President Museveni letter to Hon. Monica Azuba Ntege – Ruling out external or internal borrowing for development infrastructure (18.09.2019)
I write what I like.
“In this regard, we need to learn and apply lessons from emerging economies such as India, whose total healthcare industry revenue is expected to increase from US$ 110 billion in 2016 to US$ 372 billion in 2022 in response to deliberate investments in telemedicine, manufacturing of medicines and health technologies, medical tourism, health workforce training and risk pooling/health insurance, among others. In order to achieve this, we need to plan in a harmonized way. In Uganda, for instance, we, indeed, have a nascent pharmaceutical industry producing Aids/HIV, Malaria, Hepatitis-B, pharmaceuticals, etc. drugs. These are, however, still using imported pharmaceutical grade starch and imported pharmaceutical grade sugar. The pharmaceutical grade starch and sugar are crucial for making tablets and syrups for children’s medicines. Yet, the starch is from maize and cassava and the pharmaceutical grade sugar is from sugar. I am told the drugs would be 20% cheaper. Moreover, apart from helping in the pharmaceutical industry, more refined sugar is also needed in the soft drinks industry. Uganda is squandering US$34 million per year importing refined sugar for the soft drinks, about US$ 20 million for importing the pharmaceutical grade starches not including the other raw materials, US$ 77million for taking patients to India etc. Africa is incredibly rich but wasteful” (Yoweri Kaguta Museveni at THE OFFICIAL OPENING OF THE JOINT EAC HEADS OF STATE RETREAT ON INFRASTRUCTURE AND HEALTH FINANCING AND DEVELOPMENT, 22.02.2018).
Seems like the 1980s World Bank loans to restart Kakira Sugar Works hasn’t done enough, since the Ugandan state did right after the National Resistance Army takeover of the state. They went into an arrangement with the World Bank getting loans for the company, to restart. That deal was done 8th March 1988. As the documents said back in 198:
“Uganda currently imports US$15-20 million worth of sugar annually, which ranks second only to petroleum imports. Import substitution through restoration of domestic production capacity is therefore a high priority and eminently justified given the considerable comparative advantage Uganda enjoys as a result of its landlocked situation. Conditions for sugar production at Kakira are highly favorable. Cane growing benefits from excellent soils, good rainfall distribution (requiring only limited sunplementary irrigation) and relatively low levels of inputs of fertilizers and pesticides. The project brings back to the Kakira complex the original owners who have a demonstrated ability to manage sugar operations at Kakira and elsewhere” (SUGAR REHABILITATION PROJECT, 08.03.1988).
Therefore, what the President said today, the Sugar Rehabilitation Project, which was done to stop the heavy imports of sugar and for consumption, has clearly not worked as projected. Since his own state is squandering their resources and not even following the loans to make the project work. That is my take on it. The president of 32 years has clearly mismanaged this and not finished his job. Since he hasn’t been able to rehabilitate the industry.
When it comes to pharmaceutical industry there massive challenges, not just the sugar starch for medicine coverage of the pills. Nevertheless, the whole arrangement, since the technology to operate these machines are imported, as well is the parts. Not only the sugar starch, but also the ingredients are imported too, than you have few companies who has automated manufactures, which makes hard to make medicine on a larger scale. It is also high operation cost, because of use of back-up generators because of blackouts and shortfall of electricity. Because of this, it is expensive to have cold storage of the medicine and have a storage for the final products.
So the Idea from Museveni that it is simple, it is the whole system around it, that makes it more profitable to import ready made medicine, than actually produce it. Even if the added value of production would be there, but with the circumstances put by United Nations Industrial Development Organization, seemingly it is from 2009. However, the state of affairs hasn’t changed that much.
We can really estimate, that the adjustment and the needed organization to pull forward both industries during the years of NRM hasn’t been totally fruitful. If so, why would he complain about the imports of sugar and medicine, when he hasn’t been able to make it function with his 32 years of reign? Someone who has 3 decades, should have the ability and time to find the information, finalize plans and execute as seen fit. That is if he cared about the industries in question and their possible engines for growth and riches of Africa. Nevertheless, he hasn’t cared and haven’t used the time wisely. He has used the time bitching and not acting. That is just the way things is and it isn’t becoming better either.
He could have made sure that the pharmaceutical industry had energy, had the sufficient organization behind it to make the medicine, not only import and assemble certain medicine, he could have made sure the sugar industry was profitable and had the equipment to make the refined sugar used in the pharmaceutical industry. However, both is a lost cause, because it takes money and time. Both, is something he doesn’t have, since the narrative isn’t making him wealthy.
Alas, he we are at the status quo, with a President running for life and complaining about waste. When he has wasted 32 years and not made effort to change it. It is all talk and no fire. Peace.
Just as President Yoweri Kaguta Museveni is on the road in a By-Election in Ntungamo District and in the Ruhaama Constituency. He was talking well for the National Resistance Movement flag-bearer, who only has three independent candidates to run against on the 11th January. Therefore, this should be walk in the park and ready made road to the Parliament for the NRM candidate.
However, what was interesting, was what Museveni said about roads. He said this:
“The hilly terrain of Ruhaama poses a challenge to building of roads, however, the government is committed to providing good roads to all parts of the country. The Government has built the Ntungamo-Kafunjo road and plans are underway to build the Kitwe–Bugamba road” (Yoweri Kaguta Museveni, 09.01.2018).
Dennis Singahache wrote in the Budget Framework Paper for Ntungamo District for the Financial Year 2017/2018 this about the road works in the district. Its revealing, that the President has not looked into the dire needs that is there:
“Lack of training in RAMPS,Lack of substantitve District Engineer, Senior Engineer in charge of Mechanics among other critical staffs required,are Major challenges” (…) “Cut in the District budget with strict guidelines,Very little funds received from central Government of average 300,000= for maintenance per km” (…) “Chineese road equipment very fake and break continously and Lack of a low bed and supervision vehicle” (Local Government Budget Framework Paper, P: 14, 2017).
So it is not strange that the road works are hard to work on, when you have fake and breaking down Chinese equipment, also cut in the guidelines and critical staff is required to be able to maintain and also build roads in the district. Clearly, the memo has not been received by the State House. If not he just haven’t minded it, because its just talk from the President anyway.
But it wasn’t hard to find the District Chairman’s Singahache addressing his concern and then seeing the hypocrisy of the President. Then, they might get better roads in the Ntungamo District. Seriously, it is mismanagement from the State House and beyond. The Local Government have addressed the challenges, but its doesn’t seem to matter! Peace.
This should not surprise you, that the Chinese government and their subsidiary businesses are making sure they are gets the best deal with the Ugandan counterparts. The Bank of Uganda policy paper are spelling out the advantages for the Chinese in the bilateral and the state-to-state offerings given to the Ugandans. They are clearly getting infrastructure loans and plyaing minor rolse in GVCs, therefore, the Ugandans are people loaning for infrastructure and then repaying, while the Chinese contractors and Chinese labor are working on the indebted projects. Just take a look, it is not a positive read!
“It should be emphasised, however, that for Uganda to leverage the shifting growth dynamics in China (such as a shrinking labour force, rising wages and an appreciated Renminbi), it must create a conducive investment climate. Low wages and a competitive exchange rate alone will not make much difference without reliable power and transport links, or in the face of suffocating bureaucracy and corruption” (Bank of Uganda, P: 6, 2017).
“With the migration of labour-intensive manufacturing shifting from China and an improvement in investment climate, Uganda also stands to expand its involvement in global trade, including Global Value Chains (GVCs). Historically, countries like Uganda have played a relatively minor role in GVCs. Figure 5 below, which illustrates a useful measure of Uganda’s integration in GVCs, relative to other sub-Saharan countries, indicates that Uganda is below the average value-chain position for developing countries” (Bank of Uganda, P: 6, 2017).
“It must be pointed out that while China has emerged as a significant financer of infrastructure projects in Africa, it still lags behind both private investment and the more traditional sources of funding. Recent research actually reveals that, over the past few years, China has contributed about only one-sixth of the US$30 billion Africa receives annually as external finance for infrastructure” (…) “Moreover, most of this financing to the transport and energy sector takes the form of state-to-state, non-concessional deals and comes from the Export-Import Bank of China (China Exim Bank). Examples of the major state-to-state deals signed with China Exim Bank in Uganda include: US$1.4 billion and US$483 million for Karuma and Isimba hydropower dams as well as US$350 million for the construction of the Kampala-Entebbe express highway” (Bank of Uganda, P: 7-8, 2017).
“For Uganda, which has so far committed up to US$ 2.3 billion in contracts with China Exim bank and is soon to take on more debt for projects like the Standard Gauge Railway, debt sustainability is a growing issue of concern; underscored by the fact that the country faces a low tax-to-GDP ratio relative to its regional peers and significant public investment challenges. Uganda’s debt as a percentage of revenues has risen by 54% since 2012 and is expected to exceed 250% by 2018, raising calls for caution and improved public investment management from various policy circles including the IMF, World Bank and Moody’s, which downgraded Uganda’s long-term bond rating in 2016 citing deteriorating debt affordability” (Bank of Uganda, P: 10, 2017).
This here report shows both the possible troubles with the debt, that already are problem with current budget, but will become bigger. Secondly, that the relationship and bilateral business agreements with China, will only benefit China and not Uganda. As they might get the infrastructure projects, but they have to repay the debt and also use funds on labor from the Chinese contractors and businesses. They are not hiring and educating locals to work these sorts, because Chinese are getting their own hired.
This here is not bringing positive results, but instead are being a nice debt collector for China and will be indebted to them. While the Ugandans gets scarps from the Chinese, as the infrastructure projects like the Dam they have bought on debt, has been said is “shoddy” work. That proves the Chinese gets easy money, get expat workers and later returns on every single Yen. Peace.
Dollar, David; Mugyenyi, Akura & Ntungire, Nicole – ‘How can Uganda benefit from China’s economic rise?’ (August 2017) – International Growth Centre Uganda & Bank of Uganda
As the Budget Framework paper for Financial Year 2017/2018 in Uganda, the Uganda National Roads Authority (UNRA) requested for the roads a total of Shs. 1,779bn and the required just to build the road in this budget year alone where 1,107bn. This was seen as a strategic area from the state, as the road is seen as one of them Oil Roads. Which, is one of the most important projects the government has, as the future profits of these are soon all used before the drilling starts. This with the giant projects and the misuse of funds. This is epitome with the Hoima-Butiaba-Wasenko road! Just take a look at the reports collected on the road. But the official paper of the budget said otherwise than the framework, who was just nonsense.
While the Budget report to the Parliament of May 2017 Vote 113 UNRA Hoima – Wanseko Oil Road Shs. 29.00bn. This funds will be available after reconciliation of numbers. While the Ministry of Finance, Planning and Economic Development (MoFPED) where planning proposed numbers for the Oil Roads and the Hoima – Wanseko road where the length of 83 kilometers, and the budget was 444bn. Which is a bit more than the vote! And doesn’t fit with the records even. The numbers are staggering and confusing. As to put it further every unit or kilometers are estimated to cost 5,35bn. So the cost of the oil-road just in this budget year is insane.
“Hon. Cecilia Ogwal expresses concern about the cost of the Hoima-Butiana-Wasenko oil road of shs53billion per kilometre” (Parliament, 31.05.2017). The Road that is under construction and is upgraded are 111 kilometers road. If the MP’s estimate is correct means the road cost shs. 5,883bn or Shs. 5.8 trillions. In the budget plenary session on the 31st May 2017 she was also very adamant that the roads who we’re budgeted without feasability studies should be cut and get other use of the funds. Still, that didn’t happen. One of these roads was the oil-road of Hoima-Butiaba-Wasenko. But with this years Budget report and actual feasibility study alone, proves the state will use 444bn on the road. As the other reports prove what they we’re planning to use. But this project started in 2015 and the reports of the misspending on it, seems so big as it gets. So the Road development and the Oil Road could be proof of another UNRA scandal. Take a look!
“The works on Hoima-Butiaba- Wanseko road are expected to start during the second half of 2015. This is subject to availability of funding for the project,” said Dan Alinange, the UNRA head of corporate communications” (Rwothungeyo, 2014).
Hoima-Butiaba-Wanseko cost Shs. 454bn:
“Works minister John Byabagambi and the new Uganda National Roads Authority (UNRA) executive director Allen Kagina have agreed to handpick a contractor for Hoima-Butiaba-Wasenko road despite an earlier petition on influence-peddling and fraud in the process. Mr Byabagambi has also changed from his earlier position where he opposed the move, when he was still a junior minister. A whistleblower had raised the red flag in a petition to Ms Kagina indicating that the project cost had been inflated by Shs66 billion ($20 million)” (…) “The 111km road stretches from Hoima to Butiaba on Lake Albert and one of the major corridors in the oil-rich Albertine Graben in south western Uganda. The project is expected to cost Shs454 billion” (Musisi, 2015).
UNRA on the Spot:
“The third road project, pointed out by the whistleblower is the 55km Hoima-Butiaba-Wanseko road. According to the dossier, bids for the road were opened on January 22, 2016 and the deal was awarded to China Communications Construction Company (CCCC) at Shs 398 billion. According to the whistleblower, this would translate into $2m per kilometre, which is exorbitant. The whistleblower notes that this is way above construction estimates posted on the Unra website, which are at $960,000 per kilometre. Later, after an outcry from some bidders, Unra cancelled the deal, the whistleblower says. “The IGG should investigate the people who crafted this ignominious evaluation and bring them to book. They should even be interdicted as investigations continue,” notes the dossier. The whistleblower claims that roads in the oil sub-region of Bunyoro have been restricted to only Chinese firms because of the funding from Exim bank. Local and other foreign firms, the dossier noted, were left out” (Kiggundu, 2017).
So the prices of the budget framework and the budget report of 2017/2018, as the whistleblower of early May 2017 are clearly saying that the $2m per kilometers on the Hoima-Butiaba-Wanseko. If the US Dollars are Currency converted into Uganda Shillings which means the price per kilometers are Shs. 7,187bn, that means the price calculated by the budget and the MoFPED are Shs. 5,35bn. That means that are a difference in the price per kilometers which is Shs. 1.837bn. If the budget would be correct than the total price for the 83 kilometers, would e 596bn. I also find it strange that the UNRA budget and length on the FY 2017/2018 is 83 kilometers, as the initial length was 111 kilometers. That is also a length of roads that suddenly couldn’t disappear.
This road is surely more expensive than the government wants it to be, or certainly some lost public funds. Not shocking in the nation run by National Resistance Movement. The total tally of the cost will be revealed, but is not yet. Peace
Kiggundu, Edris – ‘UNRA on spot over Chinese contracts’ (03.05.2017) link: http://observer.ug/news/headlines/52685-unra-on-spot-over-chinese-contracts.html
Musisi, Frederic – ‘Minister, Kagina hand-pick contractor’ (26.06.2015) link:http://mobile.monitor.co.ug/News/Minister–Kagina-hand-pick-contractor/2466686-2765360-format-xhtml-9uhqklz/index.html
Rwothungeyo, Billy – ‘Hoima-Butiaba-Wanseko road for upgrade’ (02.01.2014) link: http://www.newvision.co.ug/new_vision/news/1336203/hoima-butiaba-wanseko-road-upgrade
“We have had a wonderful collaboration with IMF since 1987. We have managed to control inflation. By controlling inflation, we have succeeded in preserving the people’s earnings” – Yoweri Kaguta Museveni (State House, 2017).
Well, there been many who has set similarities with the inflation and price shocks of the year 1987. The Republic of Uganda has been through their mess before. The government of Uganda and the National Resistance Movement/Army (NRM/A) had just taken power in 1986. This was a year after the coup d‘etat, which brought the NRA into power. President Yoweri Kaguta Museveni in collaboration with International Monetary Fund (IMF), which had agreements and Structural Adjustment Program (SAP), which promoted deregulation and less state control of the economy. This was also put forward to settle inflation and the deficit that the state had.
So, because some has put similarities between 1987 and 2017, as the prices has gone from about 3,000 Uganda Shillings (UGX) in 2016 and 7,000 Uganda Shillings (UGX) in 2017. There is clearly that there was problems in 1987, but whole another level. The Sugar Industry wasn’t established, the economy of Uganda needed export of coffee and this was the sole benefit of foreign currency into the economy.
