aid is earmarked for specific projects and that there is a projected increase in interest payment by UU Shs. 41.1bn compared to FY 2006/07 means that the net additional resources available for allocation to priorities next FY is only U Shs. 253.7 billion.
The options for Government to reallocate spending from within the budget to under-funded/unfunded priorities are severely limited. Currently 36% of the National Budget is financed with donor resources, a significant reduction from previous years. With the shift from project support to budget support donors require a number of benchmarks to be fulfilled before disbursing funds. As a result, Government has entered into a number of undertakings with donors that have budgetary implications. One such undertaking is to sustain the share of the PAF in the total budget. PAF currently accounts for 39.8% of the FY 2006/07 budget.
The option to finance additional expenditure requirements through cuts in the discretionary budget is limited due to the fact that the discretionary budget has been cut by 80% relative to the FY 2001/02 level. This leaves Government institutions that are highly dependent on the discretionary budget with a bare minimum of the resources they require. Therefore any further adjustments in these areas will be tantamount to closing down these affected institutions.
The option to increase revenue from external sources is also limited. Government aims to reduce aid dependency because high dependency increases the vulnerability of the budget to a sudden cut-back in donor aid thereby constraining economic and budgetary choices. In addition, developing a large deficit through external borrowing tends to appreciate the exchange rate, as more donor foreign exchange flows into the economy, and to raise interest rates, as the Bank of Uganda sells more treasury bills and bonds to ensure that the injection of donor-financed Government expenditure does not raise inflation. An appreciated exchange rate is damaging to export-led growth, as exporters receive fewer shillings for each dollar they earn. High interest rates are detrimental to private sector development as they raise the cost of doing business and reduce access to credit.
In view of this, there is need to agree on the feasibility of undertaking inter-sectoral budget re-allocations in favour of those sectors which can make the strongest contributions to tackling the core challenges of the budget strategy by consistently prioritising government expenditure on areas that clearly contribute to poverty eradication in a cost effective manner. In addition, it is clear that stakeholders need to identify key expenditure drivers in each of the critical expenditure priority areas. This will enable government to determine how the financial implications of these priorities impact on the rest of the sectors/sub-sectors in light of the projected MTEF.
The GOU Resource Envelope has increased by U Shs. 253.7 billion for FY 2007/O8 and the rationale underlying the FY 2007/08 Budget Strategy and Priorities are;
i. Interventions that will enhance economic growth and development;
ii. Measures that will increase production; productivity and value addition including micro finance.
iii. Measures that will enhance domestic and external competitiveness; and
iv. Public Sector interventions that deal with constraints to accelerate the socio-economic transformation of Uganda.
In addition, there are expenditures that disrupt the execution of the budget and must be provided for in FY 2007/08. These include additional expenditures under the Parliamentary Commission arising out of increased allowance rates and number of MPs, G-Tax compensation and CHOGM related activities.

Does the NRM intentionally make Ugandans poor so that it is easy bribing them at polls?

I have always heard about the dishing out of money by people from the NRM camp, but today, I met some youth talking about how he dished shs 10,000 to voters very early in the morning of the voting day in 2006. He said money was brought in a saloon car but heavily guarded. And he was one of those assigned the duty to help dish out money to all who were passing in the path and looked the type who could change their mind and vote NRM! If this is true, it is so unfortunate to see the people who wagged a 5 year bush war with one of the reasons to fight the stealing of votes practising the same evil.

Literature that can help you learn the values of Moringa o

The Nutritional Moringa Leaves

Moringa really works but many of our people are simply ignorant of that fact and hence look for more expensive options.
William Kituuka

Moringa leaves are highly nutritious and have been used in traditional medicine to treat a host of diseases. Some people call it a "miracle tree."
Many people who work with Moringa are realizing that further scientific studies are essential to create mass awareness. The key to making such studies a reality lies in the hands of top-level decision-makers who hold the purse strings for scientific research.
Trees for Life has compiled two powerful tools to help people like you share this information with key decision-makers in your country. These tools are:
•A book
•A PowerPoint presentation
The book
This book is designed to present essential scientific facts in a way that has proven to be meaningful for such decision-makers. The book was produced through the joint efforts of a large number of people over several years. The message was thoroughly tested in the field for its effectiveness. It is a must for anyone who wants the people of their country to gain from the benefits of Moringa.
You may preview the book at: www.treesforlife.org/moringa/book
Printed copies to share with decision-makers are available on request.
The PowerPoint presentation
The main content of the book has also been converted into a PowerPoint presentation. It is an excellent tool for sharing the potential of Moringa with a group of people. People have shown this presentation to gatherings of hundreds of scientists, as well in small meetings with a few decision-makers. Several people are also using this presentation to share the information with civic and service groups.
To view or download the presentation, go to: www.treesforlife.org/moringa/presentation
Both the book and the PowerPoint presentation are free of cost and completely copyright-free.
These materials have been prepared through the generous gifts of people who believe that Moringa can prevent untold misery for millions of people around the world -- especially women and children. You can do your part by sharing them with people who can make a difference.
Best regards,
Jeffrey Faus
Managing Editor, Trees for Life Journal

What does one have to do to get Basajjabalaba type of favours?

