MinBane

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Archive for the tag “WB”

President Museveni letter to PM Ruhakana Rugunda – “Re: Existence of a “Sugar Board” in Kampala” (19.08.2018)

Amuru Land Grab – Apaa Village Evictions: A long process of failure from the state!

That the Northern Uganda have been in deep end of the stick in many eyes is evident, by how lax the state has been to take care of their needs and their rights. That can now be proven by the forceful evictions from land in Apaa Village in Amuru District/Adjumani District. Where the previously have been attempts to make a giant farm for an investor called Bruce Martin and also become sugar cane plantations and factory for Kakira Sugar Factory owned by the Madhvani Group, this goes all the way back to 2006. Therefore, the plans to evict these people has been slow process from the state.

Now in 2018, the Uganda Wildlife Authority (UWA) have evicted dozens upon dozens of the local residents from their lands. As the purge on the village and the area continues, this has been in the making, but the ones losing their lands get nothing, but lose their homes and their livelihoods at the same time. The government authorities have torched the houses and left nothing behind, as they are continuing to evict people. Their lives are no meaningless, as they have to flee their land and are living on the United Nations Compound in Gulu, while awaiting their future, as the state, UWA and the Uganda People’s Defence Force have been evicting them over the last two months. Surely, the hurt is felt and real.

Who can wonder if the state is finalizing the agreement with Madhvani Group to deliver his second sugar factory and also sugar plantation in the area or they are making a game drive from Bruce Martin. However, this is still grabbing the land without any forewarning and also taking their livelihoods without any compensation for the hurt.

The District Land Board and Area Land Board cannot been informed or care to inform the people, as the army and UWA have been busy evicting people with force. They are just pawns on the chess-set, and the authorities in Kampala let it happen. The leadership from afar are accepting it and have gazetted the land and taken the land. Therefore, the people who has settled in Apaa have to flee or be evicted from the land, without any justice or law helping them out. No compensation and nothing left for them.

This sort of play has to stop; I am sure the State House is fully aware and let it happen, as they are getting their cut of the transaction of the land for whatever purposes it has. Its been planned for years, but doesn’t make it better, when they could have had solutions back-in-the-day as the government knew this would come. They were already in talks with both Kakira and with Martin. They knew perfectly well, what was up. There is even a third scenario where the land is sold to someone else named Linton Brimblecombe.

Clearly someone forgot the memo and left it stranded. They just evicting people in the favour of one lucky bastard who capture all lands, without paying the needed ones who was actually living their and done so for generations. This is a violation of the trust between the citizens and the government. Because someone accepted the trade of the land people where living on and had rights too.

The Apaa village and Apaa community deserves better, all of the Acholi deserves better. They are being misused and taken for granted by the government. They are just pawns on the chess-set. No value, the first one in the battle-line to take out so the ones of value can be put into play. That is how it looks from the outside.

This have been planned for decades and now it happens.

Amuru Land Grab: What is ours, is OURS; What is their’s, is OURS; and Whatever is your’s, is still OURS. Peace.

Kakira Sugar Limited addressing farmers strike (02.07.2018)

The World Bank commends the rising taxes in Uganda!

Yep, the biggest bank and the Bretton Woods Organization called the World Bank has commended the works of President Yoweri Kaguta Museveni and his plans for added taxes. That comes from the similar institution like International Monetary Fund, that ordered Uganda to follow the Structural Adjustment Plan (SAP), therefore, the IMF that fixed more privatization without lacking investments. Are now okaying a higher rising taxes on the Republic’s citizens. This is done, while the economy is not strengthen, but with added external and internal loans. Therefore, the rise of GDP and use of loans, as well as repayments on those loans will sooner or later hurt the economy. Even with the rise of taxes. This will be start of vicious cycle where the state is issuing loans and taxes, while the revenue is used to repay loans, not development. It is basically. But before I go into the deep of the part of the troubling take from the World Bank. Let me just show you quickly the result of the SAP and their advice there.

