MinBane

Helt ute av sporet (Okumala ekigwo okulyaku kya okuziga)

Archive for the tag “World Bank”

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

Opinion: President Kabila appoints new Cabinet, but he is 141 days on overtime! (Time to leave for Togo?)

On the 19th December 2016 the last term of President Joseph Kabila went out. The Democratic Republic of Congo we’re the opposition negotiation through Conférence Episcopale Nationale du Congo (CENCO) agreement on the 31st December 2016. Still, the President hasn’t left any sign of leaving. As the Army are fighting on different front, are trying to avoid more problems, but having civil war situation in Kasai-Oriental, where the province has rebels killing and the army doing the same.

There are not been any visible signs that he is stepping down or giving way. Neither any clear signs of up-coming elections. Like there are just figment of imagination that his term went out in December 19th 2016. That is 4 months and 20 days that he is on overtime, without any consideration of the violation of the Third Republic. The Democratic Republic of Congo deserves better and should have legitimate President. Also, if you count days he has already spent total 141 days, which he shouldn’t be the Commander-in-Chief and President.

Therefore, 141 days on overtime, the news that he has unleashed a new cabinet and new set of ministers. Proves the violation and the rights of the Republic is being misused and misguided. I don’t care to look into the men and woman appointed, because that isn’t fair to the citizens of the DRC. They deserve a legit President and a regime they have elected. Not someone using the army and the resources as their personal business.

Even if on this date that the President appointed 47 Ministers and 11 Vice-Ministers. They are surely all loyal to Kabila, as they doesn’t care about the constitution, nor the laws that the Third Republic are supposed to have.

The Constitution of 2005 says clearly:

Article 70: The President of the Republic is elected by direct universal suffrage for a term of five years which is renewable only once. At the end of his term, the President stays in office until the President-Elect effectively assumes his functions” (Democratic Republic of Congo – The Constitution of 2005).

So he has had two terms, plus the waiting term after the assassination of his father, who also was President. Therefore, because of that, he has already had three terms in that respect, but only elected in two. Now he is on his fourth without any consent or ballots. That because cannot be elected as long as the Constitution is written like this. The thing that he didn’t do, like many other totalitarian leaders, they change the laws to fit their paradigm and continues “legally”. He is functioning as President while waiting to President-Elect assumes his functions. But with no election and no plan of doing so, there is no evidence of him leaving.

That is even more evident as he changes and appoint a new Cabinet, with lots of ministers loyal to him. It is within the law that he appoint ministers. Still, it is 141 days since he had legitimate powers and was the President. Right now, he shouldn’t be preoccupied with who leads Communications or where Lambert Mende is working. President Kabila, should be come a civilian or join Yayah Jammeh in Equatorial Guinea, even go to Togo like Mobotu!

After a weekend of confusing reports on Mobutu’s whereabouts, CNN confirmed on Monday that he was in Togo, escaping there early Sunday just ahead of rebels advancing on his home in the northern Zairian village of Gbadolite” (…) “Mobutu — who fled Kinshasa on Friday, the day before rebels entered the capital in force — was resting in a residence belonging to his old friend, Togolese dictator Gnassingbe Eyadema, government officials in the West African nation said” (Arnett, 1997).

So if he would do the 3rd Republic a favor, he would leave the Presidency and leave the Nation. It doesn’t seem to be possible at this point. President Kabila has not conceded or tried to give way. Therefore, the trust of him leaving power, seems day-by-day unlikely. President Kabila shows that he uses his power and capacity, as the army are loyal to him. This proves that the elections seems far-fetched, since he has not showed anything feasible or even tried to even get tenders for ballots.

That President Kabila will say elections are expensive, the are to many rebellions, that the M23 are in the Kivu’s, that FDLR are doing their thing, that ADF-NALU still existing, that the Kamunia Nsapu and other groups killing in different provinces. This will all be used as tactics to postpone the elections and make sure there are no official date for elections, nor ordering ballots or securing funds for the Commission Electorale Nationale Indépendante (CENI). They will all be left behind, since there are no plans or wish of the President to get a successor. That means he will leave all his power behind!

This new government is just a disgrace… and not respecting the Constitution of the 3rd Republic. Neither, it is clear disrespect of the people and republic. President Kabila doesn’t own the nation and the public doesn’t owe him anything, they deserves some who legitimate rule them. Time for Kabila to follow the fleeing President and leave for Togo! Peace.

Reference:

Arnett, Peter – ‘Mobutu in Togo as Zaire rebels assume leadership’ (19.05.1997) link:http://edition.cnn.com/WORLD/9705/19/zaire/index.html?eref=sitesearch

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)

Uganda: Civil Society Position on Tax Revenue Measures for FY 2017/18 (21.04.2017)

Rwanda 1994: Gen. Paul Kagame letter of 10. August 1994 (Confidentiel)

Uganda: CSBAG – “Reducing Wastage and Curbing Inefficiences to Finance our Priorities for the FY 2017/2018 (09.04.2017)

Uganda: “Rejection of bids for upgrading of Rukungiri-Kihihi-Ishasha/Kanungu Road Proc Ref UNRA/Works/2016-2017/00035” (29.09.2017)

Kenya: Monetary Policy Committee Meeting (27.03.2017)

REDD+ Kasigau Corridor Project: Lacking results and with questionable affiliations!

There are a December 2016 report written by Jutta Kill and published in parts by the European Union. The name of the Report are: “The Kasigau Corridor REDD+ Project in Kenya: A crash dive for Althelia Climate Fund”. This report tells a worrying story of how a project is a possible revenue source, instead of being there for climate change use or even local development. This sort of project and funding should be used for sort of projected land titles that saves the forests or create land that the owners can earn on instead of destroying the land. Something most of the REDD+ funds and projects is about, making sure the forest and the agricultural lands are kept and saved by the use of funding from donors and project builders.