What does one need to do to be lucky to get bailed out as Bassajjabalaba?
William Kituuka

Uganda Govt bails out Basajja with 20bn
ON WHAT GROUNDS DOES GOVERNMENT BAIL BASAJJABALABA WITH TAX PAYERS MONEY ?
Martin
By Ssemujju Ibrahim Nganda
WEEKLY OBSERVER
One week after we broke the story of the state spending Shs 2.5 billion on Dr. Speciosa Wandira Kazibwe’s PhD, The Weekly Observer can reveal that the government spent another Shs 19.9 billion to bail out businessman Hassan Basajjabalaba.
On President Museveni’s instructions a year ago, Bank of Uganda has paid Basajjabalaba’s debt of Shs 19.9 billion ($11.5 million) owed to Standard Chartered Bank.
The hides and skins exporter had failed to re-pay a $22 million loan from Standard Chartered and Stanbic banks. He was indebted to Standard Chartered Bank to the tune of $14 million (Shs 24 billion) and Stanbic $8 million.
On April 26 last year, Museveni told a rally at Kabwohe in Bushenyi district that he had asked Bank of Uganda to help Basajjabalaba clear his debts.
“I have discussed the issue [of Basajjabalaba] with [Emmanuel] Mutebile, (Governor Bank of Uganda) to have him rescued. There should not be much worry,” The New Vision quoted the President as telling the rally.
The Weekly Observer can now reveal that Bank of Uganda has complied. The request to rescue Basajjabalaba had been made by Mr. Longino Ndyanabo, the LC-V chairman of Bushenyi district, Basajjabalaba’s birthplace.
Museveni’s pledge provoked anger from the public and so the parties involved decided to quietly execute the deal.
Sources at Standard Chartered Bank in Kampala told The Weekly Observer this week that Bank of Uganda had paid up.
Bank of Uganda Governor Emmanuel Tumusiime Mutebile was reportedly out of the country for medical treatment but the acting governor, David Opio Okello, confirmed the payment in a telephone interview.
He said Bank of Uganda had deposited $11.5 million with Standard Chartered, which it will recover once a commercial bank interested in buying Basajjabalaba’s debt emerges.
That means that a commercial bank can buy Basajjabalaba’s debt at, for example 75 percent from Standard Chartered Bank. For a loan of say $11.5 million, the interested bank might be charged $8 million.
Then Standard Chartered would transfer the collateral to the new bank and Basajjabalaba would be obliged to pay it.
Okello admitted that only one commercial bank had expressed interest in the Basajjabalaba debt; that bank has since pulled out.
The $11.5 million Bank of Uganda deposited with Standard Chartered Bank might, therefore, never be recovered. It might end up a “donation” to the tycoon.
Okello further admitted that the payment was arranged after government approached the Central Bank. Earlier reports had indicated that Basajjabalaba secured the loans from the two banks under a Bank of Uganda guarantee negotiated by President Museveni.
His was the largest individual line of credit with the two banks and it caused the sacking of some top managers.
Basajjabalaba is the proprietor of Kampala International University and is completing a multi-million medical school campus in Bushenyi. He also owns Lake View Regency Hotel in Mbarara and two Regency hotels in Kampala at Bakuli and in the city centre.
The businessman won the tender to run Owino and Nakasero markets and is also managing the city abattoir.
Basajjabalaba’s indebtedness came to light in April last year when Stanbic Bank seized his factory in Kampala’s Industrial Area over the $8 million loan.
Uganda Revenue Authority (URA) also blocked him from shipping out containers of hides, citing non-payment of taxes.
News of Basajjabalaba’s alleged house arrest while in Italy came to prominence at the same time, reportedly over $6.5 million he owed a businessman there. He ran to Museveni for assistance.
The young tycoon invested heavily in the re-election campaign of President Museveni in 2001. He is reported to have hired all motorcycles and vehicles in Bushenyi the day former presidential candidate Kizza Besigye visited the district. Besigye found hardly any motorcycles and vehicles to mount a serious procession.
Acting BOU governor Okello said that the lending banks accepted that once an agreed amount is deposited, they would write off the loans.
Standard Chartered Bank Managing Director David Cutting was out of the country and the acting MD Ms Rebecca Kaggwa declined to comment on the issue. Corporate Affairs manager Harriet Musoke was yet to respond to our e-mail by press time.
In pursuit of fairness, The Weekly Observer spent two days trying to get Basajjabalaba to comment on this story before publication, but he and his aides played an endless game of hide-and-seek.
A similar story of the state spending an estimated Shs 2.5 billion on Kazibwe’s PhD programme at Harvard in the U.S. drew countrywide outrage, dominating debates on nearly all FM radio stations.
Whatever justification President Museveni might have, the Basajjabalaba bailout may also raise eyebrows in many quarters that would question the criteria used to rescue one businessman, and not so many other investors who have also gone down because of bad debts or failed investments.


Uganda Govt bails out Basajja with 20bn
President has no power to direct BoU Governor
I was rather surprised to read that the President had directed Central Bank Governor, Tumusiime Mutebile to "bail out" beleaguered tycoon, Hassan Bassajjabalaba. Unless this was a case of misreporting by both The Monitor and The New Vision (28 April), one could raise several questions regarding such intent.
In particular, we could ask why "Hassan B" merits any closer and better attention and treatment than any of the many other businesspeople who have met hard times over the years. To my recollection, this would be the first known instance in which the Central Bank intervenes on behalf of an individual.
There is another disturbing aspect to the case. If it is indeed true that the president has spoken or intends to speak to the Governor of the Bank of Uganda, this is clearly unconstitutional. Article 162(2) of the 1995 Constitution stipulates that: "In performing its functions, the Bank of Uganda shall conform to this Constitution but shall not be subject to the direction or control of any person or authority." The Attorney General should inform Mr Museveni that the president is also included in the phrases "any person" or "any authority". The intention of the provision was to ensure that the operations of the
Bank were free from political or other control to the detriment of its professional and purely economic performance.
Since the president is intent on amending the Constitution to, among many other things, secure a 5th term, clip parliamentary powers and appoint puppets to the judiciary, the amendment of this provision is another that he can add to the list of those provisions that he seeks to change. Until then, he has no powers whatsoever to direct the Governor
of the Bank of Uganda on Mr Basajjabalaba's case.
J. Oloka-Onyango,
Makerere University.


