The final IDA19 Replenishment meeting took place in Stockholm, Sweden from Dec 12-13, 2019. The final figure agreed for the period 1st July, 2020 to 30 June, 2023, was a record $82 billion.
The International Development Association is the lending arm of the World Bank. It has 173 countries as shareholders, including Uganda. Now, this all seems stuff for economists. But, you will get to realize, as we read on, that the pothole on Sixth Street, Industrial Area, the little ponds called a road along Kinawataka are all connected to this. You may even get very angry.
The Daily Monitor, on 12th July, 2017, carried a story that was easy to miss. Very few people really read much into anything to do with the Presidency with much interest. It was also about the economy, and a smaller number want to subject their already tired minds to figures, graphs and almost abstract acronyms such as GDP.
In that report, the Speaker of Parliament, Rebecca Kadaga, is said to have informed the members of that body that going forward, all loan approvals would be by the President, Yoweri Kaguta Museveni. That the President, out of 27 multi-lateral support requests(both loans and grants) had rejected 11 loan requests!
The President explained that some loans were unnecessary such as the $200m for fiscal transfers and management. In his words, “you don’t need a loan to learn how to transfer money”.
Some, such as the rejection of a $200m loan from the African Development Bank, for the construction of the Kampala-Jinja Expressway, stumped even his fiercest critics. The explanation he gave was that the “loan lacked clarity”, and that the Kampala-Jinja Expressway should be tolled, and whoever invests money in the project should collect it from the tolls! 10 days to the end of the 2nd decade of the 21st century, Kampala-Jinja highway is a largely dysfunctional road with some of the worst road infrastructure in Uganda. A road, that accounts for over 96% of all exports and imports into Uganda, and Eastern DRC, Burundi, DRC, and Rwanda, before it arbitrarily closed the border with Uganda.
In total, the President rejected $944 million of which, brace yourself, $318m was grants! That is free money! $318m is UGX 1.17 trillion. $626m was loans. Including the one meant for the KJE.
Now, it isn’t that Jajja is indecisive. No. He is a seriously disciplined individual whom you underestimate at your own peril.
Let us look at his past dumbfounding decisions that later turned out, inexplicably, as strategic successes. There is the going to the Luweero Triangle to fight Obote. There is the decision to restore kingdoms. The buying of half a squadron of Sukhoi Su-30MK2 jets, which in light of what this region offers up, seems a masterstroke of epic proportions, and others. Uganda Airlines’ revival, the CCTV cameras which have seen over 300 hardcore criminals arrested, the decision to intervene in Somalia and South Sudan, all excellent.
There are also hurtful and potentially trajectory altering ones. The decision to not get oil out of the ground; fighting Kony as a conventional enemy rather than a mercenary that needs to be assassinated; the enactment of a set of PPDA rules that has all but brought government infrastructural development to a halt or ensured that all projects get delivered over time and budget; some may even add the Constitutional Amendments since 2005. But, like we have been counselled before, it’s the economy, stupid.
Barring the Judiciary, and Ministries of Health, Works, Energy, the Ministry of Finance, Planning and Economic Development (MOFPED), plus the agencies it supervises has, arguably, the largest concentration of brainpower in the country. They are serious individuals. They have families. Aspirations and dreams are part of their psyche. All of them are frustrated by Entebbe. They cannot fathom why with a population of 42 million people, Entebbe has chosen this time in history to go-slow on IDA funding. IDA funds have the best terms of any money on the market. Chinese loans are onerous to say the least.
The inexplicable bit, that makes all the MOFPED guys gall, is the $318m in grants! This is money that can cause a whole lot of change in the economy. Entebbe, has refused to approve. MOFPED, has tried its best. The economy suffers constrained demand, but the refusal to budge at Entebbe makes everyone angry.
The worst bit, is the Chinese, too, think that they will not be the only ones to bankroll a regime that fails to tether itself to capital that is well structured. Understandably, in light of their trade wars with Trump, which could stretch on an extra 4 years, lower growth in their GDP, and with many countries in their Belt and Road Initiative looking more likely to default, what they wouldn’t want is to bankroll an economy whose managers cannot even provide counterpart funding to most projects, whose EVERY project is beset by, in Chinese lenses, stupid human rights concerns, weird PPDA rules leading to all manner of disputes, restless indigenes without any work ethic but with all manner of entitlement, and of course, the big question, political transition. These are Capitalists first, despite their misnomer as the Communist Party of China.
