Fredrick Masiga
7 October 2008
interview
It is over six months since Ms Kundhavi Kadiresan took over as the new World Bank Country Representative in Uganda. She gives Business Power an assessment of what she believes is the way forward for Uganda:
The World Bank is overly optimistic in its various outlook reports about economic stability for developing countries but events elsewhere are not encouraging; why this optimism?
The financial crisis in the United States is a matter of concern that affects all of us. In Africa, the hiking of prices of food and fuel is having a very dumpy impact. What is happening on the capital markets in the developed world may not immediately have fallout on Africa or particularly Uganda.
However if this continues for a longer period, then we will see some impact for Uganda within the next few years. Having said that, I have to say that Africa has had some very good stories for the last few years and this gives us a confidence. Many of these countries have well managed and good macro-economic strategies.
There is fear the financial crisis will acerbate the food price situation in Africa. Uganda is in a different situation than the other parts of Africa. The other countries of Africa are hurt much more in terms of the food price increases. In fact in many of these countries like Ethiopia, Kenya and Ghana, the World Bank has a huge global food facility to respond to the food crisis.
The bank has put together a huge facility to respond to these crisis situation and we are also thinking of establishing a similar one in terms of fuel crisis because many African countries including Uganda net importers of oil.
The government is toying with the idea of issuing an international bond; isn't that the best thing to do to raise interest free cash?
Absolutely not! Uganda like other African countries have access to many grants and the concessional loans like IDA-WB which are interest free. It doesn't make business sense to go to the capital market but it makes sense to tap into these potentials first than to going into capital markets. And with the current financial crisis, the premiums have gone higher and it doesn't make business for Uganda to go into international market.
For example, Ghana last year went into international bond markets and raised close to $550 million but they did not plan on what they wanted to do with the money. $350 million was used for real investment and the rest of the money is in the bank.
Are you worried Uganda's inflation is running out of hand?
Inflation in Uganda is higher than what it used to be and that's largely because of the increase in food prices and that comes from the growing regional demand particularly from the Sudan, Kenya where demand for maize, beans and other food items has increased. Then of course the global fuel price is causing a hike in the inflation.
But then when you compare with other countries like Ethiopia and Kenya, in that sense Uganda's inflation hasn't gone higher. Bank of Uganda needs to sharpen and put systems/policies to manage the inflation and I think that's what the government has done.
The question of how to make aid more effective was the centre of talks in Ghana last month. Is the picture clearer now on how donors and recipients will interact on this subject? What developed partners want is put in place a system on how to handle the $120 billion aid throughout the world and to see its impact. Similarly recipient countries don't want to see rigidities that's why the World Bank is there to see that the concerns of both sides are addressed.
The issues in Ghana included exchanging views on how aid can flow into a government system, how countries receiving aid will be able to know how much aid they would get to enable them plan and the urgent need for alignment and untied aid, so that aid is not tied to goods and services provided by a particular country. The World Bank has taken a backseat on the question of corruption and good governance lately in Uganda. The World Bank takes issues of governance and corruption very seriously.
In Uganda we are working closely with the government and the private. How do we intervene?
We have different mechanisms; one is the 'PRC' Support operation' based on our policy dialogue. We try to address areas of good governance in terms of how the government operates its financial management mechanisms and procurement procedures. PRC has been an effective tool in addressing some of the large institutions and policy issues to bring about good governance.
Uganda has the best systems in addressing issues related to governance and corruption. You have the IGG office, Police, a Directorate of integrity, but the laws are not enforced and some of the institutions established don't have the capacity. Good intensions but not having good results on the ground.
What projects does the World Bank support in Uganda?
We have a number of projects which address the technical elements related to financial management. We have a huge financial management accountability programme which is putting in place an integrated financial management system at the local government level for good financial management.We are also working with the other development partners in supporting the Public Procurement Development Agency. They need to feel empowered and have the skills in terms of doing transparent procurement process and that's an important element not only in the central agency but having capacity at the local government as well.
We have a $1.2 billion ongoing programme in Uganda for the infrastructure sector of which $800 million is in the energy sector, about $250 million is in the road sector, and then we have a project supporting environment and health. We have also have planned in the next three years to commit $1.2 billion new loans for Uganda largely focusing on the infrastructure sector.
What role do you see China and India playing in Africa as they enter into the donor domain of aid?
We are pleased to see new players like India and China coming to contributing their part in the development agenda in Africa. Last year the World Bank gave about $7-8 billion development aid to Africa. Infrastructure needs alone for Africa is close to $22 billion.
Maintenance alone of these infrastructures is about $18 billion per annum. China and India coming in is a good thing and we support this kind of dialogue of bringing new emerging financier. More than anything else these countries have been there just a few years (15-20) ago so the experience they bring is extremely useful for Africa.
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