Opinion: 2 Trillion shillings is suddenly needed to cover the deficit

A letter dated to the 7th November 2022 by the Minister of Finance, Planning and Economic Development, Matia Kasaija was leaked titled “Request for Proposal to Finance the Government of Uganda Budget for the FY 2022/23”. In that letter, the Minister is specifying the needs to borrow €500 million euros. When you convert this to Ugandan Shillings it ends up being 1,957,704,000,000 or about UGX 2 Trillion Shillings. That’s a lot of money that the Government and the MoFPED needs to borrow.

This is the definition of deficit financing. The cycle of bad loans in combination of lacking domestic revenue. The only way to be able to cough up funds for the short-fall in the short-term is to add additional loans. So, the cycle continues, the state take one loan after another. Loans upon loans to cover for the old loans. While also borrowing more money to be able pay expenditure and government expenses.

That’s why the idea that the MoFPED is asking for this now isn’t surreal. It is the bleak reality and the misfortune of a bloated government. The government has to many entities, to many representatives and a local government structure, which is too expensive. Expensive in the sense, that the government cannot foot the bills and don’t have the revenue to carry the expenses. That is living lavish and someone else is picking up the tab.

We already know the state is running out of loss, when the budget was forecasted with a huge leap of faith that grants and such would cover about 40% of the budget. That is telling and it’s really showing the lack of it when the state this early in the Financial Year needs another 2 trillion shillings loans to cover it’s expenses.

The MoFPED wouldn’t call for this loan and at these levels… if they didn’t know there was a short-fall or a lack funds. There is deficit and that’s not shocking. It is just worrying that it’s happening at this extent and is so normalized. While we are seeing the 11th Parliament is following where the 10th Parliament left off. Accepting loans after loans on development projects and other additional expenses, which only creates a huger debt-burden down the road. These roads or infrastructure projects has to be covered and they are not money generating enterprises. Therefore, the cost of doing it will be ten-fold in the long run. Especially, when you don’t have money for the upkeep or the ones doing the day-to-day works on it.

That’s why you know the latest revelation of this loan is just concerning. It is not a winning bargain, but a proof of mismanaged and lacking progress. When the state cannot sustain itself or be able to get a tax-base to cover these expenses. That’s because the state is wasting funds on paying for old debts and interests, which are far over the grace-period. Peace.

A look into Mzee’s 60th Independence Speech [a story about coffee and the pipeline]

For the 35th time or the 36th time that President Yoweri Tibuhurwa Kaguta Museveni has addressed the nation in the Independence Day. This year its the 60th year since Uganda got independent from the United Kingdom. That day should have been held with fanfare and celebration across the Republic. However, the most vital and important place to be was at Kololo in Kampala. Where Museveni together with foreign dignitaries was at a bash. Which lasted and lasted.

President Museveni knows how to hold lectures and long one too. So, I will only take a few paragraphs here and there. That’s the ones that stood out to me. Because there is a lot of flesh and bone in a two hour speech and nobody with a sane mind wants to fact-check that on a whim. Therefore, I am only looking at snippets and addressing them as I see fit.

Like this one: “These achievements, have been in spite of the stiff opposition we have been facing from the parasites and their foreign backers, such as the Monitor Newspaper. To take an example, this paper, on the 22nd of May, 2022,it said that: “Coffee deal stinks; but key culprit will not be punished”. In other words, Museveni is committing a crime by trying to add value to the Ugandan Coffee” (Museveni, 09.10.2022).

By saying this we know his the Hawk Limited, which wasn’t addressed in the Parliament report. As the Government of Uganda and Uganda Vinci Coffee Company Limited has made agreements, which is practically creating a coffee-bean monopoly to a company that isn’t really built yet. Neither is the coffee factory built or ready for the levels of production either. That’s why this whole deals stinks and could easily destroy the agricultural output with the marginalized agreements, which isn’t benefiting the free-market or the spirit of producing it either. This is not an incentive or an adjustment anyone asked for, but a problem and bottleneck, which the President himself has created.

While on the subject. This paragraph is just amazing:

After that, I engaged the Nestle group in Davos. They made it clear that they already had their factory for coffee processing in the UK and would not build a new one. Hence, we had to remain as Raw-Material producers, getting only 5% of the value of the coffee we grow. They, moreover, try to muddy the water by claiming that “blending” of the different coffees can only take place in Europe etc. We told them that Uganda had all the varieties and the blending would be done here. That has been the war, I have been involved in until I got the Vinci Company to help me. You heard how some of the MPs were talking in that war. Mwalimu Julius Nyerere, had built a coffee processing factory in Bukoba, in Tanzania, near the border of Uganda. When I heard of that, I linked our people with that effort. They were producing an end product known as “Star Coffee”. Unknown to me, the officials of Uganda, allowed that effort to die out or get stunted. What blindness and betrayal this is!!” (Museveni, 09.10.2022).

It is interesting that Museveni mentions Nestle, which is only this year opening up a Coffee Processing Plant in Mexico. So, this means that Museveni is lying about the fact or that’s so long ago that the Nestle company has changed their perspective. Nevertheless, I don’t believe Coffee can only be processed in Europe. That is deliberately false and a lie. Just to malign Europe and direct his displeasure with Europeans in general. In this regard, there are already coffee processing plants in Uganda. Just to mention one other, which has been operating since 2015 is in Bushenyi district and run by APCU Union. This plant alone is sufficiently supporting 6,000 small-coffee growers in the Bushenyi district. So, the UVCC agreement with the monopoly is dismantling and destroying for instance that processing plant, which is already in operation since 2015. It just shows how his not interested in other visions than his own. His actually betraying the ones that already has started and is operating, which was also described earlier this in a Parliamentary Report. A report that the President don’t mention or even cares to assess. It’s his way or the highway…

On another note, he speaks of the petroleum pipeline:

Recently, there was yet another manifestation of Imperialistic arrogance and hegemonism by elements in the European Union Parliament whereby they decreed from Brussels that the East African Crude Oil Pipeline should not be constructed, until those arrogant actors permit us to do so. Parasitic elements from that part of the World, have been causing problems for Africa and the World for the last 500 years” (Museveni, 09.10.2022).

It is really astonishing the ways that he puts this. That’s why you know this is “his oil” and he feels tampered with. He isn’t describing or explaining the grievances of the EU Parliament Motion. Only describing them the worst way possible and putting them in sinister political context. Instead, of trying to defend with proper arguments for the continuation of it. While again maligning his detractors with language that isn’t fitting for a grown man of his stature, but we know that is common practice from him.

Well, enough for this piece, will write one more about his speech. Since it was over 30 pages and there was one more tale that needs to be addressed. It’s coming on the page as soon as it is finished. Peace.

Opinion: The PDM is set to destroy the parastatals supplying Coffee and Tea Seedlings…

Rt. Hon. Speaker, as you may be aware, up until FY 202l /2022, Government policy has been for Uganda Coffee Development Authority (UCDA) and National Agricultural Advisory Services (NAADS) to procure seedlings from certified Coffee and Tea Nursery Operators. However, Government has since decided to transfer funding previously appropriated for procurement of seedlings from UCDA and NAADS to the Parish Development Model (PDM) starting this FY2022/2023” (Statement to Parliament on the Supply of Coffee and Tea Seedlings, 22.09.2022).

The latest revelation of the Parish Development Model (PDM) will by this Financial Year takeover the powers to buy Coffee and Tea Seedlings, which has been done through the UCDA and NAADs. We know that similar activities was also in the past done through the Operation Wealth Creation (OWC). Though through those schemes wasn’t delivering the quality or the promised needs of seedlings at any given time.

When we have seen how the OWC and NAADs has failed in this. They are now putting this in the hands of the PDM and the Secretariat, which isn’t even prepared to do the basics of the PDM. The PDM is supposed through SACCOs and through the Local Government ensure Parish SACCOs get’s microfinance loans and funds, which is supposed to help development. However, the authorities, the local leadership and republic wasn’t prepared for it. As it was launched ahead of the polls, just like Emyooga, OWC and now the PDM. This is new minted schemes to be a “trick” to be the “silver bullet” to end poverty, but it ends up in nowhere.

Now in the middle of nowhere is the coffee and tea seedlings. Which are now transferred to an entity that cannot even do it’s core. Money is wasted, money isn’t received and we are certainly hearing about “missing funds” soon.

So, an organization that has been rushed, lacked funding and procedures is taking over something so vital for the supply of seedlings for the cash-crops of coffee and tea. That’s significant and shouldn’t be showed under the rug. This is a move to stop accountability and control of it. As we know the Republic is already under scrutiny with the Uganda Vinci Coffee Company Limited (UVCCL).

It’s just iffy that this happens now. That seems fishy to me and it seems coordinated too. This is clearly taking away power and making the UCDA meaningless. Only a place to put some loyal cadres and giving them a pay-check, but having little power or oversight since the PDM and UVCCL will have monopoly. The farmers just have to produce and the Republic will take care of the rest. This is from seedling to the refined product.

