MinBane

Helt ute av sporet (Okumala ekigwo okulyaku kya okuziga)

Archive for the tag “World Bank”

U.S. Treasury fines ExxonMobile meager $2m for violation of the Russian-Ukraine Sanctions!

Some days you wonder if the connections of the New York isn’t to strong for the moment. When the joys of their loot and their power is not making them lose their senses. The common sense is clearly gone, as the company formerly run by Rex Tillerson, the now State Secretary of United States. Who couldn’t care less about the relationship between the United States of America and the Russian Federation. As the illegal and not internationally accepted annexation of the Crimea from the Republic of Ukraine happen. Still, even as that was happening the former Standard Oil baby ExxonMobile decided to be a trading partner and create opportunities in the vast resources in Russia and Russian territories. Now today they we’re fined, but that was a little slap on their wrist, as the real wealth inside the deal shows how much they really could have earned. Therefore, the crime and the penalty doesn’t fit. The Company gets away with a heist, but has to pay small interests for doing so. Now they are waiting for the possible time for their giant payoff and this will be simple write-off in their results in the next quarterly estimates. This sort of fine isn’t that serious, as it can easily chop it off and continue to eat.

First we will look into what the Wall Street Journal wrote about the deal between Russia and ExxonMobile, the second and third are about today’s fine and you see why it insulting fine to give.

A U.S. official said the new penalties would affect Exxon’s current drilling in the icy Kara Sea with its Kremlin-controlled partner, OAO Rosneft, though the extent of the impact was unclear Thursday. No other Western energy company has as much direct exposure to Russia as Exxon, thanks to a $3.2 billion deal giving the company access to a swath of the Arctic larger than Texas that could hold the equivalent of billions of barrels of oil and gas. Officials in Europe, which has extensive trade links to Russia, have insisted that Western nations share the fallout from sanctions against Moscow. Russia has said it would retaliate against additional sanctions with measures of its own, further heightening the risks to companies operating there, legal experts said. Exxon is “assessing the sanctions,” said Alan Jeffers, a company spokesman. “It’s our policy to comply with all laws.” (Gilbert, 2014)

ExxonMobil Corporation Assessed a Penalty for Violating the Ukraine-Related Sanctions Regulations: ExxonMobil Corp., oflrving, Texas, including its U.S. subsidiaries ExxonMobil Development Company and ExxonMobil Oil Corp. (collectively, “ExxonMobil”), has been assessed a civil monetary penalty of $2,000,000 for violations of the Ukraine-Related Sanctions Regulations, 31 C.F.R. part 589 (Ukraine-Related Sanctions Regulations). Between on or about May 14, 2014 and on or about May 23, 2014, ExxonMobil violated§ 589.201 of the Ukraine Related Sanctions Regulations when the presidents of its U.S. subsidiaries dealt in services of an individual whose property and interests in property were blocked, namely, by signing eight legal documents related to oil and gas projects in Russia with Igor Sechin, the President of Rosneft OAO, 1 and an individual identified on OF AC’s List of Specially Designated Nationals and Blocked Persons (the “SDN List”) (referred to hereinafter as an “SDN”)” (U.S. Treasury, 20.07.2017).

OF AC considered the following to be aggravating factors: (1) ExxonMobil demonstrated reckless disregard for U.S. sanctions requirements when it failed to consider warning signs associated with dealing in the blocked services of an SDN; (2) ExxonMobil’s senior-most executives knew of Sechin’ s status as an SDN when they dealt in the blocked services of Sechin; (3) ExxonMobil caused significant harm to the Ukraine-related sanctions program objectives by engaging the services of an SDN designated on the basis that he is an official of the Government of the Russian Federation contributing to the crisis in Ukraine; and (4) ExxonMobil is a sophisticated and experienced oil and gas company that has global operations and routinely deals in goods, services, and technology subject to U.S economic sanctions and U.S. export controls” (U.S. Treasury, 20.07.2017).

So it’s okay, the company ExxonMobile was fined for intervening in a Republic and inside a state where there was clear sanctions against trade. That was something Rex Tillerson knew and also the Russian counterparts, but ExxonMobile didn’t care. They just wanted the profits and earn on the fragile arctic and also into areas like the annexed Crimea. This shows the intent of profiting while being under sanctions and not respecting the laws of the United States and being a registered company residing in the United States.

This show the ethical backdrop of the New York Gang and the Administration of today, we cannot know how much the company earned before the stop between Rosneft and ExxonMobile. The suspension of activity between them. What we can imagine is that it was vastly more than the little they paid for breaking the law. Peace.

Reference:

Gilbert, Daniel – ‘Sanctions Over Ukraine Put Exxon at Risk’ (11.09.2014) – Wall Street Journal

OAG Muwanga explains in two reports problems and errors within the Petroleum Industry!

