The International Monetary funds have concluded yet another visit to Uganda. As todays statement and insights to the economy is dim. There is not much prospects or much goodness to take out of it. Unless, you are thinking to invest while the inflations are rising and hoping it does not stop. Even though the needless to say, it has been like this before after General Elections in Uganda. That the economy has suffered a blow and a shock, which has hurt the economy and food prices. Therefore, sparked demonstrations and uprisings, like that last big one in Walk to Work and Activist for Change in 2011. It is clearly on the same path, but just in 2017 instead. President Yoweri Museveni likes to repeat himself!
“Inflation has edged up, mainly reflecting the effects of the drought. Food price inflation rose from 5 percent year-on-year in September 2016 to 22 percent in April 2017. With this, headline inflation recorded 6.8 in April 2017. Core inflation stood at 4.9 percent, in line with the Bank of Uganda’s (BoU’s) 5 percent target” (IMF, 2017). These numbers are showing the decline and increase of common commodities, even if the Core Inflation is around the estimated level; the food prices are showing the problems in the economy in general.
“The authorities have made some progress on structural reforms. Two structural benchmarks have been met on time, three with delay, and the remaining five are pending. Most notably, the authorities moved forward the legislative agenda that will support Uganda’s exit from the Financial Action Task Force “grey” list—the laws now await President Museveni’s assent. The Ministry of Finance, Planning, and Economic Development published reconciled reports on the stock of outstanding arrears at end-June 2016 (3.2 percent of GDP). Pending reforms include sending the BoU Act Amendments to Parliament, publishing the report on end-December unpaid bills, and sending to cabinet a policy for regulating mobile money” (IMF, 2017). The GoU and President Museveni have not complied totally and made laws objectively transparent. Therefore, there are laws awaiting the approval and be requested to Parliament, as the state reserves and budgets are still enforced with the will of the President. In addition, a proof of the maladministration is the amount of budget arrears that was in last budget year, which will hit the economy, as the bills have to be paid this year.
“Uganda’s external position is broadly consistent with fundamentals and desirable policies in 2016. The current account deficit is projected to temporarily increase over the next 5 years as infrastructure and oil sector investment ramp up further. Achieving the envisaged growth dividend of these investments is essential to maintaining external stability—just as for public debt sustainability. International reserves at end-December 2016 stood at US$3 billion (5¼ months of next year’s imports), above the adequacy level suggested by the IMF’s metric for credit-constrained economies. Going forward, the BoU can purchase reserves opportunistically and would meet the EAC convergence criterion of 4½ months of imports. The flexible exchange rate regime is serving Uganda well” (IMF, 2017). Therefore, the government and IMF envisions that the future prospects of oil monies will be sustainable for the current loans into infrastructure projects. It even envision it and with that will ensure external stability and trust into the economic climate of Uganda, that shows that the trust in future gains is the ones; that makes people have faith in the Ugandan economy.
This is all here proof in stated language that the IMF are looking through the budgets and their laws. Nevertheless, is not addressing the trillions shillings suddenly disappearing, neither the Presidential Handshake, as these are just figment of imagination for the foreign economic advisors. They just do not see it or does not want to see it. Peace.
IMF – ‘Uganda: Staff Concluding Statement of the 2017 Article IV Consultation Mission and Discussions for the 8th Review under the Policy Support Instrument’ (16.05.2017) link: http://www.imf-fmi.africa-newsroom.com/press/uganda-staff-concluding-statement-of-the-2017-article-iv-consultation-mission-and-discussions-for-the-8th-review-under-the-policy-support-instrument?lang=en
Uganda’s economy has performed reasonably well in a complex environment.
WASHINGTON D.C., United States of America, January 11, 2017 – On January 5, the Executive Board of the International Monetary Fund (IMF) completed the seventh review of Uganda’s economic program under the Policy Support Instrument (PSI).1 The Board’s decision was taken on a lapse of time basis.2 In completing the review, the Board granted a waiver of the nonobservance of the end-June 2016 assessment criterion on the overall deficit of the central government.
Uganda’s economy has performed reasonably well in a complex environment. Growth slowed marginally to 4.8 percent in FY15/16, reflecting muted sentiment in an election year and adverse global and regional developments. The current account deficit improved by 1 percentage point to 5.9 percent of GDP, and the Shilling has stabilized after a sharp depreciation in 2015. Growth is projected to nudge up to 5 percent in FY16/17.
Program performance under the PSI has been mixed. Tight monetary policy in 2015 has helped contain inflation in the target range, and the Bank of Uganda (BoU) has started an easing cycle in April 2016. Reserve cover remains adequate. Fiscal revenue and deficit targets were missed, reflecting lower-than-expected growth and election effects. Investment spending fell short, while current expenditure overshot. Structural reforms have progressed, albeit with some delays.
The banking sector remains overall well capitalized, despite elevated non-performing loans. The BoU appropriately took over an undercapitalized bank and is identifying a strategic investor.
Uganda remains at a low risk of debt distress. The scaling-up of infrastructure investment implies a temporary increase in debt, putting a premium on domestic revenue mobilization and ensuring that public investment yields the intended growth dividend.
Looking ahead, priorities include close cooperation with the Financial Action Task Force to ensure Uganda’s swift exit from its “gray” list; strengthening domestic arrears monitoring; and amending the Bank of Uganda Act to reinforce central bank independence.
1 The PSI is an instrument of the IMF designed for countries that do not need balance of payments financial support. The PSI helps countries design effective economic programs that, once approved by the IMF’s Executive Board, signal to donors, multilateral development banks, and markets the Fund’s endorsement of a member’s policies (see imf.org/external/np/exr/facts/psi.htm). Details on Uganda’s current PSI are available at imf.org/uganda.
2 The Executive Board takes decisions without a meeting when it is agreed by the Board that a proposal can be considered without convening formal discussions.
“We are struggling, the situation is not as easy, but we are not desperate and the situation is under control. For us [government] we are ready to listen and to learn” (…) “The economy is not receding, the disposable income for drinking may not be there but we are not in recession” (…) “To avoid having arrears, we have to budget appropriately and the money budgeted for has to be absorbed” said Finance Minister Matia Kasajja earlier today (Oketch, 2016).
Nakumatt Holdings is apparently struggling as evident today of their Corporate Statement, that they have to even state it to the Nation, even after the takeover of Shoprite Supermarket Limited; they are still not financial stable. This news is coming days after the Crane Bank got into Administration by the Bank of Uganda (BoU). That after the bank tried to subdue the public together with the BoU in September, telling that the Bank we’re not looking for new owners. This is happening while the troubling times for Cairo International Bank and United Bank of Africa (UBA) Uganda… this is known as the Prof. Emmanuel Tumusiime-Mutebile of BoU said they we’re under notice.
Just as this is known in March 2016 the Exim Bank Uganda, that is a subsidiary of the Exim Bank of Tanzania. That bank took over Imperial Bank of Uganda and also Imperial Bank of Kenya. This is banks licenced by the BoU. So there have already been issues for the banks in Uganda, just more silent movement as the Investors of Exim Bank wanted it to die down.
Cancelled funding from Exim Bank:
“The major funder of Karuma and Isimba dams has withheld money for the country’s two biggest hydro-power projects until the legal disputes in Ugandan courts about the two ventures are resolved. The Export-Import Bank of China has written to Uganda’s Ministry of Finance, asking the Secretary to the Treasury, Mr Keith Muhakanizi, to explain why the ministry submitted to them documents of due diligence on the two dams and confirming the tendering process had been properly concluded yet the power projects are now a subject of litigation in court” (…) “Mr Muhakanizi was in State House yesterday for a meeting with President Museveni, but after consulting him, Ministry of finance spokesperson Jim Mugunga said: “It is true that the Export Import Bank of China like any other responsible party, expressed concern about the court case by a concerned Ugandan citizen which listed the bank among defendants. The Government of Uganda, through the Attorney General, secured a court order dismissing the case against the Exim Bank. The bank, therefore, is no longer party to the suit and the PSST Mr Keith Muhakanizi this week communicated the same to the bank.” (…) “Mr YuMeng expressed concerns that the outcome of the case in question would affect the commercial contracts related to Karuma Hydropower Dam and Associated Transmission Lines Works and Sub Stations Project, the 183MW Isimba Hydropower Project and the Isimba-Bujagali Interconnection project under Preferential Buyer Credit facility” (Mugerwa, 2016).
