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@observer Wed, 16 Aug 2023 04:54:19

Hidden dark side of World Bank loans

The golden rule: He who holds the gold makes the rules was recently put into play when the World Bank, one of Uganda’s major financiers, in a statement publicized on August 8, 2023, cut all new funding to Uganda for passing the Anti-Homosexuality Act.

This action followed a directive signed by eleven members of the USA Congress in a letter dated July 25, 2023, urging the newly appointed president of the World Bank Ajay Banga to “immediately postpone and suspend all current lending to Uganda until the recent Anti-Homosexuality Act, signed by President Yoweri Museveni on May 29, 2023, is struck down”.

The release of this statement threw the country into a frenzy, prompting responses from President Museveni to assure his fellow countrymen that “Uganda will develop with or without loans”.

Other technocrats like the permanent secretary and secretary to the Treasury of Uganda Ramathan Ggoobi in a pique muttered that BRICS provides a good opportunity for the global South and gives developing countries like Uganda viable alternatives in pursuit of their development agenda as per the ministry of finance’s official Twitter page.

Loud whispers of cutting down the recently passed national budget have also gotten louder in the corridors of the ministry of Finance. The World Bank’s firm stand on homosexuality doesn’t come as a surprise since one of its founding fathers, reknowned economist John Maynard Keynes was openly gay, meeting his first boyfriend Alfred Knox while both were studying at Eton.

This gives nuance to the reality that homosexuality and ‘sexual and gender minorities’ are a virtue deeply ingrained in the bank’s gene. That said, over the years the World Bank’s revered loans have come shrouded in difficulty such as: up until 2018, the bank has been charging Uganda very high interest on its loans irrespective of her political and economic situation.

As an example, with Uganda three years removed from the bush war in 1989, the World Bank charged Uganda its highest interest rate to date of 40 per cent, and then went ahead to impose structural adjusted programs [SAPs] as conditions for lending money to Uganda.

SAPs rolled out the selling of government-owned entities and led to the retrenchment of many nationals. To this day, the country hasn’t fully recovered from this egregious strategy. The international lender has justified these high interest rates the world over by quoting its credit ratings protocol as the reason for expensive loans. Uganda has poor/negative credit ratings: B for S&P Global, B2 for Moody’s, and B+ for Fitch ratings.

This directly translates in it borrowing expensively with interest charged in years 1986 [33.3 per cent], 1988 [35 per cent], 2012 [26.2 per cent], 2016 [23.9 per cent], and so forth. Paradoxically, Uganda is charged a higher interest rate on loans than Bu- rundi which is considered the world’s poorest country and has no credit rating from international agencies: S&P Global, Moody’s and Fitch.

In 2012, Burundi borrowed at a rate of 11.8 per cent; in 2016, 14.2 percent; and 2018, 14.8 percent; all lower than the rates Uganda got World Bank loans in the same years. This defeats the principle of the international financier’s lending based on credit ratings which it continually uses to issue loans to the USA, and UK at incredibly low rates of 0.5 percent in 2012 and 2014 [UK], and 3.5 percent in 2020 and 3.4 percent in 2021 for the USA.

Not known to many, World Bank loans take years to materialize. Afsaneh Beschloss, the former treasurer and chief investment officer of the World Bank, revealed: “For example, getting a loan from World Bank takes seven years on average”.

This, she mentioned on Bloomberg television in an April 2023 interview. This is more time than Uganda would need to take out a much-needed loan from a bank, or corporation. What is more disturbing is that even with the bulging debt of the international lender’s biggest customer, Africa, the World Bank is reluctant to restructure the continent’s loans, Uganda’s inclusive. Debt restructuring is when the lender agrees to renegotiate the terms of payments for the borrower.

When the 13th World Bank president David Malpass was asked in a January 2023 Bloomberg television interview about China’s request to the World Bank to “eat some losses” in debt restructurings in Zambia, he said: “There’s not a mechanism to do that...” translated as the World Bank has no renegotiation policy with debtors even when they land on hard times.

World Bank loans are famous for tactfully being directed at projects that don’t matter to the lowly but the affluent who are corrupt. In September 2020, the bank approved $300 million to boost service delivery in education, health, water and environment through local governments in Uganda.

