If you were ever thinking that Beijing would loan and build without consequence. Those days should long be gone. The Chinese are planning to earn money on their investments, they don’t care about the Republic’s they are investing in, as long as they are profits on their investments. They want earn on these loans and since the rate of loans are so high. They are now starting to pick collateral for their infrastructure loans, especially the draining of loans to the Standard Gauge Railway (SGR).
“While acknowledging China’s leading role in the Kenyan economy as a trading partner, the President called for increased Chinese investments in the country. “China now ranks as the number one trading partner with Kenya accounting for 17.2% of Kenya’s total trade with the World,” he said. “Kenya is open and safe for business. Kenya has one of the most conducive business environments in Africa,” the President added” (President.Go.Ke – ‘President Kenyatta Asks China To Give Preferential Treatment For African Goods’ 02.11.2018).
While Kenyatta are acting as it all positive, the reality is that the state are having giant issues with their “investments” and loans there. But Kenyatta wants to make it sound positive, when it really isn’t, just the rate of the loans have grown and the consequences of the relationship with China is now starting to cost. It is the Kenyans that has to pay these loans down and with every way possible. As the Chinese has leverage over the Kenyan government. Take a look at these quotes from media recently!
Loan Rate in Kenya:
“Kenya’s current public debt stands at approximately 4.884 trillion Kenyan shillings (USD$49 billion) or 56.4% of the country’s gross domestic product.. This is up from 42.8% in 2008. In other words, the country owes more than half the value of its economic output (GDP)” (…) “China is Kenya’s largest creditor, holding about 72% of the country’s bilateral debt as of March 2017. Studies show that Kenya’s Chinese debt poses a threat because the loan agreements are not transparent, projects are not well prioritised, accounting procedures are weak and it’s not clear what projects are costing” (Odongo Kodongo – ‘Kenya’s public debt is rising to dangerous levels’ 05.08.2018).
Selling State Owned Enterprises:
“The Privatisation Commission has approved sale of 26 state-owned corporations to raise funds to support the budget. The commission, under the Privatisation Act, 2005, was mandated to sell 26 poorly performing state corporations to cut down government spending. Those approved for sale are National Bank of Kenya, Consolidated Bank of Kenya, Kenya Meat Commission, Development Bank of Kenya, East African Portland Cement, Kengen, Kenya Pipeline Corporation, Kenya Ports Authority, and five sugar millers — Chemilil, Sony, Nzoia, Miwani and Muhoroni. Others are Agrochemical and Food Corporation, New Kenya Co-operative Creameries, Numerical Machining Complex and Isolated Power stations, hotels (Kabarnet Hotel, Mt Elgon Lodge Ltd, Golf Hotel Ltd, Sunset Hotel Ltd and Kenya Safari Lodges and Hotels Ltd). Also targetted are Kenya Tourism Development Corporation-associated companies, which include International Hotels Kenya Ltd, Kenya Hotels Properties Ltd, Mountain Lodge Ltd and Ark Ltd” (Cynthia Ilako – ‘State to sell 26 companies to finance current budget’ 03.11.2018, The Star Kenya).
China Selling Infrastructure Loans to Investors:
“The plan will see Hong Kong mortgage insurer Hong Kong Mortgage Corporation (HKMC) buy a diverse basket of infrastructure loans next year and explore the idea of “securitising” or repackaging them into securities for sale to investors, allowing it extra liquidity that it can loan out to finance more infrastructure projects. “This initiative we believe will help ‘recycle’ commercial banks’ capital to be redeployed into other greenfield infrastructure projects, besides enabling wider capital markets participation in infrastructure development under the Road and Belt initiative,” said HKMC Greater China chief executive Helen Wong” (Allan Olingo – ‘China plans to sell off its African infrastructure debt to investors’ 05.11.2018).
We are seeing the growth of loans, that is up 42,8% and the debt level of the 56,4% of the GDP. Because of that, the state are now selling of their State Owned Enterprises. Most likely to Chinese holding companies and investors, who are expecting to gets points on their dollars. As well, as securing their future on the investment. They are selling the central institutions and businesses, which was state controlled, but they will now become para-stalls of the Chinese.
But selling the institutions are not enough for the Chinese. They are planning to take it further. Planning to rehash the loans as sub-prime loans for investors, meaning they are taking the risk instead of the Export-Import Bank of China, where the loans are usually collected and distributed from. Therefore, the loans are another target of more profits as they want to earn on them as well into the Capital Market. Just like the US Banks did with House Loans and mortgages in the past.
While all that is happening and with the knowledge of this, the President is still keeping it cool. Kenyatta is still not saying the brazen truth, that they are a debt-slave to China. Are in such big trouble, that the investment of the SGR are killing the economy and they have to trade-off their assets to keep up with their payments. That is what is happening and this is not really developing, but hurting the economy even more. As this institutions and businesses has been controlling their markets. Now, they will have masters from outside, which are not there to secure the market, but make a direct profit. Therefore, the citizens are not only paying their loans for the railroads, but for destroying their economy. Peace.
The Government of Kenya and the Government of Uganda, should both worry about their arrangements and their growing debts, as the non-sustainable rates of debt and higher interests. As the unnatural growth of the national budget, where the lack of revenue is covered with more state debt. To cover both salaries and development projects. All of this has happen over the recent years. As more and more of the yearly budget goes to pay interest on old loans, as the old loans also mature and the rates will become more dire. As the strength of the economy isn’t going in the same rates as the loans. This is in the end a debt trap. A debt trap China has used in other countries.
Sri Lanka is the recent example, which has come into a debt trap, where the Chinese loans has become so dire, become so big and not able to recover. That the collateral for the state was to favorable lease the harbor of Hambantota to the Chinese. They had too, since they couldn’t repay the creditor from Peking. That should be realization from all the others who borrows big and think that the Chinese will not get something valuable back for their funding.
This should be a warning for the Kenyan and Ugandan counterparts, this should be a warning for President Kenyatta and President Museveni. That is if they care about the state resources, about their minerals and about the possible extractions from their republics. If they want to be debt-slaves, or lease away the crown jewels to the Chinese, because they promised favorable debt plans, that in the end put them in juxtaposition, that they cannot come out off; unless they trade away something very valuable. If that would be licenses to drill oil in Turkana or in Bunyoro.
Who knows what the end-game of these massive loans are and if the Presidents and their parties plans to repay them. Or hope that the next generation will try to invent new way of generating money. If so, then they are saved by rare luck and not by planning ahead. These loans are big and taking bigger and bigger slices of the GDP. They are going far beyond the levels of revenue and possible future forecast of funds. Therefore, the loans can only at this point benefit the ones giving them. They will get the repayments and the interests. If they don’t get that, they will take collateral and take other state entities to get their values back. The Chinese are doing that in Sri Lanka, they could easily do that with Kenya and Uganda too. They are in for the taking and ready to muscled out.
The Chinese doesn’t play and doesn’t play with money, they will recollect and they will recover the funds spent. As they are not playing games, they are really investing and hoping to get paid-in-full. They are waiting for the numbers to go from red to black. They don’t expect to loose, and if they do. They will figure other ways to collect the lost.
President Kenyatta and President Museveni should know this, but I doubt they are thinking in this direction right now. They are eating and not caring, but their states and their economist should worry. As the growing debts has a backside, not only the interests and the lack of development it creates, as they have to find bigger revenue to cover the debt and the mature loans, as they have to settle old affairs and such. They don’t go away or get deleted over nothing. They got to take charge and find a way to solve it.
The Chinese will take advantage if they start to default, if they struggle to pay, which could come, if the loans and the negative spiral of lack of revenue continues. That is if the state doesn’t find ways to repay. Than, the Chinese might take a port, might take state owned enterprise, but surely they will be paid-in-full. Peace.
I know that Thomas Joseph Odhiambo (Tom) Mboya was a vital politician in the first part of the independent Kenya. He was a charismatic person, who even got himself on the front-page of the Time Magazine in 1960. His assassination in 1969 are still unanswered, like so many other extra-judicial killings. But that should not overshadow the impact and the wisdom of the man, who helped to form Kenya after Independence. He was part of the Kenya African National Union (KANU) and worked together with Jomo Kenyatta.