The Auditor General has two reports on the Petroleum Industry and the issues of Petroleum Data and the Petroleum Fund. The errors of the state, the PAYE of the tax to URA. Proves that the monies earmarked for the Petroleum Fund, ends up in the Consolidation Fund. This is proof of the problematic use of the added taxes before the oil adventure really takes off and the drilling of the explored blocks in the Lake Albertine Basin. Where already different international companies have come to drill and the state is making a petroleum pipeline to Port Tanga in Tanzania. Therefore, these vast resources and possible taxes created by the industry and within the Republic. Still, the default problems that the Auditor General address can be fixed. It is just a matter of morals and actually following guidelines. Some are even set in the Public Finance and Management Act of 2015, so if for instance URA follows it, the problems of transactions into wrong fund can create payment arrears and also future problem of spending by the state. Since the misuse of funds and taxes can be allocated to other than what they was expected, as the Consolidation Fund has other uses than the Petroleum Fund. Just take a look!

Petroleum Fund:

For the six months ending December 31, 2016, the Fund received non tax revenue worth UGX 922,348,854 (USD270,900) as surface rental fees from Tullow Uganda Operations Pty and Total E & P Uganda” (OAG, P: 7, 2017).

It was however noted that monies collected by Uganda Revenue Authority (URA) under the income tax on income derived from petroleum operations such as PAYE, VAT and WHT is not being remitted to the Uganda Petroleum Fund. This contravenes the Public Finance and Management Act 2015” (…) “In their opinion PAYE is not tax charged on income derived from petroleum operations but paid by the employees and as such it had been excluded from the definitions of petroleum revenues. Arising out of the above it was established that UGX.l1,390,530,053 collected through the commercial banks and remitted to the consolidated fund should have instead been transferred to the Petroleum Fund. Management has promised to remit it to the Petroleum Fund before closure of the financial year 2016/17” (OAG, P: 10, 2017).

During the period under review, the fund received USD 270,900 (Two hundred seventy thousand, nine hundred dollars) in respect of surface area rentals consisting of USD 113,400 (One hundred thirteen thousand, four hundred dollars) paid by Total E& P Uganda for the development areas of Ngiri, Jobi-Rii and Gunya and USD 157,500 was paid by Tullow Uganda Operations Pty Ltd for development areas of soga, gege, Kasemene, Wahrindi, Nzizi-Mputa & Waraga, and Kigogole- Ngara Unrealised foreign exchange gains worth UGX 15,093,435,449 have been recognised in the Statement of Changes in Equity. These arose from translating the USD opening balances and revenue collected during the period into UGX at the closing rate for reporting purposes” (OAG, P: 14, 2017).

Petroleum Data:

The oil companies did not fully comply with submission of reports relating to their drilling, exploration activities and operations as required. Delays and non-submission of reports results in an incomplete database which may reduce the effective use of the database in petroleum resource management” (OAG, P: vi, 2016). “The shortcomings in the management of petroleum data by the Ministry of Energy and Mineral Development may affect the completeness of the data on the existing petroleum potential, extent of reserves, and amount recoverable thus reducing Uganda’s ability to maximally exploit and benefit from its oil and gas resource potential. A thorough understanding of the resource base and its geographical distribution informs key decisions on the rate of exploitation and potential future revenues” (OAG, P: viii, 2016).

This should all be worrying that the State and the Industry isn’t sufficiently ready for the activity, as the URA cannot even allocate funds correctly. This is even before the Petroleum Data is taken care of and made sure that the exploitation and drilling happens where the best well is within the block. Secondly, the real value of the reports and the licenses that the state would offer to the companies. That because the flow of data and the status of it wouldn’t be where it could be. This is losses created by maladministration and lacking will of institutionalize the knowledge. Instead, the Petroleum Industry is controlled and has just a few handshakes away from the State House. That is why the URA might have delivered the funds to the Consolidation Fund instead of the Petroleum Fund. All of the potential might be wasted in the lack of protocol and care of resources management that is needed in the Ministry of Energy and Mineral Development (MoEMD).

The recommendations and the looks into the issues should be taken serious by the Petroleum Industry and the MoEMD. So the state could both earn more on the industry and also create more positive growth through the provisions that is already made in Public Finance Management Act (PFMA) 2015. So time will tell if they will be more reckless, if they will listen to the OAG or if the Presidential Handshakes will steal it all for keeping the NRM cronyism at bay. Peace.

Reference:

Office of the Auditor General Uganda – ‘REPORT OF THE AUDITOR GENERAL ON THE FINANCIAL STATEMENTS OF THE PETROLEUM FUND FOR THE SIX MONTH PERIOD ENDED 31sT DECEMBER 2016’ (07.06.2017) – John F.S. Muwanga

Office of the Auditor General Uganda – ‘Management of Petroleum Data by the Ministry of Energy and Mineral Development’ (December 2016) – John F.S. Muwanga

President Macron neo-colonial perspective on Africa came to the surface at the G-20!

The supposed centrist and progressive French President Emmanuel Macron, he newly elected President who we’re to be a fresh air. Aren’t apparently so, not if he believes what he said this week during the G-20 Summit in Hamburg. It is a disgrace of a modern European President to reflect this sort of sentiment. Especially, since this wasn’t said by some rascals associated with Marine Le Pen or Geert Wilders, but actually out of Macrons own mouth. It is time to erase the saint-hood and the prestigious placing among the hopeful leaders. Because when he says these words, it hurts, and it proves that the French still feels superior towards the African Nations and their people. Macron clearly feels so when explaining himself and addressing development on the continent. The words in italic are proving his sentiments. Just take a look at a badly translated Press Conference on the 8th July 2017!

I do not share that kind of reasoning. There were several envelopes that were given. Either we change the target with the addition of billions. We have been deciding to help Africa for decades and we did. If it were that simple, you would have noticed it. The Marshall Plan is a plan for material reconstruction, in countries that had their equilibrium and stability. The challenge of Africa, it is totally different, much deeper and civilization today. What are the problems in Africa? “He asked” (…) “It is through rigorous governance, fighting corruption, a struggle for good governance, successful demographic transition. In countries that still have 7 childbirths per woman, you can spend billions of euros, you do not stabilize anything. The plan of this transformation that we must conduct together must take into account the African specificities by and with African Heads of State. It is a plan that must take into account our own commitments on all the projects I have just mentioned, better associate public and private; And it must sometimes be more regional and even national. That is the method that has been adopted and that is what we do wherever we are engaged. I will have the opportunity next week to come back in much more detail” (Macron, 08.07.2017).

It seems like he knows and understands the African experience, that he can precisely blame the mothers of Africa for the bad demographics. That he can say the failed planned parenthood is the problem. Because, the French has no interfering in the African affairs with their armies, with their control through their Central Bank and Central African Franc (CFA), and also their ideals of a Francafrique. Dr. Lansine Kaba said these words a few years ago and they still ring in my ear!

Francafrique involves a complex web of relations that have made France a major player in the affairs of many African countries and even of the African Union. Through the networks of this largely “opaque conglomerate”, France, a founding member of the UN Security Council and the World Bank, can boast a significant global influence that extends far beyond the French-speaking states. The term Francafrique suggests several facts and ideas, ranging from the politics of cordial exchange and cooperation to that of covert actions and violent military intervention that the French have been known for perpetrating in different parts of Africa since the 1960s” (…) “It involves an effective style of diplomacy that is not necessarily staffed with well-seasoned accredited diplomats, but energetic and daring doers. Francafrique builds relations that rely on close personal connections woven between the French leadership (the president and his close aides) and individual African leaders who depended on French assistance and security forces. Francafrique excelled in channelling funds to electoral campaigns of some prominent French politicians too” (Al Jazeera, 2013).

Than you have the WikiLeaks cable leaked from 2009, that even speaks volume of the way Macron views Africa as well: “Gompertz admitted that France’s Africa policy does have problems, most notably, that France continues to focus most of its efforts on its former colonies, even though they are not necessarily the most strategically important. Gompertz hopes to push for a stronger engagement with Anglophone and Lusaphone Africa. (Note: GOF officials frequently cite Nigeria, Angola, and South Africa as three of France’s key emerging partners in Africa. Gompertz was departing the same afternoon for Morocco and South Africa. End note.) Similarly, too much of France’s political and cooperation resources in Africa are designed to reinforce its partnerships within the international “Francophonie” organization. Gompertz cited the example of Burundi, where English is replacing French as the most popular foreign language, but he said this is understandable given Burundi’s important trade links in the East African Community. At the same time, he related that while he was Ambassador to Ethiopia, there was a strong demand for French language teachers, but France was not responsive in helping meet this need” (WikiLeaks, 2009).

So when Macron claims the missing envelopes and development, for various reasons, that he can understand. Even his own former Ambassador to Ethiopia Stephane Gompertz saying the projects was more for political gain and French own interest in Africa. Therefore, that the French President says what he says about the envelopes are bit disgusting. Knowingly the only intent the French has in Africa, isn’t directly developing the continent, but to extend their power there. Than he later claims the demographic and planned parenthood issues is behind it all. When the French interference and misuse of funds to keep their friendly leaders at bay. Clearly, are the program the French run under their Francafrique project.