Monies like this end up in the pockets of the affluent and corrupt who short-change these projects for their benefit. The World Bank knows this but continues to issue credit with minimal shepherding, knowing that whatever the outcome, Uganda will be liable to pay these loans, placing the country in a debt trap which they later use as leverage to arm-twist it for resources, and political capital.

As it is, the effect of the monies injected into Uganda hasn’t been felt as many in the country still study under trees; hospitals and health centres are in a deplorable state with no medicine, and millions have no access to safe water in Uganda.

According to worldbank.org in the last five years; FY 2018 to FY 2023, Uganda has received $3,291.2 million [~12.1 trillion shillings] in loans, and $1,089.6 million [over 4 trillion shillings] in grants bringing the total amount to $4,380.18 million [16.1 trillion shillings] in funds got from the World Bank.

To the World Bank’s applause, during the said period, it has extended credit to Uganda at zero to low interest in what is called IDA credits. There’s no doubt that the cutting off of such amounts of dollars from the Ugandan economy is going to have colossal effects.

Like, the dropping in value of the Uganda shilling against the USA dollar because there will be less dollars in circulation, which ultimately raises its value against the shilling — inflation. With an insufficient USA dollar in-flow, and the absence of the buffer of a strong foreign currency reserve, the shilling is going to significantly drop against the dollar, making international trade expensive and local borrowing costly since the central bank will have to raise its lending rate(s) to control inflation.

This is going to result in the shutting down of businesses, unemployment, increased cost of living, and a ferocious tax regime as government is most likely going to raise tax rates to increase its revenue to compensate for the void left by World Bank funding.

Be that as it may, the dark [World Bank] cloud comes with a silver lin- ing, China. The Red Dragon has emerged as a viable creditor lending over $1 trillion in the last decade to Africa, Latin America and Asia. Even when their debt contracts have been stricter than those of the other creditors, China is known not to exercise its loan rights.

This has won over the poor and middle-income countries especially because China treats them as equals. The Red Dragon is known to be flexible with debt payment because they have loans that enable borrowers to pay back in minerals, metals, and oil. This floats Africa’s boat. So, Uganda is most likely going to run into the arms of China for credit.

This threatens the superiority, and ideology of the West. When I reached out to Bernard Tabaire, the external affairs officer of the World Bank Group in Uganda, with respect to the threat posed by China as a ‘dangerous substitute’ creditor he referred me to David Theis, the press secretary and spokesperson of the World Bank Group, who met my queries with radio silence.

It’s in this regard that I reckon that the Mexican standoff between Uganda and the World Bank will not last long because Uganda has credit options: China, Russia, even the on-the-horizon BRICS, and the moral support of Africa.

This poses a threat to the West who are major players in the World Bank. Also, the international lender has dollars which are more useful and productive to them in the hands of poor countries than they are sitting in coffers in Washington.

kimaona@yahoo.com

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@observer Wed, 16 Aug 2023 04:07:44

Museveni reverses directive amid media uproar

A riveting turn of events unfolded at Entebbe on August 10, as President Yoweri Museveni, flanked by Prime Minister. Robinah Nabbanja, and the minister of ICT, Dr. Chris Baryomunsi, convened a historic meeting with media CEOs and editors.

The gathering marked a dramatic juncture in a saga that had ignited fervent debates across the nation. The backdrop to this theatrical scene traces back to March 6, 2023, when President Museveni issued a directive that sent shockwaves through the media landscape.

The order stipulated that all government advertisements must be exclusively routed through the Uganda Broadcasting Corporation (UBC). A cascade of consequences followed this decree, reverberating through the media fraternity. The directive’s potency was fortified further with the issuance of a circular on July 10 by Ramadhan Ggoobi, the permanent secretary of the ministry of Finance.

This circular, aimed at government accounting officers, held ominous undertones, warning of dire repercussions for any dissent. It bore a stern message: those who dared to disobey the directive would face punitive measures, potentially including dismissal.

Ggoobi’s directive also extended to the realm of print media, asserting that all print advertisements must exclusively flow through the New Vision Printing and Publishing Company (NV).

The response from media bodies was swift and resolute. The National Broadcasters Association (NAB) and the Uganda Editors Guild (UEG) rallied in protest, announcing a boycott of government briefings. The halls of power resonated with their collective voice, as media houses stood united in challenging the directive that threatened their autonomy.

In the aftermath, a series of deliberations unfolded, drawing the NAB, UEG, media CEOs, editors, and high-ranking government officials into a web of negotiations. The stakes were high, and the discourse centred on the directive’s implications for both the Uganda Broadcasting Corporation and the private media sector.

The pivotal moment arrived at the Entebbe meeting, where Kin Karisa, chairman of NAB, delivered a compelling presentation on behalf of the media entities. His words resonated with a call for collaboration rather than coercion. Karisa’s narrative struck a chord, underscoring that the private media was not averse to assisting UBC but emphasized the dire consequences of directing all advertisements to a single entity.

The president’s response, delivered with unexpected candour, laid bare the heart of the matter. He confessed that his motivation for the directive was rooted in a sincere desire to aid UBC. However, a jarring revelation emerged: he had been oblivious to the true magnitude of government advertisement revenues, quoting a meagre Shs 7.7 billion as the sum at stake.

Yet, as discussions deepened, the president’s perspective evolved. He later recognized that some media organizations were teetering on the brink of collapse, reliant on these revenues for survival. His metaphorical reflection likened his position to that of one refusing food due to plenty, while acknowledging the plight of those in the throes of starvation.

“I wanted to help UBC. I didn’t know that you are also on a starvation ration,” he wondered. To which Nabbanja interjected: “They are all needy.”
“For me, I am losing weight. Food is there, but I do not need food because I have enough. But the starving one cannot refuse food because he is on the borderline; he will be malnourished,” he said, prompting laughter from his audience.

He added, “When I asked about the money from public advertisement, apparently it is not a lot of money. It is about Shs. 7.7 billion. So, it will not solve UBC’s problems, and yet some people who are on starvation rations will die if they don’t have it,” he said before he made the monumental reversal of the directive.

Amid this unfolding drama, the president made an announcement that resonated like a script twist in a riveting play. “Abasadha tubaleke, tiyenda.. [in the context “let them have the ads—I have reversed the directive,”] he declared, adding that he could not bear the weight of curses on his hands [Sagala bisirani].

The State House gardens filled with a sense of relief as media practitioners breathed a collective sigh, knowing the reversal would avert a potentially catastrophic course of action. While the episode ended with an applause-worthy reversal, it has ignited pertinent questions.

Why did it take such a culmination of events for the decision to be reconsidered? What factors informed the initial directive, and who were the architects of this course of action? A sobering takeaway remains: the role of government extends beyond arbitrary decisions.

The rescue of UBC is imperative, but it must not come at the expense of a thriving private media sector. As the curtain falls on this chapter, it is a clarion call for a more informed and balanced approach to governance.

The president’s decision is appreciated, yet it underscores the importance of well-considered policies and laws that secure a vibrant media landscape without veering into coercion. The future narrative must be marked by collaboration and foresight, where government and media entities harmonize for a prosperous tomorrow.

pmkatunzi@observer.ug

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@observer Wed, 16 Aug 2023 00:22:57

Uganda to unveil first digital transformation roadmap

The Ministry of ICT and National Guidance announced the upcoming launch of Uganda’s Digital Transformation Roadmap.

Scheduled for launch on August 17, 2023, at the Kampala Serena hotel, this comprehensive strategy is expected to revolutionize Uganda’s technological landscape and establish the nation as a beacon of digital innovation in the region.

The Roadmap will be launched by Uganda’s vice president, Jessica Alupo, and will be broadcast live on television and the ministry’s YouTube channel.

A STRATEGY FOR ECONOMIC GROWTH

According to President Yoweri Museveni, the government is focusing on four main sectors— agriculture, service, ICT, and industry—to foster growth and development. The ICT sector, with an impressive average growth rate of 14.8% and a 9% contribution to GDP, is seen as the driving force behind the nation’s socio-economic surge.

Dr Aminah Zawedde, the permanent secretary of the ministry of ICT, explained that the Digital Transformation Roadmap details the ‘how’ of Uganda’s journey towards a fully digital society, aligning with the nation’s Vision 2040. With a five-year cycle, the roadmap aims to lay a robust foundation for digital ambitions, while remaining agile in response to technological shifts.

