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Umeme, grain and coffee: Why Kenya should fear Uganda’s economic gamble, By Charles Onyango-Obbo

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Uganda, the 1990s shining Africa poster boy for privatisation, is engaging in what could be East Africa’s biggest economic liberalisation reverse gear. Last year, the Uganda government formally announced it would not renew the contract of electricity distributor Umeme in 2025, when its concession expires, and that it will form a state-owned entity to take over its business.

The government’s main criticism of Umeme is its margins are too high, so it has failed to lower electricity costs, and the expensive rates have hobbled Uganda’s industrialisation ambitions. Umeme counters that it is just a distributor, and the high electricity costs are passed on from the power generators.

In two years, the debate will be resolved. Uganda will be in the midst of campaigns ahead of the January 2026 election, when President Yoweri Museveni, weighed down by the wear and tear of 40 years in office, will likely be bidding for a record-shattering ninth term, with his son, Gen Muhoozi Kainerugaba, among those trying to wrestle the crown from his head. It will be the worst possible timing because incumbents rarely make the most enlightened decisions during heated election campaigns. As the West Africans say, there will likely “be a lot of cry.”

Distribution concession

Umeme was formed in 2004 when the government of Uganda granted the distribution concession to a consortium belonging to Globeleq, a subsidiary of the Commonwealth Development Corporation of the UK, which held 56 per cent, and South Africa’s now inept utility corporation Eskom, which had 44 per cent. In 2006 Eskom exited the consortium, and Globeleq became the sole owner of Umeme.

The regional impact could be significant because, among other things, Umeme shares are cross-listed on the Nairobi Securities Exchange. If it unravels, Kenyan shareholders would be left crying in their bowls, and we could be back to the feud over regional assets that followed the break-up of the first East African Community in 1977.

Too messy to swallow

The renationalisation of Umeme will not be unique. Kenya just tried to renationalise cash-haemorrhaging national carrier Kenya Airways but found it too messy to swallow. The recently elected new government of President William Ruto has decided to throw it back on the block.

The difference in Uganda is that Umeme is just the shallow end of the pool. There are other moves to renationalise the very lucrative liberalised coffee sector by granting a near-monopoly to a Vinci Coffee Company, owned by controversial and shadowy Italian “foreign investor” Enrica Pinetti, to process and export Uganda’s coffee. That would take Uganda back to the early 1990s when the disastrous Coffee Marketing Board was disbanded.

A similar move is being made to give the Grain Council of Uganda, on paper a non-profit membership organisation, the kind of sway over the country’s grain last seen in the colonial era.

The force behind the Grain Council is the otherwise amiable president’s younger brother, retired Lt-Gen Salim Saleh (Caleb Akandwanaho), a sly operator who is the second most powerful figure in the land. A nationalist and statist, Saleh has led a quiet but effective assault against laissez-faire liberalisation, which he argues has mostly benefited foreigners and left Ugandans with only holes in their pockets. He has taken over a large chunk of the country’s agricultural budget and several “development” functions under the amorphous state-created vehicle Operation Wealth Creation (OWC) that he heads and inserted disciples in key national economic institutions.

Return to old roots

This state of affairs is a dramatic return to old roots. Uganda launched the first of a series of economic liberalisations in the 1990s that were deemed impossible in Africa at the time and anathema in the hyper-nationalist traditions that were entrenched in post-independence Africa.

It was the first country in Africa to radically liberalise its foreign exchange market and still maintains one of the least-interventionist approaches to the money market on the continent. It was also the first in East Africa to pass laws that gave the central bank extensive independence.

It was the first on the continent in the early 1990s to liberalise the fuel market and scrap fuel subsidies. Again, in East Africa, at least, it is the government that meddles least in setting the price of gas at the pump. When fuel prices skyrocketed everywhere following the Russian invasion of Ukraine last year, it alone was the East African government to flatly refuse to even consider a fuel subsidy and price cap, as all the rest of the EAC states did.

Price of food

Uganda, too, is the country where the price of food is most considered none of the government’s business. When Ugandans read stories and political fights over maize in Kenya, and the government setting the price, to some of them, it sounds like a tale about an alien planet.

