Kampala, Uganda | By Timothy Kalyegira | Has the government lost its ability to control a crisis?
When the pressure group Action for Change (A4C) and the other opposition groups announced their “Walk to Work” protests in April, many Ugandans dismissed them as poor losers.
Contrary to popular belief, Lorem Ipsum is not simply random text. It has roots in a piece of classical Latin literature from 45 BC, making it over 2000 years old. Richard McClintock, a LatinThey had lost the general election, but rather than concede defeat, they were now trying to come to power by stirring up the public.
With 2011 drawing to an end, it is now evident that the cost of living and the economic difficulties that the A4C fronted as the reasons for Walk to Work were actually only a minor foreshadow of what was to come.
It has become nearly impossible for most of the lower rungs of Uganda’s business community to continue. In April, Action for Change claimed their protest walk was because of the high fuel prices. Those prices have risen still further, but now there are even more complications.
Headline inflation is believed to be something close to 30 percent. But what has finally dealt the business climate in Uganda a death blow is the shortage of electricity.
Even with the six- or 12-hour cycle of load-shedding that Uganda has become used to for several years now, profit margins were thin in the best of times. With load-shedding now 24 hours a day, various parts of Kampala and upcountry towns report going days without electricity. A difficult situation has become desperate.
November, when the latest round of 24-hour load-shedding started, is the month when businesses start planning for the new year and many in the public start preparing for the long and lucrative Christmas holidays.
The new office wall calendars for 2012 are being printed around this time. Many, if not most weddings take place in December and the power cuts created a major backlog of wedding cards, calendars, desk and pocket dairies and other stationery.
This frustration is what caused traders at Nkrumah and Nasser roads to finally take to the streets in protest.
For most of the latter half of the year, the Uganda shilling has come under so much pressure that several interventions by the Bank of Uganda have been required to prevent it from dropping in value against the U.S. dollar to Shs 3,000, a barrier significant in the difference between normalcy and panic.
To add to the economic crisis and the shortage of power, is the national political crisis. If the NRM party and its flagbearer won 68 percent of the popular vote, up nine percentage points from the last election in 2006, it has not been easy to see this mandate at work for most of the latter half of 2011.
Opposition Members of Parliament, joined unexpectedly by a large number of NRM MPs, were prompted to call for the resignation of ministers Mwesigwa Rukutana, Sam Kutesa, Hillary Onek, John Nasarisa and Prime Minister Amama Mbabazi over various alleged acts of corruption from the 2007 Commonwealth summit to taking bribes from the Tullow Oil Company.
The news from September was about censure. Mbabazi, as head of government business, has found little time and breathing space to effectively do his duties. An NRM retreat at Kyankwanzi appeared to bring rebel NRM MPs into line, but not for long, which means that even President Museveni has for once failed to exercise total control over the country’s political situation.
Jumping from crisis to crisis, and emergency to emergency, the government has lost the means to take hold of a crisis and bring the situation back to normal.
The major question now and for 2012 is: Can Ugandans still hope? Is Uganda still a place in which to do business? If one had not already started a business before 2011, is it wise for anyone to start up a new business in 2012, especially if it is a small one?
By late 2011, western donors were already indicating that they were concerned enough about embezzlement and misuse of their funds to cut back on their aid. The Dutch government did so in November over doings in Universal Primary Education.
With its own serious economic crisis in the euro zone showing no signs of ending, in 2012 it is likely that foreign governments will cut back aid to Uganda even more and put a further strain on the economy.
Fortunately for Ugandans, there a few glimpses of light that have kept the country from sinking into total poverty.
One is the fact that Chinese goods are continuing to make inroads into the economy. On the shelves of most supermarkets in Kampala, Entebbe and Jinja today, Chinese goods have become the clear choice for most consumers. On average, western-made goods that cost Shs 10,000 per item cost about Shs 3,500 shillings for the same or equivalent item that is made in China. These cheap, or at least more affordable Chinese goods, are what have prevented Ugandans from walking about in rags or small businesses from collapsing.
When Qatar Airways started operations at Entebbe International Airport in November, its adverts on various radio stations emphasised the Far East and in particular China as some of the airline’s main destinations. Twenty or 30 years ago, airlines used to stress, with pride, western routes like London, Rome, New York and Paris.
Two, for the better educated Ugandans and foreigners doing business in Uganda the other lifeline has come in the form of the Internet and digital technology.
After the Seacom undersea fiber-optic cable landed at Mombasa on Kenya’s Indian Ocean coast in July 2009, there was hope that finally the interior of East Africa was going to experience faster and cheaper Internet services.
The cost per gigabyte has not fallen by as much as had been hoped, but it is still significantly down from the previous Shs85,000 in 2008 and 2009, to between Shs30,000 for Foris Uganda and Shs49,000 for MTN.
The promised 3G+ upload and download speeds are, by European and Japanese standards, more like 2G, but by the frustratingly slow standards Uganda had been used to, the current speeds are adequate for basic text and audio-based uploading and downloading. Imagine what it would have been like, with the current shortage of electricity, if the Internet was still as slow as it was in 2008 and still cost Shs85,000 for a Gigabyte.
Even with the high inflation, the basic tools and materials for small business dealing in video and audio recording the cost of a blank CD-R or DVD-R remains fairly cheap, between Shs700 and 1,500.
Ugandans have, of course, also benefited from the cheaper, reconditioned vehicles from Japan that have come to dominate Ugandan roads. We can only imagine how much more difficult life would have been if we bought brand-new taxis, private “my car” vehicles and lorries.
Third, for a number of businesses, especially the major players in Kampala and those in northern towns, the independence of South Sudan in July as Africa’s latest and 54th state and the acute shortage of very basic goods and services in Sudan has helped many businesses offload and sell stock that would have been sitting idle and expiring in Uganda.
Transporters, wholesalers of mineral water, sugar, beer, textiles, shoes, soap, plastic utensils and so on, have found an opening in Sudan. A similar opening is reported at Uganda’s border with the Democratic Republic of Congo.
Tens of thousands of Ugandans enjoyed a few financial benefits during the 2011 election season, whether from getting free campaign T-shirts to being paid to ride around towns and trading centres on behalf of candidates, or outright receiving cash bribes, or printing posters, the media running campaign adverts, getting free booze and food and transporting rented crowds to various venues.
The problem was that this national euphoria and free flow of cash, especially from the ruling NRM, came from the central treasury and that hole has not yet been filled. After the election, $750 million left the Bank of Uganda vaults to pay for Russian-made SU-30 fighter bombs that Uganda will not need to use anytime soon.
So the campaign and post-election financial indiscipline by the state wiped out any profits that trade with Sudan and Congo and any temporary thrills that the election might have brought. As we approach and enter 2012, we can expect that things will get so much more difficult that the general view will be that things are falling apart.