UgandanInvestor profile
ccc
Issue 01 | Winter 2010 | www.focusonuganda.com
Shaping Uganda’s Finances Emmanuel Tumusiime-Mutebile is one of the most colourful of Africa’s current Central Bank governors, and is widely credited with shaping Uganda’s financial policies, stabilising the economy and introducing the kind of fiscal discipline that has seen Uganda record a stead growth.
In this issue 14 Road to 2011 elections Uganda’s presidential candidates speak out on their plans for the economy, oil policy, foreign policy, terrorism, infrastructure...
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54
Emerging prosperity A high profile conference on Uganda was recently held in central London attracting top delegates.
Putting Uganda at the heart of the East African Community UgandanInvestor
1
profile comment
Welcome
Uganda, the future is now Welcome to the launch edition of the
negotiating table to “fight their corner”
believe that in the field of international
UgandanInvestor. It is a new and
effectively. For that reason, economic
trade Africa must establish its own
exciting quarterly publication that will
blocs are being formed by governments
place by encouraging intra-Africa trade.
highlight the trade and investment
all over the globe to help negotiate from
Uganda has great opportunities for
opportunities in Uganda and will present
the strength of larger trading region.
international trade as the EAC becomes
readers with insights on investing in
The European Union (EU) was one of the
stronger in its trading position.
Uganda, a country that is definitely on
first to recognise that; Mercosur includes
believe that the EAC will enable Uganda
the move as we enter the second decade
most of the countries in South America;
to stand shoulder to shoulder with her
of the 21st century.
even the mighty America is part of a bloc
EAC partner states to create a place in
including Mexico and Canada.
The major event in the business
We
Many
the world of international trade. Turn to
lives of all Ugandans, and indeed the
small countries in Europe would not have
page 52 to learn how we believe this can
130million people of the East African
survived as economic entities during the
be achieved.
Community (EAC), is the way that this
recent financial crisis if they had not
Democratic governance is now a
huge economic bloc has come about.
been members of the EU. Africa’s small
household item in most stable economies.
The world is full of countries that are too
countries must prepare for what may
In Feb 2011, Ugandans will be given
small to operate on their own. The only
occur in the decades or even centuries to
another opportunity to elect their leaders
exceptions are America, China, India
come. I count even South Africa in this
in
and possibly Russia. The strengths of
context as a small country; small fish do
elections. Ugandans, in the main, have
the economies of virtually every other
not last long in a pool of sharks.
voted in the past for peace and economic
presidential
and
parliamentary
country in the world are not robust
As a result, the EAC is going to be an
stability and this year is not expected to
enough to give them the authority at the
integral part of our editorial coverage. We
be any different. On page 12 Uganda’s
Publisher:
Uganda:
Special Correspondents:
The information contained in this publication
Focus on Uganda Limited
Focus on Uganda
Moin Siddiqi, Walter Wafula,
is verified to the best of the author’s and the
100 Pall Mall,
C/o Conrad Plaza,
Janet Tibble, Stephen Williams, Neil
publisher’s ability and has been obtained from
St James,
Plot 22 Entebbe Road,
Ford, Mercy Nalugo, Peter Matthews
sources the proprietors believe to be correct.
London SW1Y 5NQ,
PO Box 21984,
United Kingdom
Kampala, Uganda
Business Development
errors or loss arising from reliance on it. No part
Tel: +44 (0)20 7321 3768
Tel: +256 (0)772 507 200
& Sales: Rehema Naiga
of this publication may be reproduced without the
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prior consent of the publisher. ©UgandanInvestor.
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www.focusonuganda.com Designer: Flaminape
Part of the Focus on East Africa Group
www.focusonuganda.com
However no legal liability can be accepted for any
Editor: Peter Matthews Editorial consultant: Stephen Williams
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UgandanInvestor
Trade | Investment | Partnerships
presidential candidates speak out on their plans for the economy, oil policy, foreign policy, security, infrastructure etc. In September 2010, London hosted the first Uganda-UK Investment Forum, organised by Focus on Uganda. This was a window of opportunity for investors and businesses to gain an insight into Uganda’s
economic
prospects.
We
present a full report on the proceedings on page 23. The development needs of Uganda are enormous and the Uganda Government cannot shoulder the burden of addressing them all, either financially or technically, by itself. By taking on some tasks such as infrastructure development, the private sector can help Uganda grow. Public Private Partnerships (PPPs) can also help the government’s budgetary constraints and allow resources to be better focused on acute social needs. In this and following issues, UgandanInvestor will offer editorial space for success stories or challenges in projects run by the private sector. Actis Capital, featured at page 30,
Uganda accounts for 40% of East Africa’s
efficient, effective forum to discuss what
arable land and as our article on page
Uganda has to offer the international
30 shows, Uganda has the potential
investor, and the part that your business
to become the food basket of the EAC
can play.
region, if not the whole continent! We are committed to telling Uganda’s stories, communicating its successes and helping to gain a great share of voice for the Ugandan business environment across the world. We encourage you our
Edward Katende
readers to look beyond the headlines and
Executive Editor
but demonstrates the returns that are
realise that Uganda is a new frontier for
UgandanInvestor
possible in Uganda and what a positive
doing business and maximising returns
impact private sector investment is
on Investment. This is Uganda’s story
Edward Katende is also the Executive
having in the country.
and indeed the future, so be part of it!
Director of Focus on Uganda
not only testifies to the confidence that private equity investors have in Uganda
While big ticket projects, such as the
The UgandanInvestor will mirror the
Bujagali hydroelectric scheme on the
achievements and aspirations of a country
Nile and the oil and gas sector attract
that is alive with opportunities and truly
the most of publicity, it is Uganda’s
aware of its abilities and possibilities.
agricultural sector that offers huge
We will encourage our readers to look
benefits in terms of job creation and
at Uganda for its enormous potential,
improving living standards. A recent
and
IMF study, Spillover Effects and the
that are present in any country, present
East African Community: Explaining
the economic achievements, successes,
the Slowdown and Recovery, found
growing consumer demand, and a people
that both exports and foreign workers’
who dare to dream.
notwithstanding
the
challenges
remittances fell sharply in all countries
Here, we will need your assistance.
except Uganda. In fact, exports hit new
Not only do we welcome letters for
highs in 2009, aided by a surge in non-
publication, but we would also like your
traditional exports, especially cash crops,
response to the thoughts and concepts in
to neighbouring countries – offsetting
our coverage. I want to encourage your
weaknesses
suggestions as to how we can provide an
in
developed
markets.
“
The development needs of Uganda are enormous and the Uganda Government cannot shoulder the burden financially or technicallyof addressing these needs alone. UgandanInvestor
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contents
Winter 2010
54 held in central London. We highlight some of the key features of the event.
Finance & Development 50
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40 Japan in Africa Africa has for years been receiving financial aid; most of it coming from a few major donors, Peter Matthews looks at the Japanese Aid to East Africa and its effectiveness.
Cover Story
14 Road to 2011 elections Uganda is currently undergoing a sizzling political spell with eight presidential candidates campaigning to take over the highest political office in the land with presidential elections scheduled for 18th February 2011.
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29
Profile – Emmanuel Tumusiime-Mutebile
FDi
Uganda has become one of the most interesting economies to have emerged unscathed by the global economic crisis, rarely out of the global financial news, Emmanuel TumusiimeMutebile has been exalted on the circuit.
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54 Putting Uganda at the heart of the EAC US Secretary of State Hillary Clinton praised the EAC as an excellent example of regional
06
UgandanInvestor
Interview Dr Magie Kigozi, Executive Director, Uganda Investment Authority, has much to be pleased about; her organisation has established Uganda among Africa’s elite.
25 Emerging prosperity Uganda is in the spotlight in Europe at a high profile conference which was recently
Agriculture While big ticket projects such as the Bujagali hydroelectric scheme attract most of the publicity, it is Uganda’s agricultural sector that offers most benefits in terms of job creation and improving living standards.
35 Turning the light on the Ugandan power sector investment
Stephen Kaboyo talks about Uganda’s capital market landscape.
Uganda is endowed with plentiful hydroelectric potential but far too many Ugandans remain without access to electricity, while variable water levels cause fluctuations in power supplies to existing customers.
38
Automotive
44 Interview
economic integration in Africa. We look at how Uganda can benefit.
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Electrifying Uganda with Private Equity investment Ugandan electricity consumers have benefited from private sector investment by Actis into Umeme, the principal power distribution company in Uganda.
Sector Profile
29 Oil & Gas Consistent success for Albert basin exploration.
50 Porche Cayene Given the improved economy, the new Cayenne S Hybrid meets a number of environmental concerns that have become associated with large SUVs, and both its rough terrain capabilities and sophisticated paved road performance make this new model a compelling option for African markets.
digest
Uganda hosts 15th African
developing its agriculture and the food
shareholding, composed of businessmen
Union Summit
industry, with the expertise, experience
and entrepreneurs.
Thirty six heads of state and government
and
across Africa as well as Mr. Felipe
individuals and institutions.
Calderon
the
President
of
involvement
of
knowledgeable
Kalema, Bankom Chairman and Mr.
Mexico
Mitchell Elegbe, InterSwitch Managing
Uganda, at the 15th Summit of the African
Foris telecom launches Uganda’s first 4G network
Union. Member states were urged to
Moving
convened in Kampala the capital of
double their efforts to ensure that Africa becomes prosperous and economically strong enough to be a better trading partner with the Group 8 countries. The summit took place almost a week after the July 11 twin bomb attacks on Kampala, giving Uganda an opportunity to call for continental support to end wars and terrorism on the continent. President Yoweri Museveni called on all African Heads of State and government to adopt multiple and cheaper ways of providing health services in order to solve the challenges of most diseases afflicting the common man.
Uganda
hosted
the
ahead
of
the
Director, said that the union creates “a
crowd
and
exploiting the benefits of joining the market late, Foris telecom a subsidiary of Israel-based Foris Group launched the first Fourth Generation (4G) wireless network in Uganda. Foris entered the market with a superior network at the time when some of the traditional companies like; MTN Uganda, were preparing to upgrade to 3G+. Until Foris’ entry, Orange Uganda had the most advanced telecommunications network technology. Mr Moshe Mitz, the Foris Telecom Uganda chief executive officer told press in Kampala that they were out to defeat the high prices and slow internet speeds in the market place.
Agribusiness Agribusiness
In a joint statement, Dr. William
over 400 public and private sector
electronic
representatives, entrepreneurs, micro-
payment processing solution provider in
leading
switching
infrastructure
to
drive
the
growth
of payment products of real value to banks, corporate organisations, utilities, government and the people of Uganda. “This is a union of like-minded solution providers, whose vision for Uganda is a nation-wide real-time electronic funds transfer and transaction processing and switching solution that takes away the burden of backroom processing from the banks, allowing them to do what they do best- raising deposits and providing credit, thereby improving the customer experience both in and out of the banking
banking Africa and CEO for East Africa
InterSwitch
transaction
robust, market-driven electronic payment
Patrick Mweheire, head of investment
Forum 2010, which brought together
the
to handle the growing demand for a
hall,” read the statement.
InterSwitch Limited acquires Bankom Limited,
stronger Bankom with a renewed ability
and
at Renaissance Capital said the deal is a turning point in both companies’ strategic
future.
“InterSwitch
has
acquired an excellent platform to repeat
finance institutions, researchers, bankers,
Nigeria, has acquired a controlling stake
farmer organisations, and experts to
in Bankom Limited. The deal which was
discuss the global concern of Food
brokered by Renaissance Capital saw
instantly has access to a unique set
Security.
President Yoweri Museveni
InterSwitch acquire 60% of Bankom
of products and services that can be
urged foreign investors to invest in
at an undisclosed price. Bankom was
marketed
Agribusiness in Africa. The Agribusiness
previously owned by Cashnet (80%)
region,” MWeheire said.
Forum aims to contribute to sustainable
and Pesacom (20%). Both Cashnet and
economic growth of Africa by further
Pesacom
have
significant
Ugandan
its successes in Nigeria and Bankom
across
the
East
African
Continued on page 08 >>>
UgandanInvestor
07
“
digest
Securities
performance in its oil and gas industry,” a market analyst from MBEA research
Nation Media Group (NMG)
and brokerage firm said.
cross-lists shares in Uganda Nation Media Group (NMG), the parent company of the Monitor Publications
Innovation
Limited, cross listed its shares on the
Moved
by
industry
competition,
Uganda Securities Exchange (USE) –the
Uganda’s telecom companies have come
domestic stock market. The company
up with innovations to maintain their
cross-listed over 157 million shares from
customers and attract new ones. Most of
Kenya’s Nairobi Stock Exchange, to the
the innovations are being introduced by
USE. The deal allows Ugandans to buy
the new entrants in the market but have
into East and Central Africa’s largest
also woken up the industry leaders to
media group with operations in Kenya,
retain their customers.
This is a union of like-minded solution providers, whose vision for Uganda is a nationwide real-time electronic funds transfer and transaction processing and switching solution that takes away the burden of backroom processing from the banks, allowing them to do what they do bestraising deposits and providing credit, thereby improving the customer experience both in and out of the banking hall,” read the statement.
Uganda and Tanzania with ease. “When
Warid Telecom’s promotions such as
you buy a share in NMG, you are buying
Mega Bonus, One shilling per minute
a portfolio of very successful businesses
calls and lately ‘Paka Last’ have sent
across East Africa,” Mr Linus Gitahi, the
shivers in the industry and has helped
CEO of NMG said at the cross listing
the company grow its clientele base to
ceremony.
Mr Wilfred Kiboro, the
over 1million subscribers. Not to be left
Chairman NMG said the company will
out, other companies have come up with
also cross list its shares in Rwanda and
equally exciting. Most recently, Orange
Tanzania besides opening operations
Telecom came up with a promotion
in Rwanda and Burundi to make the
dubbed ‘Gyekiri’ which is almost similar
company truly East African.
to Paka Last. The difference is that when
has entered a partnership with National
you load airtime and subscribe to Gyekiri,
Water
Tullow oil to cross-list shares in Uganda
the airtime is not deducted as is the case
(NSWC) which saw them launch the on-
with Paka Last. When a customer loads
line water billing service in the country.
News that Tullow Oil PLC would cross
airtime worth Ushs1, 000, they are given
The service which was invented by
list its stock on the Uganda Securities
free Orange to Orange calls and they can
the bank to do away with the constant
Exchange (USE) has been welcomed
use their airtime to call other networks
with enthusiasm by the industry players
as well, send SMS, or use it for mobile
and investors alike. Tullow is expected
Internet. Airtel Uganda has also followed
to offer about 804 million shares on
suit with a new promotion dubbed ‘Airtel
the Ugandan bourse in April 2011 if
Flexxy’. Under the new promotion, Airtel
negotiations are concluded.
customers will be able to make calls
Mr.
Simon
Securities
Rutega,
Exchange
the (USE)
Uganda
with discounts as high as 99% across
Chief
all networks. Uganda telecom has also
Executive said Tullow was still working
launched a promotion where it gives its
on the requirements for approval. “The
customers 100% bonus when they load
market forces that would drive this listing
airtime of any denomination.
would be determined by the company’s
8
UgandanInvestor
On another note, Ecobank Uganda
and
Sewerage
Corporation
queues at the NWSC offices by customers trying to pay their bills in time to beat their disconnection deadlines is the first of its kind in the water billing system.
You come as a Guest...and Leave as a Friend
Plot 2-4, Wampewo Avenue, P.O. Box 10218, Kampala Uganda Tel: + 256 (0) 41 - 348080/6, Fax: + 256 (0) 41 - 348090/1
issues of the day
UgandanInvestor quizzes the Experts on issues of the day
Q&A
Patrick Mweheire
Zain Latif
CEO of Renaissance Group’s activities
is the founder and principal of TLG Capital
in East Africa and Head of Investment Banking, Africa and sits on the Africa Management Board for Renaissance Capital.
PTA issued a
This was an important issue for the region as it
PTA’s issue of a US$300million Euro Bond
US$300million
shows that international investor base is looking
is significant. It proves that international
Euro Bond - how
for African exposure. The fact that it priced at
investors are no longer turning away from
has or will the local
sub 7% also sets a benchmark for sovereigns and
African markets due to its perceived high-risk
markets respond?
corporates in the region post 2008 credit crisis. It
potential. It will be interesting to see how local
also signals that investors are quite comfortable
markets respond - with international investors
with the political risk situation. It is worth noting
offering lower interest rates it is likely that
that PTA is rated BB by Fitch and BA1 by Moody’s.
others [banks] will also capitalise on the shift in
It has a higher credit rating than the East African
perception toward many African markets in the
Sovereign nations.
mindset of international investors.
Regarding the
Uganda is going through a transition with the new
Uganda has a rich plethora of natural resources
EAC Common
oil find. Energy is an expensive and critical input
at its disposal. Containing much rich and
Market- what do you
into most production in the region. Uganda is about
fertile land, the country is often referred to as
think is Uganda’s
to get a massive discount on energy and should
a potential breadbasket for East Africa, if not
competitive
therefore make the country a lot more competitive.
the whole of Africa. Hopefully Uganda will be
advantage?
Additionally, close to 50% of Uganda’s population
able to capitalise on this, as recent government
is under the age of 15 years. This is a latent work
initiatives have pushed agriculture to the
force for many years to come.
forefront of economic planning. At the same time there is the potential to capture the market that will be available as a result of Uganda’s transition to an oil producer meaning there will be much scope for the country to take a leading role the EAC common market.
10
UgandanInvestor
issues of the day
Q&A What in your opinion
I am assuming that you are referring to equity
This is always difficult to ascertain. My view is
is the average rate
rate of return? If you look at the banks as a proxy.
that one has to be careful and prudent when
of return in Uganda
Most banks in Uganda are running a Return on
investing and we would always look for returns
across all sectors?
Equity (“ROE�) in the 25% area. This is a good
in excess of 25%.
benchmark. There are sectors that do more and others that do less. Here’s US$1million-
I would invest it in the oil field services sector. A
As mentioned consumer goods and industries
which Ugandan
lot of focus is on the oil but there is a wide range
is a key sector at present in Uganda and is
sector would you
of ancillary services and by products of oil that will
attracting much interest. There are many small
invest it in?
need processing. The logistics of moving 2 billion
and medium businesses in this sector that are
barrels of oil from the ground is a daunting task
looking to grow but lack the capital necessary to
and will require an entire chain of suppliers. A well
do so. Often they do not require a large amount
thought out business plan to capture part of this
of investment but are unable to even secure
windfall will be a good investment.
smaller loans due to lack of collateral. These businesses that do not require vast sums of cash may still have massive potential to grow. Investing when they are at this pivotal stage can result in great long-term benefits.
Do you think the
The Ugandan currency is quite stable and has
Of course if current global currency wars escalate
current global
been in a tight band for a period of time. Inflation
further they will have an impact on the Ugandan
currency wars, will
has been cut dramatically and the Government is
economy: there is the risk that they will have a
affect the Ugandan
improving its tax collection % which is one of the
major impact on local foreign exchange rate and
economy?
lowest in the region. The combination of improving
portfolio flows. Certainly, with the Ugandan
revenues (not withstanding the US$400million
shilling depreciating against the dollar it is
Heritage Tax windfall), lower inflation, high GDP
likely that foreign investors are going to be more
growth and expected oil revenues in 24 months all
cautious when investing in Uganda, and with
lead to a stronger currency.
such a large number of enterprises containing some percentage of foreign investment this will of course impact on the Uganda economy.
If you would like to take part in this section, please contact Peter Matthews (magazine@focusonuganda.com) for information on future topics.
UgandanInvestor
11
election special
2011
Road to 2011 elections Uganda is currently undergoing a sizzling political season, with eight candidates campaigning to take over the highest political office in the land as presidential elections are scheduled for 18th February 2011. Uganda’s presidential candidates speak out on their plans for the economy, oil policy, foreign policy, terrorism and infrastructure. The front runners are President Yoweri
People’s
candidate.
Save for Otunnu, all the candidates
Museveni, who is seeking a fourth five-
Others include Beti Olive Namisango
have launched their manifestos setting
year term in office with the ruling National
Kamya of the Uganda Federal Alliance
out what their vision for the economy
Resistance Movement (NRM) party;
(UFA), the only female candidate in the
would be if they take power. They have
Rtd Col Dr Kizza Besigye is running
race, Abed Bwanika of the Peoples
outlined their business and foreign
against the incumbent for the third time
Development Party (PDP), former Local
policies, as well as strategies on how to
on the Inter-Party Cooperation (IPC)
Government Minister, Jaberi Bidandi-
tackle the problem of widespread poverty
ticket; Norbert Mao is representing the
Ssali of the Peoples Progressive Party
in the country, and much else besides.
Democratic Party (DP); and former UN
(PPP) and Samuel Lubega, who is
diplomat, Olara Otunnu, is the Uganda
running as an independent.
12
UgandanInvestor
Congress
(UPC)
In alphabetical order, we present the candidates’ key policy pledges.
can afford them. That means that many
trained and well remunerated, with
more goods will be sold and government
promotions executed on merit. He will
will consequently generate more indirect
pursue the objective of an East African
tax to be able to build infrastructure, put
Federation and will work constructively
medicine in hospitals and so on. Primary
with other countries to combat terrorism
school teachers will earn a minimum of
and
Ush400,000 (US$174) a month to get
and laws. He also promises to pursue
them out of abject poverty, and pupils
regional economic integration through
will get free meals while at school,”
harmonisation of tariffs, investment
Besigye pledged.
policies and strengthening the teaching
He added: “We need to revolutionise
adhere
to
signed
instruments
of foreign languages in the country.
the country’s co-operative societies so that agricultural produce can once again
Kizza Besigye
achieve better prices and enable farmers
Besigye, who ran against President Museveni in 2006, remains a major political
threat
president’s
to
the
authority.
incumbent
Besigye
was
President Museveni’s personal doctor during the bush war that brought the current government to power in 1986, until the two disagreed politically in 2000 and Besigye declared his intensions
“
to stand against him.
live to earn a decent income. How can a farmer who only relies on maize tend to it for six months then sell a bag for only Shs10,000 (US$4)? When we improve the prices of farmers’ produce, they will be able to better their lives and this kind of poverty that we see all over Uganda will be history.” On corruption he commented: “The corrupt
should
stand
warned
that
accountability will be the pillar of my
I intend to reduce taxes on most manufactured goods so that all people can afford them. In an interview with UgandanInvestor,
government. We shall not allow theft of
Jaberi Bidandi-Ssali
public funds and merely talk about it.” On
Jaberi
sharing oil proceeds, Besigye promises
UgandanInvestor that he has laid out
the people of the oil-rich Bunyoro region
his plans in a book entitled Together
a reasonable share of the revenue, unlike
We Shall Deliver. He says that his
the ruling NRM party which considers
undertaking to the people will focus on
oil as a national resource but offers no
policies that harness the vigour, energy,
affirmative action for Bunyoro.
synergies and enthusiasms of the youth,
told
To boost the country’s GDP, Besigye
women and people with special needs
further offers a special package for
for their individual advancement and
individuals
national development. “I am committed
and
corporate
entities
Besigye promises a stable, self-sustaining
intending to invest their money in the
economy. He says that he stands for broad
country. “All investors in Uganda will get
economic growth; a lowering of the high
a tax holiday as an incentive to help in
interest rates that he sees as crippling the
the creation of jobs, particularly amongst
economy; revolutionising a co-operative
young
society; investing heavily in agriculture;
growth in the process,” he promised.
fighting
developing
Another highlight is to raise the PAYE
infrastructure; changing the tax regime;
tax threshold to at least Shs500,000
offering quality education; creating jobs
(US$220) which would allow low-income
for the unemployed; and revamping the
workers enough disposable income to
health sector.
live on.
corruption;
Bidandi-Ssali
people,
and
spur
economic
“I intend to reduce taxes on most
He also proposes a national defence
manufactured goods so that all people
and security strategy whereby members of the armed forces would be recruited,
“
I am committed to fighting corruption in all its various forms and at all levels of our society.
Continued on page 14 >>>
UgandanInvestor
13
election special
2011 to fighting corruption in all its various forms and at all levels of our society. I have the moral authority, political goodwill and track record to fight this vice and all its mutations, through established state institutions,” Bidandi avers. Bidandi says he will institute effective mechanisms, processes and systems for the collection, management and utilisation of all the country’s natural resources, including oil and gas revenues, for the benefit of Uganda, saying this will be the hallmark of his leadership. “Anti-corruption agencies will be strengthened and facilitated to fight theft, embezzlement, abuse of power and all forms of corruption in all sectors of the economy,” he says.
“
In every country, there are people who are at the pinnacle of the society with extraordinary intellectual capacity to think, research and produce new ideas able Samuel Lubega to drive the nation’s strategy into a desirable Samuel Lubega told UgandanInvestor that his vision revolves around a future. 16-point programme to reclaim and deliver Uganda under the theme “A
patriotic Ugandans,” he adds. He asks
Peasant Solidarity for Genuine Change
people to vote for him so that he can usher
in 2011 – The Change Ugandans can
in a new leadership that will establish a
Trust and Believe.” He says that he
national intelligence body that will guide
intends to put a halt to the country’s
the country’s best human resources. The
steadfast move towards a failed state
Peoples’ Development Party’s candidate, Bwanika is a veterinary doctor who says that if he wins the presidency, a national programme will be rolled out to identify the country’s best brains that will help to develop appropriate national policies and programmes. “In every country, there are people who
Abed Bwanika
are at the pinnacle of the society with extraordinary intellectual capacity to
“
A Peasant Solidarity for Genuine Change in 2011 – The Change Ugandans can Trust and Believe.
Abed Bwanika, who is running his second
think, research and produce new ideas
presidential bid, stresses that he intends
able to drive the nation’s strategy into
and salvage the country from its deep
to bring about a change for the better in
a desirable future,” Bwanika says. He
socio-political logjam and a worrying
the lives of all Ugandans by tackling the
believes that a better Uganda has to
economic downturn. “This will be done
most challenging issues facing them,
become a global workstation where a lot
by reconciling communities, remoulding
namely
employment,
of outsourcing work for other countries
and healing the country with a new
health and security. “This vision cannot
can be undertaken, thereby generating
and positive politics that cement our
be achieved without the support of
employment opportunities.
founding values and national interests.
14
the
economy,
UgandanInvestor
It will rebuild a genuinely democratic,
donor-funding; boosting job-creation;
peaceful,
trade
strongly
competitive
and
and
productivity;
enhancing
freely enterprising Uganda and re-fix
free-enterprise; harmonising taxation
the prevailing systemic institutional
with incomes and benefits; and a fair,
rot and the pathetic national grids and
minimum wage to boost productivity and
public infrastructural framework,” he
meet the cost of living. Other needs, according to Lubega, are
added. Lubega has big plans to break
the building of a durable basic economic
down the development barriers for
infrastructure and curtailing the waste
opportunity
socio-
of aid, revenues, human skills, time and
economic, political-administrative and
other resources to prepare the country
environmental inequity that exist in the
for a more competitive 21st century.
country. By doing this he will change the
He would drive this by investing more
image of Uganda into the real “Pearl of
in the health of the citizens; providing
Africa”. According to Lubega, securing a
quality schooling as well as vocational
whole range of people rights, freedoms
and higher education, research and
and civil liberties and meeting the
technology transfer.
and
fight
the
rising aspirations of what a majority of
Lubega also intends to bring about
Ugandans believe is needed. He says
radical changes by instilling discipline
that there is an urgent need to make
and responsibility in the way Uganda
“political paranoia” history by widening
conducts
the democratic space and rooting out
business
brutal
authoritarianism
corruption, irresponsibility, negligence
and injustice in Uganda. He promises
and the flagrant abuse of office, people
to introduce an enduring commitment
and community rights. He wants to
to treat others as one would wish to
shine a light on inept and fraudulent
be treated, whether it be the realms of
government spending, inspire integrity;
civil rights, politics, socio-economic
and
status, or the rights and freedoms of
environment. His other pledges include
women and children. He will work for
empowering the public, civil society and
the entrenchment of justice and peace
democratic institutions to stand up as
for communities, families and every
whistle-blowers and watchdogs.
repression,
citizen, without discriminating in terms of
creed,
tribal-ethnic
background,
political lineage, race or station in life.
and
delivers
thereby
create
a
government
stamping
conducive
out
business
Beyond domestic policies, Lubega says: “[We will] reshape our foreign policy to renew Uganda’s leadership on
Lubega says that his plan is to
the regional and Africa stage and confront
make government leaner and more
our most pressing threats, not through
responsive to the poor by reprioritising,
the perpetual provocation and flexing of
restructuring, refocusing, reducing and
our military might, but through the use
merging ministries for the purposes of
of all elements incidental to our human
improving efficiency. This will also help
security to keep us safe, prosperous and
to save resources and redirect them into
free … instead of alienating our nation
real programs for poverty eradication
from this region and the world, we
and social welfare for all.
will enable Uganda – once again – to
He adds that the country’s economy
reconcile with neighbours and regain
needs to be fixed by ensuring competent
its former glory and competitive lead
economic management that thrives more
in the best interest of fighting poverty,
on trade rather than aid. He also argues
promoting human and national security
for a national budget largely funded by
and
domestic revenue as opposed to debt/
Ugandan People.”
expanding
opportunity
to
Olive Kamya Like Bidandi, Olive Kamya pledges to establish a good system of governance based on a federal model. “We believe that each region should be in charge of its resources to benefit from them, like oil revenue, which needs to be studied carefully,” she says. She argues that although a lot of emphasis is being put on oil, the country also needs to exploit other opportunities like tourism, which needs to be nurtured to bring in more revenue for the country. Kamya notes that there is nothing wrong with Uganda’s growing population, but that it needs to be empowered with purchasing
power,
health
services,
better market conditions and to ensure adequate provision of social services. She says her foreign policy focuses on gaining respect from foreign partners, managing the budget and respecting the way of life and the need to work together with its neighbours and international players as
“
equal partners, not dependants.
We believe that each region should be in charge of its resources to benefit from them.
the Continued on page 16 >>>
UgandanInvestor
15
election special
2011
Norbert Mao Mao, commonly referred to as ‘Uganda’s Obama’, is the youngest candidate in the presidential race and he aspires to attract the country’s younger voters. Riding on the promise of a zero tolerance
“
rural livelihoods,” he says. On the issue of peace and security, Mao promises to institute a truth and reconciliation commission to bridge differences in the
We shall also revive co-operatives and explore block export opportunities, which will lead to increased economic growth and spur the transformation of rural livelihoods.
country.
promises of a strong and united party that will build a better Uganda for all. The manifesto suggests that DP will champion personal, cultural, economic and political freedoms for all citizens; the rule of law;
Yoweri Museveni
promoting high ethical standards in
We were unable to reach the incumbent,
outlined in his manifesto that he would
government; protecting security of life
President Museveni, for an interview, but
review the PAYE tax levied on lower-paid
and property; and guaranteeing justice
his 2011 manifesto appears to be basically
workers arguing that it is imperative
for all. The party also promises a nation of
a continuation of existing policies.
they should have a decent take-home
responsible people who are economically
Of course, his critics will argue that
wage. He suggests that no foreigner
and politically empowered.
repackaging existing ideas is essentially
on corruption by having transparent and accountable leaders, he has also
should be allowed to deal in small-scale
Mao pledges to better the lives of
“old wine in a new bottle”; and indeed
retail businesses, giving local people the
teachers and doctors and to create 5,000
this criticism was made against two
opportunity to invest in this space.
jobs for young people in the public sector.
previous manifestos in 2001 and 2006,
Like Besigye, Mao says that while
In his bid to create a strong economy, Mao
however his supporters will argue for the
natural resources such as oil are
also promises to increase the minimum
desirability of continuity.
principally a national asset, they are God-
budget for agriculture to 10%: create a
Once again, the incumbent is riding on
given to the people where the resource
citizens’ empowerment fund to support
a 13-point election manifesto where he
is located. “The Democratic Party (DP)
SME and start-up enterprises and put in
promises to boost the country’s economy
will work out a royalty percentage of the
place a responsible foreign investment
and consolidate the achievements on
oil revenues to develop the areas where
policy including restrictions on foreign
economic transformation, saying Uganda
the oil is being exploited. The royalties
retail trade to protect vulnerable sectors.
has reached its ‘take-off stage’. The next
will, in part, be used to mitigate the
“We shall also revive co-operatives and
stage will be transforming the economy
negative environmental impact in those
explore
opportunities,
into middle–income model where per
areas,” he said.
which will lead to increased economic
capita income doubles to US$1,000 from
growth and spur the transformation of
the current US$500, his manifesto reads.
