Opinion: Museveni – “China might be a problem in the future” – it will be if you default on your debt

“Africa has been having problems for the last 600 years due to the slave trade, colonialism, neocolonialism — and none of it was from China” (…) “not seen any serious problem, because their approach is different” (…) “They do not impose their offers if you do not want them, so we have not seen a problem for now. Maybe a problem in the future, but not now” – President Yoweri Kaguta Museveni (Sinan Tavsan – ‘Uganda leader says China-style diplomacy ‘better than’ the West’s’ 17.03.2022, Asia Nikkei).

President Museveni had an exclusive interview with a journalist from Asia Nikkei and it was published today. These few quotes are from there and it is striking. The former donor darling of the West. The President who has pandered to the interests of the United States and their allies for ages. Who has eaten of the buffet of aid, grants and all sorts of prepositions, which has given him a larger than life persona.

That man is now blaming the West for if all. He is right in going after the colonial past of the West and the neocolonial structures, which are hampering development and continues the cycle of rich versus poor. This is justified, but he also shows a little nativity in concern to China.

It is just like he don’t think the monies, the funds and the China Exim Bank, which works like this:

“The China Exim Bank is increasingly making use of a deal structure – known as the “Angola mode” or “resources for infrastructure” – whereby repayment of the loan for infrastructure development is made in terms of natural resources (for example, oil). While this approach is by no means novel or unique, and follows a long history of natural resource – based transactions in the oil industry – China has taken its implementation to a higher level. By providing preferred lines of credit to Chinese state-owned enterprises and foreign governments wishing to purchase Chinese made goods, the China Exim Bank supports the overseas expansion of Chinese firms in line with the country’s “Go Global” strategy, whose long-run goal is to increase the productivity and competitiveness of these enterprises vis-à-vis their global competitors. The arrangement is used for countries that cannot provide adequate financial guarantees to back their loan commitments and allows them to package natural resource exploitation and infrastructure development” (Institute of Developing Economies – Japan External Trade Organization (JETRO) – ‘China in Africa’ October 2009).

What Museveni is not saying is what the costs of the debt and the structure of the Chinese support to Uganda or anywhere else. It is like Museveni haven’t seen what has happened when Republics or Nations defaults or fail to pay on the debts. Since, the Chinese Banks or Funds are coming with strings, which isn’t always public. That’s why we have seen what has happened to Sri Lanka and Tonga, which both has to give up key infrastructure to be licensed. The same has been told to happen Zambia and there are already fear of what could happen to Entebbe International Airport.

President Museveni should consider all of this, as it is next generation that will cover the debt he has been accumulated during his reign. There will be more than the Toll Road on the Entebbe Express-way to secure revenue for the added debt. It is like Museveni isn’t concerned about this and the threshold for repayments are coming closer. Therefore, at one point or another… if there is lacking domestic revenue… the Chinese companies or China can cease or capture collateral.

So, Museveni is right… China could become a problem. Especially, for all the nations who has eaten loans for the infrastructure projects in the Belt Road Initiative (BRI), which will pass the grace period and the debt of these has to be repaid. It wasn’t free money to build roads, buildings or rail-roads. No, it was an investment, which the Chinese plans to get profits out of. They didn’t give away this money. The first loaned the money, got a Chinese developer and Chinese Engineering company to build it and now later the debtor has to repay it with interests.

That is the brutal truth… I am not saying the loans are a problem, but they could easily become it. Especially, if the debtor doesn’t pay on time or in a fashion, which the creditor accepts. If they defaults or fails to repay. This gives the creditor leverage and possible freedoms or liberties to ensure collateral. Therefore, it could easily become a huge problem…

Museveni should also study how this happened to others. As sooner or later, this could happen in Uganda or anywhere else in Africa. The Chinese is right in doing this. The debtors signed the agreements and the stipulations on the loans are giving it legal binding rights to get it repaid. That is why … they might not use colonial techniques to get resources, ownership or have influence. They just borrowed money and with that has the upper-hand of their poorer states. It is a wise move, because the Chinese knows greed is an easy way of corrupting minds and get them into the fold. The same ways happens here. They don’t come with guns or war, but they are financially binding, which can easily be triggered.