ICT: A LIFE-SAVING FORCE

Dr Zawedde also highlighted the vital role of ICT in enhancing efficiency, transparency, and life-saving processes. With automation and digital processes like eGP (electronic government procurement), Uganda aims to fortify its systems against vulnerabilities, ensuring timely service delivery and preventing corruption.

The roadmap is designed to not only prevent monetary losses but to ensure timely construction of bridges, delivery of hospital equipment, and provision of educational tools. By utilizing ICT to thwart corruption and increase efficiency, the nation aspires to make a tangible difference in the lives of its citizens.

LEADING THE DIGITAL REVOLUTION

The announcement emphasized Uganda’s intention to lead the digital revolution rather than merely participate in it. By harnessing emerging technologies, the country aims to bolster its economic stature, attract investments, foster innovation, and create sustainable job opportunities.

The roadmap is not only a strategy to compete on a global scale but also a vision to enhance the well-being and progress of every Ugandan citizen. Through this digital transformation, the government aims to provide benefits across sectors like healthcare, education, public services, and entrepreneurship, ensuring inclusivity and a brighter future for all.

CONCLUSION

Uganda’s Digital Transformation Roadmap is a landmark initiative that has the potential to redefine the nation’s future. It combines strategic policy decisions, sound investments, and a collective ambition to create pathways for connection, efficiency, and growth.

As the nation prepares for this historic launch, the ministry of ICT and National Guidance invites all citizens to join in this transformative journey. With a strong focus on transparency, efficiency, and well-being, Uganda is positioning itself as a leader in digital innovation and progress in the region.

The unveiling of this roadmap signifies a bold step toward achieving a digitally empowered Uganda, one that stands tall as an example for other nations to follow.

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@observer Wed, 16 Aug 2023 01:31:36

Teen pregnancies pile pressure on government

“In order to decrease the high mortality rate among children, it is essential to reduce the rate of teenage pregnancies, which place an excessive burden on the government,” states Margaret Muhanga, the Primary Health Care state minister.

She explains that children giving birth not only risks their own health but also put pressure on the healthcare system.

“A child giving birth means that the child’s health will be permanently weakened. Their life is compromised by giving birth at such a young age. Often, they must give birth through caesarean section when natural delivery is not possible,” she remarks.

Muhanga emphasizes the financial burden this places on the ministry of Health: “This issue is not simple; it costs us a great deal. We spend significantly on treating these young mothers, who require prolonged hospitalization, unlike mature individuals who usually deliver and leave the hospital within a day.”

She highlights the troubling statistic that most deaths during childbirth in Uganda occur among young people, with an estimated rate of 336 deaths per 100,000 live births. Last week, Muhanga spoke at the launch of Amref Uganda’s eight-year strategic plan at the Serena hotel in Kampala.

This plan, spanning 2023 to 2030, aims to achieve universal healthcare coverage by 2030 and focuses on issues such as maternal mortality rate, neonatal and reproductive health, child and adolescent health, nutrition, climate change, hygiene, water and sanitation, community empowerment, and livelihoods.

The strategy aligns with Uganda’s third National Development Plan (NDP III), the Health Sector Strategic Plan (2020/21-2024-25), Vision 2040, and other National health and development policies.

According to a study published by the National Library of Medicine in March 2022, Uganda has one of Sub-Saharan Africa’s highest maternal mortality ratios, estimated at 336 deaths per 100,000 live births. Another study from November 2020 states that about two percent of women in Uganda die from maternal causes.

The United Nations released a report earlier this year revealing alarming setbacks in women’s health globally, as maternal deaths have either increased or stagnated in nearly all regions. The World Health Organization (WHO) identifies severe bleeding, high blood pressure, pregnancy-related infections, complications from unsafe abortion, and malaria as the primary preventable and treatable causes of maternal deaths in Uganda.

Minister Muhanga has also provided advice to parents, urging them to take responsibility for their children to avoid the high cost of teenage pregnancies, which hampers economic development. She touched on the contentious National Health Insurance Scheme Bill, emphasizing that once signed into law, every citizen would be required to pay a minimum of Shs 15,000 annually for insurance.