“Inflation in Uganda is running as high as 200 percent, and low prices to farmers serve as a disincentive to agricultural production in a country of rich soil and mild equatorial climate” (…) “At the center of the debate is the issue of devaluation. In its first year in office, the Government revalued the currency from 5,000 to 1,400 shillings to the dollar, saying that the move would make imports cheaper. But exports have become increasingly expensive. Devaluation Debated. Some hard-line nationalists in Government insist that the cost of devaluation would be devastating. The cost of such imports as sugar, cooking oil and soap would increase significantly, they say, making the average Ugandan even worse off than he is now” (Rule, 1987).
“In 1987 the Uganda shilling was demonetizated during the currency reform and a currency conversion tax at a rate of 30% was imposed to further reduce excessive liquidity in the economy. There was an immediate drop in average inflation from 360.7% in May to about 200% cent in June. However, with the possible fears of complex and drastic currency reform, the premium shot up, representing essentially a portfolio shift to foreign currency, and possible capital flight, and suppressed inflation. The intended aim of the conversion tax, apart from reducing excessive liquidity, was to lend money raised through this tax to the government. This was to finance the budget deficit over a short period, rather than financing it through printing more money. Nonetheless, inflation shot up again within three months mainly due to renewed monetary financing of increased government expenditure, domestic credit expansion by commercial banks to meet coffee financing requirements and financing of the newly launched rural farmers scheme” (Barungi, P: 10-11, 1997)
“Prices for sugar and vegetable oil (both imported goods) increased rapidly in the early part of the year, falling between May and August — replicating the pattern of the premium between the parallel and the official exchange rate. The subsequent fall in sugar prices and stability of cooking oil prices were due to greater official imports. Inflationary pressures on food prices have been aggravated by supply shortages on account of severe transportation problems” (World Bank; P: 36, 1988).
“In October 1986, Mulema was replaced by Dr. Crispus Kiyonga, who has a medical background Kiyonga has a difficult task. The government’s finances are shaky at best. In an attempt to enable Ugandan citizens to purchase imported consumer goods, the government fixes their prices below world prices. This, of course, puts considerable pressure on the government’s finances: for example, in July 1986 the government imported $4.8 million worth of sugar to sell at subsidized prices” (Warnock & Conway, 1999).
Perspective from Kakensa: “Today sugar costs 7000/- per kilo. When Museveni came to power in 1986 each kilo was at 4/-(four shillings). Immediately he came to power he said Ugandan shilling had lost value, in 1987 all money was changed, not only changed but two zeros were cut off to give it value on addition to the 30% levied on each shilling. This means on every 100 shillings, you got 70cents. Those who had 100,000/- got 700/-” (Kakensa Media, 12.05.2017).
We can see there was certain aspects, but the sugar industry now is different. The Sugar factories are now real and the business are now in full affect. While, in 1987 the state needed coffee exports to get funding and foreign currency. The sugar was imported and was put on fixed prices. The inflation back then was because of the crashing economy after the bush-war and the effects of it. The Sugar prices now are rising for different reasons. These reasons are the yields of sugar-cane, the hoarding of sugar and the export of surplus sugar. Also, the production of ethanol and bio-fuel. That was not the situation and context in the past.
Still, history is repeating itself, since the NRM, let the prices run as crazy in the past. The price has gone up a 100% in a years time. Which, means the prices who doubled from 3000 to 7000 Uganda Shillings. This is not a stable and the ones who get hurt is the consumer and Ugandan citizens. Peace.
Barungi, Barbara Mbire – ‘EXCHANGE RATE POLICY AND INFLATION: THE CASE OF UGANDA’ (March 1997).
Rule, Sheila – ‘UGANDA, AT PEACE, IS FACING ECONOMIC BATTLES’ (28.01.2017) link:http://www.nytimes.com/1987/01/28/world/uganda-at-peace-is-facing-economic-battles.html
State House Uganda – ‘President commends Uganda – IMF collaboration since 1987’ (27.01.2017) link: http://statehouse.go.ug/media/news/2017/01/27/president-commends-uganda-%E2%80%93-imf-collaboration-1987
Warnock, Frank & Conway, Patrick – ‘Post-Conflict Recovery in Uganda’ (1999)
World Bank – ‘Report No. 7439-UG: Uganda – Towards Stabilization and Economic Recovery’ (29.09.1988)
There are various of reasons for the rising prices of Sugar and processed sugar in Uganda. This isn’t the first time or last cycle of inflation on the prices of this common commodity. Sugar is common in Uganda for concept of having in it in the chai or the milk tea. To sweeten the milk and the black tea the Ugandans drink. Therefore, the Ugandans are needing and using lots of it on daily basis. It isn’t a luxurious goods, but a daily usage, for ordinary use. It has become staple and is staple together with matooke, cassava, rice and maize flour. This is all seemed as basic for the Ugandan people. Sugar is something very important. Therefore, the rising prices says something is out balance.