His words in this speech, should not be a fading memory, but something that the leaders of the continent should have worked upon. Since some of it has already been proven to be right. I myself wished it was different, since the trade-imbalanced with the former colonial states and the other developed countries. Therefore, the knowledge he had should be enforced now. As there are to many generations who has been lost and hasn’t gotten what they deserved. Here is the pieces of the speech that should be taken to heart.
“Meanwhile, we in the poorer. countries are faced with a rapid growth in population and’ with the standards of life demanded by the. Masses. It has been calculated that a 1% increase in the per capita income of an industrialised country increases the demand for. food and raw materials by only 0.6%, but that the same increase in per capita income in a country importing manufactured articles will lead to an increase of 1.8% in the demand for imports. Super imposed on this has been a tendency for the terms of trade to move against the less developed countries. Unless we in Africa build up quickly our domestic services of supply for enough of the industrial products which are required for the modernization of our countries, we will either become increasingly” indebted’ to and “hence” politically dependent on foreign countries, or have our. progress undermined by balance of payments difficulties” (Tom Mboya, 1966).
“Whatever industry we attempt to build the same sort of problems, arise an accurate knowledge, of natural resources is required. Although there is much more to be learned we already know that we have in Africa the natural resources to feed a vast range of industries. Cheap energy has to be obtained. While Africa is rich in energy resource only a fraction of them have been harnessed. Industry cannot grow without efficient transport, but we can get ourselves out of’ the vicious circle since new transport links can themselves be justified in strictly commercial terms by the specific development possibilities now opened up, These three subjects natural resources, energy and transport are Vitally important, but they are not on the agenda, of this Conference” (Tom Mboya, 1966).
These words from Mboya, should be cherished and remembered, as the powerful statement it was. That the will of development on own terms was key and that they could not continue with a trade deficit with the developed countries. This has happen since because the loans, the grants and direct aid from the developed countries to the African continent. That has been a paradigm to control and assess the situation in terms of donors, not on the governments who got the funds. Therefore, the circle of aid and donor aid prospered instead of industrial development and other shifts of supply.
There been many other factors as the leadership and the cronyism has eaten budgets and donor aid. We could have hoped the past had listened to Mboya, that the states and republic’s could have followed this. To build nations on dependent on donors, that in the end will work for their own benefit and not for the African development. They will use the aid and donor aid for their own gain and personal benefit for their constituents, not for the African republic. In an ideal world it would be different, but looking through history and you can say otherwise. Since the development aid and the slums are still there, where Tom Mboya left them. The poverty Mboya saw and discussed are there, the names of the streets and nations might be different, but the troubles are the same.
Tom Mboya spoke wisdom and that should be recollected and not forgotten, not only his vital role in Kenya, but beyond. Mboya’s words here should be discussed and used to change political and trade imbalances to benefit own republic’s, federations and kingdoms of Africa. The states deserves to stop the deficit and also develop themselves on their own terms. That is something they have deserved all along, but the International organizations, Multi-National Financial Organizations and Development Banks has stifled this with their creeds, their protocols and their agreements with the state. To get needed funds they have to open economy and stop government subsidizes to support local production in agriculture and industry. So, the history of the neo-colonial Africa, had deserved to follow the paradigm shift Mboya spoke of in 1966. Peace.
United Nations – ECONOMIC COMMISSION FOR AFRICA AND CENTRE FOR INDUSTRIAL DEVELOPMENT – Symposium on Industrial Development in Africa, Cairo, 27 January – 10 February 1966 – SPEECH BY TEE CHAIRMAN OF THE ECONOMIC COMMISSION FOE AFRICA THE HONOURABLE TOM MBOYA MINISTER OP ECONOMIC-PLANNING AND DEVELOPMENT, KMYA, AT THE OPENING OF THE INDUSTRIAL SYMPOSIUM, CAIRO, 27 JANUARY, 1966
The Bus Rapid Transport system together with a Metropolitan Area Transport Authority (MATA), in the midst of the Kampala Capital City Authority (KCCA), Kampala City Hall and Ministry of Kampala. This are having different heads combined with the mastermind on the top President Yoweri Kaguta Museveni. Doesn’t matter what the ones in the parishes are considering, the Division Mayors, Lord Mayor Lukwago, KCCA Director Musisi or even State Minister Kamya. The one rubber-stamping the initiatives is and will be the President. Since he has his finger into everything.