They are even taking away the little powers and ability the UCDA has and doing this is shady. That’s why they are giving it to the PDM, which they know have to much on its hands. This isn’t strengthening the agricultural development, but making another scheme within the scheme. To fit another scheme they have already made. The PDM is now becoming a part of the UVCCL. That’s really interesting move and just shows what the National Resistance Movement (NRM) does at this point.

No one should be shocked, but they should be worried about this move. This isn’t done to make the cash-crop more profitable or better. We know how the OWC failed with the procurement and logistics of seedlings. Do you really think the PDM will be any better? Who are they trying to fool here? Who is the ones who are losing and are the party they are crushing?

Because, there are parties, companies and co-ops that are hurt by this. Since the PDM is taking over and there should be outrage over this. Like the NRM and the Government didn’t learn from the failure of OWC. That’s what is striking… and just shows that it doesn’t care. While it could be a scheme to fit the UVCCL and that makes it even more disgusting. Peace.

Bank of Uganda (BoU): Government has not failed to pay Bank of Uganda (20.09.2022)

The Government own 11 trillion shillings to the Bank of Uganda [and out of that 3 trillion shillings in advances from the last financial year!]

The National Resistance Movement (NRM) are ruining the economy. They have a deficit financing that is revealing to deplete all funds and all sources of revenue. That’s why in the Leader of Opposition statement published on the 13th September 2022. The Leader of Opposition Mathias Mpuuga MP in his statement is showing a staggering issue of fiscal nature.

The Government of Uganda (GoU) or the National Resistance Movement (NRM) are now owning 11 trillion shillings. Out of those 11 trillion shillings, there is 3,03 trillion shillings it got in outstanding advances in the Financial Year of 2021/2022. Because of this, the Government of Uganda lacks fiscal funds to repay their own National Bank, the Bank of Uganda. It has taken money from one post to cover other posts, in advance, but it has no plan of returning these advances.

The addition trouble with this is that the International Monetary Fund (IMF) has stopped releasing funds or loans to the Government of Uganda until these advances are paid. That is again hurting the funding of the Government and the operational funds of the state. Since the IMF will not cover the deficits or the lack of funds in the GoU. The GoU is running so low that it’s not able to repay their own advances, which it created from the BoU.

This just shows how dire things are… this is only talk of 3,03 trillion shillings. The GoU budgeted itself with a 25,78 trillion shillings in domestic revenue in the budget of FY 2022/23, but we can wonder if the GoU has any of funds to recover or to spend on the advances in question.

If you wonder what mismanagement and how destructive a debt-cycle is… it is becoming very eminent that the NRM and the GoU has stretched it out. They are not able to get or find sources for fresh funds. The state is not able to get enough domestic revenue to even cover the basics. That’s why they are even shortfall on 3 trillion shillings to the Bank of Uganda.

This should be depressing and be worrying, but it is just another day in the Republic. The Value of Money is gone. The money and funds are just missing. Loans for development projects, day-to-day activities are just gone in thin air and they have no plans to repay them. If the NRM and GoU does this to its own Bank. What is it doing to the Multi-National Banks and Monetary Instruments it loans from on the regular?

That should put shiver down your spine. This is a sign of a financial downturn, a sort of financial self-destruction and possibly re-structuring of old debt. Because, the state cannot even carry the advances it took out in FY 2021/22. Peace.

Opinion: 4 MPs issues a Motion to praise the SONA 2022 to get some recognition…

When it comes to the recent high commodity prices, caused, initially, by the re-launch of the world economy after the two years of lockdown and, additionally, by the war in Ukraine, our decision, after careful analysis, is to avoid the traps of tax cuts and subsidies” – President Yoweri Tibuhurwa Kaguta Museveni (07.06.2022).

It is really a spectacle when 4 Members of Parliament uses time and energy to make a motion to praise the President for a speech he held on the 7th June 2022. The 4 MPs saw it fit and usage of their valuable time to speak of the glory of His Excellency. They are having a ceremonial act and showering the old man with the hat with positive vibes.

These MPs are:

Mover: Hon. Emely Kugonza, MP Buyanja East County

Seconder:

Hon. Michael Bukenya Iga, MP Bukuya County

Hon. Sarah Kayaga Netalisire, Namisindwa DWR

Hon. Okot Boniface Henry, MP Youth Representative Northern

It is really amazing that Kugonza MP, Bukenya Iga MP, Kayaga Netalisire MP and Okot MP who are all in on it. These 4 MPs have used their time in office to file a motion of praise and appreciation of the State of the Nation Address of 2022. That’s what they are using their time on.

This is clearly done so the President and the State House notice their existence. They wants to score-some brownie-points and get goodwill from the old man. The MPs wants to shed a positive light and show loyalty. They are using their time to give credit to inaction and lack of concern to the rising prices, the inflation and the lack of government help in the middle of crisis. That’s what the MPs are doing and it should be called out.

Going solar:

Once the solar powered irrigation pumps are on the market, the Government will buy them for some of the co-operatives or farming villages, where one pump can be shared by a number of small farmers” (Museveni, 07.06.2022).

The MPs wants to envision the empty pledges which is so common placed in any speech from the President. The MPs must look forward to get “solar powered irrigation pumps” because I think that’s a mirage. The President promise a huge leap when he in the last period or last term was proud of bottle-Irrigation as a way of solving irrigation cheaply. This is just following the pledges of the President during the lockdowns, which was Village-TVs and Village Radios… that no one ever saw. Therefore, people should expect the same of the “solar powered irrigation pumps” as with other pledges, which shows this will never happen under his reign. It is to costly, a big burden and it will not be sustainable…

They are directly acknowledging a speech with this sentiment:

Another danger to our rapid social-economic transformation is the corruption of political actors and Public servants who do not only steal government money, thereby denying the population the services that money would have provided, but they also parasite on our business people. Business people and investors, do not feel beholden to these parasites. Expose both their requests for bribes and their schemes for frustrating those that do not pay bribes. Action will be taken for the benefit of the business atmosphere in the country” (Museveni, 07.06.2022).

It is really vivid when someone calls people insects and parasites. This is a posture and tough talk, as his government is known for being corrupt and accepting graft. The same government that promoted and was proud of the “Presidential Handshake”. That way civil servants got kickbacks for photo-copying papers in a court trial winning the state money. The same President and Government calls the corrupt parasites. This doesn’t add up and still the MPs wants to sing psalms in the Plenary Sessions for greatness of the State of Nation Address of 2022. That sounds stupid, right?

So, I don’t get what the MPs are seeing in this speech. Unless, they are only doing this to give empty sloganeering and show their loyalty to him. That’s the true legacy of doing this sort of motion. Just to signal the State House and the Office of the Presidency. We can just expect a small acknowledgment from His Excellency.

The 4 MPs really wasting their time doing this. Instead of looking into the fallacy of the speech. They uses it to be in the good graces. The MPs are not using their time or their wisdom to actually make a difference. They are just there to bow down to the master and hopefully get a moment to kiss the ring. Peace.

The Rise of the Cassava Republic: Low-Income turned into Middle-Income out-of-nowhere..

Remember, the locusts, the rising waters of the Lakes, the floating islands, the landslides, the terrorist bombs, the covid-19 and now the rising commodity prices artificially caused by the Ukrainian war. In spite of all these, the Ugandan economy, by the budget time in the next few days, will be standing at US$ 45.7billion by the exchange rate method and at USD 131.6 billion by the method. This means that the GDP per capita is now $1046. You remember, the entrance points for the lower middle-income status, is USD 1036. We have now passed that figure. Congratulations. However, to be declared a middle-income country, you need to sustain this for two to three consecutive years. I am confident, we shall over perform, in achieving that” (Museveni, 07.06.2022).

The President yesterday surely said a lot of things yesterday. I thought this one would be one of the myths and legends of old. That no one would take seriously… because the delusion is real. The powers of the State House and all of his Presidential Advisors should have told him “no”. Even the son who prefers to party and throw birthday parties should have advised him to say otherwise. Because, this is useless…

Museveni isn’t close to Middle-Income Country. Not by stretch, a mile or such. That’s because of the financial policies, the lack of financial integration and all the other means of which is a proper open economy. Alas, if it had been open and tradable, he wouldn’t have his hand in every cookie-jar. That’s why his butt-hurt that his coffee deal with Vinci is under fire. Because, no one see it as a viable enterprise or idea to begin with.

We know in a nation of hand-to-mouth, in a nation of gig-economy and 1 out of 5 is living in direct poverty. It’s hard to believe that nation is a middle-income. Heck, there isn’t even a growing middle-class either. If it had been a growing middle-class, there would be more stores and other sorts of outlets for people to buy luxurious goods. However, there hasn’t been a growth of that either.

The growing inflations, the deficit financing and the running debts of nation is proving otherwise. The state isn’t growing with domestic financing, but the budgets are bloated and covered by expensive loans. Which the next generation or the next President has to clear. Since, Museveni is possible dead when the maturity of these loans has hit peak. There is already trillions of shillings going out of the economy just to finance old loans, as the state is hiking up new one. That’s all to keep the upkeep of a huge entourage and cronies surrounding the President. With a mushroomed cabinet and gerrymandering of epic proportions, that is all costing and the amount 555 MPs says it all. They are all paid and has perks. So, the state is coving these expenses without adding any new revenue or such.

That’s why hearing a man like this saying… they have hit Middle-Income is nonsense. It is pure A QUALIFIED BS. It is utterly ridiculous. It would be funny, if it was a punchline or a joke, but he said this and meant it. Like it was fact. When the World Bank state the nation as a “Low-Income” and the budgets, the domestic revenue and everything else proves it. Maybe the lack of Governor of Bank of Uganda is haunting him. Since, he can now make things up on the spot and make it legit. There will be no push-back from the professionals… We know the MoFPED doesn’t read the papers or look over the numbers before voting on the supplementary budgets. So, the Minister of Finance is far from professional. His just eating and hoping his Permanent Secretary can save his behind.

Well… this is garbage. This is trash. We hope for betterment, but under the self-styled President for Life. I wouldn’t count on it. I would only count on cassava. Peace.

A brief look into Mzee’s State of the Nation Address of 2022…

When you have speaking as much as President Yoweri Tibuhurwa Kaguta Museveni… there is little wiggle-room or ability to “invent the wheel”. He has said most things and is repeating himself. He is trying to forge narratives and sound epic. I will not look into smaller details, but just outright straight nonsense, which is plenty of. A man who has over 130 Presidential Advisors should have the corrections and the staff to secure the facts. Nevertheless, there is “only one man with a vision” and his always “correct”.

The “correct is a running feature in his speech too. About the “Correct Ideology”, “Correct Pan-Africanist Ideology”, “Correct NRM Policy”, “Correct Strategy” and “Correct Ways” which is just typical of Museveni. Where his always correct and cannot be wrong. He has all the remedies, but ironically never really fixed things or been able to elevate the Republic since 1986.

Here is quotes and breaking down each piece by piece:

Some myopic people, thought that this was sandy ground where the NRM had constructed the house of Uganda. However, the onslaughts to which Uganda has been subjected in the last 2 or 3 years, have proven that the Uganda house the NRM has constructed in the last 60 years, including the preparatory years before 1986, has been built on hard ground, indeed” (Museveni, 07.06.2022).

It is really magical how Museveni rewrites history. The NRM wasn’t established in 1962, which is 60 years from today. The NRA was born out of rebellion in 1980. The Uganda Patriotic Movement (UPM) was born earlier than that and the failure of a campaign in the election. Was a reason for the rebellion and creation of the mentioned NRA. The earliest known body, which people know of and part of was Front for National Salvation (FRONASA). Which dates back to 1971. Therefore, that is far from the vision of NRM back in the day. That’s why I have trouble to see how NRM worked for a better Uganda in 1962 or the 1960s. That’s rewriting history, which should be rebuked.

The NRM was entity, which came into light in 1980 as a rebellious outfit and resulting the prolonged bush-war that lasted to 1986. So, saying that the NRM has constructed a house on a hard ground is foolish. That is a delusion and not legit. That is making historical facts, which cannot be proven and is only a political fiction of the President.

Moreover, the wise man’s house is currently full of surpluses, without too much use of irrigation or the use of fertilizers. In the coming financial years, we are going to intensify the modest efforts we have already started on, in connection with irrigation. With irrigation, we have worked with the private sector to produce solar-powered water pumps that the rich farmers can buy and engage in mini-irrigation, farm by farm. Once the solar powered irrigation pumps are on the market, the Government will buy them for some of the co-operatives or farming villages, where one pump can be shared by a number of small farmers” (Museveni, 07.06.2022).

This here will never happen… remember the Village TVs and the other pledges during the two-year lockdowns? Well, non of that has happened. Neither has plenty of the other pledges either. It took decades to ensure local councillors could get bikes or even able to give away garden-hoes to the villages. Therefore, when these things has been impossible and taking decades. This will happen the earliest 2030 or 2040. Museveni will not have the funds, the ability or the manpower to make it happen. That’s why he has praised water-bottle irrigation and other means to develop the agricultural sector. I have a hard time believing that this will happen. It needs a miracle or a generous donor who can foot the bill. Because, the NRM will never do this. Nedda ssevo.

When I met Madame Pinetti, she had no idea about coffee. I, however, could see that she had a wide network of contacts. I asked her to look into coffee. After sometime, she came back with a positive report that it was doable. Therefore, those attacking that project, are supporters of okukenenula, (ekyejwiiso) of Africa – perpetual bleeding. If they were not, they would have responded to our call of 1986 and after, to come forward and add value to coffee and seek government assistance. Instead of attacking the saviour (oyo anataasa), if you are genuine, join the liberation effort. It is criminal for anybody to continue arguing for the continued export of raw-materials in Africa when there is 90% more value in that product that you are giving to outsiders” (Museveni, 07.06.2022).

The President thinks his smarter than anyone. Is his the owner of Hawk Limited or what? Why does he cares so much about the company and the coffee processing in the Republic? It makes sense that his invested and is the shadow owner of the company. When he cares so much about it. Because, the deals written between the state and the UVCC is creating a monopoly and taking over the trading of coffee beans. That’s why people wants to block it. The company has no knowledge or any sort of experience in the business either. While others are already working and processing coffee beans. Therefore, the deal in question is made with wrong intentions and illegal too.

It is striking that his so angry and bad tempered like someone stole a candy from a kid. As an old man he should understand this deal or agreements isn’t righteous. That is if he cares about the industry. Instead he thinks he can trick the public and the farmers. However, people can google and thinks leaks. So, the truths are coming out. The Vinci Coffee deal is a disaster… and Museveni should reconsider, but trust me. His greedy, so his trying to soften the blow and ensure he gets the best deal for himself. Which is what an ageing “revolutionary” does…

Another danger to our rapid social-economic transformation is the corruption of political actors and Public servants who do not only steal government money, thereby denying the population the services that money would have provided, but they also parasite on our business people. Business people and investors, do not feel beholden to these parasites. Expose both their requests for bribes and their schemes for frustrating those that do not pay bribes. Action will be taken for the benefit of the business atmosphere in the country” (Museveni, 07.06.2022).

This here is the most bogus statement within the National Address… this year and that says a lot. We know that Gilbert Bukenya has no issues, Amama Mbabazi, Jim Muhwezi, Hentry Tumukunde and the list goes on. Corruption and greed is a vital part of the commercialization of politics under Museveni. The kickbacks, envelopes and misuse of power is well known. The President himself vouched for a “Presidential Handshake” not too long ago. So, the President is really caring about this. His earning on corruption himself and his directives is promoting companies that his either getting greased or profiting from. If not, why is Dott Services is so well-known…

Therefore, let all the NRM MPs and other positive elements, rally around the patriotic programme of the NRM that has transformed Uganda from the failed state of 1986, with the economy expanding in size 30 times plus in 30 years, in spite of the endless betrayals by certain elements. Those who cause frictions among the NRM fraternity, should be carefully examined. Why can’t you discuss any matter in non -antagonistic ways. Antagonistic ways only work for the enemy” (Museveni, 07.06.2022).

Here the President is speaking about possible “NRM Rebels” which is the most endearing thing that is… because a rebel himself isn’t accepting any rebels. That is the truth about the President and his close associates. They are just supposed to listen and give way. The NRM MPs are just there to sign off and do what the President says. That’s what is “patriotic” and the “correct NRM way” just so you know. That’s why he says this and speaks like this. It is a betrayal to stand-up or even question the “high above”. The ones who don’t know that after all these years have clearly not listened. That is obvious by now. If you dares to challenge or go against him from within… than you are an enemy. Therefore, know what you do and never ever consider that.

This was my takes from the National Address of 2022. Peace.

A bitter cup of coffee: A brief look into the Parliament Report on the agreement with Uganda Vinci Coffee Company Limited

Today the Plenary Session spoke about the “Report of the Sectoral Committee on Tourism, Trade and Industry on the Investigation of the alleged unfair terms in the MoU between Government of Uganda and Uganda Vinci Coffee Company Limited” published on the 29th April 2022. This is unravelling as the public and media is surrounding it. As the UVCCL company would get tax-wavers, coffee beans monopoly and other parts of the agreement, which is favourable to a company, which isn’t operational or fair for the farmers or coffee industry as a whole.

The UVCCL agreement is already questioned. The Ministry of Finance, Planning and Economic Development (MoFPED) and other high ranking officials adamant defence of it. Only shows how the faulty and unfair, partly illegal agreement was put into play. While this agreement would also endanger and certainly become a real hurdle for a growing coffee industry. A cash-crop turned into a monopoly.

I will not discuss the free-land, the lease or any of those sorts. That is interesting on it’s own, but there are several of other quotes, which just shows how bad this deal was and how in the wrong the authorities are to authorize it. Secondly, the UVCCL was supposed to do magic and get huge funds out of nowhere. While not being operational to build a big coffee processing plant. It just shows how this deal was the rig the economy and the whole coffee sector towards on entity. That’s really despicable…

Here are some quotes from the Parliament Report:

6.1.7.5 MOU is not sincere on the quantity of premium grades According to the MOU, UWCL’s coffee supply requirement for the start of the project is estimated to be 27,000 metric tonnes and 60,000 metrics tonnes at full capacity. The committee was informed by Uganda Coffee Private Sector that the conversion rate of Green coffee to soluble coffee is 3:1 and this means that UVCCL requires about 180,000 metric tonnes of green coffee. The committee however observes that Uganda’s average annual export for the past 5 years is about 5.2 million bags which is equivalent to about 309,000 metric tonnes. This implies that WCCL at full capacity will take 58.2% (180,000 metric tonnes) of Uganda’s coffee production. The committee notes that the stated reason for UVCCL’s desire to “ring-fence” is to ensure uninterrupted supply of high quality soluble beans” (P 23, 2022).

The Committee observes that whereas UVCCL has share capital of USD 10 Million, the money required to construct such a factory envisaged in the agreement is estimated by UCDA to cost about USD 44OM in the first year alone. The committee is convinced that UVCCL given its limited share capital cannot be in position to borrow a sum which is 44 times the value of the company” (P: 28, 2022).

The Committee observes that UVCCL was not eligible to benefit from the 49- year lease extension since it had not complied with the building covenants under the initial Lease agreement. This means that the lease was irregularly extended” (P: 30, 2022).

The Committee further observes that the UVCCL has not, even after the extension of the lease to a full 49-year, done any construction works on site to-date” (P: 30, 2022).

The Committee notes further that, the VAT Act does not grant any person, not even the Minister, the right to waive a tax. In that regard therefore, the Minister acted irregularly and illegally in granting the VAT exemptions to UVCCL” (P: 38, 2022)

The Committee observes that clause 4.2 creates a monopoly in favor of UVCCL to the purchase of superior quality coffee beans from Uganda by restricting Government from registering any contract or acknowledging any arrangement for the export of coffee beans. The Committee observes that this means that no export of super quality coffee beans shall be allowed by Government until the quantity required by UVCCL is attained. Further still, a monopoly is created in favor of UVCCL since it controls the prices it pays for the coffee beans supplied to it” (…) “The committee also observes that this monopoly is a threat to the already existing 47 licensed processors of coffee with possibilities of causing unemployment, loss of tax and in the worst long term scenario, shut down of operations” (…) “This means the farmer has the right to determine how and to whom he or she sells his or her coffee to. The Agreement therefore interferes with the exclusive rights granted to farmers over their coffee by article 26 of the Constitution by pledging the coffee to a single entity without the consent of farmers. The farmer’s proprietary rights have been affected by the Agreement, irreversibly” (…) “The Committee also observes that whereas farmers are being promised premium prices, the agreement is silent on the method of supply of coffee beans to the factory. This therefore, this opens a window for possible contracted brokers by UVCCL since the factory will need constant supply from different regions of the country. Thus reducing the margin on the farm gate price. The Committee is concerned that designating UVCCL as a price determinant will distort coffee prices in Uganda by disregarding the forces of demand and supply, both locally and internationally, in determining coffee prices” (P: 47-49 + 51, 2022).

It is really interesting the whole agreement, as the inept or the gravity of the whole situation was never there. If not, the MOFPED and other agencies involved never studied or thought of the implications of the arrangement. That a company with lacking funds was to build a big coffee processing plant. Secondly, the plant in question wouldn’t be able to fulfil its mission or planned monopoly itself. As the scale of production only will not meet the targets or the available beans for the plant in question. The farmers are producing to much beans for it process. Therefore, the monopoly is faulty from the outset. Thirdly, the agreement is done without thinking or considering the ones processing coffee-beans already, which is 47 companies and their livelihoods are in danger because of this agreement.

The agreement further has irregularly given a lease of land and it has done any construction work on the site. Meaning the company has some funds on paper and exists, but the operational and plant itself is far ahead of time. The UVCCL gotten dozens of advantages, but has nothing to prove for it. Neither does it has anything materialized.

The state has furthered breached several of tax-wavers to the company and given incentives, which is breaching with laws and regulations. It is like a whole enterprise of inept, incompetent and ill-advised high ranking officials inside the MOFPED. It just like all procedures, all protocols and all safeguards of the state has been thrown out of the window in a haste to sign a deal or amend it in favour of the paper-tiger called UVCCL. A brief-case company which is getting monopoly on the coffee-industry.

The company would further undermine the whole industry from the farmer to the exporters. This company would have all the rights and the positive outcomes. The farmers would be locked into selling to it and that after the price it would set. The UVCCL would practically be a state owned enterprise and be the only one allowed to operate. This giving no incentives and no rights to either farmers or former coffee processors of the Republic. Because, the UVCCL would have the monopoly of the industry for years. That is really bitter and shows how destructive this agreement is.

The MOFPED has served some “high above” or “interests” which we don’t know today. Because, we still don’t know who is behind Hawk Limited, which is the biggest shareholder of the company. However, sooner or later that information will trickle out as well. Because, that is the main benefactor of this agreement and a company like that is owned by somebody with influence and power to get such favours from the state. Peace.

The Art of Deficit Financing: Budget 2022/23 and the worrying affects of the growing debt…

The proposed budget for FY2O22/23 hos increased to UGX 47.25 trillion from the approved budget of UGX 44.77 trillion in FY2O21/22. ln the proposed budget, recurrent expenditures amount to UGX 33.54 trillion (71%) while development expenditures amount to UGX 13.70 trillion (129%). Worryingly, the projected revenue collections of UGX 25.54 trillion cannot fund the country’s entire recurrent expenditures” (Opposition Response to the Annual Budget Estimates for FY 2022/23, 03.05.2022).

When you read the first numbers on the Budget for the Financial Year of 2022/23 you see a problem that has been a long lingering issue. The National Resistance Movement (NRM) and Government of Uganda (GoU) has done this for several of years now. The state has banked on loans and grants to cover the deficits. While the state is budgeting with a deficit financing method, which is far from covering fiscal funds by the lack of domestic revenue. That’s why the rising debt and the cycle of recycling debt isn’t making things better.

Just read this paragraph here:

It is critical to note that debt management costs hove risen from UGX 8.58 trillion in FY2017/18 and ore projected to be UGX 15.94 trillion in FY2022/23. This translates to on increment of 86%. The costs take first coll on the budget to cater for interest payments, commitment charges, debt management fees and amortisation. Therefore, from the onset 33% of the proposed budget will

not be available for service delivery. instead, it will be utilised for payment of partial debt commitments” (Opposition Response to the Annual Budget Estimates for FY 2022/23, 03.05.2022).

Just seeing this number, as you see the lack of domestic revenue to cover the budget of 47 trillion shillings, which is only at the level of 25 trillions. While the project debt management is put to about 16 trillions shillings. That means most of the domestic revenue would be used to pay old debt. Unless, the state plans to take out more loans and recycle debt to pay the old debt. That is just pushing the problem further down the line and get more interests as well. Therefore, the state finances isn’t tricky anymore, but a tragic phenomenon. These sorts of numbers are getting closer to default and a possible debt trap at one point. As the state needs more loans to cover current loans. That is not how to run a nation and neither how to run a fiscal responsible government.

The numbers becomes even more striking:
“The advance effect of this astronomical level of borrowing is felt through interest payments of over UGX 5.5 trillion in FY2O22/23 rising from UGX 2.4 trillion in FY2017/18. An increment of 130%. This is coupled by external debt repayments that ore projected at UGX 2.4 trillion in FY2022/23 rising from UGX 589 billion in FY2017/18. An increment of 307%. These toke first coll on the revenue collection and reduces funds available for service delivery” (Opposition Response to the Annual Budget Estimates for FY 2022/23, 03.05.2022).

We see the debt management and now we see the rising interest payments are also doing the same. The ones that has been crying wolf and worried for the rising debt portfolio is catching up with the government. The Ministry of Finance and Planning and Economic Development (MoFPED) has failed to comply with the mechanisms and the codes of Public Finance and Management Act. Clearly, the Government and the all the Ministries has to be following suit.

These sorts of numbers should strike fear of a debt default and a crashing economy. The art of deficit financing … is now becoming a growing issue. The state cannot hide from this and this should worry the citizens. As there is nothing given that the creditors will be merciful or give way. They might … be vengeful and take collateral over failure to repay the debt. Peace.

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