The balance have now been lost a year after the election. The prices of goods and food was also rising in 2011, therefore, the Republic had the Walk 2 Work demonstrations. These was demonstrations against the rising food prices, which also meant the sugar at that time went up. The same is happening now. With also on alternative exception, that the producers are not only creating sugar for consumption anymore, but ethanol and bio-fuel. Therefore, the produce and profits are going to export bio-fuel and other products, instead of the sugar that the consumers in Uganda uses. This also is an explanation for the rising prices, as well the added exports to Kenya, where the producers gain more selling it there. Than in Uganda, take a look!
In April 2017 USMA commented:
“Uganda Sugar Manufacturers Association (USMA) says the increase in sugar prices has been prompted by the increase in cost of production and the deprecating shillings against major currencies. The Association’s Chairperson, Jim Kabeho says sugar millers were forced to announce what he called a paltry 4 percent increase on each 50-kilogram bag on ex-factory price. The increase according to Kabeho saw a 50-kilogram bag of sugar trading at one hundred and eighty five thousand shillings up from one hundred and seventy thousand shillings” (…) “Meanwhile a source at the Ministry of Trade Industry and Cooperatives who asked for anonymity says the Ministry suspects that the big players like Kakira could have decided not sell its sugar to the market so as to increase production at the ethanol its ethanol plant. The sources says sugar mills with ethanol plants are finally making money on sugar through on co-generation of power, alcohol and ethanol” (URN, 2017).
In April in Masindi:
“Masindi district leaders have risen up against the Masindi district Resident Commissioner, Godfrey Nyakahuma over stopping sugar cane buyers from buying cane from Masindi district. Last week, Nyakahuma launched an operation of impounding trucks of all sugar cane buyers who buy sugar cane from Kinyara sugar limited out growers and over five trucks loaded with cane were impounded by police” (…) “Byaruhanga added that that is a sign indicating that Kinyara sugar Factory has no capacity to crush the available sugar cane adding that since Uganda has a liberalized economy let everyone come and buy the abundant cane available instead of leaving the farmers suffer with the monopoly of Kinyara sugar factory. Amanyire Joshua the former mayor Masindi municipality said that if Kinyara is saying that sugar cane buyers are poachers, Kinyara sugar factory is a smuggler because it is also doing the same. Mary Mujumura the deputy speaker Masindi district blamed Byaruhanga Moses the presidential advisor on political affairs for failing to advise the president on political issues saying that he is not supposed to enter into business matters” (Gucwaki, 2017).
In May 2017:
“From last year’s average of Shs 3,000 per kilo of sugar, the price shot to Shs 4,000 early this year and is now hovering over Shs 5,500. A kilo of Kinyara sugar is the cheapest at Shs 5000, while Kakira sugar is selling at 6,000 a kilo. On the shelves, Kakira sugar and Lugazi sugar are scarce compared to Kinyara sugar, which is in plenty. Many dealers have now started hoarding sugar in order to benefit from anticipated price hike in the short term” (URN, 2017).
In May 2017 – Stanbic Statement:
“The only category to buck that trend was wholesale & retail, where staff costs rose and employment fell. Average purchasing costs also rose in April, reflecting increased prices for animal feed, food stuffs, raw materials and sugar. Higher cost burdens were passed on to clients, leading to a further increase in output charges” (Stanbic Bank, 2017).
President Museveni praises Kakira Millers:
“I would like to thank the Madhvani Group, despite the disappointment by Idi Amin. The family pioneered the production of sugar in Uganda. By 1972 they were producing 70,000 tons but today they have almost tripled the production to 180,000 tons,” he said. The President was today commissioning a state of the art ethanol distillery at Kakira Sugar Limited in Jinja district. The US$36 million facility, which is the largest in the East African Region, will be producing 20 million litres of ethanol annually” (…) “President Museveni pledged to address the issues to regulate the sugar industry but urged the Madhvanis to partner with farmers with large chunks of land for production of sugar-cane, as the cane is not a high value crop. He said people with small land holdings should be left to do intensive farming like the growing of fruits that give high returns. Turning to the issue of prices payable to sugar-cane out-growers, President Museveni advised the buyers and out-growers to sit together and agree on the prices taking into consideration the market prices globally” (Uganda Media Centre, 2017).