That is why I have no faith in BRT. Even if it is stop the congestion, the lack of public transport in Kampala and problems of control of the Boda-Boda’s, the authority of the Taxi’s and the Specials. There are still significant issues to be reached. It doesn’t matter if they are banning or stopping certain transport options. As long as the ones working, are the taxis and boda-boda’s. These are the ones who has designated routes and travels with licensing for their routes. The Taxis are usually used Toyota Hiace imported from Japan, second-hand ones who was former bread-trucks, who are rebuilt to fit as many people as possible.
While a BRT means there will be heavy investments in stages, in divisions and in congested areas to fit the paradigm of buses. It isn’t barely putting buses on the road and assume the population will start taking it. The need for steady implementation of road structure, of bus-companies, of driving schools and of time-tables has to be put on order to make sense for the citizens to use it. Since it needs to be better than the transportation options that are today, like the taxis, boda-boda’s and specials. At this stage the Uganda Investment Authority (UIA) in their feasibility study estimates the needed funds to get it going at this point to be the staggering $612.06 Million. With today’s value of the Uganda Shillings it is about Shs. 2,193,883,999,999 UGX, in other terms over 2.1 trillion shillings. Which means one tenth of the Financial Year budget of 21 Trillion Shillings in FY 2017/2018. Just to put in perspective.
This infrastructure project of this size and ramification better make the roads of Kampala into bricks out of gold. Clear every single pothole and make sure the gravel grade more than standard. This project has been going on for ages without any movement or significant progress. Why I am writing about it, well there suddenly if it is true, some Chinese Investors who wants to touch the erratic transport system of Kampala. This are together with the Chinese Ambassador to Uganda, at the State House discussing investments into it. Therefore, the sudden move of actual fueled money into it. As the 2.1 Trillion shillings doesn’t grow on trees.
President Museveni stated this today:
“The Kampala Metropolitan Rapid Bus Transport project is a necessity. We should not continue to have so many cars with limited capacity” (…) “The investor will construct 26 rapid bus stations, 420 stage shelters and an initial 400 buses with a carting capacity of 74 passengers” (Museveni, 18.06.2017).
With this unknown Chinese Investor, they are clearly indicating some infrastructure and some buses to put up. If this will see the light of day and will be honestly implemented, than there are start, but it takes time to find routes and needed ways to make it profitable, as there will also be lost oppertunities for the ones who used taxis, specials and boda-boda’s on these roads. That is if this isn’t a scheme and plot of manufacturing more monies through the state-house. Which wouldn’t be surprising knowing how the President often operate.
The BRT would be a bonus and strengthen the congestive traffic of Kampala, a needed one for more time working and less time stuck in traffic jams. It would be important for the citizens leaving the divisions and traveling across town to work. But the state haven’t been able in the recent years to pull it off. Maybe Chinese investments would help it and their involvement in it would see it moving. But it shouldn’t just be the President’s blessings over the investments. The KCCA, Ministry of Kampala and City Hall should all have a say and make reports on how to build it properly. As the UIA even states there have only been a feasibility-study. That is preparation for the solution, but not the white paper or even framework for the Divisions or Central Business District of Kampala to make the BRT a success. Right now it is dream, which most likely could turn into a nightmare before its shuttle.
NAMA Proposals in 2013 are even more costly: “The capital costs budgeted over the 15 year period were estimated to total some US$ 1.181 Billion”. That is the double of the estimates from UIA in 2017. Therefore, something has either been scaled down or the NAMA was considering more aspects in their plans, than the UIA has. But is not like the President today has delivered any paperwork or reveled any sort of information what sort of possible deal he done with the “the Investor”. He could be scapegoat or even a mirage for all we know. Because none is on the up and up.
Especially considering he had a meeting with them at the State House in Entebbe with none of the leadership of Kampala. The ones in Kampala will just later get the news of the building and investments, therefore has to figure out how to implement it and work-out the perks. Parts of me wonder if the President even has looked into the documentation and considered the needed partners in play. But that is just how the President operates. He just can build Rome on his own or Kampala for that matter. He has all the skills and the brown envelopes at his disposal. Peace.
President Museveni: “Yes, it is true I was a rebel, but sometimes rebellion fails. I was fighting a just war” (#UGBudget17 Speech, 08.06.2017).
Today was the day the Budget Speech from Minister of Finance, Planning and Economic Development (MoFPED) Matia Kasaija as the Parliament we’re delivered the total budget for the Financial Year of 2017/2018. This one has already been voted for and was a summery for the representatives in Parliament to know the values of their ministries and the projected use of the revenue of the state will have. Still, on this day, the President of 31 years, the rebel of 1980s decided to wear military fatigue and be wearing the gear as a General. He was not the executive in some sense, he was the military general. The gun-loving and militarized politician Museveni was allover today.
Therefore I have to take a piece of law, which could be used as the UPDF Act of 2005, where it states on 164: “Unauthorized sale or wearing of uniforms, etc.
(1) Any Person who, without authority –
(c) wears or uses any decoration supplied to or authorised for use by any member of the Defence Force or any decoration so nearly resembling that decoration as to be likely to deceive” (UPDF Act 2005).
So even if he is Commander-in-Chief and the Executive, he is still of contempt of the Parliament and their rules, when having to show-up in military fatigue or military uniform. As if he is storming to war and not trying to speak well of the budget framework and the voting for the post in the budget. This is clearly lacking the gravity of the acts of contempt. Wearing it in a sessions which is unauthorized or seem as wrong.
Therefore another part of the sub-section part (3): “Any person who by act, words, conduct or otherwise, falsely represents himself or herself to be a person who is or has been entitled to wear or use any uniform or decoration referred to in subsection (1) commits an offence and is, on convection, liable to imprisonment not exceeding three years” (UPDF Act 2005).
So when he as President is wearing the military fatigue or uniform in Parliament, I cannot take that man seriously for doing so. Even if he didn’t really violate the UPDF act, still his acts by words or even falsely representing himself, since he is not a full-time general, but a President of 30 years. His revolution or coup d’etat ended in 1986. A disco-tune that should have lost meaning two decades ago, but since he is still the President. That year is still magical like some of old Disney flicks.
Time to leave the Military Uniform Mr. President! Time to leave it behind and also be and act like a President. If he was in war or had to save Parliament from an angry powerful militia. Alas, it is not so! Time to relief the attire and be peaceful man, especially since he is supposed to help with the National Dialogue in South Sudan, but easier to sell arms than negotiate peace, right Mr. President?
So was it a sign of warfare from the President or his NRM Way to prove that the bullets gave him power to bless the budget? Peace.
The Uganda People’s Defence Force Act 2005
Today the Ugandan government, the National Resistance Movement finally read the Shs. 29 Trillion budget for the 10th Parliament. However, it is not necessary the size of funds and all, which is allocated, but the way it is funded. Like “Government hopes to raise sh14.6 trillion in revenues to fund the 2017/2018 budget” (Uganda Debt Network, 08.06.2017). Of the 29 Trillion, they expect to get close to half of that, but the monies has get from somewhere and also be of use. What is left are relieved like this: “The balance sh14.3 trillion (49.5%) of the National Budget will be raised through internal and external borrowing” (Uganda Debt Network, 08.06.2017). With this in mind, half of the budget is adding more debt. So if a nation already having lots of debt and debt repayment, it still adds another half budget. This is a bad cycle of events.
There lets us put things in perspective: “Our concern is sh9.9trillion, which is 35% of the total budget, will be spent on debt repayment” (…) “Amount of money spent on debt repayment has escalated in the recent past now at 9.9 trillion for fy2017/18” (Uganda Debt Network, 08.06.2017).
Therefore, the state and the NRM are clearly getting funds through loans to pay-off their interests. AS the 35% of spending is on interest in the coming fiscal year. This should worry, even if the corruption, misspending of obnoxious amount of funds through the paradise of Okello house. Still, that 1/3 of the coming budget is paid interest on old loans, which are been made by this government and by this President. What it show is the lack of concern of the future and how sound fiscal policies. At this state, the government of Uganda are clearly footing the bill. They are filling in the blanks for where they in the past had happy donors filling the envelopes.
The NRM and President Museveni is overspending and misusing state reserves, as the revenue and the state coffers do not sustain this massive overspending. Certainly, it is visible, also the worry of the running interest rates and growing debt as close to half of this year alone are by loans. Neither if it is local, by foreign or multi-national financial institution does save the fact, that the state has a problem.
That of the coming fiscal year, the state is borrowing half, and repaying that with 35% says a lot. IT says the fiscal policies needs change and it is dire. The state are clearly walking the wrong path. And remember this, there will be supplementary budgets during the fiscal year, that will expose the overuse of funds and needs for more loans. Therefore, they are surely going to exploit the faith in future, without having the funds for it today. Peace.
Today I am dropping numbers that are devastating, as the numbers of debt that the National Resistance Movement (NRM) isn’t paying, show’s sufficient motives for malpractice when it comes to budgeting and the structure of payments. There are certainly not enough transparency and clear audit of the state reserves, as the State is misusing seriously amount of funds. The NRM Regime and their President should be ashamed by their record.
Emmanuel Katongole is the Head Information Technology in the Ministry of Finance, Planning and Economic Development (MoFPED) in Uganda on the 12th April 2017, he dropped a document on their web-page that show’s the domestic arrears of the Republic of Uganda in the last Financial Year.
If you wonder what Domestic Arrears means: “The amount by which a government has fallen behind in its payment of interest and principal on debt to lenders within its own country” (Encyclo.co.uk). So Katongole will literately show how bad the National Resistance Movement is on paying their bills and expenditure. All the sums of this report is in Ugandan Shillings (UGX).
Like under the Office of the President and the Internal Security Organisation (ISO) who itself leaves arrears in the margin of 3.8bn shillings and 8bn shillings in other payable arrears. That one part of the budget and current audit of the Office of the President as the total of verified arrears at June 2016 was 37bn shillings alone. So the Office of the President owes a lot of funds that it hasn’t paid, not only for the ISO!
The State House by the verified arrears at June 2016 was 1bn shillings. What is more unsettling is that the Pensions and Gratitude for Veterans are the sum of 183bn shillings, Survivors 315bn shillings, EXGRATIA 10bn and UNLA 26bn shillings. The Ministry of Defense by June 2016 verified arrears was 718bn shillings! So the MoD are a lax payer of their expenses and expenditure.
Ministry of Justice and Constitutional Affairs owes verified arrears by June 2016 the amount of 684bn. Shillings Court Awards unpaid by the Ministry is 203bn shillings. The Electoral Commission has growing verified arrears by June 2016 because of Unsettled penal insterest for URA in the total sum of 3.2bn shillings. Uganda National Roads Authority (UNRA) has by June 2016 billed up verified arrears by 283bn shillings.
This is just some of the government that has not paid their dues and their expenses, their salaries or pensions, even their lacking covering of funds to pay debt, either internal or external. So the National Resistance Movement are clearly running an economy and fiscal policy that isn’t healthy for the republic.
Just to drop the total sum that the Government of Uganda has failed to pay or failed payments on their debt are by June 2016 the total of 2.7 Trillions of Uganda Shillings! Which is an insane number and amount of misspent monies by the state. The strategy by the Republic to fail so miserably cannot be sustainable, as the invoices and the target to pay their debt should be the most important. Still, the NRM doesn’t seem to think so. They are surely missing steps to having a sound economy when the verified arrears are hitting 2.7 trillions by June 2016. So the Financial Year of 2015/2016, the Ugandan government failed to serve out over 2 trillion of their needed expenses!
What is troubling that the year before, the total state had not paid on their debt and failing expenses in the Financial Year of 2014/2015 as by June 2015 we’re totally 1.389 or close to 1.4 Trillion shillings. So the miss-match between FY2014/2015 and FY 2015/2016 are 1.3 Trillion shillings. So the clear picture is that the Election Year for the NRM is very, very expensive.
Just think about that… eat the bill and pound on the amount of lost monies in the system. Peace.