In this instance, Museveni is partly outsmarted. Both are getting their interests nurtured, but at one point he could easily get into real trouble. It would be a huge problem and the state has to find currency or liquidity to actually cough up funds to pay on old loans. This is on the horizon and evidently, people are speaking to soft-heartedly about it. Peace.

Chinese Embassy in Uganda: Remarks by the Spokesperson of the Chinese Embassy in Uganda on Some Media Reports Alleging that “Uganda Surrenders Airport for China Cash” (28.11.2021)

Opinion: Financial distress and defaulting on loans causes the state to loose Entebbe International Airport

“China is most likely to take over Uganda’s Entebbe International Airport for default on debt repayment. More of Uganda’s national assets are at stake of seizure because of the unrealistic and endless borrowing which has mountained public debt to UGX65 trillion” (Kingdom Media Uganda, 25.11.2021).

The Deficit Financing can only take you so far. The bloated and crony capitalism can only keep you going so far. There been years upon years with loans for all sort of development projects and infrastructure upgrades in general. The loans have gone to buildings, roads and the only international airport in the Republic.

The National Resistance Movement and President Yoweri Kaguta Museveni have over the years promised they have a threshold and control of the amount of debt. However, in 2021 after a downturn and lack of generating revenue. The state is defaulting on it’s loans. The state has taken out loans it cannot carry. Loans are not only the loan, but the services for it too. The loans are with interests and with additional fees, which was accepted on taking the loans. These loans are now maturing and the grace period of not paying interests etc.

The Ministry of Finance, Planning and Economic Development (MoFPED) have promised they can service it and has it under control. They have said it would be used properly and well-spent funds. Nevertheless, the loans are clearly piling up and the state doesn’t have the revenue to pay them. They have recycled to many bad-loans and now they comes to haunt the Republic.

The state is paying for ghosts, huge patronage and a local government structure that is dilapidated from the get-go. Since, the state has such excess of expenditure, but they have to keep that to breathe life into the regime. This is why the state has to spend and use funds like a drunk sailors in port. Just awaiting to be robbed by a bystander or waste a salary at a gentleman’s club. However, this is a serious government and not a drunk lonely man who has been at sea for months on end.

It is tragic, but there been warnings. The Sri Lankan debt to China and what happened there should have been a “red flag”. What happened in Zambia as well should be another story of which the Ugandan government should have reacted too. However, that is clearly asking to much, as kickbacks, graft and grand corruption is part of the diet at the Entebbe/Nakasero State House. They are just eating and doesn’t care about the ramifications of it. Since, the cattle in Rwakitura farm is better taken care off, than how the budgets are financed. This is the sad reality of the Republic in 2021.

The amount of loans and debt will cause more distress. Why? Well, there is no future or ability to clear the debt without any proper revenue. The state needs to find new measures to get fiscal responsible. However, the state cannot just tax things and start to tax people for their every transaction. Because, with doing that… they are taking away money, which will generate more revenue and even more possibility to create new businesses. Yes, the state gets more taxes, but they are also creating a wormhole where there is no option to generate any real income. Since, if you have any transactions, the percentages of money is siphoned by the state and instead of getting invested to make new markets.

Therefore, the state is forced to change the way it operates. However, by doing so… the NRM and Museveni will have to drop cronies. That is something it cannot afford, because they are to eat and not to make the Republic better. This state cannot sustain itself …. and it’s own fault that it defaults on loans. Nevertheless, the citizens and the taxpayers are the first to be hit by this. Not the ones who has issued or taken out the loans over the years. They are the ones that has to fix it or for generations pay the Chinese for ordinary services. Because, the current regime wants SUVs and envelopes to cover for funerals or pay for medical tourism. Peace.

Opinion: 7 years down the line and the China Exim Bank loan to upgrade Entebbe Airport can become a liability

“The State Minister of Finance, David Bahati assured the legislators that the implementation of the project will be monitored to ensure the funds are properly utilised” (The Observer – ‘Parliament endorses Shs 680bn Entebbe Airport expansion loan’ 30.10.2015).

It is now evident that the Government of Uganda and the National Resistance Movement (NRM) might struggle with a loan it took out in March 2015 from the China EximBank to fund upgrades of the Entebbe International Airport. We are now in October 2021. There was forewarnings about taking expensive and extensive loans to build and development infrastructure projects. The ones who was steadfast and worried about the rate of loans the state took out was silenced. The state had a plan and initiated with thresholds of loans the state could borrow.