Government statement on the 11th May:
“Speaking to 256BN on condition of anonymity a government official monitoring the situation said the manufacturers have not increased the factory price, but he conceded that the situation is worrying. “At the factory prices are stable. Why is it that the prices at the retail gate are high. This means that there are some distributors who are using the hiding strategy in order to rob Ugandans. As Government we shall continue monitoring the situation until we come up with the solution” the official said. Affordability of sugar is considered a key barometer of an ordinary person’s well-being and its pricing can take on political dimensions when people cannot have sugar with their tea” (256BusinessNews, 2017).
Putting the price in pespective:
Kakensa Media reported this today: “Today sugar costs 7000/- per kilo. When Museveni came to power in 1986 each kilo was at 4/-(four shillings). Immediately he came to power he said Ugandan shilling had lost value, in 1987 all money was changed, not only changed but two zeros were cut off to give it value on addition to the 30% levied on each shilling. This means on every 100 shillings, you got 70cents. Those who had 100,000/- got 700/-” (Kakensa Media, 12.05.2017).
This is all proof of a systemic malpractice, where both export, together with lacking yields because of drought and also the production of ethanol and bio-fuel. All of this collected together are reasons for the rising prices of sugar. The sugar price goes up because the use of cane for other things than millers producers sugar for consumption, but for other export products. This is all making sure even as the Republic of Uganda has in the past produces to much, it now doesn’t. Since it elaborately uses the sugarcane for other products.
That has made the Madhvani Group rich and their exports of sugarcane products are clearly selling. Now even their basic milled sugar are sold more expensive on the Ugandan market. There are also proven problems by other millers, who either has to much cane like Kinyara Sugar Factor in Masindi. Which is ironical problem, as the Kakira and Lugazi sugar is empty on the shelves, while the sugarcane hoarding Kinyara are still in the shops. But Kakira which is produced by Madhvani Group, we can now understand, since they have bigger operation and is blessed by the President for their industrial production of ethanol and bio-fuel.
Therefore, the are more reasons than just shopkeepers not getting enough stocks. That the rising prices are not only that there is lacking production. It is the system of export and production. Where the cane isn’t only becoming milled sugar for consumption, but for all the expensive industrial exports like bio-fuel and ethanol. This is all good business, but also bad for consumers and citizens who are accustom with decent prices for their sugar. That is not the fact anymore, as the business and millers has found new profitable ways. So that the surplus sugarcane and also the other gains massive profits. This is all good business for the owners of the sugar-millers and sugar industry. The one who feels the pitch is the consumer and the citizens. Who see scarcity of sugar inside the shops and also the inflation of prices on the sugar. Peace.
256BusinessNews – ‘Government to issue statement on sugar’ (11.05.2017) link:http://256businessnews.com/government-to-issue-statement-on-sugar/
Gucwaki, Yosam – ‘MASINDI RDC IN TROUBLE OVER STOPPING SUGAR CANE BUYERS’ (28.04.2017) link: http://mknewslink.com/2017/04/28/masindi-rdc-trouble-stopping-sugar-cane-buyers/
Stanbic Bank Uganda – ‘Ugandan economic growth continues at start of second quarter’ (04.05.2017) link: https://www.markiteconomics.com/Survey/PressRelease.mvc/143ca2b8e3d84c79b96aed4885b7337e
URN – ‘Sugar manufacturer’s association explains price hikes’ (14.04.2017) link: https://dispatch.ug/2017/04/14/sugar-manufacturers-association-explains-price-hikes/
URN – ‘Uganda: Sugar Crisis On for Another 2 Years – Manufacturers’ (09.05.2017) link: http://allafrica.com/stories/201705100129.html
Uganda Media Centre – ‘President Praises Madhvani Group’ (05.05.2017) link: https://mediacentre.go.ug/news/president-praises-madhvani-group