This is new that the Exim Bank is answering with postponing the building of the dam. Something that is the Markie and big Infrastructure projects that the Movement needs to shine a light into the dim situation of the Government. Certainly this answer from them could not be anticipated by President Museveni and his friend in the State House.
This is not the first blow this year as Uganda National Roads Authority (UNRA) has been under fire all year ever since first response from World Bank on the 8th January 2016:
“Following the cancellation on December 21, 2015 of the World Bank-supported Uganda Transport Sector Development Project, overseen by the Uganda National Roads Authority (UNRA), the World Bank has suspended the disbursement of funds for civil works in two other projects in Uganda. Those projects, overseen by the UNRA, are the North Eastern Road-Corridor Asset Management Project and the Albertine Region Sustainable Development Project which are suspended pending a review and strengthening of the capacity of UNRA to adhere to the required environmental and social standards” (World Bank, 08.01.2016).
If you though it wasn’t demeaning enough the World Bank continued later in the year with this statement: “UGANDA, September 13, 2016 –The World Bank Group took a decision to withhold new lending to Uganda effective August 22, 2016 while reviewing the country’s portfolio in consultation with the Government of Uganda. We continue to actively work with the Ugandan authorities to address the outstanding performance issues in the portfolio, including delays in project effectiveness, weaknesses in safeguards monitoring and enforcement, and low disbursement” (World Bank, 13.09.2016).
This is now evident that they used all the months from December 2015 to September 2016, that means the suspended funds for the projects been delayed for 10 months already, which is a close to year. Certainly that must hurt the UNRA and Government of Uganda really, really hard. The World Bank has because of this made the UNRA change how their work, as the Director and staff has sacked at a point. Now in October the agreement made between UNRA on behalf of GoU has been looked over and seen that some has been fraudulent and not made with due-diligence.
And your know there is issues in the finance market when even the states own National Social Security Fund (NSSF) have to explain where they invests their funds after social media spreads rumours of buying a mall in Nigeria and borrowing heavy funds from the Banking Sector of Uganda. This is happening as there 3 banks under fire and struggling already and if you forgotten they are Crane, Cairo International and United Bank of Africa. So the citizens and costumers of Uganda are already worried, they have been there before with the Greenland Bank and other who has lost confidence and gotten into receivership.
Yesterday even the IMF has answered the financial issues of the republic under the Movement:
“The mission notes the difficult environment for fiscal policy in FY15/16. While revenue collection increased as a share of GDP, it fell short of program expectations, reflecting lower than projected nominal GDP growth. At the same time, current spending was higher than anticipated. Taken together, the overall deficit target was missed by 0.4 percent of GDP, and the government partly relied on BoU advances for its financing needs. The execution of externally financed projects lagged behind target” (…) “the financial sector remains well capitalized, though non-performing loans have edged up. This has prompted a tightening of lending standards and a slowdown in credit to the private sector. The third largest domestic bank had become undercapitalized, and the BoU appropriately took over its management to protect deposits and safeguard financial sector stability. As a next step, the financial position of the bank needs to be established, and BoU will look for a strategic investor” (IMF, 2016).
If you see all of this and wonder how can this be, that one government has all of this just months after a General Election, than you know something isn’t as it supposed to be. The Government of Uganda are not running a steady ship when a bank is trailing, 3rd biggest commercial in the nation by 19th October into Administration, Cairo and UBA under the watch-list of the BoU; World Bank suspending loans for the Infrastructure Projects that is needed. While the BoU are fixing some financial stability it is not helped by the giving ways of the President Museveni and his dropping funds like a Walking ATM.
“Prof Joe Oloka Onyango said every crisis in this country is being solved by way of brown envelopes, a scenario he described as being sad and far below the rule of law in the country” (…) “In early 1980s, when this country was under the leadership of Godfrey Binaisa Lukongwa, State House was like a market place. Today, State House has been converted into an ATM,” he said amid cheers” (Wesaka & Adengo, 2016).