The studies also make it clear that for SAP-type policies to have a chance of success, certain preconditions are necessary. The public sector had certain social responsibilities that the current framework has pushed it out of but without “a proper handing over” to the private sector. The assumption and hope were that the market would fill the gap left by the retreating state. Clearly this has not happened. There is therefore need for Government either to retain certain key social sectors, or only hand them over to the private sector only when the latter is ready to effectively take them over. Clearly non-profit making aspects of social responsibility cannot and do not get taken over by the private sector. For poverty to be reduced there are certain social responsibilities or even whole sectors that can only effectively be handled by the public sector. Welfare systems and subsidies to farmers in the developed world attest to the need for the retention of these key areas by the public sector. Therefore a policy that proscribes such a hand-over must also ensure that it is done in a verifiable manner so that the private sector can be held to account. Civil society has in the past tried to fill the gap but this has been done in an ad hoc manner” (Kevin Akoyi Makokha – ‘STRUCTURAL ADJUSTMENT PARTICIPATORY REVIEW INITIATIVE (SAPRI) – UGANDA COUNTRY REPORT: A synthesis of the Four SAPRI Studies’ September 2001).

So, when the last system from the World Bank and IMF was introduced the system and the government wasn’t ready to privatize, however, that didn’t stop them or the government to do so. Especially since the funds and loans at the time came with the hitch of doing so. Therefore, the troubles with the privatization and the lacking oversight is also partly because of these programs subsidized by these organizations. That is why the World Bank and IMF should be more careful professing what sort of thing would be genuine and sincere, since they have messed up before. It isn’t only the State House who has messed up, he has gotten help and followed the procedures of these mechanisms. If not, he wouldn’t be able to eat such vast amounts of donor funding in the past. This is well-known, but the lack of oversight, is because of the will of wanting to have control and a say in everything. That is why the letter from the President to Minister of Finance, is the reason for the new levied taxes. So, if you wonder why I have distrust to the World Bank and IMF, it is because of their history and that the public is paying for it, because their impact on the governments for the reasons. That these states should be guinea-pigs for the economy belief of trickling down economics, even as the results has begged differ if it really drips back into the system again. Which it doesn’t because the ones that gets a lot want to keep it and get some more. No dole it out to anyone they can find.

Here is what the World Bank stated today: “In the special section of the Update, the report analyses how Uganda could raise more domestic revenues to support its development. Uganda’s tax system is one of the most modern in the region, but revenue collections, at 14 percent of GDP, are low, and way below its tax potential. Tax avoidance and evasion, partly resulting from generous tax exemptions to investors, weak tax administration, and a large informal sector (now at 80 percent), pose challenges to increasing revenues. Up to 5 percent of GDP is lost annually in tax leakages. Personal income tax contributes roughly 18 percent of GDP compared to up to 40 percent in developed countries. VAT collections amount to 4 percent of GDP, but would rise to 6 percent if there were no exemptions. The report suggests that Uganda could widen its tax base by tapping into areas that are outside the tax net; applying tax instruments correctly and fairly; improving efficiency, transparency and accountability in tax administration; and delivering better public services” (World Bank – ‘Improving Taxation to Finance Uganda’s Development’ 15.05.2018).

Therefore, the World Bank likes the idea of adding more tax on the Mobile Money transactions and the movement of digital cash, as well as on Airtime and other needed things. The ones that hasn’t a bank-account or the ability to fund or even try to get a loans from the banking system. Are okayed by the World Bank as possible targets for taxes. This isn’t transparent, but making it more expensive to be poor, as the rates to transmit and the use mobile money will come. The companies whose use this method will bill the users, they will not take the hit. The same with all the traders and the importers of all the other items that was on the lists of the newly taxed items.

I doubt these new taxes will do any good, it will just be more funds for the elites, the NRM and the President to eat. They are not delivering government services with the trillions of shillings they are using now. They are billing up to their asses and spending rampant, without having the revenue. That is why the rising debts are there. Instead of living frugal and thinking of the future, the NRM and President Museveni are eating like there is no tomorrow!

State House, the President and the Cabinet are eating heavy, they are not delivering, they have no plans to do so. If so, they give locally when needed, but the lack of transparency and accountability, is the reason for missing funds. Recently even the documents from the GAVI Funds was taken from the Ministry of Health. Therefore, a government who cannot be trusted with funds giving donations to help the sick, how can we believe the tax put on Mobile Money will go to roads or teachers?

I doubt that, I am not that naive, this NRM has proven for 32 years, that they are eating and not caring. The World Bank can commend and praise. While I condemn, until they prove that they money are delivered to the schools, that the teachers have their salaries and the civil servants are properly paid. Not just hiring some random Cubans to fix the issues for a short time. That is not how to build a national health care system. That is how to mock the ones you already have. Peace.

Mzee complains today about waste, however he haven’t rehabilitated sugar industry or revamped pharmaceutical industry either!

“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.

Kenya: Monetary Policy Committee Meeting (29.05.2017)

Looking into the inflation of 1987 as the Sugar prices are rising in today’s Uganda!

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.

Reference:

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)

A look into the rising Sugar prices in Uganda!

I commissioned a state-of-the-art ethanol distillery at Kakira Sugar Factory in Jinja today (Museveni, 23rd January 2017)

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.

Reference:

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

Ugandan economy could get Oil-Shocks due to external factors, recent BoU report claims!

Surprise, surprise the Bank of Uganda (BoU) has made a working paper on the possible consequences of the oil price, the oil exports and the oil imports on the Ugandan economy. This didn’t exceed my expectation of a report or paper, but said enough to clearly anticipate changes in the economy with the coming export. Even as the BoU called the domestic oil production in embryonic stages, which means the real impact will come when it is closer petroleum production the GDP and CPI feel more impact of the oil prices and the volumes exported from the Lake Albert Basin.

That the Ugandan State and the Republic of Uganda, should know that the fresh foreign exchange and currency into the economy, as the domestic parts of petroleum is not having big impact on the economy! Still, the export can change it as the oil prices and change the consumer price index for instance. Take a look!

One such shock that is a source of major concern and risks to monetary policy-making in Uganda is the oil shock. To our knowledge, the effects of oil shocks in Uganda, to date, have not yet been analyzed. The objective of this paper therefore, is to analyze the nature and importance of oil shocks to Uganda’s economy in a dynamic framework” (Nyanzi & Bwire, P: 4, 2017).

According to the Uganda’s Ministry of Energy and Mineral Development (2012), oil provides about 10 percent of Uganda’s energy requirements – the rest is sourced from the small and underdeveloped and unreliable electricity sub-sector and the cheap biomass energy. The oil sector was also deregulated in 1994, under the broad structural reforms implemented by the Government of Uganda, which effectively eliminated oil prices subsidies. Uganda is endowed with commercially-viable oil reserves, but domestic oil production is in embryonic stages. Consequently, all of the oil-energy needs of the country are satisfied by imports” (Nyanzi & Bwire, P: 8, 2017).

The results of the variance decomposition in regard to oil shock are not entirely unexpected, given the structure of Uganda’s economy. Oil and its products constitute 8 percent of total intermediate consumption and 10 percent of energy requirements. In addition, oil is crucial to electricity supply in Uganda because hydro-electricity is unreliable and insufficient. This implies little or no substitutability of oil with hydro-electric energy in production in case of adverse oil shock, which could justify the long-run 20 percent variance in output due to oil shocks. Regarding consumer prices, the small percentage of variance in consumer prices due to oil shocks is justified by the small weight of oil in the CPI basket. Oil constitutes about 1 percent in the 2009/10 rebased CPI basket, of which 0.8 percent is oil for personal transportation and 0.2 percent a source of liquefied energy at home. These numbers are not surprising given that over 75 percent of the population live in rural areas and depend mainly on wood and charcoal as a source of energy, and that rates of car ownership are generally low. Moreover, the main source of short-run volatility in the Uganda CPI is weather-related factors affecting food prices. This leaves the bulk of fluctuations in the core consumer prices (Comprising over 80 percent) explained by demand” (Nyanzi & Bwire, P: 18, 2017).

Oil shocks are transmitted through the supply channel, as a shock that increases the international price of oil leads to opposite movements in real output and consumer prices in Uganda” (Nyanzi & Bwire, P: 19, 2017).

It is hard to say how it could impact and how the petroleum production and exports will change the economy, how the prices and the inflation, as the measure of how much the price of the crude-oil will be at the given time. That the government has secret agreements with oil companies and also agreements with other to build the crude-oil pipeline that goes to Tanzania. Therefore, the reaction in the economy is not yet known, but with the background and knowledge of the how it is now. Most likely a real output and change in consumer prices in Uganda.

That will be an oil-shock no-one can be prepared for. Unless the Government and Parliament created legislation and policies who might soften the change of the economy. Therefore, with this in mind, the National Resistance Movement, the State House and the President Museveni have work to do. That is if they consider the implication the petroleum production and exports will have on inflation, currency value and consumer prices index as well. This report should open some eyes into it, but it should not be surprising. Peace.

Reference:

Nyanzi, Sulaiman & Bwire, Thomas – ‘Working Paper No. 04/2017 – The Macroeconomic responses to Petro Shocks for Uganda’ (May, 2017)

Kenya: Monetary Policy Committee Meeting (27.03.2017)

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