Alas, the state is starting to struggle to cope with all of these loans. It is not shocking as the NRM and the state have been busy with deficit financing it’s budgets to balance it. They are operating with a higher expenses than it has domestic revenue. So to go from red to black the state borrows vast sums from various entities, both locally and internationally. These are taken out with interests and with that… the debt burden is ballooned and at one point… the creditor will either ask for the collateral or make an agreement to cover the funds to cover the defaulted debt. This is what that could happen to Entebbe International Airport…..

Here is how the story went…

How the loan was made:

“On October 8, 2014, Uganda’s Civil Aviation Authority (CAA) and China Communications Construction Company (CCCC) entered into a contract for the up grading and expansion of Entebbe International Airport (Phase 1). To access funding for the project, the Government of Uganda (GoU), represented by the finance ministry, signed a concessional agreement with EXIM Bank of China dated March 31, 2015 for the principal amount not exceeding Renminbi 1.26 billion (about $200m) and interest to be charged at a rate of 2% per annum” (Africa Tembelea – ‘AG Muwanga raises queries on Entebbe Airport Expansion’ 12.01.2019).

How CAA looked at the agreement in 2019:

“Current overall progress for the upgrade and expansion of Entebbe International Airport is at 52 per cent as opposed to the planned progress of 55 per cent. This is commendable progress. At one point in time, there was a delay in release of money from the Exim Bank of China to the contractor (CCCC), which led to a slight delay that has since been resolved. There was a difference of opinion between Exim Bank and the Government of Uganda on the loan agreement clauses. This necessitated the Government of Uganda and Exim bank of China to renegotiate the terms. This was done and the matter resolved amicably. The contractor has since increased resources committed to the project including manpower and equipment. The rainy season also affected works” ( Dorothy Nakaweesi – ‘Renegotiating loan terms slows Entebbe Airport expansion’ 03.06.2019, Daily Monitor).

Xinhua reports:

“Under the Belt and Road Initiative, construction works started in May 2016 after Uganda acquired a 200-million-U.S. dollar loan from the Export-Import Bank of China (China EximBank). The project is scheduled to be implemented in two phases, said China Communications Construction Company (CCCC), which was contracted to design, construct and manage the project. The first phase, with three-quarters finished, involves construction of a new passenger terminal, a new cargo complex, and upgrade of two runways and their associated taxiways, rehabilitation and overlay of three aprons. “For the new cargo building, it is about 10,000 square-meters and when it is finished, it can handle 100,000 tons of cargo per year; for the new passenger terminal building, it is about 20,000 square-meters (and) can handle 3 million passengers per year,” Li Qinpu, CCCC project manager told Xinhua in a recent interview” (Ronald Ssekandi – ‘Feature: China revitalizes Uganda’s aging airport to carry more int’l traffic’ 15.10.2021, Xinhua).

Brian Luwanga tweeted today:

“EXIM Bank of China can take over Entebbe Airport in case Uganda fails to pay back a loan of 740 billion shillings ,this has been unearthed by COSASE while meeting Finance Minister Matia Kasaija. The loan was advanced to Uganda for upgrade of Entebbe Airport” (Brian Luwanga, 28.10.2021).

It is now a shot that the state promised was safe and would be able to liable for. The state said it would be able to repay the Chine EximBank and service the debt. However, it now seems likely the state is failing to pay back the loans. This means the state is defaulting in it and depending on the agreement. The creditor will have power to cover the debt from the debtor. In this instance, the state has to give collateral or any other sort of value, which will practically cover the lost debt and get returns on the loans issued.

This here is a sad story, but they could have done things differently. Even MPs and some said the state should use other sources to raise the funds for the upgrades of Entebbe International Airport. There was one MP who said the state should borrow this from the NSSF to cover it. Alas, that wasn’t the case and now we are here.

We shouldn’t be shocked at this current rate and with the trillions of shillings of debt. The debt isn’t only the amount you get directly from the lender, but you will also pay additional fees and interests. Meaning the loan isn’t just the fixed funds, which the debtor is receiving, but also the costs of servicing it too. That is what the state has do to when it takes these sort of loans and financial instruments.

The general public should worry about this. Because the state has taken out so many loans and these could it easily default on. The state needs domestic revenue, but is running on huge burden of running costs. While it doesn’t have a growing economy or financial structure to cover the deficits. That’s why the state has taken out loans to cover these expenses and this is why they are defaulting on it.

This was inevitable and the state has to restructure itself. Also, ensure it only has expenses that it can cover and just continue to add debt until the sky. Now the rainy days are coming and the loans taken out in recent years will come to haunt the state. This will hurt the state even more and the spiral of depreciative loans will eat up the budgets, which it is already doing. The rate of paying down on it will be destructive, unless there is a sudden miraculous change of financial fortunes. Alas, await more tragedies like these, as the Entebbe International Airport is the top of the ice-berg. Peace.

Opinion: Mr. President needs more supplementary funds than the average referral hospital

Today, the Ministry of Finance, Planning and Economic Development (MoFPED) in the first week of the budget year dropped the first supplementary budget of the budget year. What is striking in this one and the International Monetary Fund (IMF) is loaning billions upon billions of shillings for a possible financial recovery after the pandemic.

However, the President is now getting more funds in the Supplementary Budget than the 15 referral hospitals. Yes, the Ministry of Health getting a huge slice of the pie this time. Nevertheless, the fine print shows that the President needs 6,964,000,000 to fight COVID-19. He needs 6.9 billion shillings on his own to combat this.

The 15 referral hospitals, which has been deemed fit for additional funding on the other hand gets the handsome sum of 575,500,000 or 575 million shillings. In total 8,625,000,000 or 8,6 billion shillings. That’s the total direct budget supplement from the state to 15 hospitals in the middle of a pandemic and the second wave.

The funds given to the hospital barely have over 1,5 billions shillings more than the President. However, each hospital gets less funding and they are on the frontline. It is not like the President is giving people vaccine in Kawempe or in Makindye. Heck, he will not even do it in Ankole. The President is rather safe behind bulletproof glass in his vehicle, than ever giving a helping hand. Unless, there are some elders willing to bend their knees for him and kiss the ring for his majesty.

This is a supplementary budget to fight COVID-19 not to further salaries for additional Presidential Advisors or whatnot. Neither it is to cover expenses from the general election or what else you can imagine.

It is just baffling that the state prioritize this way. Just like the External Security Organization gets additional 1.1 billion shillings and Internal Security Organization gets 4.7 billion shillings. You can wonder how these organizations combat this deadly disease. In combination that the Ministry of Defence is getting the 10.4 billion shillings and the Uganda Police Force for some reason has the grand total of 19 billion shillings. This is all security, tear-gas and to enforce the Standard Operational Procedures SOPs or the Presidential Directives plus keeping the officers and soldiers happy during the lockdowns. Because, what does these entities has to offer in the combat of COVID-19?

That is beyond the point, right? Just like the Office of the President has little to nothing to do in the ambition to stop the spread. This just shows how mismanaged the whole thing is and lack of priority. When such vast sums of money can be spent on these parts of government. This is not to procure or get vaccines. This is not to buy PPE or produce more oxygen. This is not train more nurses or doctors. No, this is to boost the fragile ego of one man and secure his reign. Why else would he spend billions on the State House and Security, as a measure to fight COVID?

He is not kidding anyone, only himself and his fellow cadres who eats this nonsense for breakfast. This a mockery and public wastage at it finest. Peace.

Uganda: Statement by Finance Minister Matia Kasaija on IMF Executie Board Approval of extended Credit Facility for Uganda to Support Post-COVID-1 Recovery (30.06.2021)

Uganda: Kasaija plans to borrow $190m extra to cover a budget shortfall within two years!

“Someone please call 911, yeah yeah (pick up the phone yo)

Tell them I just got shot down, tell them I just got shot down

And it’s piercin’ through my soul (I’m losin blood yo)

Feel my body gettin’ cold, oh, so cold

Someone please call 911 (can you do that for me)” – Wyclef Jean ft Mary J. Blige – ‘911’ , April 2000

In an election year in the Republic, the economy usually runs loose. The State House lacks suddenly funds, the President needs more and so fourth. That is standard procedure. However, on the 19^th March 2020 Matia Kasaija has now announced that the plans to borrow USD 190 million to cover a short-fall of funds, because of the COVID-19 or Coronavirus.