So for the once that do forget, the ATM Museveni is the cause of the issues that are now; this is his fiscal responsibility and Monetary Policies that made this happen. This is the reactions to the overdue and overspending of the Presidential Campaigns. These reactions should also lead to higher Inflations that it has done before after the elections. Therefore the Finance Minister Kasajja and Executive director Tumusiime-Mutebile have made some progress from previous elections in the Republic. Though the aftermath is now vivid for the citizens who are costumers at Cairo, UBA and Crane… there visible proof and the evidence are in the reaction of the Campaigning as the fraudulent and maladministration of the Banking Sector. This comes into mind as the State House had this message after February:
“As parliament’s budget committee tussled with an avalanche of supplementary budget requests late last week, which totalled Shs 1.04 trillion, some officials confessed that they emptied their initial budget allocations in order to sustain President Museveni’s campaign expenditure. State House comptroller, Lucy Nakyobe, whose office tabled a supplementary budget request of Shs 49.7 billion, told the parliamentary budget committee on April 1 that her coffers were depleted by the so many inland travels of President Museveni, who addressed four campaign rallies daily on average for the campaign period” (Namuloki & Oluka, 2016).
So the debt has to repay and taken from somewhere as the Central-Government, Banks and Multi-National Organizations are stepping off from the Ugandan Government, the Movement are running in circles taking care of their own while the citizens is now trailing and falling off. That is why businesses are giving in.
Just as people might have forgotten the paying of businesses connected to the family and General Salim Selah: “Prominent businesses in the country might soon run out of business if a decision that could see the use of Shs1.3 trillion taxpayers’ money to bailout companies in distress is not taken in their favour” (…) “Talking to Daily Monitor on condition of anonymity, a source privy to the talks revealed that “there is concern that bailing out companies without correcting the economic situation in the country will not resolve the problem.” (…) “The economy is not growing fast enough to generate activity for these companies to perform at full capacity. A bailout will not deal with the core problem. That is the argument being fronted by several government technocrats against the bailout,” the source said” (Muhumuza & Adengo, 2016).
So with this in mind, there are some sound imbalance about the bailouts months before one of the great banks put into Administration, NSSF has to answer for Social Media outbursts, two more Banks on a stroll, State House being broke months ago, UNRA projects suspended by the World Bank, IMF are seeing that infrastructure projects are lagging behind, Exim Bank suspended pay to the two dam projects and the strange bailout. There are too many evidence of lacking financial sound practises… Even Nakumatt the Supermarket are having troubles. There just more pawns on the set ready to move, but how they fall only the kings knows; because the Kings stay King. Peace.
IMF Communication Department – ‘IMF Staff Concludes Review Mission to Uganda’ (26.10.2016) link: http://www.imf.org/en/News/Articles/2016/10/26/PR16462-Uganda-IMF-Staff-Completes-Review-Mission
Mugerwa, Yasiin – ‘Chinese bank holds back Karuma funds’ (27.10.2016) link: http://www.monitor.co.ug/News/National/Chinese-bank-holds-back-Karuma-funds/688334-3431376-qxr194/index.html
Muhumuza, Keith & Adengo, Jonathan – ‘FULL LIST: 65 loan-stressed firms line up for Shs1 trillion taxpayer bailout’ (22.07.2016) link: http://www.monitor.co.ug/Business/65-loan-stressed-firms-line-up-for-Shs1-trillion-tax/688322-3305166-d6h193/index.html
Namuloki, Josephine & Oluka, Benon Herbert – ‘State House broke after spending on Museveni campaign’ (09.04.2016) link: http://www.observer.ug/news-headlines/43556-state-house-broke-after-spending-on-museveni-campaign
Oketch, Martin Luther – ‘Economy is struggling – Minister Kasaija’ (27.10.2016) link: http://www.monitor.co.ug/News/National/Economy-is-struggling—Minister-Kasaija/688334-3432534-t8dv3c/index.html
Wesaka, Anthony & Adengo, Jonathan – ‘State House turning into ATM, says Mak don’ (11.10.2016) Link: http://www.monitor.co.ug/News/National/State-House—ATM–Mak-don-/688334-3411968-1155d8t/index.html