Bank of Uganda opposed Basajjabalaba bailout
By Ssemujju Ibrahim Nganda
WEEKLY OBSERVER, 18 Nov 2004
Bank of Uganda stands to lose up to 16 percent of its core capital in its controversial attempt to rescue Hassan Basajjabalaba’s business empire.
The central bank had a core capital of Shs 241 billion in 2003/2004 but President Museveni asked it to pay off the businessman’s loan with Standard Chartered Bank.
Basajjabalaba was indebted to Stanchart to the tune of $14 million and to Stanbic Bank by $8 million.
That rescue package was 16 percent of the central bank’s core capital and, according to minutes of a BoU board meeting The Weekly Observer has seen, members were reluctant to sanction the transaction.
“It was further observed that when coffee, the main export and country’s highest foreign exchange earner experienced problems, there was no rescue of any coffee exporters by Bank of Uganda, therefore to rescue Basajjabalaba Hides and Skins (U) LTD would set a bad precedent,” reads minutes of a special board of directors meeting held on April 22, last year.
Bank of Uganda board of directors include: Tumusiime Mutebile (chairman), Chris M. Kassami (secretary to the treasury), Mr. J. Wasswa Balunywa (member), Mr. Blasio Kiiza (member), G. Sebunya Muwanga (member) and Ms J. M. Kihirimbanyi (board secretary).
Despite initial board opposition, the government went ahead with the bailout. The Weekly Observer in its October 28 edition reported that Bank of Uganda had paid Shs 20 billion to the Standard Chartered Bank to clear the businessman’s loans.
Stanchart publicist Harriet Musoke responded to our inquiries with an e-mail that gave nothing away: “Standard Chartered Bank does not discuss our customer’s business in the public domain as this would violate our professional standards. We are bound by the Bankers Code of Conduct not to disclose anything regarding our customers unless the customer asks us to do so.”
Theoretically, Bank of Uganda would recover the money once there is a commercial bank interested in trading Bassajjabalaba’s debt at a 30 percent profit with the original lending banks.
The London-based Equator Bank, the only commercial bank that had offered to trade in Basajjabalaba’s loans, has withdrawn its offer.
According to a BoU proposal, the commercial bank was to advise Basajjabalaba’s company on the recruitment of a general manager, financial controller and external auditors.
The withdrawal of Equator Bank leaves Bank of Uganda with tricky choices: selling the businessman’s properties or losing the money altogether.
In his own proposal, Basajjabalaba had committed himself to selling off his non-performing assets, proceeds of which would be used to settle the loan (see full list on the right).
However, attempting to sell Basajjabalaba’s properties might force other commercial banks that he still owes money to hurriedly sell off any assets he mortgaged to secure the various loans.
Basajjabalaba’s hides and skins business lost Shs 40 billion last year, yet he had borrowed Shs 51 billion from Standard Chartered, Stanbic, Uganda Development Bank (UDB), PTA Bank and East African Development Bank (EADB).
Bank of Uganda, through the Development Finance Credit Scheme, guaranteed only the loans from UDB and EADB.
Basajjabalaba complicated his financial position further when he and two other directors in the hides business borrowed Shs 20 billion from their company to build (or buy) hotels and shopping malls across the country.
As a result, the hides business ceased to operate due to lack of working capital in April last year. It was at that point that Museveni asked Bank of Uganda to rescue the businessman.
Commenting on the initial Weekly Observer story, Information minister Nsaba Buturo defended the bailout as “strategic intervention in a vital sector generating employment”.
Junior finance minister Isaac Musumba also explained that when government intervenes, among other things, it looks at the returns on the company’s investments and the cause of its financial troubles.
A justifiable cause must have been beyond the company’s control and one that could not have been anticipated.
According to an internal memo prepared for Bank of Uganda board of directors, Bassajjabalaba lost Shs 40 billion in his hides business due to the following reasons:
•Delays at the airports after Sept. 11, 2001 terrorist attacks on the U.S. This was coupled with the fall in prices of hides. This resulted in the loss of $7.2 million.
•The rejection of 150 containers of hides by a buyer in Pakistan resulted in the loss of $2 million.
•The introduction of a 15 percent tax on exports by Uganda Revenue Authority (URA) resulted in the loss of $1.5 million.
•The other loss of $9.87 million came when an Italian company auctioned his 72 containers of hides after he failed to pay $6 million for equipment to build a tannery in Mbarara. The total loss is $23.67 million or about Shs 40 billion.
The memo says President Museveni asked BoU to rescue Basajjabalaba because the hides and skins business contributed 5 percent of total revenue from exports.
If Standard Chartered Bank were to lose the money it lent Basajjabalaba, the loss would “wipe out almost all the core capital of Standard Bank which now stands at Shs 35bn.
Although the Chartered Group head office in London could possibly rescue the bank, there is serious reputation risk to Standard Chartered Bank in Uganda,” reads the internal memo.
However, merely paying off Basajjabalaba’s debts is not enough to resurrect his hides and skins business. He needs an additional Shs 14 billion to restart.
Research shows that it may be good for the economy for government to rescue a sinking private company. Bailouts are, however, prone to controversy.
Questions that often arise include the strategic importance of the affected sector to the economy and the choice of actual beneficiaries.
The Governor, Mr. Tumusiime-Mutebile, refused to discuss what he called board issues when called this week. Sources, however, said that he too had vehemently opposed the rescue bid, at one point threatening to resign in protest.
It is not clear whether the government managed to make the board change its mind or whether it simply went ahead with the bailout against the board’s advice.
Just as in our first story on this matter, attempts to get Bassajjabalaba’s side of the story were futile.
See related story
List of Basajja assets to be sold to recover money:
1. Mbarara High Street plot, (Stanchart - Shs 350 million).
2. White Horse Inn hotel/Kabale (Orient Bank - Shs 1 billion)
3. Munyonyo residence (Stanchart - Shs 1.5 billion)
4. Lumumba Avenue, plot 30 offices. (Shs 300 million).
5. Kitante Road, Plot 29 residential (Stanbic - Shs 300 million).
6. Nsambya plot. (Shs 150 million)
7. Six plots in Bugolobi (Shs 180 million.)
8. Kisugu plot residential (Stanchart - Shs 450 million).
9. Jinja Road plot - complex. (Shs 1.3 billion.)
Other Basajjabalaba assets not on sale/sold
10. Plot 12 Luwum Street. Mall/hotel (EADB - Shs 4 billion).
11. Plot 17 Market Street, mall/hotel (EADB - Shs 4 billion).
12. Nkrumah Road mall/offices (Stanchart Shs 1.5 billion).
13. Plot 5 K William Street, Mall (UDB - Shs 3 billion)
14. Plot 16D Market Street, mall. (PTA - Shs 3 billion).
15. Kampala Regency Hotel (Stanbic - Shs 5 billion).
16. Lake View Hotel Mbarara (EADB - Shs 4.5 billion).
17. Bushenyi Store (PTA - Shs 1.55 billion).
18. Mbarara Tannery (PTA - Shs 2 billion).
19. Plot 61 Bugolobi residential (Stanchart - Shs 500 million). 20. Plot 1 Channel Lane store/offices (Stanchart Shs 4 billion).
21. Plot 3A Channel Lane (Stanchart - Shs 1 billion).
22. Uganda Meat Industries (Stanchart - Shs 2.5 billion).
23. Kampala International University (Shs 12 billion).
24. Bushenyi residences (Shs 300 million).
25. Kampala City Abattoir (EADB - Shs 3 billion).