Amref Health Africa officials spoke about the country’s limited insurance awareness and the forthcoming national health insurance scheme, which will require comprehensive training and management.

Muhanga’s strong words and the associated research draw attention to the urgent need for policy interventions and community engagement to reduce teenage pregnancies, improve maternal health, and move towards universal healthcare coverage in Uganda.

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@observer Wed, 16 Aug 2023 03:43:01

Charcoal crisis hits Kampala

On May 24, President Yoweri Museveni issued Executive Order Three of 2023, banning all charcoal burning and trade in Northern and Northeast Uganda.

Museveni said that corruption within security officers in Northern Uganda is not only shameful and discrediting to the Uganda People’s Defence Forces (UPDF) and other government security agencies but also poses a threat to the environment.

“One form of corruption is in the phenomenon of the charcoal business. The people in charge of environment and forestry allow this destructive business to continue massively. Apparently, armed people escort this charcoal,” Museveni revealed.

So widespread is the bankruptcy among charcoal burners and traders that they have resorted to cutting down the famous shea-butter trees, he said. These trees are believed to have the potential to enhance nutrition and augment food supplies during the annual hungry season in northern Uganda.

Charcoal burning has a significant role in ranching. Through symbiotic arrangements, farmers in Western Uganda engage charcoal burners to clear thickets and unwanted trees, such as acacia, converting them into charcoal. In these western regions, Museveni has directed that the minister of Environment, with the recommendation of the resident district commissioner, will authorize such charcoal burning in symbiotic arrangements.

Museveni’s decision was hailed by environmental activists, but he failed to provide a viable alternative for impoverished families in Kampala who cannot afford cooking gas and electricity. According to the National Forestry Authority (NFA), forests and woodlands cover a total of 4.9 million hectares, approximately 24% of Uganda’s total land area.

As reported by Global Forest Watch, Uganda lost 297 sq km of forest in 2001, a figure that doubled to 736 sq km by 2020. Over the years, continuous depletion of trees for charcoal, firewood, agriculture, timber, and other uses has occurred. This loss of vegetation cover has largely been attributed to charcoal, a primary energy source for many urban dwellers.

CHARCOAL DEALERS SPEAK OUT

When The Observer visited various locations and individuals dealing in charcoal in places like Sentema- Mengo, Kiwatule, Ntinda and Makerere, it was discovered that charcoal prices have skyrocketed. The ban has created a crisis, leading to the closure of several charcoal-selling points.

Many have turned to alternatives like briquettes and stones to cope with the situation. Tony Musisi, a charcoal businessman in Sentema-Mengo, noted that since the ban, charcoal prices have leaped from Shs 55,000 to Shs 80,000 per bag. With the approaching Christmas season, he expects the situation to worsen, predicting that prices may even double.

“We are not supporting environmental degradation, but the government offered us no alternative to charcoal. More than 95 percent of the population in Kampala and other urban areas depend on charcoal, and other options are not affordable,” he lamented.

Poline Namande, a businesswoman in Ntinda, urged the president and his government to subsidize electricity and cooking gas prices to discourage deforestation and charcoal burning. She argued that the government is treating symptoms instead of underlying problems, and people will continue to smuggle charcoal until the high costs of gas and electricity are addressed.

This paper also found that the charcoal business continues, facilitated by a few high-ranking government individuals. Prices have risen, and the product is transported discreetly.

NATIONAL FORESTRY AUTHORITY’S STANCE

Tom Okello, the executive director of the NFA, stated that their efforts are in line with the president’s directive, working with local governments and stakeholders to prevent widespread charcoal burning.

Okello explained that the directive does not outright ban charcoal burning, acknowledging that some people clear land for cultivation or grazing. However, he emphasized that such activity must be regulated and properly managed. The initiative has led to reduced charcoal transport and increased prices due to scarcity.

“Lorries transporting charcoal have greatly decreased, and there is a scarcity of charcoal in the market. We are now assessing the impact on the forest cover that has been cut. By the end of this year, we aim to produce statistics on the losses in the charcoal burning areas,” Okello added.

Attempts to obtain a comment from Solomon Muyita, the spokesperson for the ministry of Energy and Mineral Development, were unsuccessful, as he neither answered nor returned re- peated calls.

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