One of the first hard-hitting quotes from the report are: “In addition, several reports document how land use restrictions imposed by the Kasigau Corridor REDD+ project hit pastoralists and ethnic Taita and Duruma communities particularly hard while these groups receive very few if any of the benefits the REDD+ project provides to local communities” (Jutta Kill, P: 4, 2016).

So if there are donors who seems to be positive to projects and development projects that isn’t being there for the locals, than why are they offering the monies and using the time to facilitate the project in Kenya?

The Taita Hills REDD+ Project in Kenya has been marketed by Althelia, the project developer Wildlife Works Carbon, institutional funders like the EIB and media supporting market-based environmentalism as the Fund’s signature investment. Wildlife Works Carbon has been operating the Kasigau Corridor REDD+ project in south-eastern Kenya since 2005” (Jutta Kill, P: 6, 2016). So with this in mind the Althelia has offered certain amount of money on the table, as this was the signature investment, even as it have no benefit for the local communities. The Althelia had done this: “For four of the projects, the Fund’s annual reports indicate that the investment is made in the form of loans whereas for the REDD+ project in Kenya, the 2015 audited financial report mentions an investment through an ‘Emission Reductions Purchase Agreement’ (ERPA). Four of the five projects are also covered by a US$133.8m loan guarantee that USAID has extended to the Althelia Climate Fund in 2014. As of 31 December 2015, investors had disbursed €18,36m of the €101m committed” (Jutta Kill, P: 5, 2016). So the development project are funded through loans that are guaranteed by the USAID, but extended into the Althelia Climate Fund, so the two are co-operating in the direct funding of the REDD+ Kenya. So they are rubber-stamping and giving faith to the projects.

The ‘Stand for Trees’ Initiative, a brainchild of Wildlife Works and supported by USAID, has become an important source of revenue – some say, a lifeline – for many private sector REDD+ projects” (Jutta Kill, P: 17, 2016). So that the Wildlife Works that works inside this REDD+ project, that are using the funds from USAID and EIB, are complicating it more as the other revelations that should worry the ones who cares about the environment and accountability of ones running it: “The Kasigau Corridor REDD+ project’s financial lifeline came from the International Finance Corporation (IFC), the private sector arm of the World Bank, and BHP Billiton, the mining company with a record of severe environmental damage and forced displacement of communities that stretches back decades and continues to this day” (Jutta Kill, P: 18. 2016). So why would a mining company cares about an environmental project in Kenya, unless they we’re earning funds and getting profits on the project?

You can really understand the issues of the IFC and BHP Biliton involvement, when the local communities gets no benefit or contributing to the projects.

So when you have the Althelia Climate Fund, which is funded with loans from the World Bank private corporation branch IFC and the USAID loans, together in corporation of BHP Bilition, as the REDD+ Project in Kenya is in works with both Wildlife Works, as the ‘Save the Tree’ brainchild. As this was the Althelia signature project. That there are problematic forces in play when the EIB are supporting the REDD+ projects as well, either directly through loans like USAID or like IFC. Therefore, the many actors are surely paying and donating favorable loans so the owners of the fund and the ones living of it makes this the lifeline for the Wildlife Works, even as this one doesn’t have the impact on local communities.

Just as one key observation:

One of the most striking observations was how locally, people referred to Wildlife Works as “the company”. The reasons for this seemed twofold. For one part of “the community”, Wildlife Works is “the company” that instructs guards to confiscate cattle and goats; that prevents the poorest community members in the area from collecting even dry branches for firewood when “the company” itself runs a charcoal production business on the REDD+ project area; that puts up water tanks on residents’ land without even asking permission, let alone paying for the use of the land; that claims to dedicate initially 1/3 of carbon revenue sales to local community projects, but does so in a way that means benefits from these “community” projects are captured by local elites. For example, ranch shareholders who receive 1/3 of the revenue from the carbon credit sales might also sit on the “community development committees” that decide how the 50% of the profit from carbon credit sales” (Jutta Kill, P: 21, 2016).

Another insulting observation:

A carbon offset provider offering carbon credits from the Kasigau Corridor REDD+ project writes on its website that “committees determine what projects to undertake, prioritizing them by need and feasibility. ‘So many people have problems with water, so water projects—water tanks, water pipelines—always come first,’ said Pascal Kizaka, a local chief and committee board member” (…) “Exploring the location of one of the “water pipelines” advertised as an activity of the Wildlife Works Carbon REDD+ project revealed that far from what was suggested by the large placard outside the building (a One Vision Center), it seemed that the Wildlife Works contribution to the “water pipelines” project had been just the guttering along the side of the building’s roof and piping to connect the gutters with a water tank constructed by others. People also commented about bore holes put in by “the company” that had never provided any water” (Jutta Kill, P: 23, 2016).

So the Company, the Wildlife Works are supposed to provide water and pipelines. Still, there aren’t any who has been provided with the water, even as the REDD+ Committee Board Member Pascal Kizaka claims, as the locals and community says otherwise. This together with the lacking proof of the help with carbon credit sales and the control of land. This whole development project seems sketchy and a lifeline for Wildlife Works instead of being there for the local Kenyan Communities. Therefore, the use of IFC and Althelia Climate Fund, seems like way of misusing Carbon Tax and Carbon trading, instead of developing the Kasigau project for the Taita and Duruma communities. That deserves better and also deserves that when people and organizations comes in that they does not earn on their misfortune, but actually comes with projects serving them. If not this is just a way of fraudulent development industry, that no republic deserves. Peace.

Post Navigation

%d bloggers like this: