Ugandan economy could get Oil-Shocks due to external factors, recent BoU report claims!

Surprise, surprise the Bank of Uganda (BoU) has made a working paper on the possible consequences of the oil price, the oil exports and the oil imports on the Ugandan economy. This didn’t exceed my expectation of a report or paper, but said enough to clearly anticipate changes in the economy with the coming export. Even as the BoU called the domestic oil production in embryonic stages, which means the real impact will come when it is closer petroleum production the GDP and CPI feel more impact of the oil prices and the volumes exported from the Lake Albert Basin.

That the Ugandan State and the Republic of Uganda, should know that the fresh foreign exchange and currency into the economy, as the domestic parts of petroleum is not having big impact on the economy! Still, the export can change it as the oil prices and change the consumer price index for instance. Take a look!

One such shock that is a source of major concern and risks to monetary policy-making in Uganda is the oil shock. To our knowledge, the effects of oil shocks in Uganda, to date, have not yet been analyzed. The objective of this paper therefore, is to analyze the nature and importance of oil shocks to Uganda’s economy in a dynamic framework” (Nyanzi & Bwire, P: 4, 2017).

According to the Uganda’s Ministry of Energy and Mineral Development (2012), oil provides about 10 percent of Uganda’s energy requirements – the rest is sourced from the small and underdeveloped and unreliable electricity sub-sector and the cheap biomass energy. The oil sector was also deregulated in 1994, under the broad structural reforms implemented by the Government of Uganda, which effectively eliminated oil prices subsidies. Uganda is endowed with commercially-viable oil reserves, but domestic oil production is in embryonic stages. Consequently, all of the oil-energy needs of the country are satisfied by imports” (Nyanzi & Bwire, P: 8, 2017).

The results of the variance decomposition in regard to oil shock are not entirely unexpected, given the structure of Uganda’s economy. Oil and its products constitute 8 percent of total intermediate consumption and 10 percent of energy requirements. In addition, oil is crucial to electricity supply in Uganda because hydro-electricity is unreliable and insufficient. This implies little or no substitutability of oil with hydro-electric energy in production in case of adverse oil shock, which could justify the long-run 20 percent variance in output due to oil shocks. Regarding consumer prices, the small percentage of variance in consumer prices due to oil shocks is justified by the small weight of oil in the CPI basket. Oil constitutes about 1 percent in the 2009/10 rebased CPI basket, of which 0.8 percent is oil for personal transportation and 0.2 percent a source of liquefied energy at home. These numbers are not surprising given that over 75 percent of the population live in rural areas and depend mainly on wood and charcoal as a source of energy, and that rates of car ownership are generally low. Moreover, the main source of short-run volatility in the Uganda CPI is weather-related factors affecting food prices. This leaves the bulk of fluctuations in the core consumer prices (Comprising over 80 percent) explained by demand” (Nyanzi & Bwire, P: 18, 2017).

Oil shocks are transmitted through the supply channel, as a shock that increases the international price of oil leads to opposite movements in real output and consumer prices in Uganda” (Nyanzi & Bwire, P: 19, 2017).

It is hard to say how it could impact and how the petroleum production and exports will change the economy, how the prices and the inflation, as the measure of how much the price of the crude-oil will be at the given time. That the government has secret agreements with oil companies and also agreements with other to build the crude-oil pipeline that goes to Tanzania. Therefore, the reaction in the economy is not yet known, but with the background and knowledge of the how it is now. Most likely a real output and change in consumer prices in Uganda.

That will be an oil-shock no-one can be prepared for. Unless the Government and Parliament created legislation and policies who might soften the change of the economy. Therefore, with this in mind, the National Resistance Movement, the State House and the President Museveni have work to do. That is if they consider the implication the petroleum production and exports will have on inflation, currency value and consumer prices index as well. This report should open some eyes into it, but it should not be surprising. Peace.

Reference:

Nyanzi, Sulaiman & Bwire, Thomas – ‘Working Paper No. 04/2017 – The Macroeconomic responses to Petro Shocks for Uganda’ (May, 2017)

The UPF Statement on unlawful assembly of the FDC in Kyankwanzi (05.05.2017)

Opinion: The rich are so poor nowadays!

“The test of our progress is not whether we add more to the abundance of those who have much; it is whether we provide enough for those who have too little.”Franklin D. Roosevelt

Well, this time in history will be remembered, in the times that the multi-national corporations have most of them fled their regional scenes and put their headquarters and main operations into tax havens. Therefore, with this in mind, the states and republics that actually is where they make the profits get less tax and get fewer monies to spend on public services. That does not make them poor, but smart someone might say. This is legal and the openness of the economies let them do it, but to be frank, we should question this big giant corporations for their fleeing fortunes abroad.

The corporations are not alone in all of this, the rich people themselves cannot sustained this, they cannot afford to pay reasonable taxes, and they need tax-relief so they can salvage their Monte Carlo and their Lamborghini’s. They have their massive mansions and stalls of cars, but cannot pay the percentages on the tax as ordinary working-class do. In addition, the working-class use decades on end to pay down the mortgage on the house and loan on their Ford Fiesta. If they can even afford a house and a car at his point.

The American enterprise and experience is really seeing it, as they plan to repeal and replace Obamacare, because the wealthy are too broke or to selfish to help the working-class who made them rich. That the working-class and industrial worker are falling behind as new schemes to outrun their possibilities. The corporations and the believers of free economies want more flexibility, but do not give equal wages or compensations. Therefore, the loser in the transactions are the workers and not the companies. Secondly, the states earn less without added productivity.

It is naive that the businesses care about other things than the bottom-line is vicious, like the wealthy have the capacity to share the spoils, which they have earned on the commoners and the citizens. Therefore, the spoils, which in some industries entails sweatshop workers and exports to the Western hemisphere with grand profits for the clothing and appeal giants. Something that the workers in Bangladesh or Pakistan doesn’t see anything delivered back, than a filthy industrial complex and possible health hazards for their hours work on end for a lousy T-shirts.

The others are the ones who are doing mining and extraction for the technology and IT businesses that has no issues with the illegal and militias taking controls over mining fields and black-market trading of rare earth minerals or cobalt for that matter. As long as the giant companies trading computers, smart-phones and whatnot get their profits. Certainly, the CEO and other leaders in the corporations should worry of the implications and the lives destroyed while their businesses are earning loads of monies. There should be some sort of certification of the weak trading points; if they knowingly paid, some of the monies on technology could fund militias and illegal armed conflicts.

This is real poverty, that we have systems, salary structures and imports that hurt local areas, while the businesses earn fortunes, that again is flying on the merry to a tax haven in the pacific through a shell-company set-up by lawyers in Panama. In addition, this is legal and just, by law and in society. That the same companies telling their workers that they cannot afford more wages, since they have to stack millions upon millions in the British Virgin Island. So that the shareholders and stakeholders can earn profits for the toils and sweat of fellow workers.

So when I hear that the workers cannot ask for bigger salaries, while the states and republics create tax-holidays and tax-breaks, incentives for “investments” while the big-men are doling away vast fortunes in the middle of the day. Like a legal heist, a theft of both tax and salary, the salaries that could be used more in the system to gain growth, and secondly the added tax that could build roads and infrastructure that the company could need. However, hey, we do not need proper roads and wages, as long as the rich can travel to Monaco and St. Tropez whenever they feel like it. We are foolish to think otherwise!

When you hear that the rich has to get tax-breaks and their taxes cut, know that they are poor in spirit and heart. They may have vast fortunes and riches, but their hearts are empty. They do not see the problems of the day-to-day basis of the ones creating their empires. They do not see the people who buys their labeled products and services. They only see the bottom-line, the empty shells companies’ accounts and the schemes to hide the monies. That is because these wealthy people are so poor; they cannot afford to be like the rest of us.

