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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)

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Opinion: Mzee apparently turned a bit honest!

Museveni Debate16

“I am not an employee. I hear some people saying that I am their servant; I am not a servant of anybody. I am a freedom fighter; that is why I do what I do. I don’t do it because I am your servant; I am not your servant. I am just a freedom fighter; I am fighting for myself, for my belief; that’s how I come in. If anybody thinks you gave me a job, he is deceiving himself. I am just a freedom fighter whom you thought could help you also” – President Yoweri Kaguta Museveni (Muzoora, 2017).

The 1986 coup d’état goes full circle; it goes into the wind, get distilled and has been repackaged more than Destiny’s Child best of hits. It’s been sold in so many ways and to so many outlets, that the stories of the battles and reasons for the coup to even happen. I hate that I have to bring up 1986 again. But it’s because the whole legacy and reason for the Presidency of Museveni, is because of his NRA/NRM battle to supremacy in the 1980s. Since Museveni wanted to be different and have a democratic government compared to the predecessors in the republic.

Still, now he sounds more like them and acts like them. He uses the military against them and uses political positions to buy of opposition and even own cronies. Museveni depletes banks and economy. Certainly, together with election rigging and having added economic interest rates, these sorts of significant outbursts prove what is wrong in the Republic.

President Museveni is now showing his true character. Museveni is saying he isn’t a civil servant. That means that he shouldn’t be the Executive, be the Commander-in-Chief or His Excellency. He should be in the bush as rebel. Not be in power and not head of government. Because government is to serve the public with the usage of taxes and using public coffers to deliver public goods and working government institutions that serves the citizens. The government is there for the citizens, not the government for the government itself.

So President Museveni can charge his guns, take his tanks and his jet-planes to scare the hell out of the public during the elections. The rigging might make the President forget his role, as if he we’re legitimately elected he might feared the public and citizens more. But when the public fear him and his guns than they don’t need to have a civil servant, however they have a thief-in-command instead.

President Museveni has invented the “Presidential Handshake” and given way to all sort of non-governance behaviour. As he has tried to get friends and culpable men in power around his neighbourhood, so he has installed and helped keeping totalitarian and despots in Rwanda, Burundi and Democratic Republic of Congo. He has used support of guns to get Paul Kagame as President in Rwanda, sent military support after the third term fraudulent election of President Pierre Nkurunziza, also helped to elect both President Joseph Kabila in the DRC. These men have not proven that they care about democratic societies or the trust in the governance.

Not that Museveni has cared, as he put’s family and loyal cronies in all sort of government institutions, instead of getting the educated or the ones who does it as professions, with lacking level of staff, with massive amounts of ghost workers and forged spending, allocated funds misused and transaction without proof. These is ordinary after 30 years of rule, as rampant corruption, parliamentarian greed and government mismanagement. It is not strange that President Museveni isn’t an civil servant.

President Museveni is the head-crook in charge, the head thief who robs the Republic with passion and for the freedom of his family and cronies, nobody else. Peace.

Mzee is missing a “Presidential Handshake” to maintain the Presidential Jet!

m7-presidential-jet

Long live the almighty President Yoweri Museveni, who can spoil his fellow cronies and mismanage funds in a splendid way that even his Presidential Jet is lacking funds. He is the only Executive and President who has this capacity and this arrogant ignorance to pull this one off without any consideration to the current state of the economy or the implications of where the funds has to be taken from. There are certain lack of fiscal policies and holding procedures as the constant scrutiny from Auditor General and other Government Officials are steady on the allocated funds used without supervision or proof. Therefore a Presidential Jet and Helicopter at the State House budget is not overwhelming, it is more of the same. Apparently, the maintenance of the Jet and Helicopter is underfunded and need to get money.

As the Parliament Watch so wonderfully stated today:

“State House is seeking for Shs 6.2 billion shillings to facilitate routine maintenance of the presidential jet and helicopter. State House Comptroller, Lucy Nakyobe, while presenting the institution’s budget for the 2017/2017 financial year before the Presidential Affairs committee on January 23, 2017, told legislators that the current budgetary estimates are meager to fund maintenance of the chopper and jet. Nakyobe presented the budget before the committee, in which under unfunded priorities, Shs 4.6 billion is provided by the Ministry of Finance, out of Shs 10.8 billion budgeted for by State House. Committee chairman, Fred Mwesigye acknowledged the need for money to maintain the presidential jet to be provided. “These machines must be properly maintained so we need to get the money,” Mwesigye said” (Parliament Watch Uganda, 24.01.2017).

Certainly, the President needs to shake his own hands and find the needed funds. Because there are apparently enough there to pay the cronies and “winner” of the Heritage Oil and Tullow Oil drilling tax case. Still, there is not enough to buy parts and fuel for the Presidential Jet. Which is ironic that it is about the same amount of monies that are spoiled on the Presidential Handshake. If the President was wise he would see this malfunction, but I think he rather take monies from a ghost-SACCO or ghost-NAADS than actually take the ill-given funds to his own Presidential Jet.

President Museveni surely would be reckless to take the funding from Health Care and allocations there, as the state of Ministry of Health is dwindling, not only with fires, but also with lacking medicine and procured machinery for their treatment. It is reasons why the rich and the elite fly abroad to salvage their health. Still, the State House really needs money for this plane, they do not want to be in charge when the Presidential Jet falls from the sky and the reason is a knock-off unit from a Ukraine Airplane instead of the real-deal fresh from the factory without any defects or even been used in 10 planes before.

We can surely see the headline: “Museveni dies in Plane Crash: Cheap parts for the wings are the reason for the crash”. First line of the article reads: ‘Let us wait for the black box to determine outcome of preliminary results of the crash-site, which is look after by the Police and Interpol’. That would be dangerous and misgiving that the lack of oversight was the reason for the technical deficiency because of his own Presidential Handshake. That the President are his own worst enemy, the sole reason and sole candidate for the lacking funds to his own airplane. Sounds like a bad movie, but still very real.

President Museveni has a Presidential Jet that lacks funds, that lacks maintenance and needs new fresh funds. Certainly all he needs is a Presidential Handshake! Peace.

Motion for a Resolution of Parliament to Investigate the Circumstances under which Rewards were made to 42 Public Officers for Winning the Tax Arbitation Case between the Government of Uganda and Heritage Oil and Gas (09.01.2017)

ug-09-01-2017-motion-p1ug-09-01-2017-motion-p2

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