Basajjabalaba sold UCB mansion at Sh16m
Solomon Muyita
Kampala
Businessman Hassan Basajjabalaba irregularly received fresh titles to properties he had earlier mortgaged to Bank of Uganda as security for a multi-million dollar loan, and then quickly sold off the properties to his cronies in an attempt to conceal their ownership, court documents reveal.
Bank of Uganda is seeking to reverse the consent decree upon which the new titles were issued and re-establish its right over the properties as it seeks to recover a $18.3 million (over Shs35 billion) loan owed by the businessman.
BoU saved Mr Basajjabalaba’s business empire from collapsing in 2004 when, on the directives of President Museveni, whose party the businessman belongs to and sponsors, it paid off his debt owed to two commercial banks. As security for the loan, which the businessman was supposed to pay back to BoU, titles to properties he had mortgaged to the banks were handed over to the Central Bank.
The Central Bank now accuses Mr Basajjabalaba of allegedly using a fake court order dated June 25, 2008 to acquire new titles to the properties and selling them rapidly, leaving BoU holding onto worthless paper.
Court documents seen by Daily Monitor indicate that having illegally repossessed the titles to at least 22 of his prime properties within Kampala city and its suburbs in July, the businessman entered multiple transfers on each of them within a fortnight.
In a sworn affidavit that is part of an application currently before Principal Judge James Ogoola, BoU’s legal counsel Margaret Kasule, says the multiple transfers to the purported purchasers were meant to put the properties out of BoU’s reach. Evidence shows that all the 22 properties were transferred to six of Mr Basajjabalaba’s associates, who kept selling and transferring the properties among themselves, with the help of the same advocate, identified as Iyamulemye Tweheyo.
Court documents have named the six associates as Saidi Kayondo, Dan Katarihwa Kwatampora, Stephen Kagoro, Silagi Tumwine, Imam Kankurihemu and James Magezi. “Registration of the properties to (the six men) was done through fraud which they were privy to,” says BoU’s Kasule in her affidavit, adding that land documents clearly show that the men were nominees of Mr Basajjabalaba in the alleged fraud.
The banks have also attached valuation reports from 2001, when the properties were mortgaged to the commercial banks, to show the gross undervaluation of the properties in this year’s rapid transfers.
In one such case, the Uganda Commercial Bank mansion in Munyonyo, which Mr Basajjabalaba bought several years ago and which was valued at Shs1.8 billion in 2001, was sold in July at Shs16 million. Two prime residential buildings in Kisugu, a city suburb, valued at Shs450 million in 2001 were sold at Shs15 million each while a commercial building valued seven years ago at Shs3.2 billion was sold at Shs100 million.
Another residential house in Bugolobi valued at Shs560 million was sold for Shs105 million and a Shs2.2 billion commercial building on Nkrumah Road was sold for Shs120 million. BoU earlier faulted the Commissioner Land Registration, Ms Sarah Basangwa Kulata, for ignoring the existing mortgages on the properties and for issuing fresh titles without issuing a public notice as required by law.
Ms Kulata said on Wednesday she had not seen the latest BoU complaint. “But when I see it, I will respond,” she told Daily Monitor by telephone. Mr Basajjabalaba had not filed his defence by yesterday and efforts to speak to the businessman proved futile. But when Daily Monitor broke the story on November 21, Mr Basajjabalaba issued a press statement in which he said he had been offered the titles in a swap debt settlement with the government.

More than 2 decades later... Has Museveni delivered the fundamental change?

More that 2 decades in office, has the fundamental change been delivered?
President Museveni still wants to be in power after 25 years, is it because he is still trying to see the fundamental change he promised a reality?
William Kituuka

Emmanuel Gyezaho
Kampala
Tomorrow, President Yoweri Museveni celebrates more than two decades of uninterrupted stay in power. From a bush war hero, who preached the gospel of frugal spending and lean government, to a politician now enjoying the perks that come with longevity in power. Sunday Monitor’s Emmanuel Gyezaho examines the transformation of President Museveni, the man, as we know him.
On Wednesday, January 26, 1986, President Yoweri Museveni stood on the front porch of the Parliamentary Building before a rudimentary desk and took the oath as the 9th President of the Republic of Uganda.
He had just ousted the short-lived rogue regime of Gen. Tito Okello Lutwa after a five-year guerrilla war that had also seen his National Resistance Army rebels fight Dr Apollo Milton Obote’s (1980-85).