The wealthy are so poor, they are so poor that they have to avoid taxes or pay taxes, because if they were paying taxes they would be like us. They would have the same responsibilities and have the same understanding of welfare and public services. Therefore, since they do not need the public service, they can afford to travel abroad for health-care; they can afford to send their kids to private schools and can afford to import goods. Then they do not need the support and the base line of the republic or the state. Like you and I do. Therefore, with that in mind, which is why they are so poor. Their poverty is in the mind and in their spirit; they cannot be a part of us, because they want to shield themselves from us. Still, earning our monies and taking our cheap labor, no problem!

This poor people need help, they need guidance, their riches might fall out of their hands, might be lost in coup d’état or worse than they get bankrupt. Than they need the states to salvage their business or their bank, with our tax-monies, without any hesitation, but when it was booming. That was the time they had no need of paying taxes or paying amends to the state through the regulations. Like we do and pay for our right to live and use the needed services of the states.

In these interesting times of ours, we have the riches seeking to pay-less, while the working-class is footing the bills or trying too. While the republics and states make it harder for public service and make it more expensive to pay for the needed services. This are all made in the hands of the wealthy and the multi-national corporations, without considering the implications of the commoner, the working-class nor the middle-class that are all sinking on the behalf of the rich. Certainly, the belief that the trickle-down economy should be a project avoided, but to many still have faith in the paradigm. While very, few have any social mobility or have the capacity to go from one class to the next. Peace.

UNMISS peacekeepers repel attack on base in famine area (05.05.2017)

Between 11pm and midnight on Wednesday, the Mission’s Temporary Operating Base (TOB) in Leer town in the former Unity State came under small arms attack from the direction of the nearby Government-held town.

JUBA, South Sudan, May 5, 2017 – An attack on a United Nations base has been strongly condemned by the head of the UN Mission in South Sudan (UNMISS), David Shearer, as being carried out with callous disregard for the lives for civilians as well as UN and humanitarian workers.

Between 11pm and midnight on Wednesday, the Mission’s Temporary Operating Base (TOB) in Leer town in the former Unity State came under small arms attack from the direction of the nearby Government-held town.

The Ghanaian company of UNMISS peacekeeping forces based there quickly and robustly returned fire, deterring the attack.

David Shearer praised the response of the Ghanaian forces for successfully repelling the attack and remaining on high alert throughout the night.

“They reacted in the best possible manner, according to the true spirit of peacekeeping. Their quick defensive action secured the safety of all of the internally displaced people who had sought UN protection adjacent to the base,” he said.

“We strongly condemn the attack, and call on all parties to the conflict to respect the sanctity of UN premises.

“We are here to protect and support the people of South Sudan. The base is located at Leer for that reason. The people are hungry and deprived as the result of the famine. However, it is clear the attackers have no consideration for their plight, given those who most desperately need help will suffer more because of a likely resulting delay of humanitarian aid,” said David Shearer.

There were no UNMISS or other casualties within the base from the attack.

Currently, there is no confirmation of which party to the conflict carried out the attack. UNMISS is continuing to investigate the incident and will examine whether the TOB needs to be further strengthened.

Zimbabwe is apparently a high developed country, who knew?

Zimbabwe is one of the most highly developed countries in Africa and after South Africa, I want to know which country has that level of development that we see in Zimbabwe,” (…) “We have resources, perhaps more resources than [any] other country in the world,” he said. “We are not a poor country. We can’t be fragile country. We’ve got these resources.” – President Robert Mugabe appearance at the World Economic Forum (WEF) in South Africa – 4th May 2017 (Mail & Guardian, 2017).

President Robert Mugabe have never been casual and clearly understating his rule. As a ruler he wants to be certain to leave a legacy of prosperous society. Even as the Republic has an economy that been called an albatross by Governor Dr. J.P. Mangudya of the Zimbabwe Reserve Bank. Whose report earlier this year said the country lagged behind with debt repayment, deficits, lacking trust in bond-notes and the unbalanced economy. So when the Governor of the state bank of ZRB are saying this, the President of decades upon decades knows this. If not he is trying to lie. Think the world is blind and stupid on the fragile situation in Zimbabwe.

