7 November 2018

Uganda: The Capture of Uganda's State House and How We Got Stuck in Reverse Gear


Last week's World Bank Ease of Doing Business report was not good reading from the highs of Kampala.

In the East African Community (EAC) countries, Rwanda topped and ranked 29th globally, from last year's 41 while Kenya recorded the biggest jump, from last year's position 80 to 61 this year. Rwanda and Kenya have improved two years in a row. Uganda fell five places to 127 from 122.

Tanzania dropped to 144 from 137. Burundi was 168th, and an index measuring 190 countries you would think that was a hopeless position. No, South Sudan did even worse, coming in at 185.

We are sliding further in a two - or even three - tier EAC, with Rwanda and Kenya at the top. Uganda toward bottom with Tanzania. And at the very bottom of the barrel Burundi and South Sudan.

This is a sea change. The 1990s were undoubtedly the "Ugandan Decade" in East Africa. It was easily the most happening place on the continent. Uganda was among the first countries (or the first in most instances) in Africa to do the following: (a) Liberalise the foreign exchange market. (b) Liberalise the fuel market. (c) Disband parasitic parastatals. (d) Create a Privatisation Unit and Investment Authority. (e) Overhaul the financial sector. (f) Carry out mass demobilisation of the army. (g) Reform tax collection by creating the Uganda Revenue Authority. (h) Liberalise the airwaves and licence private FM stations. (i) Introduce Universal Primary Education (UPE) along with Senegal in 1996.

There is no agreement on whether all these were successful, and the economic liberalisation in particular continues to be attacked. But the forward-looking spirit, the goal to create new wealth and attract investment, expand the middle class, improve social welfare, were laudable even in a one-party context.

This was a time when Uganda was notching up the highest growth rates on the continent. And, remarkably, it was during a time of deadly war in the northeast and north. In other words, at a time when there were more than enough excuses for the government not to do well, it did well. The last 15 years have been a period of peace - but on the contrary, a time of decay, decline and increasing corruption and repression. That is very contradictory.

A large part of it is that after more than 30 years, both the NRM and President Museveni have lost it. But we have to ask, "how" did that happen, and what exactly does it mean?

When Uganda was still in the headlines as a trailblazer in how aggressive open education campaigns could be weaponised against HIV/Aids, a big conference took place in Kampala.

With a mix of awe and embarrassment, participants found an HIV/Aids education leaflet and condoms in their conference pack. The chaps were ahead of the time. Some years later, a conference on the same subject returned to Kampala.

Veterans of the first conference were shocked to find that though HIV/Aids was still a key issue, there were no condoms, and they were being asked to abstain and say prayers instead! As one participant said, between the two conferences, it seemed the "country had suffered a scientific collapse"!

Twenty years ago, Gerald Ssendaula, a savvy banker, businessman, commercial farmer, and moderate politician was appointed Finance minister. Right there, you can see where we are going with this - people like Ssendaula are no longer appointed to the Finance portfolio in today's Uganda.

Ssendaula and the Ministry of Finance led on far-reaching reforms of the banking sector, with two of the most hotly contested issues being the move to dramatically raise the capital adequacy ratio for banks.

A couple of Ugandan-owned banks like Greenland Bank and International Bank had gone bust or been shuttered. There was very acrimonious debate about Ugandans being "kicked out" of the banking sector, but at base, it was about how to grow the financial sector, make it attractive for investors, and secure people's savings.

Today, we have another bitter fight over the banking sector, but we are mostly exhuming dead banks' bodies, and carrying out autopsies on lately demised ones. Sure investigate, but don't take eyes off the future.

This at a time when neighbours are looking at how to enable citizens buy government bonds through their mobile money wallet, and countries like Tunisia and Senegal are grappling to bed-in cryptocurrency based on their national currencies.

How did Uganda become so backward looking? The short of it is that progress tends to produce a cluster of beneficiaries who work to protect what they have, and through paying money to politicians for elections and so on, buy influence to prevent reform, and close doors to new competitors. They call it (state) capture.

The main reason Uganda is declining in nearly all indexes, is basically down to the fact that State House has been captured.

Mr Onyango-Obbo is the publisher of Africa data visualiser Africapedia.com and explainer site. Roguechiefs.com. [email protected]


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