Late President Obote

On that day, President Museveni delivered his now memorable line to a very anxious nation: “No one should think that what is happening today is a mere change of guard; it is a fundamental change in the politics of our country,” he said.
In that speech, the President promised to run a frugal and responsible government and told his fellow countrymen: “We want our people to be able to afford shoes.
The honourable excellency who is going to the United Nations in executive jets, but has a population at home of 90 percent walking barefoot, is nothing but a pathetic spectacle. Yet this excellency may be busy trying to compete with [then US President Ronald] Reagan and [then USSR President Mikhail] Gorbachev to show them that he, too, is an excellency.”
Such was the contempt President Museveni had for African leaders who were living opulent lifestyles while their nations basically decayed around them. But as he celebrates 23 years in power, the idea that inspired his disdain for affluence resurfaces to haunt him.
Only last week, it emerged that the government had forked out Shs88.2 billion for a luxurious new Gulfstream V extra-special performance executive jet for the President, even as the state continues to borrow heavily abroad to supposedly provide better infrastructure, decent education and healthcare for Ugandans.
It is understood that the new jet, the only one of its kind known to be owned by either an African head of state or anybody else on the continent, is fitted with enhanced anti-terror capabilities.
In the early years, his ministers drove around in modest Nissan Laurel saloon cars, today they have expensive fuel-guzzling Toyota Landrcruisers 4WD.
The President’s critics are now armed with fodder to question his lifestyle and judgement. They ask, is this the fundamental change he talked about in ’86?
Respected academic and Executive Director of the Mbale based Afrika Study Centre, Prof. Dani Wadada Nabudere told Sunday Monitor in an interview on Thursday that the country was witnessing power corrupt the President. “That’s open for all to see,” said Prof. Nabudere.
“He (Museveni) told us in 1986 that he wanted people in government not to live in opulence. He even wanted State House to have cutlery from Tumpeco (a local plastics producer). It is clear power has gotten to his head. Since he has absolute power, he feels he can ride any storm.”
President Museveni’s press secretary, however, believes such criticism is unfounded.
Said Mr Tamale Mirundi: “What they (the critics) don’t know is that the Presidency is the property of the State. How do other President’s travel? Because he is our President, we must ensure he lives comfortably. We must protect him. In 1986 there wasn’t terrorism. We have soldiers in Somalia and do you think the Islamists are happy?”
And while Makerere University political science professor Aaron Mukwaya did not pick issue with the purchase of a new jet for the President because “I thought Parliament discussed and approved that matter”, he said there was evidence to indicate a complete transformation of Mr Museveni from the austere man we once knew.
“In 1986, Museveni was just coming from the bush. He didn’t understand the mechanisms of the State and what power is. So when he comes to power, he realises there are so many factors; he needs to expose himself domestically and internationally,” said Prof. Mukwaya. “So it was inevitable that these things would happen. He totally forgot about the dictum that power corrupts but absolute power corrupts absolutely.”
Former Samia Bugwe North MP, Aggrey Awori, once a strong Museveni critic but now in bed with government, was more philosophical in his analysis of the lifestyle changes the President has undergone.
“Politics isn’t a matter of faith where you commit yourself to some doctrine,” said Mr Awori, who abandoned his mother party, the Uganda People’s Congress. “It is an art of possibilities, perceptions and constant changes. In this case, the man [Museveni] has undergone tremendous transformation. In 1986 he was barely a President; he was still in the mould of a rebel leader not interested in the perks of the Presidency.”
Mr Awori said he doubted whether the President had personally “run” to the Ministry of Finance and ordered the purchase of a jet. “It’s the people around him who must have said, ‘Sir, your office needs better transportation.”
Added Mr Awori: “It is a matter we have to live with. These modern seemingly expensive items come with the office of the President, and given the difficult security environment obtaining, such as international terrorism, he definitely needs secure transport.”
What cost does the taxpayer has to bear in maintaining the President? According to the ministerial policy statement for the Presidency, this financial year alone, the Ugandan taxpayer will have forked out Shs51.3billion sustaining the Office of the President, besides Shs66.5 billion needed to run State House.