On 30 June, 2020 the World Bank/IDA will take back all the money. This money was part of IDA 18. Countries that are already asking for money from the IDA19 Replenishment shall then use this additional money NOT used by Uganda as an addition to whatever they will have applied for. Meanwhile, all indications are that Uganda is NOT ready for IDA19! Kenya, has already got $750m to help pay off loans. Ethiopia will get $3 billion as a loan to help with structural reforms in its economy.
As we talk right now, the government of Rwanda, has finalised its application for $300m from the $944m that will NOT have been used by Uganda on June 30, 2020. They are calling their project, the Commercialization and De-Risking of Agricultural Transformation.
Now, KCCA has already tabled a request for $300m to build at least 300km of tarmac in the city. This request has been gathering dust on the shelves at Entebbe.
Meanwhile, money to buy lead cars to push us off into the trenches is got from the taxpayers, but something to aid the taxpayers to make more money such as money to build roads to make Kampala city functional cannot be approved! Never mind that Kampala and its metropolitan area account for 65% of GDP. Kapeeka will never make it to even 5%. It is this mindset that celebrates having traffic gridlock in the city as a sign of development, instead of the seamlessness in delivering goods, services and people around the city.
The potholes in the city, the lack of traction on the most important highway in the country, the Kampala-Jinja Expressway is tied into this. For the KJE, the story is actually tragic.
The European Union, the French Agency for International Development and Africa Development Bank have all indicated interest in the road. In fact, they have committed $400m as viability gap funding for the 95 km $1bilion project. Viability gap funding is meant to protect the private investor from likely losses over the duration of the project. All the investor and government need to do is get the remaining $600m.
Entebbe, threw a spanner in the works when it tried to bring in China Railway 17th Group, which had promised that it can construct the 95km highway in 3 years, using its own money, as long as other “preparatory works” are finished ahead of schedule. This came after Uganda National Roads Authority was in the final stages of a bid that saw 4 consortia selected. It emerged that CR17 had actually bid through two subsidiaries, CCECC and CRCIG, which were disqualified on 3 grounds, among which was failure to show how they would raise the $1billion in a PPP.
A meeting to establish where CR17 would get money from flopped, when CR17 representatives, despite a letter from the President to the relevant ministries and agencies to hear them out, failed to make a presentation alleging that they had been intimidated by government officials! As farfetched as that is, it is laughable that anyone in their right mind would intimidate a Chinese group backed by Entebbe.
To the technocrats, this was expected. CR17 has no capacity to raise that money, and would make the toll road unnecessarily expensive. The ghosts of the 51.5km Entebbe Expressway project, which a Value for Money Audit by the Auditor General in 2015 found to have been overpriced at $9.3m per km, as a result of single-sourcing CCCC, making it the world’s most expensive, albeit unlit toll road, were beginning to rear their ugly heads. The EU ambassador to Uganda, stated that they were almost certain of funding the KJE after a 19 Nov, 2019 meeting at Entebbe with the President.
It is one of the worst times to be a planner in Uganda. The Treasury function is basically taken over by Entebbe. But, Entebbe is clueless or out of touch with reality. The pain being caused by these decisions or lack of them on 42 million souls is devastating. For every lead car given to an overfed politician, a pothole swallows up a child going to school. A Boda-Boda gets knocked. A police officer commits suicide as a result of unattended to mental health issues. The people of Eastern Uganda cannot be as productive when the main highway to the economic heartland of the country is treated as a pawn in a game of chess that leaves Uganda in a losing position the longer it takes. Government infrastructural projects stall and their ROI diminishes. Investors flee to more predictable climes.
Uganda is predictable, too, but only in its incompetence and procrastination presided over by Entebbe. Tullow, CNOOC, Total, the World Bank, the EU, the Africa Development Bank, IMF, etc all these cannot be wrong and you are right. That is as impossible as arguing against Newton’s laws of motion.
On the economy, increasingly, the biggest impediment to double-digit growth needs to look at itself in the mirrors in the plush, carpeted, high ceilinged environs of extreme opulence at Entebbe, well protected from the slime of Kinawataka, the fumes of taxis on Kampala-Jinja highway, the loss-making dairy cattle farms, the maize growers of Kiziranfumbi and Kibingo, the uniports of police officers, the crippling unemployment of the country’s demographic dividend.
The Jajja needs to listen to the grandkids. We cannot eat candy all the time. Our teeth will fall out. We need Cassava, Rice, Pap, etc. You can’t lay a foundation for the Bazukkulu, educating them at great sacrifice, then NOT listen to them as they tell you that the world has changed, and with it, the means to navigate it. I don’t foresee any strategic success, this time. I pray, fervently, that I be wrong. After all, who wouldn’t want a thriving country?