24 September 2006

Uganda: BIDCO - a Development Dilemma

Kampala — One year after the inception of a $150m (sh278.2b) palm oil development on Kalangala island, project sponsors BIDCO are soldiering on, despite incessant attacks from environmentalists and sniping from entrenched local industry interests.

But despite being the most vocal opposition to the project, the environmentalists admit they are hard pressed to put a monetary value to preserving the island's ecosystem that would outweigh the anticipated value BIDCO is bringing to the island.

They argue that by slashing forest cover to make way for the plantation, the islands will lose out on their unique species of vegetation, alter the climate of the area and suffer massive soil erosion.

In 2004, the Government gave BIDCO a go-ahead to establish an oil palm project. Under the terms of the project, BIDCO was to establish a 26,500 hectare oil palm growing operation and set up a plant to process the palm oil from the plantations.

BIDCO would provide the expertise and the funds to get the project off the ground, while for its part, the Government would make the land available allow a 25-year Corporate Tax holiday and 12-year Value Added Tax (VAT) deferral for the plantation project.

Currently, about 3,500 hectares have been put under palm trees out of the 5,500 hectares provided by the Government so far most of which has been on land reclaimed from the forest.

"First of all, we are not burning the forests. We just cut down the trees and leave them in the fields to rot. The bio diversity is not being lost. It is just migrating to the forests we are not touching," Kalangala plantation manager Lim Choon Meng said on a recent tour of rows and rows of plantation.

"Secondly, the impression is that most of the island is covered in forest. That is not true. So far, we have planted about 1,500 hectares of grassland with the palm trees," he said.

Meng also pointed out that they are adhering to an agreement to maintain a 200-metre strip of trees between the plantation and the lake shore and growing cover crops between the palm trees as preventative measures against erosion.

He said he plans to plant an additional 1,000 hectares before the end of the year, but he was desperate for more land on which to plant seedlings.

"I have about 500,000 seedlings waiting for transfer to the fields, some of which are more than a year old and need to be transferred now or I will have to lose them but the land is not forthcoming," Meng said.

According to the managing director of the Uganda project, Kodey Rao, under the agreement, the Government was supposed to have provided the whole 26,500 hectares within a year of signing the agreement, which has not happened.

"We have about 5,500 hectares available, but need the whole component as soon as possible to ease planning," he said.

Partly as a result of BIDCO's activities, the island is experiencing an economic boom.

Land prices are rising, Kalangala town is growing and immigrant labour is swelling the island's numbers.

"The wage bill for our workers is higher than the wage bill for Kalangala district administration and we have not even begun commercial production," Rao said.

BIDCO employs about 1,500 workers whom it pays twice a month which invariably leads to higher sales for shops in the nearby trading centres.

"The improvements around here since BIDCO touched down are amazing," the district agricultural officer, David Balilonda, said.

While agreeing that the workers' salaries have brought increased liquidity into the island's economy, he sees more fundamental benefits.

"The project has opened up roads where there were none. Communication and trade across the island has been greatly improved," Balilonda said.

A new ship, the 108-passenger MV Kalangala, was commissioned in February and sets sail from Entebbe compared to the old one which docked in Masaka. That has improved access to the mainland.

"We are seeing more tourists especially Ugandan tourists since the new ship started," former MP Mulindwa Birimaso, who owns the 30-room Palm Beach Hotel Resort said.

"Everything has an impact on the environment, even your breathing. The question is: what is being done to mitigate this impact?" Rao asked.

"We think we have put together an environmentally-friendly package while at the same time putting together a project that will have a transformative impact on the island's economy," he said.

Rao estimates that the $150m injected into the project will have a six-fold multiplier effect on the economy through - saved foreign exchange, job creation and support services.

On the project's outgrowers scheme, the company projects that on a hectare of land (about 2.5 acres), a farmer will be able to get $1,000 (sh1.85m) per month.

Environmentalists are having a hard time countering these benefits with evidence of their own that shows that the islands trees will have as great an economic impact.

"Building a case for non-monetary benefits is difficult," National Forestry Authority's spokesman Gastor Kiyingi said.

"But the calamities that come with such environmental degradation do not take long to show themselves," he said to the ill- advised move to build a dam parallel to the old Kiira power dam, a situation that has caused a larger than usual outflow and is partly responsible for the reduced water levels on Lake Victoria.

"Today, people are looking for political advice but neglecting professional advice," Kiyingi said.

That maybe but for the time being, the locals remain unconvinced.

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