It isn’t in doubt that the Presidency, like any other across the globe, deserves the comfort and efficiency of modern transport. But why is it an issue for critics of this expenditure? The case made is that, the Executive and its policies are not in tandem with the needs of society. For a President who was seen as a reformer; one who spoke of fundamental change by lean effective government and frugal spending, the transformation is out of step with his own vision for change.
In understanding the evolution of Mr Museveni, however, we must assess his performance over the past two decades and determine whether he has lived up to his promises.
President Museveni assumed the mantle of leadership in Uganda at a time when the State had been run-down; insecurity was at an all time high and the economy was in tatters. His administration arrived with a high-sounding 10 Point Programme -- recently modified to 15 points -- with the restoration of democracy and security top on the agenda.
President Museveni introduced the Movement political system, a system that was supposed to be all-embracing where individual merit thrived, and one that was to forge national unity. In the years that followed, Uganda attained relative stability and economic growth after enduring decades of government mismanagement, civil war and rebel activity.
Initially an avowed disciple of the Marxist-Socialist economic model, President Museveni later introduced radical measures to liberalise the country’s economy – at the urging of the International Monetary Fund and the World Bank, that included privatisation and currency reform.
His State-of-the-Nation addresses have always been punctuated with rosy statistics about the progress Uganda has made, although quite often, he has said little if at all anything about the problems that have blighted his Presidency.
In his latest missive to media houses ahead of tomorrow’s celebrations, President Museveni points out that the “literacy rate [in the country] has risen to almost 70 percent up from 42 percent in the early eighties.”
The economy, President Museveni wrote, “has been growing at an average 6% of GDP since 1986.”
Without doubt, revenue collection under his tenure has exponentially increased.
Statistics from Ministry of Finance indicate that the Uganda Revenue Authority now collects Shs4 trillion compared to Shs5 billion in 1986. “As a result, Uganda can now service 70 percent of our own national budget, a great indicator of progress towards independence,” wrote the President in a letter to media houses last week.
The number of Ugandans living below the poverty line has reduced, he opined, to 31 percent down from 56 percent in 1988.
Mr Moses Byaruhanga, the president’s political assistant told Sunday Monitor on Friday that his critics “must appreciate what the NRM has done. Those criticisms are not logical and well-thought-out.” He cited the introduction of Universal Primary Education (UPE) in 1997, the increase in domestic revenue collected and the construction of new roads as examples of the fundamental change President Museveni promised in 1986.
If we are to gauge Mr Museveni’s performance based on UPE enrollment figures, his administration certainly scores highly. In 1997, 2.2 million pupils were in primary school, and as of 2007, that number had risen to 7.5 million, government statistics show. But questions abound about the quality of education provided for under UPE in the absence of adequate facilities and teaching resources especially in rural areas.
The high drop-out and increasing failure rate has blighted the programme. In the 2008 Primary Leaving Examination results, only 17,021 pupils out 463,631 passed in division one, an almost 50 percent drop compared to 2007 results which returned 31, 969 first grades out of 404,985.
The road infrastructure is at its worst and the public health services are all but crippled.
Two decades of conflict in northern Uganda, unprecedented institutionalised corruption in government, growing nepotism and cronyism, increased militarization of politics, disrespect for human rights by the security services and intolerance for the political Opposition, evidently stand out as the other negatives in his regime.
In 2005, President Museveni had presidential term limits deleted from the Constitution, in his quest to stay in power, following a Shs5 million inducement paid to NRM-leaning MPs. That action was a contradiction to his 2001 commitment to relinquish power at the end of his second elective term in office.
He told the US’ Los Angeles Times in an interview on March 12, 2001: “I will leave office for sure, because I am not a hereditary king. I would be very glad to leave office, once I have served my term.
To be remembered, just as a freedom fighter who helped to give the people of Uganda a key to their future, to give them democracy, get rid of dictatorship.”
Now, the President, mid-last year launched his bid for fourth term at a rally in the eastern town of Mbale.

No Hunger in countries with democracy

Amartya Kumar Sen (Welfare Economics)

Amartya Sen's Famous Theory Is Being Tested by Starvation in India
Agence France-Presse
Growing reports of starvation are due in part to droughts that have produced parched fields like this one near Chandigarh in Northwest India.

By MICHAEL MASSING
Few scholars have left more of a mark on the field of development economics than Amartya Sen.
The winner of the 1998 Nobel Memorial Prize in Economic Science, Mr. Sen has changed the way economists think about such issues as collective decision-making, welfare economics and measuring poverty. He has pioneered the use of economic tools to highlight gender inequality, and he helped the United Nations devise its Human Development Index — today the most widely used measure of how well nations meet basic social needs.
More than anything, though, Mr. Sen is known for his work on famine. Just as Adam Smith is associated with the phrase "invisible hand" and Joseph Schumpeter with "creative destruction," Mr. Sen is famous for his assertion that famines do not occur in democracies. "No famine has ever taken place in the history of the world in a functioning democracy," he wrote in "Democracy as Freedom" (Anchor, 1999). This, he explained, is because democratic governments "have to win elections and face public criticism, and have strong incentive to undertake measures to avert famines and other catastrophes." This proposition, advanced in a host of books and articles, has shaped the thinking of a generation of policy makers, scholars and relief workers who deal with famine.
Now, however, in India, the main focus of Mr. Sen's research, there are growing reports of starvation. In drought-ravaged states like Rajasthan in the west and Orissa in the east, many families have been reduced to eating bark and grass to stay alive. Already thousands may have died. This is occurring against a backdrop of endemic hunger and malnutrition. About 350 million of India's one billion people go to bed hungry every night, and half of all Indian children are malnourished. Meanwhile, the country is awash in grain, with the government sitting on a surplus of more than 50 million tons. Such want amid such plenty has generated public protests, critical editorials and an appeal to India's Supreme Court to force the government to use its surpluses to feed the hungry.
All of which has raised new questions about Mr. Sen's famous thesis. In an article critical of him in The Observer of London last summer, Vandana Shiva, an ecological activist in India, wrote that while it is true that famine disappeared in India in 1947, with independence and elections, it is "making a comeback." The problem, she added in an interview, "has not yet reached the scale seen in the Horn of Africa," but if nothing is done, "in three or four years India could be in the same straits."
To Mr. Sen, though, it is not the thesis that needs revision but the popular understanding of it. Yes, famines do not occur in democracies, he said in a phone interview, but "it would be a misapprehension to believe that democracy solves the problem of hunger." Mr. Sen, who is the master of Trinity College at Cambridge University, said his writings on famine frequently noted the problems India has had in feeding its people, and he was baffled by the amount of attention his comments about famine and democracy had received. The Nobel committee, in awarding its prize, did not even mention this aspect of his work, he said, adding, however, that many newspapers had seized on it and misrepresented it.
Mr. Sen's views about famine and hunger have recently been put to the test by Dan Banik, an Indian-born political scientist at the University of Oslo. Mr. Banik has spent much of the last several years in India, studying the parched, desperate Kalahandi region of Orissa. In that area alone, Mr. Banik said by phone from India, he found 300 starvation deaths in six months. And they are hardly unique. "I have collected newspaper reports on starvation for six years in Indian newspapers," he said, "and there's not a state where it hasn't happened. Starvation is widespread in India."
He quickly added, however, that the toll was nowhere near the hundreds of thousands that constitute a famine. In fact, Mr. Sen's theory about famines not occurring in democracies "applies rather well to India," he said. "There has not been a large-scale loss of life since 1947." At the same time, he said, "there have been many incidents of large-scale food crises that, while not resulting in actual famines, have led to many, many deaths."

Associated Press
Amartya Sen, the Indian scholar known for his work on famine.
While the Indian bureaucracy responds well to highly visible crises like famine threats, Mr. Banik observed, starvation "occurs in isolated areas and so isn't very visible." India has done an even poorer job of addressing the problem of chronic malnutrition, he said. "It's so shocking," Mr. Banik added. "There's so much food in the country, yet people are starving." Advertisement
India's huge food stocks reflect the power of the farm lobby. It has pressed the government to buy grain at ever higher prices, making bread and other staples more and more expensive. To help the hungry, the government has a national network of ration shops, but they have been undermined by widespread corruption and distribution bottlenecks. What's more, the government, under pressure from the World Bank and other institutions, has reduced its once-generous food subsidies.
On a visit to New Delhi in early January, Mr. Sen participated in a forum to publicize the recent starvation deaths and to promote a new "right to food" movement. While such events show how democracies can provide opportunities for "public agitation" to redress injustices, Mr. Sen said, they also highlight how poorly India has done in meeting basic social needs. "We must distinguish between the role of democracy in preventing famine and the comparative ineffectiveness of democracy in preventing regular undernourishment," he observed.
That Mr. Sen would end up as the foremost thinker on this subject is somewhat surprising, for he initially paid little attention to the link between hunger and democracy. When the International Labor Organization asked him to look into the causes of famines in the mid-1970's, Mr. Sen decided to focus on the Great Bengal Famine of 1943, in which as many as three million people died. As a 9-year-old boy in a privileged Bengal family, he had seen the suffering first hand. At the time of his research, it was widely assumed that famines were caused by sudden food shortages.
Examining records, however, Mr. Sen found that food production in Bengal had not declined. Rather, food prices had soared while farm wages had sagged, making it hard for rural workers to buy food. Examining more recent famines in Ethiopia and Bangladesh, Mr. Sen found that they, too, were caused not by food shortages but by lagging rural incomes. In his landmark "Poverty and Famines" (1981), he argued that most famines could be readily prevented by mounting public works projects for those most in peril.
That book did not consider the role of democracy. Soon after it appeared, however, Mr. Sen began hearing reports about the Chinese famine of 1958 to 1961. The full dimensions of that calamity had remained hidden from the outside world, but after Mao's death it became clear that tens of millions had died. To Mr. Sen the reason seemed clear: the absence of a free press and opposition parties meant there was no one to sound the alarm. By contrast, India had been free of famine since independence. In a 1982 article for The New York Review of Books, Mr. Sen argued that even a fraction of the Chinese death toll "would have immediately caused a storm in the newspapers and a turmoil in the Indian parliament, and the ruling government would almost certainly have had to resign."
The question of food and starvation, he wrote, could not be divorced from "the issue of liberties, of newspapers and ultimately of democracy." Since then, though, Mr. Sen has frequently referred to India's failures in combating everyday hunger. In his book "Hunger and Public Action" (1989), Mr. Sen (along with the co-author, Jean Drèze) noted that nearly four million people die prematurely in India every year from malnutrition and related problems. That's more than the number who perished during the entire Bengal famine.
It is Mr. Sen's writings on democracy, not famine, that have troubled some scholars. Throughout his prolific career, the 69-year-old economist has been very bullish on democracy. In "Development as Freedom," for instance, he wrote that "developing and strengthening a democratic system is an essential component of the process of development." The book had little to say about the high rates of malnutrition, illiteracy and infant mortality that persist in India and many other democracies, and how they can be overcome.
This has led some to conclude that Mr. Sen is naïve about how democracies work in the real world. "Democracies are often run by ethnically based groups prepared to do terrible things to other ethnic groups," said Frances Stewart, a professor of development economics at Oxford University. "Or they can be very corrupt, dominated by elites." She added: "Capitalist, democratic states put the emphasis on the private sector, which doesn't always deliver on social goods. The free press is good on major disasters like classic famines, but it tolerates chronic hunger as much as anyone else." To be fully represented, she said, the poor need institutions like trade unions and political parties that speak for them. Advertisement
Stephen Devereux, an economist at the Institute of Development Studies at Sussex University who specializes in food security in Africa, faulted Mr. Sen for not dealing with the "big political questions." "For him," he said, "public action consists of public works programs — limited transfers to the poor to help them through a crisis. It's important to look more at fundamental reforms, like land reform." Currently, Mr. Devereux said, more than a half-dozen countries in Africa face a famine threat, including such democracies as Ethiopia.
There, he said, conditions are "as bad as in 1984," when famine deaths were estimated at one million. Ethiopia was then ruled by a Marxist dictator. Today it is democratically governed, but as many as six million people remain dependent on food aid from abroad. "Having a free press and a democratic process is important for all kinds of reasons," Mr. Devereux noted, "but that doesn't address poverty and the conditions that lead to famine." With the spread of laissez-faire economic policies, he added, governments have less ability to "step in and provide food security."
Other scholars, however, say that government itself is the problem. T. N. Srinivasan, a professor of economics at Yale University, says that political freedoms, to work, need to be complemented by economic freedoms. Mr. Sen, he said, "doesn't emphasize enough the importance of free markets, trade and access to world markets and capital." The reason authoritarian China has grown more rapidly than democratic India, he said, is its embrace of economic liberalization. Mr. Sen, he added, "seems to have a much dimmer view of globalization than people like me, who see open markets as the best opportunity of the last century" for countries to grow and develop.
What unites Mr. Sen's liberal and conservative critics is their belief that democracy, while desirable, is no cure-all for problems like hunger and illiteracy. In fact, in his more recent writings, Mr. Sen has paid more attention to the shortcomings of democracy and how they can be addressed. The key, he said, is not to jettison democracy but to find ways of making it work better for society's underdogs.
Copyright 2003 The New York Times Company. This text was reproduced from The New York Times, Books & Arts, of March 1, 2003.