This is deemed fit because of the pandemic and the financial disruption it has. Not that the Republic is alone in this. Other big states and plenty in the Western hemisphere is putting up packages of economic stimulus to salvage the economy because of it. So, the sentiment is understandable. However, the Ugandan republic is already heavily indebted and every single development project of late is covered by debts and debt relief. Not like its sustainable to take up nearly USD 200 million to suddenly boost a dying economy.

Here’s the quotes:

“The low activity in industry and services sectors will result into loss of jobs further leading to a decline in economic growth and an increase in the level of poverty. The number of people that could be pushed into poverty is estimated at approximately 780, 000” (STATEMENT ON THE ECONOMIC IMPACT OF COVID.19 ON UGANDA,, 19.03.2020).

“To deal with the financing gap in the Government budgets for FY 2019/20 and FY 2020/21, my Ministry will seek for a budget support loan on concessional terms worth US$ 100 million for FY2019/20 and US$ 90 million for FY202021 from the World Bank” (STATEMENT ON THE ECONOMIC IMPACT OF COVID.19 ON UGANDA,, 19.03.2020).

It’s seems like they have the perfect cover for rising debt. They need to do something, because lots of industries are shut-down or silenced by the lack of tourism and foreign exchange. Also, the diaspora is hit and can therefore, not remit enough funds to boost the economy either.

The MoFPED really want to stain the economy more. To quote the IMF:

““Rising debt puts more strain on the budget as more resources need to be allocated for interest payments. One shilling paid for debt service is one shilling less going to a school or a health clinic. The current ratio of interest payments to revenue is comparable to what countries with high risk or in debt distress typically face” (IMF – ‘Uganda’s Economic Outlook in Six Charts’ 09.05.2019).

By borrowing close to USD 200 million is really pushing the envelope. As the interests needs to be served, the grace period might be short, as the state of finances across the board is souring. Therefore, the state will not get to favourable terms with this. The World Bank also has all other states begging for funds and possible grants to push the set-back of the pandemic. Not like Uganda is the only one crying out loud and applying for money.

This money will not be free money, but tainted money. This sort of funds is needed, because the state wasn’t planned nor had the capacity to have a rainy-day fund. The Petroleum Fund has already been raided and therefore, couldn’t come in handy now. This is the mismanagement, your already in a negative spiral with more and more loans. This is just adding two more and they are big. That will cost in the long run. It might salvage today and tomorrow. However, it will scar the next generation. Unless, someone is forgiving like these entities was in the early 1990s. Before the state again took up huge loans to cover deficits.

This is just the way it is now. Not a good look. Understandable in the growing crisis. However, that shouldn’t undercut the possible pain it will bring in the future. Save the day, but cause more harm tomorrow. Peace.

Mobile Money Tax shortfall: People change behaviour after levying an unfair tax

“Levy on mobile money contributed a deficit of UGX 30.48 billion which can be explained by the fact that high value clients withdraw their funds from agency banking e.g MTN has had a drop of 36 percent in MM transaction values since the introduction of the levy on mobile money” (Uganda Revenue Authority, 06.02.2020).

There is also reported that it has been a 36% drop in Mobile Money Transactions since the enaction of the Exercise Duty in 2018. That means, the added tax on the MM transactions are backfiring. The State isn’t adding revenue, but ensuring that people are finding other ways of moving their money.

This is not shocking, that people change behaviour, when the state makes it more expensive. As the people used these services to send each other money by convenience. Now, one third of the transactions are gone. Meaning, the ones that can change their ways has done that.

The losers are not only the Telecoms, but also the state. As the shortfall of taxes got to be covered elsewhere. As the state had put this into the budgets to cover other state works. This means the targets for domestic revenue wasn’t considering the implications of doing it. As, there wouldn’t be an natural reaction to the consequences to the new taxes.

Instead of increasing the tax base, they are making it smaller and not able to find measures that makes sense. The state has clearly done this without due diligence, neither also configured the stats and the possible behaviour of the public. As their ways gotten more taxed and not considering that they would stop, if they found it to expensive or unreasonable.

The MM tax and the OTT taxes was measures made to tax the digital market-space in the Republic. However, they have both been flawed and also not met their targets, because the public found other ways of doing things.

The ironies about the MM saga is that before the tax, the business of MM was growing. A natural growth and having more transactions every year. Now, that they levied the tax its has a big fall. That is a result of the MM Tax and the public is not having it. Peace.

A snap-shot into the Budget Framework Paper for 2020/21

It is budget season, this is out-takes from the Budget Framework Paper for the Financial Year of 2020/21. The Financial Year, which the General Election will be held during the early start of 2021. Therefore, the budget will be hit by this.

The Budget is estimated to be a total of 39 trillion Uganda Shillings. External loans to cover the budget is projected to be about 7 trillion shillings.

While the debt repayment is growing too. That is why in this budget year, the estimated interests payment is 1.2 trillion shillings.

In special usage, the Office of the President plans to spend 101,9 billion shillings under Public Administration. We got to address the needed Shs. 1,8 billion spent on medals, so that the President will not be embarrassed.

While the State House has the expenditure of 407 billion. From that one, I have a few snap-shots of the expenditure. First, the Procurement and maintenance of transport and specialized equipment including the Presidential Jet and Helicopter at Shs. 31.172bn. Which was put under the vote of the Public Administration. Shs. 34 billions on the ageing fleet of Cars at the State House. Also, Shs. 10 billion to refurbish the State House.

The Office of the Prime Minister set to Shs. 498,531bn.

In election costs, the total budgeted expenditure. The election will cost 1 trillion, 800 billion in security and another 200 billion shillings on the Elections Road Map. The Electoral Commission is budgeted to spend about 318 billion shillings on the management of the elections.

What the NAADs plans to do:

– 130 tractors and matching implements

– 1,000,000 hand hoes

Let see if the NAADs will keep their old promise, which was a big deal before the previous election. Even if you cannot find a budget post where the hoes are fitted in. Surely, they are hidden somewhere, but not somewhere obvious to the naked eye.

These was the most fitting things I found so far. Surely, there are plenty more juicy things. There wasn’t any water bills or explaining to do. The Budget Framework Paper is very straight forward. However, usually something daft get passed through. We really will see more.

But these are few tit-bits of it all. Peace.

Opinion: OTT Tax on Data Bundles is like a dual-VAT

“URA Commissioner General Doris Akol told the Finance Committee of Parliament chaired by Henry Musasizi that the controversial OTT Tax will be charged directly on data instead of mobile money to curb the evasion” (NBS Television, 14.01.2020).

I wonder if Doris Akol has thought this through or is winging it? As she see the losses and lack of results, revenue or tax base with the 200 shillings of doom. The whole OTT Tax is to expensive for the public daily. Now, she wants to move it and indirectly tax it instead.

Surely, they will get revenue, but this will make it more expensive to buy data-bundles for the customers and make the packages more viable. VPN and similar networks to circumvent the usage and payments of the daily OTT Tax have beaten the Uganda Revenue Authority (URA). That is why URA does this now.

It is a sign of defiance and civil disobedience. They are trying to patch the hurt. But will this succeed? Will more try to only load data through Wi-Fi networks and wireless networks in general. Not load so much data on the go. Because, people are smart and tries to undercut extra taxes. Especially, when on the data is already paid VAT and the Mobile Company pay their taxes on the profits too.

Therefore, URA and Akol seems fishing. They will raise revenue, but also make the data bundles more expensive and with that stop plenty of people from buying bigger data bundles for surfing online on your smart-phone.

That is just the mere reality. It is a sign, yet again that the OTT is a failed project, who didn’t hit the targets and wasn’t measured right. If it was, the aim and the bargain wouldn’t be like this. That is not happening.

This method is a clever way of adding the costs of data, while charging for service not necessarily used. The OTT Services, which is the reason for why these are charged. Because, the data could be used for other things and therefore, is violating its attempt to make it costly for certain usage on online.

This is again, pushing one story, pushing one tax and trying to tax the public by any means. When the hook doesn’t work, they use the crook. Instead of doing directly, they want to do it indirectly and initially in some way adding a separate VAT on data-bundles masked as OTT Tax. That is really it.

We all know this, URA verify it today. That the only things certain in life is death and taxes. Thanks Akol for reminding us. Peace.