There has in recent years struggled to have fiscal funds to pay teachers, soldiers and civil servants for months on end. The hospitals have been lacking needed medicine and having equipment. So the developed state is falling. Even if President Mugabe and Gucci Mugabe are buying expensive treatment of health-care abroad and buy luxurious goods there as well.

This together with the patronage and the Zanu-PF elite who are driving expensive SUVs on the streets on Harare, Vice-President Phelezela Mphoko has lived months on end on hotels on the tab of the government. It is not like this ones will criticize the President, as they are living on his will and because they get paid for loyalty. Therefore, the Zanu-PF are trying to defend the long-staying rule and their ruler, who is apparently biblical and supposed to be President even when he is dead. Surely, tomorrow someone in Harare, a Minister or a loyal Zanu-PF spokesman will defend the words of the President.

Since Zimbabwe is so developed, since Pastor Evan Mawarire are in the courts, the flag and camouflage wear is banned. The patriotism and the #ThisFlag are a problem. Well, the movements and public demonstrations are a reaction to the open theft. The thievery done by the state, as they are selling away diamonds and other resources. The problem is also on the possibility of cash and foreign cash reserves. This is together with missing foreign currency and lack of trust in the Bond-Notes. Also with the deficit and the growing debt, are creating possibility of higher inflation. So the value of the currency will go down. If this is all true and the reality is so… than the President Mugabe was deluded in South Africa.

President Mugabe is right, Zimbabwe has resource and could have positive agricultural output, but that was if the Republic was governed properly and did other things than feeding the Zanu-PF elite. Instead of building positive policies and institutions to support and facilitate life for all Zimbabweans. That is something that hasn’t been done by the current leadership that is very close-knit by loyalty towards the President and not laws. The draconian laws and the failing economy will not create a better Zimbabwe. It will not be developed and clearly not the second after South Africa. That is just in the mind of Mugabe, who cannot help himself. Certainly, the Republic of Zimbabwe has a future and could become prosperous, but the Republic need leaders who doesn’t eat, but serve their citizens with services and policies. Peace.

Reference:

Mail & Guardian – ‘Robert Mugabe: We are not a fragile country’ (04.05.2017) link: https://mg.co.za/article/2017-05-04-mugabe-we-are-not-a-fragile-country

Uganda: Circular No. 7/2017 – Donation by H.E. the President of Books Titled “Sowing the Mustard Seed” (02.05.2017)

South Sudan: Weary, frightened displaced civilians in Upper Nile at imminent risk of further violence (04.05.2017)

 

The High Commissioner also called on the Government to grant the UN Mission in South Sudan access to Aburoc and Kodok, and to ensure that humanitarian agencies are able to deliver crucial aid to the internally displaced population.

GENEVA, Switzerland, May 4, 2017 – UN High Commissioner for Human Rights Zeid Ra’ad Al Hussein on Thursday urged the Government of South Sudan to halt any further military offensives towards Aburoc on the west bank of the River Nile in the Upper Nile region. The town holds between 35,000 and 50,000 people, most of whom arrived in recent weeks after terrifying journeys of up to 150 kilometres on foot, after SPLA* attacks on areas to the south of the town of Aburoc. Civilians in Aburoc now find themselves in areas controlled by the opposition SPLM/A-IO* armed group, facing a military offensive by the SPLA.

There are concerns that the SPLM/A-IO has positioned itself in close proximity to civilian areas, placing civilians clearly in harm’s way in the event of an attack by the SPLA and affiliated forces. The SPLA forces, meanwhile, reportedly include new recruits of Dinka ethnicity from the Western Bahr el-Ghazal area. The civilians in Aburoc are mostly of Shilluk ethnicity.

“Civilians in Aburoc are at serious and imminent risk of gross human rights violations, inter-ethnic violence and re-displacement,” Zeid said. “These are people who fled from towns like Tonga and Kodok to the south in the most horrifying circumstances, forced to walk through the bush for up to 150 kilometres in searing temperatures. Many reportedly died along the way due to dehydration and exhaustion. The rest ended up in Aburoc where, weary and frightened, they face grave violence and shortages of food, water and healthcare.”

“These are women, children and men at the mercy of military commanders, on both sides of the political divide, who have consistently shown little or no regard for the protection of civilians.”

The High Commissioner urged the Government to adhere to the pledges made by President Salva Kiir on 25 March, when he committed to declare a unilateral ceasefire, and to work towards political engagement to bring the conflict to an end. The High Commissioner called on all parties to the conflict to comply with international humanitarian law, including taking all feasible precautions to prevent civilian casualties.

“The civilians in Aboruc have nowhere left to go, with the SPLA closing in from the south and options to flee northwards severely limited and fraught with danger,” Zeid said. “I urge the SPLM/A-IO to ensure that areas containing large numbers of civilians, including Aburoc, are demilitarized and that measures are taken to ensure the protection of civilians under their control.”

The High Commissioner also called on the Government to grant the UN Mission in South Sudan access to Aburoc and Kodok, and to ensure that humanitarian agencies are able to deliver crucial aid to the internally displaced population.

Kenya: 2017 elections: broken promises put human rights defenders at risk (03.05.2017)

Publication of an International fact-finding report.

PARIS, France, May 3, 2017 – The abduction, torture and killing of renowned Kenyan human rights lawyer Willie Kimani in June 2016 shocked the entire world, provoking a wave of outrage at national and international level. This is only the tip of the iceberg of a widespread pattern of violence and harassment aimed at silencing dissenting voices and perpetuating impunity, the Observatory for the Protection of Human Rights Defenders (OMCT-FIDH partnership) has concluded after a recently conducted mission.

Kenya, a country that in 2010 voted a very progressive Constitution strengthening the country’s human rights framework in compliance with international standards, has in recent years chosen a different path. Unfortunately, so far the freedoms enshrined in the constitutional Bill of Rights have not been fully incorporated into domestic legislation, and, most importantly, are not upheld or implemented in practice.

“To date, the effective implementation of this progressive framework unfortunately remains a mirage and still needs substantial improvement”, declared OMCT Secretary General Gerald Staberock. “With all the right instruments put in place to bring about change, lack of implementation and political will appear to be the main reasons for such disillusionment”.

On the contrary, a report published today by the Observatory accounts for high levels of police and security forces’ violence, especially against human rights defenders involved in the fight against impunity for human rights violations. The mission report compiles several testimonies of incidents of violence, including cases of harassment, threats, torture, enforced disappearances and extrajudicial killings.

Moreover, human rights defenders are often criminalised on the basis of trumped-up charges, which aim at intimidating them through episodes of frequent arrests, detentions in police stations, long trials and punitive bail and bond terms. This inevitably prevents them from pursuing their legitimate human rights activities.

Adding to this, the lack of a clear legal framework regulating the civil society sector due to the failure to commence implementation of the Public Benefit Organisations (PBO) Act 2013 creates a legal limbo which obliges NGOs to operate in a hostile environment, characterised by the threat of arbitrary de-registration and asset freezes, continuous attacks and smearing campaigns.

“In such a context, and ahead of the upcoming general elections, it is urgent that Kenyan authorities publicly recognise the crucial role of human rights defenders as pillars of democracy and watchdogs of the rule of law. They must improve their safety, truly implement the police and security sector reforms, hold perpetrators accountable, acknowledge the misuse of criminal law to harass defenders, and finally commence the PBO Act of 2013”, concluded FIDH President Dimitris Christopoulos.

The full report is available online in English: on OMCT website here and on FIDH website here.

Burundi fuel crisis: Not only lacking foreign currency, also gov. sanctioned only 2 Petroleum importers!