The country and economy that Uganda is today are about to change. Some of the changes have to do with the politics of the Museveni succession and how the family and vested interests that have coalesced around the State House view their future security. A lot of it, though, is because of some good things: the rebirth of the EAC; the end of the wars in Uganda and the ushering in of the country’s longest spell of peace; the rebound of a post-KANU Kenya; and the Rwanda post-genocide recovery.

If there are two people in East Africa outside Uganda, who have edged Uganda to the fork in the road where it is today, they are Rwanda’s President Paul Kagame and former Kenya president Mwai Kibaki.

The author is a journalist, writer, and curator of the «Wall of Great Africans». Twitter@cobbo3

Strictly Personal

If I were put in charge of a $15m African kitty, I’d first deworm children, By Charles Onyango-Obbo

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One of my favourite stories on pan-African action (or in this case inaction), one I will never tire of repeating, comes from 2002, when the discredited Organisation of African Unity, was rebranded into an ambitious, new African Union (AU).

There were many big hitters in African statehouses then. Talking of those who have had the grace to step down or leave honourably after electoral or political defeat, or have departed, in Nigeria we had Olusegun Obasanjo, a force of nature. Cerebral and studious Thabo Mbeki was chief in South Africa. In Ethiopia, the brass-knuckled and searingly intellectual Meles Zenawi ruled the roost.

In Tanzania, there was the personable and thoughtful Ben Mkapa. In Botswana, there was Festus Mogae, a leader who had a way of bringing out the best in people. In Senegal, we had Abdoulaye Wade, fresh in office, and years before he went rogue.

And those are just a few.

This club of men (there were no women at the high table) brought forth the AU. At that time, there was a lot of frustration about the portrayal of Africa in international media, we decided we must “tell our own story” to the world. The AU, therefore, decided to boost the struggling Pan-African New Agency (Pana) network.

The members were asked to write cheques or pledges for it. There were millions of dollars offered by the South Africans and Nigerians of our continent. Then, as at every party, a disruptive guest made a play. Rwanda, then still roiled by the genocide against the Tutsi of 1994, offered the least money; a few tens of thousand dollars.

There were embarrassed looks all around. Some probably thought it should just have kept is mouth shut, and not made a fool of itself with its ka-money. Kigali sat unflustered. Maybe it knew something the rest didn’t.

The meeting ended, and everyone went their merry way. Pana sat and waited for the cheques to come. The big talkers didn’t walk the talk. Hardly any came, and in the sums that were pledged. Except one. The cheque from Rwanda came in the exact amount it was promised. The smallest pledge became Pana’s biggest payday.

The joke is that it was used to pay terminal benefits for Pana staff. They would have gone home empty-pocketed.

We revive this peculiarly African moment (many a deep-pocketed African will happily contribute $300 to your wedding but not 50 cents to build a school or set up a scholarship fund), to campaign for the creation of small and beautiful African things.

It was brought on by the announcement by South Korea that it had joined the African Summit bandwagon, and is shortly hosting a South Korea-Africa Summit — like the US, China, the UK, the European Union, Japan, India, Russia, Italy, Saudi Arabia, and Turkey do.

Apart from the AU, whose summits are in danger of turning into dubious talk shops, outside of limited regional bloc events, there is no Pan-African platform that brings the continent’s leaders together.

The AU summits are not a solutions enterprise, partly because over 60 percent of its budget is funded by non-African development partners. You can’t seriously say you are going to set up a $500 million African climate crisis fund in the hope that some Europeans will put up the money.

It’s possible to reprise the Rwanda-Pana pledge episode; a convention of African leaders and important institutions on the continent for a “Small Initiatives, Big Impact Compact”. It would be a barebones summit. In the first one, leaders would come to kickstart it by investing seed money.

The rule would be that no country would be allowed to put up more than $100,000 — far, far less than it costs some presidents and their delegations to attend one day of an AU summit.

There would also be no pledges. Everyone would come with a certified cheque that cannot bounce, or hard cash in a bag. After all, some of our leaders are no strangers to travelling around with sacks from which they hand out cash like they were sweets.

If 54 states (we will exempt the Sahrawi Arab Democratic Republic for special circumstances) contribute $75,000 each, that is a good $4.05 million.