In the DP’s manifesto there are
16
UgandanInvestor
block
export
Key areas outlined in the ruling
desirability of value addition, processing
the former-UN diplomat has assured
party’s manifesto include expansion
more agricultural products for wider
Ugandans during his election addresses
of the electricity grid’s supply capacity
distribution.
he will revamp the health and education
to 3,800 MW in order to help in
There are promises to increase
the development of both large-scale
education and health infrastructure
industries and SMEs. It also promises
at the sub-county level, expand the
to improve infrastructure through the
provision of safe water from different
construction of major roads and railway
sources, improve the salaries of civil
lines and the repair and upgrade of
servants and work towards realising
existing transport assets.
the political objective of an East Africa
Museveni has chosen to emphasise the all’
promotion
of
programmes,
‘prosperity dubbed
for
Bonna
Bagaggawale. At the manifesto’s launch,
services,
revive
co-operatives
and
industries, renovate hospitals and equip them with drugs and good doctors.
Federation. The incumbent also pledged to
carefully
develop
a
sustainable
petroleum industry policy.
Museveni promised to invest more
Olara Otunnu
money into the agricultural sector,
Olara Otunnu, whose Uganda People’s
announcing that US$60m had been
Congress (UPC) had not yet launched
secured to help farmers through the
its manifesto as we went to press, could
National Agricultural Advisory Services
not be reached for interview as he was
Programme. He also highlighted the
touring the country campaigning. But
UgandanInvestor’s wager on the future Uganda has in the last two decades experienced a steady economic growth propelled by prudent, consistent macroeconomic policies and encouragement of trade and foreign direct investment, with great emphasis on the private sector as the engine of economic growth. Further structural reforms and closer regional integration would enhance productivity and improve long-term growth prospects.One thing that is clear is that whatever the outcome of the 2011 elections, the Ugandan government of the day will continue to rely on the economic power of the private sector to generate efficient and productive economic activity. The
exploration and production of oil deposits in the Albertine basin will further increase the fiscal space to address infrastructure bottlenecks and funds for pivotal development spending. Uganda is growing at a rate well above the average for subSaharan Africa and the outlook is benign, contingent on eliminating infrastructure constraints and strong recovery of global economy. Whoever is elected by Ugandans, they will be required to build on a good economic foundation and to emulate East Asian economies’ investment-led growth, attract increasing quality FDI. Uganda needs higher ‘productivity
enhancing investments’ in both hard (physical infrastructure) and soft infrastructure (skilled workforce, educational/health facilities and efficient financial system) areas, as well as superior institutions to underpin sustainable development. Uganda is clearly open for business, with the days of economic and political instability, rampant inflation and currency devaluation a distant memory. As many firstmover investors have already found, this is a new, exciting, emerging economy with a hugely promising future where opportunities continue to abound.
UgandanInvestor
17
interview
Dr Kigozi
The Future of Investment Uganda is the destination of choice for investors looking to put their money into Africa. UgandanInvestor speaks to Dr Maggie Kigozi, Executive Director of Uganda Investment Authority, about what the country offers and why it is such an appealing business destination.
Top 10 African Countries Fdi for the year US$ July 09-June 2010 Billions Nigeria
1.6374
Egypt
1.5427
Angola
1.2663
Uganda
6.733
South Africa
5.948
Mozambique
4.052
Sudan
3.972
Zambia
2.547
Morocco
2.174
Kenya
1.653
18
UgandanInvestor
Uganda continues to shine as a foreign investor destination of choice. Data from fDi Intelligence (www.fdiintelligence. com), a service of the Financial Times, shows that in the year ending June 2010 Uganda came fourth in the league of countries receiving the most investment in Africa. With a total investment of US$6.7 billion, Uganda is ahead of South Africa and only just behind Nigeria, Egypt and Angola. Data provided by the Uganda Investment Authority (UIA) indicates that the highest number of projects (127) licensed in 2009/10 were in the manufacturing sector, followed by the Construction, Real Estate & Business Services and Agricultural sectors. The Bharti Airtel takeover of Airtel Investments, in the telecommunications industry will also mean increased
investment in this sector, stiffer competition, and lower tariffs for mobile phone subscribers. According to UIA, the top ten sources of investment in the country for 2009/10 were, in descending order; Uganda, China, Kenya, India, United Arab Emirates, United Kingdom, Russia, Nigeria, Togo and, Germany. Cross-border investments between the East African Partner States rank highly in the 2009/10 results with Kenya being the third biggest investor in Uganda globally with planned investments worth US$ 682 million. Tanzania comes in at Number 19 with US$49 million, Burundi and Rwanda at Numbers 45 and 63 with planned investments worth US$10 million and US$2 million respectively. UgandanInvestor caught up with
Maggie Kigozi, Executive Director
Sudan economy. Though landlocked,
of
Uganda
Uganda
Investment
Authority
is
conveniently
land-linked
(UIA), who is responsible for licensing
through the many borders it shares
investors in Uganda and who has played
with her neighbours, thus giving her a
an
commanding importance as a base for
instrumental
role
in
attracting
investment into Uganda.
regional trade and investment.
What makes Uganda so
‘A liberal economic regime’
attractive to business
Uganda’s economic growth has been
investment today?
fairly stable over the last 25 years,
I believe there are several factors that
averaging 6% per annum, as a result of
ensure that Uganda is a key location
good macroeconomic policies and relative
for
firstly
political stability. A liberal economic
few countries in Africa provide the
regime is another consistent characteristic
sort of strategic location that Uganda
of the Ugandan Economy; there is free
offers to investors. Located at the heart
inflow and outflow of capital (both current
of East and Central Africa, it shares
and capital accounts), 100% foreign
borders with some of Africa’s most
ownership of investment is permitted and
economically important and resource
exchange rates are freely determined by
rich countries, from the mineral rich DR
the market.
international
investment:
Congo to the rapidly expanding Southern
Finally, Uganda’s economy has been
secured and guaranteed by membership in various free trade and market access preferences offered to the country. The Common Market for Eastern and Southern African states (COMESA), a region with a market of over 380 million people in 20 countries, is one of the groupings of which Uganda is a member. This guarantees the business community more than 80% tariff reduction in this regional market. Uganda is also part of the East African Community, with a newly created Common Market, which will allows free movement of goods, labour and capital over the borders of the five East African Partner States, with a total population of over 130 million people.
Continued on page 20 >>>
UgandanInvestor
19
interview
Dr Kigozi
How does Uganda compare to peer countries and regions? According to the World Investment According to the World Investment Report 2010, Uganda has, for the fourth year running, continued to attract foreign direct investments at a faster rate than her neighbours in the East African Region. The report, which was launched worldwide on 22 July 2010, has indicated that despite the unease in the West about the global economic crisis in 2008/2009, Uganda continued to witness growth in foreign direct investments, from US$ 787 million in 2008 to US$ 799 in 2009. This increase, although still a little low, was the highest in the East African Region, accounting for about 27% of all
20
UgandanInvestor
No. Projects vs Planned Employment No. Projects
No. Projects
Planned Employment
Employment
0
0
Wh & Ret, Cat & Accom Serv
Electricity, Gas & Water
7500
Not Specified
38
Mining & Quarying
15000
Community, Social Services
75
Transport, Storage & Comm
22500
Agri. Hunt. Forest & Fish
113
Financial Services
30000
Construction
150
Manufacturing
What sectors yield the greatest opportunity in Uganda? One of the most interesting sectors at the moment, in terms of opportunities, is real estate development. The housing sector creates employment and contributes 2-5% of GDP in Uganda compared to 40-80% in developed countries and 35% for emerging economies. Housing needs in Uganda are estimated at 6.4 million housing units and current housing stock stands at 5.7 million housing units, leading to a total national backlog of 0.7 million housing units. The projected housing need between now and 2020 is 9.7 million units with an average annual housing unit requirement of 0.21 million. Other important sectors include ICT, the services sector (education, hospitals, tourism accommodation) and government is interested in entering into PPPs in strategic infrastructure sectors like roads, railways and housing. Agriprocessing also yields a lot of opportunity for the investor.
800 600 400 200 0
Uganda
Kenya
TZ
Rwanda
Burundi
FDI inflows in the Region. (According
What infrastructure projects are
to UNCTAD, the East African Region
currently being initiated or are
comprises of the Comoros, Djibouti,
nearing completion?
Eritrea, Ethiopia, Kenya, Madagascar,
The following projects exist in the
Mauritius, Seychelles, Somalia and the
energy sector.
United Republic of Tanzania). (See FDI
Medium Term Projects being considered
comparative figures attached)
by Uganda
“
Uganda has the most flexible and competitive labour market in Africa. The World Bank Doing Business Report (2010) ranks Uganda among the top 10 countries where hiring labour is simplest.
n Bujagali (250MW) under construction n Karuma (700MW)- contractor to be selected under the international competitive bidding, work is expected to start early 2011 n Isimba (100MW) Long Term Projects n Ayago North (400MW) n Other sites: Murchision Falls, etc: (600MW) n Enhancement of renewable energy development Renewable Energy Opportunities n 37 small hydropower sites with a potential of 164MW. So far 54MW has been committed by private sector for development n Co-generation with joint partnerships of five sugar factories n Solar Photovoltaic systems to rural areas or high end users High Voltage Transmission Projects: opportunities in supply of transformers, high voltage cables, construction of towers, transmission lines and substations for n 500km of 132 kV; 500km of 220kV; and 264km of 400kV n Regional projects under East African Master Power Master Plan • Uganda-Kenya (230Km of 220kV) • Uganda-Tanzania (510Km of 220kV) • Uganda-Rwanda (230Km of 132kV) NB: All the above require the participation of the private sector In addition more than 50 mini hydropower sites with a combined potential of 210 MW have so far been identified through different studies in Uganda. Currently small hydropower only accounts for around 18MW of electricity generation capacity. Some of the sites can be developed for isolated grids and others for electric energy sales to the National Grid. Details of these projects and many more can be found on our UIA’s website.
Tell us a bit about the Ugandan work force? Uganda has the most flexible and competitive labour market in Africa. The World Bank Doing Business Report (2010) ranks Uganda among the top 10 countries where hiring labour is simplest. The workforce is well educated, English-speaking and low cost. The quality of this labour is one of the biggest attractions, being the product of an education system with strong links to the British Education System. The educational system, which produces about 400,000 undergraduates annually, has made Uganda’s labour high quality and competitive. Unskilled labour is also readily available and trainable. The country also serves as a regional base for training of the East African labour force. How do labour laws favour investment and stability? Uganda’s labour laws protect both workers and investors’ rights alike. Investors are free to employ expatriate labour provided one can justify the need. The Uganda National Employment Policy addresses one of the critical challenges facing Uganda, namely the attainment of full employment coupled with decent work and equitable economic growth. As the number of educated Ugandans increases each year, employment creation through enterprise development remains the most effective route to poverty eradication. The main thrust of the policy therefore, is generating sufficient productive jobs for Ugandans. The policy emphasises the promotion of an environment for private sector development investment, enterprise growth and competitiveness in line with government strategy of a private sector led economy. In line with national, regional and international treaties, the policy emphasises the legal and regulatory framework to promote the rights of workers, equity in employment and Continued on page 22 >>>
UgandanInvestor
21
interview
Dr Kigozi industrial peace and harmony. The country’s investors have complete international protection made possible by the local laws and international conventions to which the country is signatory. The Ugandan constitution (1995) and the Investment Code Act 2000, stipulate sufficient laws to protect investors’ rights and property. The International Conventions and institutions to which Uganda is signatory include the Multilateral Investment Guarantee Agency (MIGA); Overseas Private Investment Corporation (OPIC) of US; Convention on the recognition and enforcement of foreign arbitral award (CREFAA) and several others. The table below gives a picture of the average labour costs for various categories of workers. Designation
Rate (US$ Per Month)
Managing Director 1,000 – 1,500 Management
500 - 800
Skilled workers
350 - 450
Unskilled workers
100 - 200
How is the legal and financial environment in Uganda? Financial Environment: Uganda is one of the fastest growing countries in Africa, with an average annual growth rate of 6% over the last five years. Most economic activities are fully liberalised and open to foreign investment. There are no restrictions to 100% foreign ownership of investments and no barriers to remittance of dividends. Uganda’s shilling is fully convertible and has remained stable over the last 20 years. Uganda is one of approximately five countries in Africa that have no restrictions on capital amount transfers. In general, the environment
22
UgandanInvestor
for private sector investment has improved significantly with the formal economy growing in importance. The adoption of an appropriate legal and institutional framework has resulted into a steady increase in FDI since 1990, with the manufacturing sector attracting the largest share of FDI. Legal Framework The Investment Code Act of 1991 is the law that governs foreign investments in Uganda. Stemming from the investment code 1991 the Act provides for the licensing of investment, protection of foreign investment, and agreements for the transfer of foreign technology and the externalisation of funds. The Act requires that foreign investors have an investment licence to operate a business in Uganda, and provides for certain incentives to investors. Along with the Investment Code 1991, the government created the Uganda Investment Authority (UIA) as the legal and policy framework for investment in the country. The Investment Code Act 1991 is being amended to accommodate development of industrial parks. The Free Zones Bill 2005 has been drafted to allow the establishment of Export Processing Zones and Free Ports in Uganda. Both Bills have been harmonised to suit the policy and legal framework of the other two East African countries, Kenya and Tanzania. Given the recent terror attacks on Uganda, how do you think this will affect FDI and what is being done to ensure there is no damage to long-term growth? In the wake of the July 2010 bombings in Kampala, we have not seen any
slackening of either business or visiting missions to Uganda. As a matter of fact, Uganda hosted the highly successful 15th African Union Summit. Immediately after the Summit, UIA hosted trade missions from Trinidad and Tobago, Denmark and a mission from the General Electric Co of the USA. This trend shows us that, despite security threats, investors are still very confident in the Ugandan Security systems, and are comfortable in the knowledge that their investments are safe. Investors generally are closely watching the East African region as the election season takes root in 2010/2011. Up to this point, we have continued to register new businesses in Uganda and we are still confident that the upcoming elections in Uganda will have a minimal impact on foreign direct investment inflows. While the Uganda Police Force strengthens its efforts to provide security to the general public, the business sector, led by the Uganda Investment Authority has launched an initiative aimed at supporting the police, Known as Business Against Crime, Uganda, the initiative aims to combat crime and the causes of crime.
Bujagali Project • Voted “Africa Power Deal of the Year 2007”, - Project Finance Magazine • US$850 million by: ADB, MIGA, Bujagali Energy Ltd, IFC, and Government of Uganda, etc. • 250MW by 2010 • Beneficiary of Carbon Trade
conference
Report
Emerging prosperity Sub-Saharan Africa is emerging as one of the world’s fastest-growing regions, surpassing the high-growth economies of Brazil and India, according to World Bank managing director Ngozi OkonjoIweala.
A high profile conference on Uganda
Investment Authority and was sponsored
was recently held in central London
by Tullow Oil Plc, Africa’s leading
attracting
independent oil and gas Exploration
top
delegates
including
several Ugandan government ministers.
Company.
Setting out the attractions of this fast-
Despite the recession, trade in the
growing economy and stating the case
East African Community has tripled in
for investing in Uganda, Her Excellency
recent months and Uganda in particular
Joan
High
seeks to do more business with the UK.
Commissioner to the UK, welcomed
Speaking at the conference, Dr Maggie
the audience of leading entrepreneurs,
Kigozi, Executive Director of the Uganda
bankers and politicians.