The Buganda Conference of December 2009

Kabaka restates case for federo

TOUGH TALKING: Kabaka Mutebi addresses yesterday’s conference in Kampala. PHOTO BY STEPHEN WANDERA
By Emmanuel Gyezaho & Al-mahdi Ssenkabirwa
Posted Thursday, December 17 2009 at 22:31
IN SUMMARY
The Kabaka appeared to remove his cultural jacket and don a political one as he made the case for Buganda’s ‘federo’, telling his audience that the 1990’s Justice Benjamin Odoki Constitutional Review Commission had shown a majority of Ugandans were desirous of a federal system of government.
Kampala
Kabaka Ronald Mutebi has restated his kingdom’s demand for a federal system of government and called for mutual respect between Buganda and the central government. In a speech delivered on Wednesday, three months after relations between his kingdom and the government hit an all time low in the wake of riots in September, the Kabaka said dialogue is the only solution to any differences between Buganda and President Museveni’s regime.
“I believe Uganda can accommodate all of us and we can live in peace and harmony,” said the Kabaka. “I also believe that it requires that we should be able to talk to each other honestly and dialogue in an atmosphere of mutual respect. All of this costs us nothing. But it is very priceless. We should never tire to talk to one another,” he added.
The Kabaka was speaking at the second Buganda Conference, launched last year to articulate pressing issues in the kingdom. His comments appeared at variance to consensus generated at the conference where delegates spoke in favour of closing the door to dialogue between his kingdom and President Museveni, with many arguing that past talks had failed to resolve Buganda’s pressing issues.

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“It is important to recognise that members of a family have serious concerns and needs that need to be taken care of. That is how a family can survive and be prosperous,” he said.
The Kabaka appeared to remove his cultural jacket and don a political one as he made the case for Buganda’s ‘federo’, telling his audience that the 1990’s Justice Benjamin Odoki Constitutional Review Commission had shown a majority of Ugandans were desirous of a federal system of government.
“It is clear that from the findings of the Odoki Commission people wanted to have this system,” he said. “That was the authentic voice of the people. So why deny them that right?”
Kanyeihamba salvo
Speaking at the conference, retired Supreme Court Judge George William Kanyeihamba launched a scathing attack on Baganda who have previously worked or those who continue to work with President Museveni and accused them of trading their loyalty to the kingdom for the trappings of patronage.
“They have been content to hold their offices with their attached fringe benefits and have mostly sided with the incumbent administration that is always dominated by non-Baganda,” he said.
“They appear to be very faithful servants and excellent pupils of the Kisoga saying Omwami kya koba nange kyenkoba translated as ‘I will always concur with what my master says”.
Mr Kanyeihamba said the officials who previously had what he described as the “presence of mind and intellectual acumen” had cowardly switched loyalties for the protection of status, survival and personal aggrandisement.
The conference that attracted a cross-section of Baganda, leaders of various opposition political parties, business people and academics, discussed the subject of Buganda’s quest for federo, where ideas where mooted on how the Kingdom can best achieve this dream.
Curiously, no senior Baganda officials serving under Mr Museveni attended the conference, save for Maj. Ronald Kakooza Mutale, a presidential adviser on military affairs.
Finding moment to speak, Maj. Mutale launched a scathing attack on fellow Baganda and said their failure to achieve their desires was partly because some of them are treacherous and insincere.
Although he said he did not want to “wash our dirty linen here”, Maj. Mutaale admitted that the Baganda had “some internal weaknesses” like “being treacherous” and “not being committed to specific issues.”
He went on to say Baganda had failed to understand the meaning of power and how to respond to it, something that riled Makindye East MP Hussein Kyanjo.
“Those insults must stop and I think they are exceedingly unhelpful,” the MP said.
Justice Kanyeihamba warned Baganda against viewing themselves as a special tribe saying perception had brought the kingdom more enemies than friends and advised Mengo to stop demanding for federo from Mr Museveni. “If Buganda is ever to have its way and obtain what its representatives say it desires, they must persuade, cajole, consult and if need be, dance to the tune of the rest of Ugandans,” he said, adding, “Let us demand it from Ugandans not Museveni. If he dies today does it mean that the quest for federalism will end there?”
Forum for Democratic Change leader Kizza Besigye concurred with Justice Kanyeihamba and said the absence of national dialogue was injuring Buganda’s demand for federalism.
“The federo issue no longer needs discussions because Ugandans spoke in the Odoki report and what we require is national dialogue to resolve other national issues,” he said, drawing loud applause from participants.
Mengo implored
Former spy chief David Pulkol implored Mengo, the seat of Buganda Kingdom, to desist from talking about federo as a Buganda issue. “Buganda should stop under-the-table negotiations on Federo. This is a national issue and it should become a campaign tool in the next election,” he said.

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Maj Mutaale summarised Buganda’s key challenges as a failure to distinguish between form and content, means and ends, effects and causes, glory and power, strategy and tactics.
“You need to make a clear distinction of those. I want to see Buganda participating in the power structures and not in the means. Baganda need to distinguish between glory and power. They need to distinguish between the strategy and tactics,” he said.
The Nabagereka Sylvia Nnagginda who officiated at the opening of the conference said unity in diversity would enhance development in the country.
“This discussion should serve as a platform for debate on kingdoms which are the embodiment of our African culture,” she said. “First world countries have succeeded without compromising their identities.”
Democratic Party presidential hopeful and Gulu chairman Norbert Mao said the conference was timely because the country needs consensus based on truth and justice.
“We need a new consensus and this cannot be achieved when regions are not together,” he said, adding: “All regions have had problems in the past and they should not use this time to lament but focus on the future.”
Former Minister Capt. Francis Babu who chaired one of the sessions said Buganda will attain federalism no matter how long it will take.
"I entirely agree with all the previous speakers and the question before us is how can we get the power back from the top down to the people? Capt. Babu asked
“I think its matter of time. Northern Ireland has spent 100 years fighting for liberation and Buganda shouldn’t lose hope,” he added.