If just 200 of the bigger pan-African institutions such as the African Development Bank, Afrexim Bank, the giant companies such as MTN, Safaricom, East African Breweries, Nedbank, De Beers, Dangote, Orascom in Egypt, Attijariwafa Bank in Morocco, to name a few, each ponied up $75,000 each, that’s a cool $15 million just for the first year alone.

There will be a lot of imagination necessary to create magic out of it all, no doubt, but if I were asked to manage the project, I would immediately offer one small, beautiful thing to do.

After putting aside money for reasonable expenses to be paid at the end (a man has to eat) — which would be posted on a public website like all other expenditures — I would set out on a programme to get the most needy African children a dose of deworming tablets. Would do it all over for a couple of years.

Impact? Big. I read that people who received two to three additional years of childhood deworming experience an increase of 14 percent in consumption expenditure, 13 percent in hourly earnings, and nine percent in non-agricultural work hours.

At the next convention, I would report back, and possibly dazzle with the names, and photographs, of all the children who got the treatment. Other than the shopping opportunity, the US-Africa Summit would have nothing on that.

Charles Onyango-Obbo is a journalist, writer, and curator of the “Wall of Great Africans”. X@cobbo3

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Strictly Personal

AU shouldn’t look on as outsiders treat Africa like a widow’s house, By Joachim Buwembo

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There is no shortage of news from the UK, a major former colonial master in Africa, over whose former empire the sun reputedly never set. We hope and pray that besides watching the Premier League, the managers of our economies are also monitoring the re-nationalisation of British Railways (BR).

 

Three decades after BR was privatised in the early to mid-nineties — around the season when Africa was hit by the privatisation fashion — there is emerging consensus by both conservative and liberal parties that it is time the major public transport system reverts to state management.

 

Yes, there are major services that should be rendered by the state, and the public must not be abandoned to the vagaries of purely profit-motivated capitalism. It is not enough to only argue that government is not good at doing business, because some business is government business.

 

Since we copied many of our systems from the British — including wigs for judges — we may as well copy the humility to accept if certain fashions don’t work.

 

Another piece of news from the UK, besides football, was of this conservative MP Tim Loughton, who caused a stir by getting summarily deported from Djibouti and claiming the small African country was just doing China’s bidding because he recently rubbed Beijing the wrong way.

 

China has dismissed the accusation as baseless, and Africa still respects China for not meddling in its politics, even as it negotiates economic partnerships. China generously co-funded the construction of Djibouti’s super modern multipurpose port.

 

What can African leaders learn from the Loughton Djibouti kerfuffle? The race to think for and manage Africa by outsiders is still on and attracting new players.

 

While China has described the Loughton accusation as lies, it shows that the accusing (and presumably informed) Britons suspect other powerful countries to be on a quest to influence African thinking and actions.

 

And while the new bidders for Africa’s resources are on the increase including Russia, the US, Middle Eastern newly rich states, and India, even declining powers like France, which is losing ground in West Africa, could be looking for weaker states to gain a new foothold.

 

My Ugandan people describe such a situation as treating a community like “like a widow’s house,” because the poor, defenceless woman is susceptible to having her door kicked open by any local bully. Yes, these small and weak countries are not insignificant and offer fertile ground for the indirect re-colonisation of the continent.

 

Djibouti, for example, may be small —at only 23,000square kilometres, with a population of one million doing hardly any farming, thus relying on imports for most of its food — but it is so strategically located that the African Union should look at it as precious territory that must be protected from external political influences.

 

It commands the southern entrance into the Red Sea, thus linking Africa to the Middle East. So if several foreign powers have military bases in Djibouti, why shouldn’t the AU, with its growing “peace kitty,” now be worth some hundreds of millions of dollars?

 

At a bilateral level, Ethiopia and Djibouti are doing impressively well in developing infrastructure such as the railway link, a whole 750 kilometres of it electrified. The AU should be looking at more such projects linking up the whole continent to increase internal trade with the continental market, the fastest growing in the world.

 

And, while at it, the AU should be resolutely pushing out fossil-fuel-based transportation the way Ethiopia is doing, without even making much noise about it. Ethiopia can be quite resolute in conceiving and implementing projects, and surely the AU, being headquartered in Addis Ababa, should be taking a leaf rather than looking on as external interests treat the continent like a Ugandan widow’s house.

 

Buwembo is a Kampala-based journalist. E-mail:buwembo@gmail.com

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