Investment Authority told delegates that
Rwabyomere,
Uganda
The event was organised by Focus on Uganda in Association with Uganda
Continued on page 24 >>>
UgandanInvestor
23
conference
Report the country has enjoyed two decades of growth which has taken the population “from peasant to prosperous”, with the private sector leading the economy in wealth creation. “We believe the 21st century belongs to Africa,” she asserted. “We have smart, educated leaders, 900 million people and an abundance of land and natural resources throughout the continent. Furthermore, Uganda is taking the lead in making things happen. It’s a good place to do business because it’s safe, the government machinery has been streamlined
with
new
procurement
“
In Uganda alone we have 24 universities that produce 30,000 graduates every year. This provides investors with a well-educated, productive and competitive workforce.
procedures and the private sector is the driver for business. “In
Uganda
requirements of the continent mean that
have seen much higher returns in Africa
there are big opportunities. There is also
than in other developing countries and
more trade within the region with 72 per
emerging markets.”
graduates every year. This provides
cent of sub Saharan Africa either free or
investors
with
produce a
have
is high risk higher return. Investors
24
that
we
are risks all over the world and the upside
30,000
universities
alone
synonymous with Africa, of course. There
well-educated,
One of the biggest requirements in Uganda is for power. The acute shortage
partly democratised.”
productive and competitive workforce.
of electricity has a negative effect on the
In addition there are thriving tourism
Advancing development
nation’s economy and the well-being of
and agriculture sectors and a wealth of
The aim of the African Development
its population, with only five per cent
untouched mineral deposits. The main
Bank (AfDB) is to help reduce poverty,
of its citizens connected to the national
challenge is infrastructure where the
improve living conditions for Africans
grid. AfDB has part-financed two major
necessary improvement of railways and
and mobilise resources for the continent’s
power projects in the country.
roads offers enormous opportunities.”
economic and social development.
Kigozi continued.
“When we invest in projects we ensure
It has loaned US$110 million to the Bujagali Energy Company for the
Patrick Mweheire, head of investment
everyone’s interests are protected so
Bujagali
banking Africa at Renaissance Capital,
involvement of the African Development
US$860 million dam on the Victoria
which is the largest investment bank in
Bank offers comfort to other investors,”
Nile River near the Town of Jinja will be
Africa, reinforced the message. Uganda
says
Senior
completed in 2011 and when completed
is the sixteenth-fastest growing country
Investment
Infrastructure
will generate 250-megawatt of power.
in the world and expanding much faster
Finance. “We have good relationships
Bujagali Energy Limited is jointly owned
than the traditional BRIC countries, he
with 53 African countries and our direct
by affiliates of Sithe Global Power, LLC
told delegates.
contact with African leaders helps to
and the Aga Khan Fund for Economic
“There is so much opportunity because
mitigate risk. Countries understand that
Development.
Africa is one of the least exploited areas
there are repercussions if businesses do
of the world,” he said. “The infrastructure
not operate at internationally accepted
projects under development and the
24
UgandanInvestor
Ladé
Dada, Officer
AfDB’s -
standards. “Risk is not endemic or
The
Hydropower
smaller
project.
Buseruka
The
Mini
Hydropower project is also being partfinanced by AfDB. It is lending US$9
million towards construction of a dam on River Wambabya in Buseruka, in the Hoima district. The project operated by renewable energy company Hydromax will cost US$27 million in total and produce nearly 54 megawatts annually. The cost has been shared between the PTA Bank, Hydromax and AfDB. “We are seeing increasingly private investors coming to Africa which is freeing up public resources for social projects like schools and hospitals,” Dada continues. “With private sector participation you see greater competition, which leads to increased efficiencies, decreased costs, as well as involvement of technical expertise that creates jobs and is much faster to deliver.
Tullow will continue to invest in Uganda • • • • • • • • • • • •
Headline Sponsor
Uganda is at the dawn of its oil era Exploration activity has been exceptionally successful Tullow has invested >US$2.5 Billion Tullow/Total/CNOOC about to start US$10 Billion new investment Government revenues from oil production will exceed US$50 Billion Creating major opportunities for new and existing businesses in Uganda Building a highly effective organisation to deliver the business Encouraging & supporting regulatory capacity for a new industry Developing a business and in-country infrastructure for the long-term Development planning is well underway, but there is a lot still to do Successful and collaborative partnerships will be a key success factor Tullow has got a strong platform to future growth in Uganda
Exotic productions
the crops prior to harvest.
“We invite investment from both
West Midlands-based Exotic Fruits has
“It is true that Uganda is very
public and private sectors to create
found Uganda a highly fertile ground
fertile, but we could have set up similar
the greatest value for all. We seek
for investment. The family firm from
operations in other countries like Kenya
transactions
commercially
Walsall started growing green beans
and Rwanda,” says company director
viable but also have significant economic
and limes in Uganda at the beginning
Bashir Uddin. “However, Uganda made
benefits for stakeholders. We are in a key
of 2010, which are exported to the UK,
it easy because they were so helpful to
position to assist African countries as well
United Arab Emirates and Kuwait. The
us. The country is looking for investment
as investors. We have a healthy appetite
company uses the land and services
and the various government agencies
and are willing to take risks where others
of local farmers to plant and pick the
might be a bit hesitant,” she adds.
produce, while it nurtures and sprays
that
are
Continued on page 26 >>>
UgandanInvestor
25
conference
Report
respond quickly and efficiently.
up prime land in Kampala, which would
“The Ugandan Investment Authority
eventually be developed for hotels
and the Revenue Authority helped us
and mixed-use amenities. The current
with all the tax and legal technicalities for
facilities are in a poor state of repair
setting up and registering a company.”
with overcrowding and lack of services.
Exotic Fruits has recently increased
A
village
community
is
proposed
the number of its employees in Uganda
comprising over 7,000 housing units,
to 600 and is planning on expanding. It
as well as bespoke training facilities,
intends to set up a chicken hatchery next
a community hall and children’s play
year. It will import fast-growing chickens
areas. Upgrades to nine regional police
from Thailand to breed in Uganda to
stations are also planned.
provide local markets.
Project Officer of the Uganda Police Accommodations PPP Programme Jim
Police force seeks investors
Mugunga, from the Uganda Treasury
The Ugandan government is seeking
Department (jimmugunga@perds.go.ug)
investors for a public-private partnership
is looking to put together a consortium
project to upgrade facilities for the
with
country’s police force.
between US$60-US$150 million.
UK company Turner & Townsend
five
investment
Interested
parties
packages may
for visit
is transaction advisor for the US$550
ugandapoliceppp.com for examples of
million project and has a 30-year
construction opportunities in Uganda. A
contract, which includes a three-year
further ambitious project to upgrade the
construction term.
country’s prison service is in the pipeline.
The police premises currently take
26
UgandanInvestor
What they say...
“We are here because it makes sense to be here. There’s a compelling business case, we intend to stay and we intend to grow. We are optimistic that Uganda will build its capacity to join the World’s Oil Producers.” Angus McCoss, exploration Director, Tullow Oil plc
sector profile
Oil & Gas
Consistent success for Albert Basin exploration Until recently, the African oil and gas industry was synonymous with the Gulf of Guinea and North Africa. Very few discoveries had been made elsewhere on the continent and so relatively little investment was put into exploring previously untested areas. However, high oil prices and the lack of unlicensed acreage in the continent’s established areas of production encouraged drilling on unexplored territory, resulting in new finds from Mauritania in the northwest to Mozambique in the southeast but none of the new centres of drilling has yielded better results than Uganda. The first big breakthrough was made
prospects is increasing and so the
up by a tax dispute between Heritage
in 2006, when Anglo-Irish firm Tullow
composition of the main development
and the government of Uganda but
Oil and its partners discovered oil with
consortium is in the process of changing.
it was reported at the end of October
their Mputa 1, Waraga 1 and Nzizi 1
Tullow had held 50% stakes in two of the
that Tullow had agreed to pay 30%
wells, proving the existence of a working
Albert Basin concessions with proven
capital gains tax on its acquisition from
hydrocarbon system in the Lake Albert
reserves, blocks 1 and 3A, plus 100%
Heritage. Tullow chief executive Aidan
Rift Basin. By October this year, 33 wells
equity in Block 2. The remaining stakes
Heavey said that the new consortium
had been drilled in the basin over an area
in blocks 1 and 3A were held by Heritage
now plans to undertake “an accelerated
stretching about 150 kilometres north to
Oil & Gas until 26 July, when Tullow
basin wide development plan that is
south in the west of Uganda and all but
completed the purchase of its partner’s
expected to deliver production well in
one has encountered oil or gas. Most
assets for US$1.35 billion, plus a further
excess of 200,000 barrels a day (b/d)
recently, on 28 July, Tullow announced
contractual
from the Albert Rift Basin.”
that the Ngiri 2 appraisal well on Block
million.
settlement
of
US$100
Total reserves are now put at 1-2
1 had encountered more than 40 metres
However, Tullow now plans to sell
billion barrels but the lack of exploration
of net oil bearing reservoir, at a depth of
equity in all three blocks to China
work in the basin in the past suggests
892 metres. The Ngiri 3 and Ngiri 4 wells
National
Corporation
that further discoveries are likely.
are scheduled to be drilled by the end of
(CNOOC) and French firm Total, giving
Interest in securing exploration licences
this year to assess the size of the field.
all three companies equal shares in the
Interest in Uganda’s hydrocarbon
Offshore
Oil
three blocks. The deal has been held
Continued on page 28 >>>
UgandanInvestor
27
sector profile
Oil & Gas for other unexplored territory in the
fuel prices and reduces fuel security,
the Port of Mombasa, which has two oil
country is also likely to grow on the
partly because of the poor condition of
terminals. This means that Kenya could
back of the recent discoveries. Tullow
many roads in the region.
earn a substantial amount from transit be
fees even though it has negligible oil
Kasamene field and first gas from the
constructed inland in Africa and Uganda
It
resources of its own. At present, an oil
Nzizi field, both on Block 2, by the end of
itself currently relies on fuel imported
pipeline runs only between Mombasa
next year. In the longer term, an export
from the Mombasa refinery in Kenya,
and Eldoret (in Kenya) - this needs to be
pipeline to Mombasa has been proposed
which in turn is reliant upon imported
linked up to Uganda.
for global export, although this is not
crude oil shipped from elsewhere in
Uganda’s new found oil and gas
expected before 2015.
the world. Congestion at the port of
riches have the potential to provide
now expects to produce first oil from the
is
rare
for
refineries
to
Mombasa and supply problems have
useful revenues and much needed
Spreading the benefits
resulted in fuel shortages in Uganda
infrastructural investment for the East
The income that will be generated by
this year. Provided an attractive pricing
African nation. Yet as the history of so
crude oil production will certainly
structure is put in place, the Ugandan
many other African oil producing states
be welcomed by both the Ugandan
refinery should easily be able to compete
has demonstrated, oil production must
government and the investors themselves.
with imported fuel and should encourage
be utilised to assist wider economic
However, hydrocarbon production has
much greater investment in the Central-
development rather than becoming the
the potential to have an even greater
East African road network to support fuel
focus of the national economy. It is all too
impact on the Ugandan economy by
tanker deliveries. Centred on Uganda,
easy for governments to become obsessed
widening the country’s economic base,
this network will encourage wider cross-
by the multi-billion dollar revenues of oil
boosting trade with neighbouring states
border trade, thereby helping to spread
and gas production but it only benefits a
and improving energy security. Firstly,
the benefits of the oil industry to other
nation if the income is used to underpin
oil, diesel or gas could be used to provide
sectors.
sectors such as agriculture that directly
feedstock for domestic thermal power
Speaking in late October, Uganda’s
benefit much more of the population
plants. As discussed on page 34, Uganda
minister of state for energy, Simon
and generate far more employment.
is currently heavily reliant on hydro
D’Ujanga, said that the project would
Until recently, the African oil and gas
schemes but the development of new
be
private
industry was synonymous with the Gulf
thermal power plants would diversify
partnership. He revealed that Essar
of Guinea and North Africa. Very few
the generation mix and position Uganda
Energy of India, CNOOC and Total were
discoveries had been made elsewhere
as a major power exporter within the
among the list of potential investors. A
on the continent and so relatively little
emerging East African Power Pool.
competitive tender is planned for the
investment was put into exploring
developed
as
a
public
Secondly, the Ugandan government
first half of 2011, with the contract due
previously untested areas. However,
is keen to see the development of a
to be awarded by the end of the year.
high oil prices and the lack of unlicensed
large oil refinery in the country that can
Refining capacity of 200,000 b/d has
acreage in the continent’s established
both supply domestic needs for refined
been proposed and local demand for
areas of production encouraged drilling
petroleum products and supply many
the oil will be limited, meaning that
on unexplored territory, resulting in new
of the other landlocked areas of Central
the vast majority of it will be exported.
finds from Mauritania in the northwest
and Eastern Africa. Uganda and the
Given the location of the oil reserves -
to Mozambique in the southeast but
wider region currently rely on the import
Lake Albert, between Uganda and DRC
none of the new centres of drilling has
of petrol and diesel from coastal ports or
- the most economically viable route for
yielded better results than Uganda.
refineries. The cost of transport increases
exporting the oil is through Kenya to
28
UgandanInvestor
sector profile
Agriculture
Agriculture in Uganda Making the most of rural
US$267.2 million over the same period.
in marketing Ugandan tea has already
potential
The UCDA predicts that production will
begun to pay dividends but the crop still
While big ticket projects such as the Bujagali hydroelectric scheme attract
recover to 3.1 million bags next year
does not enjoy the same high profile as
but, as always, much will depend on the
Ugandan coffee.
most of the publicity, it is Uganda’s
weather to come.
agricultural sector that offers most
However,
David
Muwonge,
the
Funding irrigation
benefits in terms of job creation and
marketing and production manager of the
In the agricultural sector as a whole, more
improving living standards. The sector
National Union of Coffee Agribusinesses
investment in irrigation is greatly needed
accounts for about 40% of GDP and 80%
and Farmer Enterprises (NUCAFE),
in order to maintain yields from year
of export revenues, while around four out
warned that yields could be threatened
to year and to enable the cultivation of
of every five Ugandans of working age are
by the appearance of leaf rust in August.
a wider range of crops. At present, the
engaged in agricultural production. As a
He said: “Leaf rust is really devastating
lion’s share of agricultural output in the
result, it is vital that the country builds
the crop in the East and West Nile. Right
country is produced by smallholders who
on its established position in coffee
now it is not expected to depress the
have little finance available to invest in
and tea cultivation, at the same time as
country’s output significantly unless the
irrigation infrastructure and so remain
developing niche products that generate
situation deteriorates and spins out of
heavily reliant on rain-fed agriculture.
greater revenues per yield.
control. What’s certain though is that
Larger producers would have more
the quality of the beans will be affected
ability to finance irrigation works but the
seriously.”
concentration of land ownership in fewer
Coffee in particular is a major source of export revenues, with robusta beans comprising about three quarters of
Tea cultivation has enjoyed a rather
all coffee production but last year’s
better year, on the back of sufficient
drought has had a marked impact on
hands would also concentrate the profits to be made.
rainfall and plentiful sunshine in recent
The best option therefore seems
coffee cultivation. The Uganda Coffee
months. Production to the end of August
to be in improving farmers’ access to
Development Authority (UCDA) reported
stood at 260 million kilograms, 78
credit, probably through the micro-
that the country exported 2.67 million 60
million kilograms higher than for the
credit organisations that are spreading
kilogram bags for the season to the end of
same period last year, although prices
across East Africa. Such schemes can
September, down from 3.06 million bags
have fallen over the past year, largely
help to fund the purchase of seeds, tools
for the previous year. This resulted in a
because of increased supplies on the
and fertilisers but irrigation projects
fall in revenues from US$291.3 million to
global market. Increased investment
are often more capital intensive and so
30
UgandanInvestor
“
Tea cultivation has enjoyed a rather better year, on the back of sufficient rainfall and plentiful sunshine in recent months.
smallholders may need to band together
would argue that increased use of
to secure sufficient funding to finance
fertilisers is the answer, while investment
water projects.
in new crops would be another option,
While
some
would
argue
that
large scale landholdings are the most
but an increasingly popular option is the promotion of organic food.
efficient form of agriculture, Ugandan smallholders can successfully sell their
Taking the organic option
produce on the international market.
Organic agriculture avoids the use of
Ugandan firm Good African has organised
synthetic
more than 14,000 small scale coffee
genetic
farmers into producer groups that supply
relying instead on biological pest control,
beans to the company’s roasting and
composting and crop rotation. The Codex
packaging facility in Kampala, ensuring
Alimentarius Commission defines organic
that a greater proportion of the industry’s
agriculture as “a holistic production
profits remain within the country. Good
management system, which promotes
African roast and ground coffees are now
and enhances agro-ecosystem health,
marketed in UK supermarkets such as
including biodiversity, biological cycles
Waitrose, Sainsbury’s and Tesco. Tilda
and soil biological activity.” The global
Uganda has adopted the same model in
market for organic food and beverages is
the rice sector, although it markets most
worth about US$60 billion a year and is
of its rice within Uganda itself.
growing by at least 10% a year.
pesticides
and
fertilisers,
modification
and
hormones,
Although urbanisation will restrict
The Ugandan organic food sector is
population growth in rural areas to some
already growing and the country exported
extent, Uganda’s high population growth
about US$30 million worth of organic
rate should ensure that rural populations
products during financial year 2008-09,
continue
the
while about 240,000 farmers now export
partition of landholdings. It is therefore
organically-certified products. However,
to
grow,
intensifying
vital that smallholders are able to increase their revenue per acre. Some
Continued on page 32 >>>
UgandanInvestor
31
sector profile
Agriculture the chairman of the National Organic
producer of organic cotton in the world.
Uganda
By promoting organic agriculture,
(NOGAMU), Frederick Musisi, warned
Uganda can actually make a strength
that although organic agriculture reduces
out of what is currently regarded as a
some
is
weakness: the lack of artificial fertilisers
required to ensure organic standards. He
used in farming in the country. Sub-
said: “The markets where we sell require
Saharan Africa as a whole already uses
strict compliance. We must have globally
very low rates of synthetic fertilisers,
certified products, but it takes a lot of
at just nine kilograms per hectare (kg/
technology, money and time to attain the
ha) but that figure falls to one kg/
required degree through observation of
ha in Uganda. That makes it easier
the internal control systems.”
for Ugandan farmers to gain organic
Agriculture
Movement
farming
costs,
of
investment
agricultural
certification than for their counterparts
output is exported unprocessed but the
in many other countries. Ensuring higher
organic sector provides an opportunity
revenues for existing cultivation is surely
Much
to
of
promote
Uganda’s
agricultural
a big step towards a sustainable future.
processing,
Neil Ford
enabling Ugandans to retain more of the financial benefits of production. For instance, pineapples can be dried and bagged in Uganda for export, rather than shipped overseas for processing. Organic products are also far more likely to be produced using fair trade methods,
farmers to improve productivity, add
providing a more attractive deal for
value and access markets which are
farmers. According to UNCTAD figures,
keys to achievement of the Poverty
the farm gate price of organic pineapples
Eradication Action Plan objectives”.
is three times higher than that for non-
In the cotton sector, Kampala has
organic pineapples because of the pricing
lifted export duties on organic goods
premium added by organic and often fair
and reduced taxes on the import of
trade certification.
equipment needed in the industry.
The government of Uganda has
The managing director of the Cotton
already thrown its weight behind the
Development Authority, Jolly Sabune,
sector, adopting the East African Organic
says that the government will also fund
Products Standards in 2007, as part
research into identifying the best areas in
of a UNEP-UNCTAD initiative and
the country for the cultivation of organic
publishing the country’s Draft Uganda
cotton, based on soil type and resistance
Organic
July
to pests and diseases. It has already
last year. The latter describes organic
financed education schemes to provide
agriculture as “one of the avenues for
information on the benefits of organic
delivering self-sustaining growth as it
cultivation to small scale farmers. As a
provides mechanisms for individual
result, Uganda is now the seventh biggest
32
Agriculture
Policy
UgandanInvestor
in
“
Coffee in particular is a major source of export revenues, with robusta beans comprising about three quarters of all coffee production but last year’s drought has had a marked impact on coffee cultivation.
sector profile
Energy
Turning the light on Ugandan power sector investment It is often argued that the biggest disincentive to investment in Sub-Saharan Africa is the lack of infrastructure. Adequate transport, telecoms and water infrastructure are all vital to the success of particular industries but almost all sectors depend upon reliable power supplies to operate. Uganda is endowed with plentiful hydroelectric potential but far too many Ugandans remain without access to electricity, while variable water levels cause fluctuations in power supplies to existing customers. industry,
at home in 2008 and although this
agricultural processers, factories, water
proportion may have increased over the
companies, IT firms and government
past two years, it is clear that a major
departments all rely on electricity for
electrification programme is required if
their day to day operations. Moreover,
the country as a whole is to benefit from
the advantages of reliable residential
power supplies. At present, Uganda relies
access to electricity are often taken for
on the 180 MW Nalubaale and 120 MW
granted by those who enjoy it but the
Kiira hydro schemes, both of which lie
socio-economic benefits are enormous,
on the Ugandan stretch of the Nile, north
from food and medicine refrigeration to
of Lake Victoria. These are backed up by
providing sufficient light for children and
small scale oil and diesel fired generators
students to study after dark. Educational
that are used during periods of low
attainment
rainfall, while some businesses rely on
Mines,
the
oil
and
almost
gas
inevitably
jumps
their own generators to ensure supplies
when access to electricity improves. According to the UNDP Human Development
Report,
just
9%
because of widespread power rationing.
of
Ugandans had access to electricity
Continued on page 34 >>>
UgandanInvestor
33
sector profile
Energy Uganda has long been mooted as a major power exporter but aside from relatively limited exports to Kenya, the country has not yet made the most of this potential. However, this may be about to change because of three developments: the construction of large new hydro schemes; the emergence of a domestic oil and gas industry to provide feedstock for new thermal power plants; and the creation of the East African Power Pool (EAPP) to provide a market for surplus Ugandan power production. The most high profile Ugandan power project is the 250 MW Bujagali hydro scheme, which is located downstream of Nalubaale and Kiira and close to the town of Jinja. After years of delays and controversy over the environmental impact of the venture, construction work began in 2007 following the World Bank’s decision to back the project after a programme of “extensive economic, environmental and social due diligence”. This allowed the Multilateral Investment Guarantee
Agency
to
provide
an
investment guarantee of up to US$115 million, the International Development Association to agree a US$115 million loan, plus another US$130 million from the International Finance Corporation. As a result of support from these three
Bujagali dam under construction
World Bank subsidiaries, the European
development arm of the Aga Khan Fund
increased interest in exploiting more
Investment
funding
for Economic Development. Uganda
of the country’s hydro potential. In
of US$135 million and the African
Electricity Transmission Company Ltd
September, Uganda’s Ministry of Energy
Development Bank US$110 million.
(UETCL) is to develop the transmission
and Mineral Development invited pre-
The scheme is being developed and
infrastructure
connect
qualification applications for contracts on
operated by Bujagali Energy Ltd (BEL),
Bujagali to the national grid and the
the construction of the 700 MW Karuma
a joint venture of US firm Sithe Global
project is expected to come on stream
hydroelectric power plant, which would
Power and Kenya’s Industrial Promotion
during the second half of next year.
lie downstream again of Bujagali and
Bank
provided
Services (IPS), which is the industrial
34
UgandanInvestor
required
to
The development of Bujagali has
about 80 kilometres downstream of Lake
Kyoga. The contracts include the supply
EAPP, while another interconnector will
and installation of five turbines, planning
link the southwest Tanzanian town of
and dam construction work.
Mbeya with Zambia, enabling the EAPP to trade with the much larger Southern
Greater diversity
“
As a result of support from these three World Bank subsidiaries, the European Investment Bank provided funding of US$135 million and the African Development Bank US$110 million.
Uganda could benefit from this process
will greatly increase national generating
of power sector integration by importing
capacity but it is also vital that more
electricity during periods of need, but with
diversity is injected into the generation
the development of the country’s hydro
mix in order to reduce the impact of
potential it seems more likely that Uganda
droughts on national power production.
will become a net exporter, generating
Uganda’s emerging oil and gas sector
large revenues from the sale of electricity
could provide feedstock for new thermal
to neighbouring states. At the same time,
power plants that can provide a reliable
the option of exporting surplus production
source of electricity. An oil fired plant
should encourage greater private sector
would perhaps not be the best option,
investment in Ugandan power projects.
given that oil fired facilities around the
There is a long way still to go, but the end
world are currently being converted to
result should be the extension of power
run on gas because of the lower carbon
distribution infrastructure across Uganda,
emissions and because of the high price
a higher rate of electrification and more
of oil. It will be easy enough to find a
reliable power supplies for business users.
commercial outlet for any volume of oil discovered in Uganda if an export pipeline to the coast is developed. However, the most convenient outlet for associated gas
Bujagali Project
African Power Pool (SAPP).
The completion of Bujagali and Karuma
What they say...
discoveries would be in local power plants. As with the oil and gas sector, the
• Voted “Africa Power Deal of the Year 2007”, - Project Finance Magazine • US$850 million by: ADB, MIGA, Bujagali Energy Ltd, IFC, and Government of Uganda, etc. • 250MW by 2010 • Beneficiary of Carbon Trade
benefits of increased power production include generating export revenues as well as satisfying domestic demand. The creation of the EAPP will connect the power grids of Uganda, Kenya and Tanzania, enabling electricity to be traded across the region. Transmission links between Kenya and Uganda are to be strengthened while the first crossborder interconnector between Tanzania and Kenya is being developed, running from Nairobi south to Arusha.
“In the field of energy there is a shortfall of 400MW of electricity to be generated for industry. This is the reason for building a new dam at Karuma.” Stephen Kaboyo, director of financial markets at Bank of Uganda
In the short term at least, this will not create a power pool in a traditional sense, with power producers able to market their electricity to consumers across the region. However, long term, cross-border power purchase agreements can be concluded and it is hoped that more flexible power trading arrangements can be put in place as economic integration within the East African Community intensifies. Rwanda and Burundi are expected to join the
UgandanInvestor
35
sector profile
Finance
Electrifying Uganda with Private Equity investment Private equity (PE) investment in Africa is growing dramatically and has provided the highest returns over the past five years. Most investors just do not know about it! US$12billion was invested in the continent in 2009 alone and Private Equity International reports a huge interest of its members investing in African stocks and shares. Actis, the emerging private equity that specialises in emerging markets has some US$1.5billion in assets across the continent and is keen on searching new investments in the US$50m or above range. Actis is not alone in the private equity field, with such firms as Aureos, Brait, Citadel, ECP, Ethos, Helios, Kingdom Zephyr and Pamodzi also investing heavily in Africa, often termed the final frontier market.
The
World
sector
benefited from private sector investment
International
by Actis into Umeme, the principal
Finance Corporation (IFC), has been
power distribution company in Uganda.
investing in private equity in Africa
Formerly
for many years. Ralph Keitel, the IFC
network covers a significant proportion
investment officer says: “Despite the
of Uganda and includes 230,000 poles
small size of the African private equity
and 17,000km of overhead cable.
investment
Bank’s arm,
the
private
UgandanInvestor
Umeme’s
sector it is quite possible to make
The Ugandan government leased the
dramatically good returns in Africa.
electricity distribution grid to Umeme
Since the financial crisis, Africa has
under a 20-year concession in exchange
been the best performing private equity
for monthly lease rental payments.
investment region in the world.” Some
Umeme
captive funds have been reported as
the government owned transmission
reaching 30% or more return.
company, UETCL, under a regulated tariff
Ugandan electricity consumers have
36
state-owned,
buys
bulk
electricity
from
arrangement who in turn purchases from
Actis in numbers New power distribution
350,000 Customers.
1,135 Employment.
1000 contractors Employment growth.
US$220m Turnover.
EBITDA US$41million.
various recently established Independent Power Producers (IPPs) - Eskom Uganda (hydro) and Aggreko (temporary diesel generation).
Concession
agreements
provide for a retail tariff structure and methodology. The sector is regulated by the Electricity Regulatory Authority. Historically, Uganda has suffered poor access to electricity partly due to a backlog of neglected maintenance that caused frequent faults and unplanned interruptions to supply. A dramatically improved service and better treatment of customers since that time has enabled Umeme to increase the rate of new customer connections to a level where more than 40,000 customers are being connected each year. Actis’ investment has been injected into the construction of new substations and
the
refurbishment
and quality of electricity supply to its customers and to become the leading East African electricity distribution company.
US$40m
the utility, the company’s objective is to
Investment.
accurately measure consumption and produce error free bills with an accurate
2005 - present
billing system.
Investment Period.
Actis follows an investment thesis that rests on two pillars: rising personal wealth
and
domestic
consumption
driven by the rapid expansion of the
substations. Improved customer billing
middle-class consumer. It is forecast
systems and a customer service call
that the number of African households
centre have also been introduced.
earning more than US$5,000 will double
and
the
by 2014, and the demand for investment
network and its infrastructure is a
in domestic infrastructure, particularly
continuous
further
energy has to meet the consequent
US$100million is earmarked by Actis to
increasing demand. The rationale for the
be invested in network restoration over
investment in Umeme hinges on these
the next four years.
two factors.
process
maintaining and
a
Actis in numbers
Having stabilised the management of
existing
Upgrading
of
committed to improving the safety
100% owned by Actis Infrastructure Fund 2 Shareholding.
US$220m Turnover.
Umeme through its concession is
UgandanInvestor
37
aid
Japan in Africa Africa has for years been receiving financial aid; most of it coming from a few major donors, Peter Matthews looks at Japanese Aid to East Africa and its effectiveness.
The world knows about China’s high profile
investment
in
the
African
continent and to a lesser extent that from the EU. Probably the world’s best kept secret is Japan’s effort to fund and assist African
development.
The
Japanese
use a structure all of their own, with an annual budget of over a trillion yen (US$10billion). Japan’s secret was let out of the bag by the Japanese International Co-operation Agency (JICA) at a seminar in London in October. The event was hosted by Duncan Bartlett, a respected journalist working for the BBC World Service. Eloquently, Bartlett described his travels around East Africa at the same time as a severe epidemic swept through the region. He says that this travel opened his eyes to the aid that the people of Japan have so quietly provided to Africa. Bartlett explained that his enquiries uncovered a story of one of the world’s largest bilateral development aid agencies, JICA, providing the money to train over 400,000 recipients in the world’s largest development assistance training programme. How could such an
38
UgandanInvestor
aid programme have escaped his notice? He realised that Japanese aid was dispensed with a different spirit, attitude and style to the other major international aid donors. Chinese operatives did not get involved in the culture of the African people but just got on with completing the job; Europeans did get involved in the communities they served but understood little of the culture of the people. This was probably inevitable, as these incomers mainly worked on roads, dams and other major infrastructure projects and had little impact on rural Africa. Japanese aid came closer to the village communities’ grass roots with a closer involvement and with a more intimate approach. A typical example was the Community Water Project, which has fulfilled the basic need of developing local sources of clean water for villages. JICA has drilled over 1,200 boreholes and has provided hand pumps to bring the water gushing to the surface for rural communities all over East Africa. JICA’s most ambitious programmes concern agriculture. Water pumps are used to channel water from wells, lakes and rivers to irrigate the land as part of an advanced crop scheme. The Coalition of African Rice Development (CARD), based in Uganda, has a target of doubling rice production to nearly 30million tons by 2018. It is believed that this will enhance the food security of the African continent. Transport of food and other goods to centres of population across borders and through customs posts has always been
a problem. Anyone travelling in Africa will have experienced the interminable customs and immigration bottlenecks and delays that make transportation costs on the continent almost three times more expensive than in Asia. A training programme run by JICA helps border officials to develop more efficient procedures
and
common
guidelines
for frontier crossings to create better working methods and establish more economic and social crossing points for the borders. The common denominator for these schemes and many others run by JICA is developing the skill of the people and accelerating their self-reliance. It is this local style of aid support aimed at developing the grassroots level that makes Japanese aid so effective. The development of skills in remote villages in small but essential matters is unusual and explains why Bartlett was not aware of Japan’s low profile aid, training and education programme. The self-confidence of people in Africa is enhanced more by small, local projects than by major infrastructure projects such as building dams and three lane highways – although, of course, these have their place in a modern and growing state. However, I like the Japanese style of aid strategies and their attitude to the African people whose lives they will shape and enrich – but then, of course, that should be the purpose of aid..
profile
Dr Mutebile
Emmanuel TumusiimeMutebile, Governor – Central Bank of Uganda Emmanuel TumusiimeMutebile is one of the most colourful of Africa’s current Central Bank governors, and is widely credited with shaping Uganda’s financial policies, stabilising the economy and introducing the kind of fiscal discipline to allow the whole country to benefit from the anticipated oil wealth. Stephen Williams profiles the man who did much to guide Uganda’s economic recovery and is leaving a solid legacy for the future.
In
Emmanuel
a countrywide survey on the demand
Tumusiime-Mutebile was reconfirmed
November
2010,
and use of financial services, only 21%
as governor of the country’s central
of Ugandans own bank accounts in a
bank, the Bank of Uganda, for a
formal or regulated financial institution,
further five years, providing him with
40% use unregulated financial products
the opportunity to build upon his
that are open to fraud and several other
remarkable career as a straight-talking,
risks while the remaining 39% have no
pragmatic technocrat who has overseen
access to financial services of any kind.
a remarkable transition of Uganda’s financial services market.
A life of service
He has welcomed the rapid expansion
While owning a bank account is not an
of the country’s banking sector, believing
end in itself, there is empirical evidence
that the additional competition that new
that links access to financial services to
entrants pose to the established banks
a successful fight against poverty. And
can only benefit the consumer and has
poverty is something that Tumusiime-
notably encouraged all banks to reach
Mutebile has first hand experience of.
out to the previously neglected rural
“I was born one of nine children into
areas and ensure as many Ugandans as
a peasant family in Kabale, south-
possible have access to banking services. Even so, according to FinScope Uganda,
Continued on page 40 >>>
UgandanInvestor
39
profile
Dr Mutebile Dr. Emmanuel Tumusiime-Mutebile CV
west Uganda,” is how he describes his
leading him to go back to the bush to
childhood.
fight for Obote’s overthrow, Uganda’s
Doing well at school he won a place in
Born: January 1949, Kabale, Uganda.
Public
Service
Commission
sent
1969 at Uganda’s prestigious Makerere
Tumusiime-Mutebile to the Ministry of
University where he intended to read
Planning as the under-secretary before
Education:
economics and politics. But his straight
making him a senior economist, then
Economics Degree from Durham University; PhD in Economics from University of Dar es Salaam, Tanzania.
talking landed him in hot water with Idi
chief economist at the ministry. He was
Amin who had seized power in Uganda
then promoted to chief economist to the
in a coup in January 1971. Tusiime-
government in 1984.
Career: 1979: deputy principal secretary to the president 1981: undersecretary in the Ministry of Planning, 1984: Chief Economist to the Government of Uganda 1992: permanent secretary to the Ministry of Finance and Economic Planning 2001-to date: Governor of the Bank of Uganda.
“
Uganda’s efforts have borne fruit – Uganda’s sustained economic growth has reduced the number of people in poverty by 15% in four years, according to the state-run National Bureau of Statistics.
40
UgandanInvestor
Mutebile, as the president of Makerere
When President Museveni eventually
University’s students union, denounced
took
Amin’s expulsion of the Asians and, as he
Tumusiime-Mutebile’s services, even if
puts it, “had to leave Makerere in a hurry
unlike Museveni, Tumusiime-Mutebile
to save my skin”, fleeing to Tanzania.
had come to reject the command economy
power
in
1986,
he
retained
There, following a chance meeting
model. So it did not take too long for
with the economist Walter Elkan, he
disagreements to arise. Tumusiime-
went on to complete his studies at
Mutebile told Museveni flatly that his
Durham University in the UK before
command economy theories were wrong
taking up post-graduate studies at Balliol
and sure enough, when the economy
College, Oxford.He returned to East
refused to respond to price controls,
Africa to teach at the University of Dar es
Museveni began to listen and implement
Salaam, Tanzania the year after Uganda’s
Tumusiime-Mutebile’s advice.
current
Museveni
An economic reform programme,
graduated. He lectured at the University
president
Yoweri
lead authored by Tumusiime-Mutebile
while continuing reading for a doctorate
and his team at the Ministry of Planning
in economics.
in 1987, began to liberalise the markets
In 1979, Tumusiime-Mutebile went
but, as Tumusiime-Mutebile explains,
back to Uganda, newly liberated from
“at that time, the programme was not
Amin’s tyranny but nonetheless with a
wholly embraced by pockets of the new
bankrupt economy devastated by more
government. There were still some who
than eight years of dreadful misrule.
believed in the command economy –
During the short-lived Binaisa and
so the economy did not really respond
Muwanga Administrations, Tumusiime-
properly to the programme because it
Mutebile was appointed deputy principal
was not being properly implemented”.
secretary to the president at State House.
In
1992,
Museveni
merged
the
It was the beginning of a career as an
Ministry of Planning with the Ministry of
economic technocrat that would see him,
Finance retaining Tumusiime-Mutebile
over the years, rise inexorably through
in the permanent secretary role who
Uganda’s civil service ranks.
began to assemble a team of young
After Obote’s return as president, in
technocrats that came to be known as
the elections that Museveni disputed
‘Team Tumusiime’ and could begin to
address one of Uganda’s key problems;
by 15% in four years, according to the
the East African Community’s monetary
the lack of control over the national
state-run National Bureau of Statistics.
and financial convergence criteria and
budget process.
Its 2009-10 survey indicated the number
this has also enhanced our capability
Under Tumusiime-Mutebile, public
of people in poverty stood at 7.1million,
to respond to external shocks. For
spending, along with inflation, was
down from 8.4million recorded in the
example,
brought
last survey in 2005-06.
treasury securities sales and the use of
under
control
while
price
controls were scrapped as the economy was liberalised.
we
rely
substantially
on
But there will be more to Tumusiime-
repurchase agreement operations for
Mutebile’s enduring legacy than simply
the transmission of our monetary policy.
new-found
overseeing the rapid growth of Uganda’s
We have also developed our domestic
political process threatened to derail
financial services sector – he has also been
debt markets and seen a more diverse
economic
Even
when
Uganda’s
Tumusiime-
instrumental in bringing a level of order
group of investors – including our
Mutebile’ department at the Ministry of
to the government budget and fostering
pension funds, regional asset managers
Finance could respond. One celebrated
foreign investment by providing a level
and non-resident, national and local
example was when President Museveni
of comfort to investors. This has allowed
retail investors – who are increasingly
made the provision of free primary school
Uganda to lead the region in this regard –
investing for the long term. Thus, overall,
education an election pledge during his
Uganda’s FDI stocks have grown by 83%
it would appear that our markets are far
1996 campaign.
in the last decade from US$807million to
less susceptible to events in the markets
close to US$5billion.
of the developed world than they may
Team
prudence,
Tumusiime
had
previously
conducted audits to assemble accurate
Clearly, much of this can be accounted
data on spending on schools, in the
for by the energy sector, with the oil
process eliminating corruption that was
finds made in the Lake Albert region
seeing up to 80% of the budget being
and World Bank approval for the funds
misappropriated at local government
to build a new hydro-electric dam at
level. That gave Tumusiime-Mutebile a
Bujagali on the River Nile, but it should
strong position to request the World Bank
also be recognised that Tumusiime-
for the funding to meet the president’s
Mutebile has had, and will continue
pledge.
to exert, a profound influence on the
have been in the past.”
What they say...
Appointed to the apex bank
common external market tariff in 2005
In January 2001, Tumusiime-Mutebile
which heralded the customs union and
was appointed governor of the Bank
working towards a common currency
“Prudent economic management and strong fundamentals have enabled Uganda to weather the global crisis relatively well. Despite a slowdown in economic activity, growth remains strong by regional and international standards. Core inflation has declined in spite of an increase in headline inflation driven by higher food prices. The external current account has performed better than expected, buoyed by strong cross-border exports, and international reserves remain adequate.”
of Uganda, the country’s central bank.
by 2012 and to form a federation,” he
The International Monetary Fund (IMF)
Reconfirmed in 2006 for a further five
says. “The Bank of Uganda and sister
years and will serve a further five years
central banks in the East Africa region
from January 2011, he has continuously
have made a deliberate move towards
focused on fiscal discipline.
the use of market-based instruments for
By June 1998, the World Bank had
country’s
macro-economic
trajectory.
provided Uganda with US$155million
Whether working within the Ministry of
for
and
primary
school
Finance or at the central bank, he has
virtually
doubled
–
an
been an important player in ensuring
extraordinary achievement. There was
that Uganda has enjoyed a decade and a
just one conditionality – rather than
half of economic progress.
education,
attendance
imposing their own officer, that might
When
asked
about
future
have been the norm, the World Bank
developments,
Tumusiime-Mutebile
actually insisted that a member of Team
makes immediate reference to East
Tumusiime join the education ministry
Africa’s regional integration. “For several
to oversee the spending!
years now we have been attempting to implement a common market, signing a
Uganda’s efforts have borne fruit – Uganda’s sustained economic growth has reduced the number of people in poverty
monetary and fiscal purposes,” he further explains. He continues, “this is an aspect of
UgandanInvestor
41
my uganda
Kaboyo
Uganda’s Capital Market Landscape Peter Matthews speaks to Stephen Kaboyo, director of financial markets at Bank of Uganda, about the need for investment in the country and the opportunities and rewards that Uganda offers investors. told the conference.
Africa is flexing its economic muscles and
few years was an important part of the
the world is taking note, with enormous
deliberations of the conference. He
UgandanInvestor’s Peter Matthews
optimism, about the opportunities for
outlined the performance of Uganda’s
spoke with him during the conference
investment and profit that can be made
domestic debt markets and the prospects
to try and find out more about Uganda’s
in this vast continent. In October, leading
for hard currency issuance for the
finances, its challenges, opportunities
African capital markets professionals and
foreseeable future in East Africa. He also
and position in the revived East African
investors gathered at Thomson Reuters
described important aspects of future
Community. Kaboyo is a part of the Bank
offices in London for the 4th Annual
issuance prospects of currency and risk
of Uganda’s ‘team Mutebile’ led by its
African Capital Markets Conference, to
ratings of East Africa’s domestic markets.
Governor Mutebile whose governance
discuss in detail how potential deal flow
Such matters will affect the attitudes
and financial leadership over the years
will play out in 2011, across bond, loans,
of international investors in East Africa’s
has given the bank its stability (see
and equity markets in Africa.
risk ratings and their debt markets.
profile on page 40).
Representing
Uganda,
and
East
Uganda, rated B+ by Standard & Poor’s
The correct oversight of the Uganda’s
markets,
and B by Fitch, put plans for a debut
economy has been crucial to the country,
was Stephen Kaboyo, the director of
international bond on hold due to the
and will be even more so to the region in
financial markets at Bank of Uganda,
global financial crisis. Nevertheless, local
the coming years.
who was part of over 30 Africa capital
bond markets are offering attractive
markets speakers at the conference. The
yields in sub-Saharan Africa and inviting
Uganda and the East African
conference attracted a large audience of
international investment. For its part,
Community
investors, investment analysts, bankers,
Uganda has a domestic bond market
The development of the East African
rating agencies, senior capital market
with maturities of up to 10 years. “We are
Community (EAC), in whose negotiations
professionals etc from Europe and Africa.
Africa’s
fledgling
capital
currently working on extending the curve
the Bank of Uganda is playing a pivotal
recent
to cover the 15 and 20 year space. We are
role, will need all the sound judgement
sovereign and corporate bond issues
looking at access to international capital
and good practice that a robust and
and their future outlook for the next
markets in the next 24 months,” Kaboyo
innovative financial team can muster.
Kaboyo’s
42
analysis
of
UgandanInvestor
the
The EAC will integrate the monetary and
commented. “In a landlocked country,
proud of his contribution to the growth
economic interests of five East African
the road and rail network and access of
and well-being of his country. He referred
countries into a powerful trading bloc
goods to ports on the coast is essential.
to the subject of the Bank of Uganda’s
with a population of almost 133million
In the field of energy there is a shortfall of
strength and leadership in its governance
people and a Gross Domestic Product
400MW of electricity to be generated for
several times during our talk.
(GDP) of over $74.5billion. The EAC
industry. This is the reason for building a
consists of Burundi, Kenya, Rwanda,
new dam at Karuma.
When asked about his family – he lit up. “I am married”, he said in glowing
develop
terms, “with three children, two girls
the new oil and gas finds in Albertine
of fourteen and twelve and a boy of
With a working Customs Union
Graben with installation of processing
ten”. They are the reason, it seems, that
already in place and a fully-fledged
systems to handle and process the oil as
Kaboyo is working so hard to ensure the
Common Market commencing on 1st
it is lifted. The government has learned
future economic stability and progress of
July 2010, the region has opened its
from the experiences of other African
his country. This new generation of future
market to fully enjoy the benefits of cross
countries that have found black gold in
customers, employees and policymakers
border trade and investment amongst
their territory, and Uganda intends to
will require an effective capital market
the five partner states.
control the revenues and the necessary
to generate the necessary investment in
A Committee of Governors of Central
investment. Plans to build a refinery
Uganda’s extremely promising economic
Banks is currently working to establish
to handle more than 2billion barrels
future.
growth and inflation targets and define
of oil are on the drawing board and the
It is both a worthy cause and
budgetary constraints and deficits, with
engineering to support a facility for an
a necessary one and, through his
a convergence of economic policies
expected two year oil flow,” he explained.
commitment to this mission at the helm
considered a vital prerequisite in the
“The Bank’s plans for developing this
of Uganda’s Capital Markets, Kaboyo is
move towards the introduction of a
and other sectors of the economy in co-
ensuring a successful future not just for
common currency for the region.
operation with the Uganda Investment
his own and his country but for the wider
The EAC’s current accounts are being
Authority are in train. Uganda has a
East African Community.
arranged and Kaboyo was able to say
surprisingly large services sector of
with some pride that his department
the economy, with over 30% of GDP
manages an open account system for
in banking, telecommunications and
Uganda’s currency. His team will be
energy, all of which will benefit from the
fully involved in formulating monetary
expected oil revenue. It also needs to
policy, co-ordinating a forex rate and
benefit the people, so a modernisation
devising payment systems to cope with
of Uganda’s agriculture programme to
cross border transactions for all the EAC
raise it from its largely subsistence level
partners.
is planned.
Tanzania and Uganda, with the DR Congo having an observer status.
“Uganda
also
wants
to
“Tourism is another sector that needs Uganda contribution to the region?
investment and encouragement, as well
Kaboyo answered this question with a
Investment Authority is helping potential
smile on his face. “The first and most
investors to evaluate profitable projects
important
in the growing economy” continued
contribution
is
a
as waste management. The Uganda
stable
governance of both in the Bank of
Kaboyo
Uganda and the country.” He continued, “the second is a thriving economy and
A bright future
a sound educational system”. Other
Kaboyo described his education in
needs include the development and
Uganda and the way he gathered
improvement of Uganda’s infrastructure.
experience in the US and his progression
to
through his profession. He represents
international capital markets in the
a new breed of Ugandan high achievers
next 24 months. We need to address
who have returned home to build a great
our
future for their country. He is obviously
“We
are
looking
infrastructure
at
gaps,
access
“
Kaboyo
What they say...
“I will ensure that oil money is spent on agriculture and infrastructure and not in consumption. There will be institutional mechanisms put in place to enable transparency in using oil revenue. If that money is badly used, I will resign because I cannot be party to corruption.” Bank of Uganda Governor, Emmanuel Tumusiime Mutebile
UgandanInvestor
43
special report
Returnee Ugandans
They toiled abroad but are making it back home There are many stories of people, who have gone abroad to work, but never returned home with anything to show for it. Yet, there are those who have gone out there, returned, and have set up successful businesses. Writes Walter Wafula
44
UgandanInvestor
Moses Matsiko belongs to the second group. His security company; Pinnacle has soared to greater heights yet in a short period of time. However, it wasn’t easy at the start because the market was already flooded with many private security companies. The option he had was to do things differently. His guards were to be trained in areas like first aid, fire fighting, customer service and others. His experience in Afghanistan where he worked in 2003 and Iraq in 2004-2008 was of a great help in his venture. “I had experience and passion for it. That is why today, I can comfortably wear a guard’s uniform and walk to Serena Hotel with my gun,” he says. Back in Iraq he worked with SOC-SMG as an administrator for the troops from Uganda before he rose to Personnel Security Detail Officer. He was later hired by another company EODT as country manager for the rest of the nations. The business was tricky, given the unprofessionalism attached to private security. “You can train the guard and give him all he needs but he chooses to do things the wrong way. People don’t
Moses Matsiko treasure their jobs,” he says. Having started with about 50 guards, Pinnacle now has over 2,000 guards. Uganda has about 35 security firms with an average of 250 guards which makes Pinnacle a new but major player in the industry. Pinnacles major competitors are Group 4 Security (G4S), Securex, KK Security, and Security Group which have been in the business for a while. To
start
his
business,
Matsiko
completely relied on his savings from the Iraq job. However, he says; “We got some
little financial assistance when we were acquiring another company Protectorate SPC and that was all.” Matsiko started Pinnacle with about US$2.1million and when he acquired Protectorate that came to about US$4.5 million. The firm was acquired this year following the July 11 attacks on Kampala which increased the demand for security
just in case a company’s client gets an emergency. And the company has since acquired three fire fighting vehicles with standby fire fighters. This is what has made Pinnacle the outstanding security company it is. All this brings smiles to a man, who back then before he left the country, had worked as a freelance journalist in two
“
I had been out there for so long, and I felt I should come here and serve my people.
Ugandans are still Uganda’s highest source of investment. 216 domestic investment projects were licensed by the Uganda Investment Authority (UIA) in 2009/10, representing 63% of total projects licensed in the year.
services in Uganda. Pinnacle Group has since expanded and acquired T1 Club, a discotheque, Pinnacle cleaners and Water Tight Services Ltd a labour outsourcing company. What he finds key to his success and what he says every private security should consider- is the good relationship with the Uganda Police. Some of the top jobs his company has done include guarding the African Union summit, MTN marathon, R Kelly Concert, Bayimba festival and others. There are not many security companies with three standby ambulances with two paramedics-
leading media houses, and as PR and corporate services person for a private security company. For Brian Isubikalu a former club deejay in London- returning to Uganda was faced with mixed reactions. While he had ideas of what he wanted to do, the people he asked to do field research for him, were discouraging. “I realized later that all along they didn’t understand what I was saying,” They would tell him, either the market was flooded with such a line of business or, they would say such an idea was hard to be implemented in Uganda. “Then, people in London told me, I shouldn’t have left, that I should have stayed for at least two more years,” he recalls. But Brian trusted his instincts. He returned and set up DBS Mobile Sounds at Centenary Park in Kampala. He also set up an ice cube making business. “I have established my clientele and I should say the two businesses are doing well.” He was smart, because on his return he came with pool tables which he collected from discotheques, sold them and increased his capital. Besides that he started an ice cubes making business. He supplies Uchumi Supermarket, Fat Boys, Rouge, Mateo’s,
In numbers
10 Uganda is among the top 10 remittance recipients in Africa.
757,000 Number of Ugandans estimated to be living abroad this year.
US$773m Expected money remitted by Ugandans living abroad this year, up from US$694m the previous year.
Continued on page 46 >>>
UgandanInvestor
45
special report
Returnee Ugandans Centenary Park and several other bars and restaurants around Kampala. One of his latest ventures, which he is so proud of, is the boat cruise gig on Lake Victoria. There, he gets to play every week. “So, even if I didn’t get other businesses this one sustains me,” he says. However Isubikalu finds the tax system very unfair to starters. He says that Uganda Investment Authority had told him that he wouldn’t pay taxes for the machines to make the ice cubes, but Uganda Revenue Authority charged him even highly. Nevertheless, he has been able to make it, because of his connections. He is also hard working. “It is about who you know, because you may have the machines and not be able to get business,” he says. But what really prompted him to return? I ask. “I and my wife felt we were ready. We had all graduated and we had built our house in Uganda. She had worked as an accountant for one and a half years, and so she had attained the required experience.” His wife now works as an accountant at Uganda Road Authority. And as soon they had returned, she introduced him, and they wedded. For all the people I have spoken to, it gets to a time when one wants to return home. The same is Jamila Habib Natukunda’s story. After spending 17 years running the Pacific African Restaurant in Dubai, she was convinced it was time for her to return home. Today, she has just set up her furniture shop on Luwum Street and in about four months she will be completing construction of her hotel; Jasula Motel on Entebbe road. “I had been out there for so long, and I felt I should come here and serve my people,” she says. But she will continue running her businesses in Dubai. “The
46
UgandanInvestor
Jamila Natukunda more I get stronger here, the more I will phase out in Dubai, but that will depend on the turnover here,” she says. I ask her how she is able to manage her business back there when she is here, and she says she has good Indian managers whom she trusts. However, she finds it difficult to trust people with money here in Uganda, “People want to make a difference on each of the money they are given to do something,” she says. That way, she needs to stay here most of the time, “But you can’t be in three countries at the same time,” she says. And as a woman, Jamila meets a lot of people who want to engage her in unfruitful conversations, but she remains focused. That aside, she says Uganda has got cheap labour. Yet, in Dubai she says the least of her paid workers goes away with US$550 every month, plus housing rate, visas and work permits. Her least paid worker in Uganda earns Shs350000 (US$154) but the average restaurant businesses in Kampala pay waiters and waitresses between (US$35 and US$150 per month). So far, her furniture business has cost her about shs50 million but she will not mention how much the hotel has cost her, because she deliberately does not keep records of how much she spends on the hotel. Her secret; “I work hard, and I don’t advise anybody to degrade
In light of this contribution, the Government of Uganda has mandated the UIA to focus considerable efforts and facilitation resources to the development and sustenance of domestic investment. themselves, because even me, when things get tough I keep trying,” she says. Her dream is to make it as big as the top business people in Kampala have.
“
You can train the guard and give him all he needs but he chooses to do things the wrong way. People don’t treasure their jobs.
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car review
In numbers The new generation Cayenne goes on sale in the UK on May 29 priced as follows:
£41,404 Cayenne
£44,178
Porsche Cayenne
Cayenne Diesel
£53,693 Cayenne S
£57,610
Cayenne: A car for all reasons
Cayenne S Hybrid
£81,589 Cayenne Turbo
In the automotive world, a lot can happen in four years, writes Stephen Williams. Back in 2007 when I test-drove the Cayenne S, the popularity of large gas-guzzling SUVs (sports utility vehicles) was booming. It had made perfect sense for Porsche, a highly successful sports car marque, to also focus on an SUV and in the late 1990s Porsche entered a cooperation deal with fellow German automotive company VW to develop four wheel drive models. In 2003, Porsche launched the Cayenne model and VW the Touareg, sharing some of the production costs with the commonality of the same chassis and various other components. Porsche’s marketing rationale was obvious but slightly different to VWs, more of a mainstream car manufacturer. Car makers love brand loyalty, and while the Porsche badge on a sports car represented a highly desirable status symbol for young customers, as soon as they marry and start a family, Porsche owners find they require more practical, family-friendly transport. The solution for many customers is either to purchase a vehicle from another manufacturer to complement their Porsche sports car or, worse still, abandon Porsche ownership altogether.
48
UgandanInvestor
Either way, bad news for Porsche. The launch of the original Cayenne in 2003 was the culmination of Porsche’s attempts to rectify matters. Here, they told the world, was a five-seater vehicle that could accommodate the whole family, meet the latest fashion trend as a four-wheel drive car with off-road capabilities, and still provide quite exceptional on-road performance. Problem solved, one might have thought. In fact, it was not quite that simple: Porsche sports-car lovers complained bitterly that their beloved brand had
been ‘diluted’ in a brazen attempt to capture the booming SUV market, while SUV aficionados scoffed that the Cayenne was far too refined to be suited to ploughing through real mud and muck like a true off-roader. But since the car’s original launch, the Cayenne has proved itself to be a quite remarkable vehicle, and in early 2011 the Cayenne range will be broadened once more. There is still the original base model simply tagged the Cayenne, as well as the Cayenne S, the Cayenne Turbo and the Cayenne Turbo S. And now this line up is joined by the Cayenne S Hybrid which promises to increase fuel economy by up to 23% and offer improved performance. This new Cayenne, Porsche tells us, has been developed according to the principles of Porsche Intelligent Performance: more power on less fuel, greater efficiency and lower CO2 emissions. This is manifested in the introduction of a new Tiptronic S eight-speed automatic transmission featuring a wider spread of gear ratios,
an Auto Start Stop function, optimised thermal management on the engine and transmission cooling system, on-board network recuperation, and intelligent lightweight construction. Despite its larger exterior dimensions, the new Cayenne being 48mm longer than its predecessor and with a longer wheel base, at 193g/km, the Cayenne S Hybrid is not only the cleanest version of the Cayenne range but the whole Porsche family of vehicles. This low level of emissions is thanks to the ‘hybrid’ combination of a 3.0lt supercharged petrol V6 and an electric motor. Depending on conditions, the Cayenne S Hybrid uses only one drive unit, operating independently, or with both drive units working together. Together, the two drive units deliver maximum output of 380 hp and peak torque of 580Nm at just 1,000rpm, with the same kind of performance as the Cayenne S with its conventional V8 petrol power unit. The two drive units are connected to one another by a
separator clutch masterminded by the Hybrid Manager computer. As well as a comprehensive list of options, standard equipment on every Cayenne includes Porsche Traction Management all-wheel drive, leather interiors, dual-zone automatic climate control, front and rear parking sensors, cruise control, audio system with a 7-inch touch-screen, eight-way powered front seat adjustment, 18” alloy wheels, front and rear electric windows, and a 100-litre fuel tank. Given the improved economy, the new Cayenne S Hybrid meets a number of environmental concerns that have become associated with large SUVs, and both its rough terrain capabilities and sophisticated paved road performance make this new model a compelling option for African markets. And overall, there is no doubting that the Cayenne, whatever the model choice, is an extremely competent and potent performance SUV.
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technology
Technology for All Africa’s diversity has hampered the introduction of the internet to the continent. However, as a number of investors in Uganda have discovered, mobile technology is bridging the divide.
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The use of mobile technology has undoubtedly been a significant factor in many African countries having some of the highest GDP growth rates in the world, and it is almost certain that it can be the basis for even greater economic advances. African technology is energetically searching for ways to serve the very specific needs of its people. Fewer than 4% of Africa’s population estimated to have access to the internet, but the mobile telephone and related technology is growing fast and the challenge of a number of technical shortcomings are being addressed to make it likely that this will be a major engine of economic expansion. The population of Africa recently topped a billion people, but it is the world’s least industrialised continent and, furthermore, the majority of its peoples live without access to financial services. Nevertheless, the continent is beginning to evolve its own communications network with the region posting the world’s fastest growth of mobile phone usage. Only 6% of Africans owned a mobile phone in 2004, but from a subscriber base of only 16million across the continent at the turn of the millennium, Africa’s huge potential has risen as prices for both handsets and tariffs have fallen. According to telephone
manufacturer Ericson, currently, the number of subscribers in Africa has reached over 500million. Almost 20% of East Africa’s population now owns a mobile telephone and, according to the International Telecommunications Union, that number is growing exponentially. This technology has a huge user base and it is here that the African market is finding fresh and imaginative applications to suit its special cultural and economic needs with fresh innovations coming on stream providing novel ways of serving African peoples and their way of life. In particular, the spread of mobile communications in East Africa has created a wide range of financial services for an entirely new customer base. Mobile banking has transformed the way East Africans can now transfer money and it is now poised to offer ever more sophisticated banking services that will make a real difference to people’s lives. In Uganda, the South African based MTN Group, the leading mobile operator in Africa and the Middle East in terms of subscriber numbers, has introduced the MobileMoney service and has attracted over 1 million registered users, double what it had originally forecast. Additionally, in November 2010, MTN and Western Union, a leader in
global payment services, announced a commercial agreement to introduce international mobile remittance services in the 21 countries where MTN operates. Once introduced, the service will allow MTN subscribers to conveniently send and receive Western Union Money Transfer transactions using their MTN Mobile Money accounts. The service is expected to be first introduced in Uganda, making it one of the most successful mobile wallet deployments in the world. According to the World Bank, Uganda receives on average US$500million in remittances every year, making up over 3% of the country’s GDP. An MTN subscriber who receives a Western Union Money Transfer transaction in his MobileMoney account will be able to use the funds to pay bills, top-up airtime, send money domestically and internationally, or withdraw cash at MobileMoney Agents or any participating ATM. Other ways of developing a revenue streams in deepest Africa have come from a US-based company called txteagle. The company uses mobile phones to collect local data for product research using individuals with local knowledge. It maintains a large contract force in East Africa that is paid for monitoring television commercials and other tasks. These small transactions build up into big money, attracting the attention of well-established credit card companies. Txteagle are planning to adapt the architecture of their mobile payment cards to integrate with other m-banking payment service. One such company is Project Pay, which has developed a mobile phone that doubles as a card reader, taking card payments from customers in the most remote places. Marketing departments of companies that have developed card payment technology are beginning to realise the potential of the millions of East African mobile phone users who do not have bank accounts and will be using the m-banking facility. They calculate that increasing mobile phone usage by 10% in a typical African country boosts per capita GDP by almost
1% – and mobile phone remittances and m-banking will only enhance that trend. The quality of economic growth in Africa calls for an investment in the training and skill-sets of its peoples. Mobile technology brings to Africans distance-learning abilities; at its most basic level, this could consist of radio transmissions containing tips and hints to African farmers on best farming practices. Already, mobile phones are used across Africa as a way for farmers to access market prices. One company, Pedagog, is also working on the transmission of high quality images from remote cameras to the colour screens of mobile telephones for use in applications such as academic and vocational training. Pedagog has developed the broadcasting of live video content to computer screens as part of a mass training course syllabus and has been part of well established distance learning network for some years. Unfortunately the lack of penetration of the internet into rural Africa makes transmission to computers, as required by screen-based distance learning, impractical, but mobile telephone screens enable students to receive tuition in their own villages. The technology may even lead to new developments, such as the creation of an interactive question and answer facility between students and their tutors. A distance-learning network in Africa promises to provide both primary and vocational education for African children and workers in the near future. The education of Africa can then begin in earnest. Nor should the arrival of sub-sea fibreoptic cables be overlooked. These cables provide massive, affordable broad-band (access to which will enhance the take up of both 3G smart phones as well as desk-top devices such as PCs). Cable represents a less expensive alternative to satellite networks that are increasingly viewed as back up to fibre optic or for use in very remote parts of Africa. Meanwhile, Africans are tailoring emerging technology to their needs, fitting it into the culture of the peoples.
The payment technology that has been developed in East Africa has global ramifications. The concept of empowering the people who do not have banks in the developing world is being embraced in South East Asia and Eastern Europe. A newspaper in Sophia, the capital of Bulgaria even has a banner headline about M-pesa. M-pesa is the number one mobile network in Kenya, Safaricom’s, ground breaking remittance service. The British press continues to speculate about the potential of m-banking and all its different applications. There is a new wind blowing through Africa and it is the wind of innovation and invention.
What they say...
“Innovation is what Uganda needs today, not only in the communication sector but the wider economy. Innovation must not be left to the importation of products from foreign lands … it should be brewed locally.” Patrick Bitature, the chairman Uganda Investment Authority on stimulating innovation and investment in the Uganda’s telecoms industry
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east african community
Putting Uganda at the heart of the EAC Opinions of the East African Community (EAC) vary widely across East Africa. Some fear that Kenyan businesses will come to dominate the entire region and stunt the growth of companies in other member states. Others, probably the majority, see it as the best opportunity in more than a generation to attract inward investment and boost the living standards of all East Africans. The impact on Uganda will not be determined for many years yet but there are already plenty of grounds for optimism.
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Ongoing efforts by the stock markets in East Africa to harmonise their trading platforms.
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It is easy to find the root cause of the fear
dominant regional economy.
of domination. In its original incarnation,
Finally, the original three Anglophone
in the 1970s, the EAC collapsed precisely
EAC members are no longer alone. The
because Kenyan companies overwhelmed their competitors in Uganda and Tanzania.
accession of Rwanda and Burundi to the
Instability in Uganda and Tanzania’s
addition of south Sudan, if as expected
experiment with African socialism did not equip the two countries to compete with
the region votes for independence in next
the more market-driven economic model adopted by Kenya. Yet this time around
the heart of the EAC and at the crossroads
the situation is very different. Firstly, there is very little to choose
it an attractive option for foreign investors
between the economic policies of the three biggest member states. Tanzania
East African markets.
has embraced market economics, while Uganda has enjoyed two decades of strong
Union (EU), the EAC member states
recovery. Secondly, the Kenyan economy
2010 thereby enabling goods, services,
is nowhere near as dominant as it was in the 1970s: both Tanzania and Uganda
labour and capital to move freely between
have recorded more rapid growth in GDP over the past decade than the supposed
barriers still exist. The next steps are the
Community in 2007 and the possible
year’s referendum, would place Uganda at of regional trade routes. This would make aiming to select a headquarter to target all Taking its lead from the European introduced a common market on 1 July
the countries, although some non-tariff introduction of a common currency by
2012 and political integration in 2015. This is a hugely ambitious programme and seeks to achieve in a decade what it took the EU several decades to complete. It seems likely at this stage that there will be some slippage in the timetable. Nevertheless, the economic benefits of integration seem obvious. The economic structures that were imposed on most African countries during the colonial era focused on the export of raw materials to other parts of the world and there was very little interaction between neighbouring states. This is reflected in the pattern of many railway networks, with dozens of lines going up to the edge of a territory but not crossing over into the colonies of a rival power. Today, the biggest obstacle to more rapid economic growth in Africa is the lack of trade between neighbouring states. The EAC is designed to reverse this trend by removing duties and encouraging the free movement of goods, capital and people across East Africa. The region has plentiful natural resources, a youthful demographic structure and fast-growing economies. Furthermore, the EAC stands out in SubSaharan Africa as having the strongest momentum for integration between the countries, making it increasingly easy and profitable for multinational companies to operate in. This will create an opportunity for companies around the world to target a single market of 127 million people
with combined GDP of US$73 billion. Ugandan firms too will be able to market their goods and services within the single market. Boost for tourism One of the industries that may benefit most from economic integration is the tourist sector. Uganda attracted 800,000 foreign visitors in 2008, while East Africa as a whole received just over 3 million tourists. This ranks Uganda among the top ten holiday destinations on the African continent but the numbers are a drop in the ocean compared with the tens of millions of visitors attracted by many European countries. East Africa has year round warmth and sunshine but many visitors are deterred from visiting the region by red tape. The EAC is therefore introducing a single tourist visa to allow visitors to Tanzania or Kenya, for example, to spend part of their holiday in Uganda. Two centre holidays are already very popular in Tanzania, where holidaymakers spend a week on the northern wildlife park circuit and a week enjoying a beach holiday in Zanzibar. Uganda’s mountain gorillas are already a huge attraction; so many visitors could be persuaded to spend a week in the country after perhaps visiting the Serengeti. The new East African Community Tourism and Wildlife Management Bill has already been passed by the
East African Legislative Assembly to harmonise national wildlife legislation, while the EAC national tourist boards are planning to market the region as a single entity. Cuthbert Baguma, the executive director of the Uganda Tourism Board (UTB), says that his organisation is moving away from purely targeting overseas visitors to a three pronged marketing strategy, targeting Ugandans, other East Africans and overseas tourists in equal measure. Some investors are already gearing up for the expected increase in tourist numbers. There are just two ferries currently in service on Lake Victoria, but EarthWise Ferries Uganda will launch the first of ten brand new vessels on the lake by the end of this year, partly in order to take advantage of increased tourism but also because of anticipated growth in cross-border travel between Kenya, Tanzania and Uganda as a result of economic integration. Infrastructure deficit to be addressed Currently, the EAC suffers from infrastructural bottlenecks which raise transport costs and hamper efficiency. The picture differs from country to country, with Uganda and Kenya being better served than Burundi, Tanzania and Rwanda. Business Monitor International’s Continued on page 54 >>>
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east african community
(BMI) Infrastructure analysts highlight two key areas of development going forward: railways and roads. On the railways front, the EAC authorities are currently working on a rail investment plan which will complement a 2009 master plan for an integrated rail network for the region. The project includes establishing rail links between the two key ports in the region, Tanzania’s Dar es Salaam and Kenya’s Mombasa. From Dar es Salaam, it is intended that a rail line will link to both Musongati in Burundi and Kigali in Rwanda. There are also plans for new lines in Tanzania and Kenya, as well as upgrades of strategic links between Mombasa and Kampala in Uganda and Dar es Salaam and Isaka in northern Tanzania. In order to finance the plans, the EAC is looking to private sector support, as well as public funds and development assistance. Final investment plans are due to be published by the end of 2010, with construction due
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to start in 2013. Accompanying the railway plan is the roads master plan, which identifies five strategic corridors within the EAC (with a combined length of 12,000km) that need to be rehabilitated and upgraded in order to improve road links within the Community. There are two primary freight corridors within the region - the 1,700km Northern Corridor, linking Mombasa through Kenya to Uganda, Rwanda, Burundi and into Eastern DRC. The second is the 1,300km Central Corridor, linking Dar es Salaam through Tanzania, Zambia, Rwanda, Burundi and Eastern DRC. Both of these need substantial investment to improve surface quality and width in order to decrease travel time. Although the plans sound impressive, and it indicates that the EAC is taking a serious look at the barrier that infrastructure presents to reaping the benefits of a common market, there
will be no quick fix for these problems. Construction of an integrated rail network will not start until 2013 at the earliest, meaning over the next few years, the benefits of removing tariffs will not be fully realised. Long waits at congested ports and border crossings are likely to remain in place for the time being. However, when the rail network comes into place, the reduction in fuel costs, emissions and road congestion will remove a major obstacle to economic and industrial growth in the region. Ugandan advantages As discussed on page 35, EAC harmonisation is also driving regional power sector integration, helping to promote investment in the Ugandan power sector to supply customers across East Africa. The process should also encourage companies from other East African states to seek a listing on the Uganda Stock Exchange (USE). Most
Uganda addresses infrastructure deficits by building roads like this Northern Corridor recently, Nation Media Group of Kenya secured a cross-listing on the USE on 19 October. The chief executive of Nation Media, Linus Gitahi, said that the move was prompted by “ongoing efforts by the stock markets in East Africa to harmonise their trading platforms”. The EAC is also championing the modernisation of the region’s transport infrastructure. At present, Uganda is reliant on trade through the Kenyan port of Mombasa but improvements in rail and road links with the Tanzanian port of Dar es Salaam would provide more competition and help to drive down prices for Ugandan traders. Alloys Mutabingwa, the EAC deputy secretary general for infrastructure and planning, has revealed that a single EAC railway master plan is being developed precisely to improve transport links between Uganda and the coast. Ugandan consumers may benefit from greater competition but it remains
to be seen how Ugandan manufacturers will fare. Ssebagala Kigozi, the executive director of the Uganda Manufacturers Association, says: “Competition is healthy and normal. What Ugandan businesses and manufacturers need to do is maintain quality standards, so quality assurance is key for us to hold our own against new competitive pressure.” Many observers outside the region believe that the Ugandan economy will be able to hold its own. In August, US Secretary of State Hillary Clinton praised the EAC as an excellent example of regional economic integration in Africa. Moreover, in its recent report The East African Community: Why this time is different, brewer SAB Miller argued: “In terms of the relative scale argument, the fast growth of Uganda and Tanzania in comparison to Kenya over the past ten or 20 years has not only narrowed the gap between them and their larger neighbour, but it has given these smaller nations
confidence in their competitive abilities.” It remains to be seen whether this confidence will translate into booming businesses but promoting intra-regional trade should create a larger market for all companies to target. It is now up to the Ugandan business community to demonstrate that it can secure a fair share of that market. Neil Ford
Uganda is ranked as the 8th fasted growing economy in the world in 2011 with projected growth rates of 8%. The Economist Magazine’s, “the World in 2011, 25-year special edition”.
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book review
From analogue to digital TV’s big switch-over The digital switch-over will involve a transformation of Uganda’s television industry from the analogue television system that we have today to digital formats that rely on satellite links to transmission signals. In Uganda, only Multichoice’s DStv, Star Times Digital TV and NTV Uganda transmit their channels in digital format, yet the country has more than 30 operational channels, 27 of which currently operate using analogue broadcasting technologies. Ruth Namatovu’s Uganda’s Transition from Analogue to Digital TV Broadcasting outlines the much anticipated switch to digital television services in Uganda and the implications that will mean for the Ugandan viewer. Just how many times does the long suffering Ugandan television viewer switch on their TV to catch a favourite programme only to find the signal is very poor? Too often, if the apocryphal evidence is to be believed. Of course, there are those in locations so remote that a poor signal is to be expected, but government would do well to fast-track the switch over. Namatovu does more than put the facts on the table. She goes to great pains with her qualitative approach to gathering the data and in answering the questions as to whether the switch over is necessary and/or affordable. Her comparison of the digital switch in Uganda and those that have taken place in developed nations is especially illuminating. She paints the
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picture clearly enough to demonstrate a passion for, and deep knowledge, of her chosen subject. For instance, how many people know that our own MultiChoice Uganda introduced digital television in the country in 1997, more than two years before the UK started digital broadcasting? Namatovu, a practicing researcher and consultant in digital broadcast technologies, is also a TV producer, journalist, filmmaker and trainer in filmmaking. She has published articles in magazines and conducted analytical analysis about the digital TV switchover in Uganda. Although this is her first book, the authority with which she writes speaks of her deep knowledge of the subject. Yet, this is the first study of its kind to be published in the region. No wonder, this publication was nominated for an award of the best-researched student project at this year’s Uganda Communications Commission (UCC) Awards. The book’s text is complemented by graphics and data from all over the world. It does not limit itself at trying to merely convince stakeholders of the desirability of a switch over, it gives a credible stepby-step guide on how the transformation from analog to digital can be approached, offering possible scenarios by taking into consideration what has been already been achieved in developed countries like the UK. The writer is well aware that there is a digital divide and that this
switchover will not benefit all but just those who can afford it, but the writer has solutions for every drawback and advises how they can be addressed. For instance, on the challenge of digital divide, she writes: “For countries without an existing infrastructure, such as Uganda, I would propose that all television, net access and radio should be incorporated into a one way wireless broadcast network as the best way forward. These channels were the only interactive services in Africa till 2009 when other players penetrated into the market and particularly in Uganda.” Namutovu’s work is not only for the stakeholder but will really benefit all those who have a passion for the broadcast media, especially journalism students. Higher learning institutions in Africa like Makerere University would be well advised to make her research available to students as an addition to its library in February 2011. This book is not just a must read for those in the broadcast industry, it is a ‘must study’ for every broadcast student and those contemplating switching over to digital TV. Uganda’s Transition from Analogue to Digital TV Broadcasting, by Ruth Namatovu. It is reviewed for Uganda Investor by Walter Wafula
views
The True human aid Peter Matthews describes some of the most innovative charity investment projects in Africa that are close to his heart and how they are working to improve the lives of the population.
During my time as a desk officer in the European Commission in Brussels I have seen aid programmes great and small being developed for Africa. The most successful, and those of which I have the deepest affection, are the smaller ones that benefit the rural people of Africa. Maybe I find the rural communities easier to relate to as everyone can see the benefits of aid and the contribution it makes to their community. Most of these initiatives are created by smaller charities driven by volunteers and not large aid agencies that can only cope with major schemes with a larger scale of operation. One scheme in which I became involved because of my interest in bees is called “Hives Save Lives”, a charity based in Brighton, UK. Its volunteers raise money for the improvement of honey production in Africa. A report on a recent visit to Uganda by Michael Oxley, one of the trustees of the charity is worth quoting. He writes: “I have never visited Uganda before but now I can only describe it as a country of unparalleled beauty, and wherever I travelled there was a great sense of calm. The villages I visited had no electricity or running water and were on a truly subsistence level. The programme to alleviate poverty by improving the quality of bee
keeping has been an unqualified success. “The best of our bee keepers produce two and a half metric tonnes of honey in a year. A star performer, Alex Thabulenga, has won best beekeeper for his community in Kyempara. They have been able to set up their own school for their children with the results of their labours. Modern hives can increase the yield by 300% over the traditional hives of the region. An important part of the process is a specially designed honey extractor to go on the back of a motorbike. The extractor travels from group to group with simple instructions as to its use. “This improves the quality of the honey… producing a purer product, free from dead bees and detritus. Thus it makes a more saleable product stored in airtight plastic buckets for transport to the bottling centre. The improved methods are proving invaluable to groups such as the Bughumba beekeepers who farm hilly country bordering national park land accessible only by footpaths. Tree seedlings were provided by the World Wildlife Fund to create a woodlot to combat land degradation. Beekeeping is the ideal activity to create a sustainable means of income Continued on page 58 >>>
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views
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The best of our bee keepers produce two and a half metric tonnes of honey in a year. A star performer, Alex Thabulenga has won best beekeeper for his community in Kyempara. for villagers to earn a livelihood on land closed to cultivation.” This is my kind of aid that counts, giving a man food will feed him for a day or so, teaching him to produce food to feed him is an investment in the future. Another small Japanese charity provides a service for water projects. It is entitled “Dowsing for Africa” and is concerned with finding underground aquifers to tap into for a village’s local water supply. Dowsing or water divining is a mysterious art that has been known and practiced in Europe for centuries. Practitioners use rods or even willow tree twigs to sense the presence of water underground. Farmers have used dowsers to find water for their cattle or land irrigation for many years. It is an inexact technique in that not everyone has the extrasensory gift to use the rods in the quest for a water source. The charity sends some of their most experienced dowsers to find hidden water supplies but more importantly, tries to identify Africans who have the dowsing gift. The ‘dowsers’ were treated
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with suspicion by Japanese engineers drilling for water. An incident convinced the drillers that dowsing could help them in their quest to water sources. The drill gantries had been going all day in the blistering African sun, all to no effect as drilling for water or even oil is a gamble. There are generally 10 dry holes to each productive one. They had not found the water flow for which they were searching. One of the ‘Dowsing for Africa’ personnel offered to see what he could do. The drilling crew watched as Tom Bryant walked around the site holding his rods and waiting for an indication of the presence of water. Finally, Bryant focused on a spot and after much testing of his own findings pointed to the spot. More in hope than expectation, they moved the gantry to the spot that he had indicated. They began to discuss among themselves how deep they should drill but were interrupted by Bryant. “About 145 feet” he advised as they stared at him in disbelief. That was deeper than they usually drilled, but 145 feet down they would go. They all watched as the drill ground into the African earth, reaching a depth of 135 feet, 140 feet, 144 feet, and then the 145 feet foot mark. There was an expectant hush, the minutes ticked by but finally a gurgle from the hole announced a flow of clear potable water for the village. Bryant was a hero to the drillers, but he was also a mystery. How did he do it? Was the question. All he did was shrug his shoulders, indicating that he was either not willing or not able to tell his secret. Yet another small charity is concerned with enabling young Africans to get an
education. A promising African student was identified for sponsorship by a resident of Tunbridge Wells, UK. He made regular payment, a pittance by European standards, to see her through a course of study and kept up with her progress through an exchange of letters. When she qualified, he and his family travelled out to her village to meet her for the first time. He was received as an honoured guest with the whole village turning out to greet him and his family. That evening, in a circle of African people the girl presented him with the certificate confirming her qualification. Then, as they all sat on the ground in the firelight she presented him with a white chicken, the highest honour her family could bestow to thank him for what he had done. It was the greatest compliment that one person could give another in her world, and one of the most moving moments of his life. That, my friends is true human aid on a small but inspiring level between the peoples of Europe and Africa. And that is my parting shot for this issue of the magazine. Peter Matthews
Dowsing or water divining is a mysterious art that has been known and practiced in Europe for centuries.
Strategy. Results. Value
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ased in Uganda, with offices in London and Abuja, Edes & Associates has built a reputation as a global, respected firm of financial consultants and advisors. With a strong, ethical working practice, we specialise in delivering tailored assurance and advisory services to public sector initiatives across Africa and other developing countries worldwide. We work with development partners, government institutions, Non Governmental Organisations and Public Private Partnership Initiatives, to enable them to obtain added value for their investments and to strengthen their capacity in delivering results. Using our extensive network of associates, we are able to deploy experts cost-effectively to deliver a tailored approach in the regions where our clients operate. To find out how we can partner with you to optimise service delivery, contact us at www.edesassociates.com Kampala kampala@edesassociates.com Tel: +256 414 250504
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