So, when a French President should know what the French has known. That the French can spend billions and envelopes a not see development. When the interests are more of Paris, than of Dakar or Bamako, even the shores of Tunis. Usually if the Fancafrique are more for the gain of its own than the ones in need. More for the Paris elite or the friendly leaders instead of development. Therefore, it is an own created monster of French influenced based on patronage and clientele served from Paris. Macron must know this as the Ivorian and other leaders have nice houses on the boulevards of Paris. These are made of the patronage created by the French.

It is therefore, disgusting, that he blames the African woman and their parenthood for the lacking development. When lots of French own influence on the continent is for personal gain and for patronage. Not for development itself. To overlook this, is to forget the French acts and also superior belief in themselves. That is why Macron said what he said. The belief and understanding of grand strength. That they are one of the greatest civilizations on planet earth.

President Macron words: “In countries that still have 7 childbirths per woman, you can spend billions of euros, you do not stabilize anything”. Macron need some sense and need to step-up from his Le Pen ways. He need to fix his mind and should rethink French strategy on African soil, before talking about stabilization. Parts of the problems still on the continent is the problems left behind from the French. That they have never left wealth, but left behind petty dictators who spends fortune on Champs Elysee! Peace.

Reference:

Al Jazeera – ‘Q&A: France’s connections in Africa’ (15.08.2013) link: http://www.aljazeera.com/programmes/specialseries/2013/08/201381584025929212.html

WikiLeaks – ‘”FRANCAFRIQUE” — MFA DISPUTES REPORTS ON A RETURN TO BUSINESS AS USUAL’ (19.11.2009) link: https://wikileaks.org/plusd/cables/09PARIS1534_a.html

UNRA: Termination of the Contract for Civil Works for Upgrading of Musita Lumino/Busia – Majanji Road (104km) From Gravel to Paved (Bituminous) Standard (12.06.2017)

Mzee was it Warfare or Budget, Mr. President?

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.

Reference:

The Uganda People’s Defence Force Act 2005

#UGBudget17: Half borrowed and a third paid back in Interests!

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.

Kenya: Monetary Policy Committee Meeting (29.05.2017)

Only in the DRC: President Kabila are now twice Registered for a Non-Existent Election!

Well, in the Democratic Republic of Congo, the one who is on his unofficial third term President. He is running the country on a new cabinet, but not on a new mandate. As per today, the Constitution isn’t allowing him to re-run. He was temporary before his first term for a few years. He was running the Republic without elections between 2001 and 2006. Than he finally got elected in 2006 and than again in 2011. He was supposed to have ended his term in 2016, but that train has passed it due-date by a few months already.

President Kabila is already 160 days overtime, he is 5 months and 9 days. That is well over the supposed time. That is not counting the days he was in-charge without an official election between 2001-2006. So he has a history of running the 3rd Republic without any mandate. That is what he does today!

So the first he registered for an election without himself at the helm was back on the wonderful day of 6th May 2016. It is easy to forget that Kabila did that on a computer looking smart and ready. Vigilant like always, the vagabond ruling Kinshasa and the provinces as well. Today on the 28th May 2017. He was doing the same maneuver. Registering himself for an election. This time without CENI having set any dates, any regulations or credentials needed for candidates. Therefore this exercise was more PR than real. Surely paid lobbyist Bob Dole and others, who are working to better the image in the United States can smile. Since this act will make it more sincere that President Kabila wants to honor the promises of the CENCO agreement of 31st December 2016. So twice now, Kabila has registered himself to something he doesn’t plan to do. Because if he does, that means he loses and someone else will run it.

This is something Kabila knows and the world already knew. If the know the DRC and its situation this wouldn’t be surprising. At this point Kabila acts like he own the Republic and the Republic owes him a big deal. Therefore, he cannot leave and has no plans of exiting the throne that he inherited from his father. It seems like the time and present moment, that the instability and insecurity is also facilitated by the government. To create problems and make it worse. This to be able to postpone the elections and keep his ruling fist. It does seem plausible that by all means he wants to stay in power. Therefore, he has even been seen in the city of Lubumbashi with tanks in recent year, to prove to Moise Katumbi and his supporters. That this place is also ruled by Kabila.

I have no faith that Kabila will honor any agreement that doesn’t extend his rule. Not because he deserves to stay as the President. But because he has shown no signs of giving the mantle to anyone else or put some ready for succession. No-one has even been groomed, only people been doomed for wishing to become Presidential Aspirants, therefore they have ended in exile in Belgium. The nation that took DRC and built massive mansions on their looted fortunes. This is ironic, but the truth. Certainly, Kabila will not back-down and give-up quickly. He has no plan to give in. Peace.

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

Post Navigation

%d bloggers like this: