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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)

Uganda’s Growth in the Era of Oil and Volatility (Youtube-Clip)

“Despite the slump in global oil prices, the start of commercial oil production in Uganda in 2018 offers long-term prospects to diversify the country’s economy and catapult it to upper middle income status in 30 years, according to the country’s new economic memorandum” (World Bank, 2016).

Another look into the #KaseseAttacks and the reasons for the violence in Bundibugyo and Kasese; as the Albertine and Rwenzori Sub-Region have had big loss of lives; while the Government Security Force have used different reasons for the Post-Election Violence; the IGP Kayihura have claimed: “Yira, Militias, Tribal clashes and Criminal activity for the same actions”; What is right Mr. Police Officer?

Museveni Bundibugyo 28.03.2016

’I have not come here because of politics but because of the people losing their lives and property. Whoever is responsible will suffer the consequences,’ President .Yoweri Kaguta Museveni during today’s visit in Bundibugyo” (NBS TV Uganda, 28.02.2016).

Yesterday President Museveni went around in Kasese District and Bundibugyo district where he was in army fatigue and speaking of the consequence of violence, as his militarized politics could lead into aggravated assaults and killings. The deaths that sparked right after elections and have made people flee their homes and land for IDP Camps. This here will show how the government through the security organizations, as the Police Force and the Army who has acted with violence and not with intelligence; as the rhetoric and information to the media does not add-up. Something I will take you through.

As the violence of Kasese and Bundibugyo district have fleered up and taken scores of lives. Both by Police and civilians; the Police and Army have targeted specific groups after a troublesome local councilor election in the area. Those have opened up wounds from 2014. The Region have been a place of violence, because of the security organs and the police force taking the handpicked individuals while civilians flee from Bundibugyo and living in IDP Camps instead of their homes. The Rwenzori Sub-Region have been put in flames since the election, and there been over a 120 people died during the last two months and many houses been burnt down to the ground. As the Police and Army have helped the men taking sides in the clashes instead of working to make it peaceful, therefore the killings that even was taped we’re directed at Omusinga bwa Rwenzuru’s security guards that even been delegated to him by the government. That is rare incidence and also showing at what level of violence the government forces goes and therefore the fear in the area. Take a look what the King said about the recent actions!

Charles Wesley Mumbere

The Rwenzuru speaks out:

“Omusinga said, “Kayihura cannot rely on someone who hates the kingdom to investigate and address issues affecting the Rwenzori region” (…)“The problems of Rwenzori region have not been handled well and this explains why people are killing each other. A section of people who are against our cultural institution and those that failed to mobilize for the (ruling) party are taking malicious reports to government that we are fighting government. This is not true.” (…)“These were spreading malicious messages that the meeting I had with Dr. Kiiza Besigye contributed to their defeat and yet they failed to organize and talk to me during the recently concluded campaigns,” (Ainganyiza, 2016).

The King says it is not criminal or ethnical acts that has done the trick this time, but a reaction to the recent election and that there been no direct actions against the government; that is said to counter what IGP Kale Kayihura earlier said after being in Rwenzori Sub-Region and using the intelligence from the Police Force, while also not stating the direct killings that happen to the Rwenzururu Kingdom guards that was shot and killed early. While the President was speaking the people in the Bundibugyo area together with Minister Bataringaya were being BOOED by the public because they sees his actions as lazy, since they doesn’t see him doing anything to stop the violence. Under here is more information about on the matter!

Kayihura Kasese Bundibugyo 24.03.2016

What a Government Official has said:

“Jolly Tibamanya, the Bundibugyo district chairperson, said that 31 people were killed during the clashes and 361 houses burnt. He requested the President to improve the presence of security personnel in the sub county. Tibamanya added that several residents have abandoned their gardens for fear of being attacked” (94.3 QFM Lira, 29.03.2016).

On 25th March the Rwenzori Police Spokesperson said this:

“The Rwenzori regional police spokesperson Lydia Tushabe has said that the police are now treating the attackers in the districts of Kasese and Bundibugyo as a militia group” (New Vision, 25.03.2016).

Something the Police left out to tell:

“On Thursday March 24, Bakonjo elders from the highlands of Bundibugyo District gathered to meet with Inspector General of Police Kale Kayihura, who has been camping in the Rwenzori sub-region over the recent weeks to tackle the violence that has so far claimed at least 32 lives in Kasese and Bundibugyo districts. After waiting for hours, the elders were informed that Gen Kayihura had flown away and that they would meet another day. Tempers flared, especially because many Bakonjo look at the police chief as a partisan player in the conflict that has pitied them against the Bamba – Babwisi, Basongora and other tribal sub-groups. Mr Christopher Kibanzanga, the MP-elect of Bughendera County in Bundibugyo, however, says his fellow Bakonjo should not worry anymore about Gen Kayihura’s perceived partisanship in the matter, which he says “has been handled”. Mr Kibazanga says Gen Kayihira’s intention was not to snub Bakonjo elders but had to leave Bundibugyo “immediately. “He gave me a call and explained” (Rwenzururu Times, 28.03.2016).

Museveni Bundibugyo 28.03.2016 P2 River

As the Police and Government continues to spread the information on the matter. “Kirumamutima” or Strong Hearted Youth Group was supposed to be behind the matter, and now even the Police Regional Spokesperson Lydia Tushabe claimed a militia, but did need say who. When Lydia says it is a Militia, than it’s either “Kirumamutima” or the Uganda Saving Force (USF), who was one of two groups claiming to be behind the shooting and stealing of guns at Kapchorwa. Still that does not sound like what’s the King or the Politicians in the area claim. The cross-claims and changing statements from the Police and Army does not look well together with the obvious malicious attack on the Kingdoms Security Guards that was even filmed and created an outrage that got even the IGP out of Kampala to search the area. The Police have stopped discussing the Yira Republic because the Public knows that is an excuse for the Security Force to get rid of the men who is not positive towards the ruling regime and the opposition; as the opposition is strong and didn’t want NRM men in councilor in the sub-counties and Rwenzori sub-region. And the Police did not say or want to say to the world that they are taking sides in a fragile situation; that is well-known since the clashes of 2014 is not far from the minds of the people and the Local Councilor III elections was just the last straw and the Police Force together with the army went all in, not with justice or rule of law, but brutally killing.

A Story on how 16 died in Bundibugyo:

“A woman with a baby strapped on her back is found harvesting cocoa (stealing) from plantation that doesn’t belong to her. In a typical mob justice fashion, she is beaten. But with the pang with which she was harvesting the cocoa, she fights back and delivers some cuts to some members of the mob. She is eventually overpowered. She and her child are dead. Her tribesmen come for the man whose cocoa was being nipped. The man (whose cocoa the dead woman was harvesting illegally) is killed by the alleged thief woman’s tribesmen. The thing spirals out of hand and degerates into a tribal clash. And the last time checking? 16 deaths” (Rwenzori Post, 25.03.2016).

Bundibugyo 29.03.2016 IDP Food

As the first sign of peaceful action from the Government:

“Government begins supplying food to the over 10,000 people displaced by tribal clashes in Bundibugyo” (NTV Uganda, 29.03.2016).

The Story is just a sorry reflection of the state of affairs and that the 16 people in the total of death, that died for very little and not even the ballot, but cocoa beans that was stolen. An innocent baby lost the life in those clashes. This proves there are certain animosity in the area and how quickly the melee and violence happens. That kind of actions are local clashes, not militia made, but mob mentality as the Police Force is not in real control of the local policing or violence. As the woman was stealing cocoa, but she deserved to be fined or repay the owner for the stolen cocoa, which would have been the ordinary treatment, not killing her and her baby, together with 14 more people! So it’s sad to know how the killings got out of hand and the clashes is just one out of many in the recent month. If the rest of the killings except for the ones directly going against the kings guards in the Rwenzori Sub-Region, and these killings was neither militia as the woman who stole cocoa was not USF or the so-called “Kirumamutima” so the Police intelligence cannot be that great. First it was tribal, than it was criminal, and not it is militia. So there is either a cover-up or the IGP Kayihura and the local Spokesperson is not speaking the whole truth. We might need a giant Parliament Report as the one that came after the 2014 clashes in the region. This time it fleered up straight after elections and announcement of local councilor in the area. That ended up in clashes and later got fueled into old grievances’ between the tribes in the area as a tool for the Police and Army to try to take more control of the Kasese and Bundibugyo district; as they are in the Rwenzori and Albertine region where also the oil-development is. So the way the NRM-Regime have treated the area and used Machiavellian tactics and now it has backfired.

Bundibugyo 28.03.2016

The worst thing is that President Museveni came in with the tanks and  the Army; while just walking around like a royalty and not asking the locals, but telling people how to be. The Same did the Police Force has done and also not listened or confirmed either with the Rwenzururu King or the Elders of the area. To continue to add further insults to the injury and the killings of relatives. That are now being used for political gain and saying that certain militias or guerrillas are behind it. While the small reports on the ground shows other display or character of violence. Like the Government of Uganda tries to disorganize the Rwenzori sub-region; so they cannot gain anything out of the coming development projects or the planned operations that are in the area. As the Albertine-Region and Rwenzori Sub-Region will have lot to say when coming in the oil-projects, so it seem a little to startling that it happens there and not in other parts of the country. But hey, that is just me. Peace.

Reference:

Ainganyiza, Steven – ‘Rwenzori Attacks: King Wants Independent Investigating Committee’ (28.03.2016) link: http://www.chimpreports.com/rwenzori-attacks-king-wants-independent-investigating-committee/

Press Statement from MEMD: Government of Uganda receive seven bids for the First Licensing Round (01.03.2016)

Oil  Press Statement 01.03. P1Oil  Press Statement 01.03. P2

Press release: Uganda announces first Petroleum Exporation Liscensing Round (24.02.2015)

UgandaOilUgandaOil2

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