The Ministry of Energy Come Manirakiza have ordered that the Petroleum at Petroleum Stations are ordered to only sell their Petroleum products between 07.00 AM to 18.00 PM. As part of the order from the Ministry this was ordered: “Distribution of petroleum products is carried out solely at petrol stations and only during the day, ie from 7.00 am to 6.00 pm. Any distribution of these products outside the above mentioned times and places will be severely penalized in accordance with the law, in particular by closing the service station, seizing the product, administering the fine, without prejudice to criminal proceedings” (Ministere de l’Energie et des Mines – N/Ref: 760/CAB/710/2017).

So the state plans to fine the stations that are selling later and not in scheduled time will be fined and penalized. This is measured done because of the fuel crisis, since the state struggles with imports. To prove how volatile the situation is this part of the measure from the Ministry to the Petroleum Stations:

All distributors of petroleum products are required to distill, without interruption, all the quantity purchased from the importers. For this purpose, they must keep daily records of the distillation indexes of these products informing them, with accuracy on the indexes of departure and closing of the day” (Ministere de l’Energie et des Mines – N/Ref: 760/CAB/710/2017).

There are reports why the Republic under President Pierre Nkurunziza lacks fuel:

“Daniel Mpitabakana, director in charge of petroleum in Burundi’s Ministry of Energy and Mines, attributed the crisis to “a technical problem at the Burundi Revenue Authority.” (…) “Another source said that fuel importers have run short of foreign currency to buy fuel, hence the shortage” (Havyarimana, 2017). So the other source are most like more honest than the Director who doesn’t want the CNDD-FDD to lose face abroad.

But the fuel crisis has been rolling for awhile as the reports goes back into early March, as the world are finally catching on it. Therefore, the reports earlier in March proves how bad it really it is:

““For over two weeks, we have no fuel. I do not know what has happened, “said one“KOBIL” gas station attendant” at Kamenge. The same situation is observed at ‘ENGEN’ gas station in Kamenge, north of Bujumbura. The pump attendant says it has been almost one month they have no fuel” (…) “Only the ENGEN and KOBIL gas stations were not providing fuel but others were supplying fuel to their customers. “We have not had fuel for over two weeks. The ‘KOBIL’ company could not stock up fuel because of the lack of foreign currency,”says the manager of the KOBIL gas station in Musaga, south of Bujumbura” (Manishatse, 2017). So if the East African Report took from this sort of report, the fuel crisis has been running before beginning of February 2017.

Here some other local reports that directly says it all: “OLUCOME, a local corruption watchdog, says mismanagement of the fuel department is the source of the problems. It accuses the director of the department of having shown favouritism and reduced from eight to two (Delta and Interpetrol) the number of companies allowed to import fuel” (Habonimana, 2017). So there are not only the foreign exchange, but also the Director Mpitabakana who has made decisions to cut importers. Therefore, the ones who are left are making it more fragile to get fuel into the republic. Not only just the lacking foreign currency, but also the favoritism of certain importing companies. Peace.

Reference:

Havyarimana, Moses – ‘Fuel shortage adds to Burundi’s woes’ (02.05.2017) link: http://www.theeastafrican.co.ke/business/Fuel-shortage-Burundi-economy/2560-3910928-iuyh07/index.html

Habonimana, Innocent – ‘Cause of fuel shortage: “No one will tell you the truth”’ (02.05.2017) link: http://www.iwacu-burundi.org/englishnews/cause-of-fuel-shortage-no-one-will-tell-you-the-truth/

Manishatse, Lorraine Josiane – ‘Fuel shortage in Bujumbura city’ (07.03.2017) link:http://www.iwacu-burundi.org/englishnews/fuel-shortage-in-bujumbura-city/

Burundi: “Association pour la Memoire des Martyrs des Manifestations de 2015” – “APM2015” en Sigle – Le Ministre de l’Interieur et de la Formation Patriotique (03.05.2017)