“The army in development, Private -Public-Partnerships, land giveaways and other issues”

Posted on June 22, 2014

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Recently all of the above topics have made headlines. PPP’s are now a buzzword and are the new “privatisation” mantra but should be approached with caution in a corrupt environment!

Below are my opinions from an inbox discussion with friends in 2011.

 

Cutting corners

Nyenje said they are missing out on the real issues by asking the owners of the buses to be revealed, saying this is not the issue.

http://www.newvision.co.ug/news/629100-Stay-away-from-city-bus-project–politicians-warned.html

There are a few issues with the [KCCA /PEB bus] deal.

Mathew Rukikaire oversaw the dismantling of Ugandan Transport Corporation, [UTC]! He is one of the principles.

Albert Muganga has been cited in more than one deal that bypasses public procurement deals. The most notable one was the contract for national oil reserves which was overturned after companies like Shell complained.

The award of a public contract without going through competitive bidding and a transparent process raises issues and questions.

There is a suggestion that the consortium benefitted from a government “loan”/grant or government guarantee in the range of several million dollars. The use of public money in a private company brings back spectres of the Basajjabalaaa deals where government sinks billions into private companies in which it has no shares, nor representation on the boards or management.

The idea quoted above which appears to be the company policy that the public should not be interested in the owners of what is essentially a public private partnership that is the beneficiary of a public contract and tax payer or ratepayer money. If there is public money in the project or it is the participant in a public project, then there has got to be full transparency!

http://www.rnw.nl/africa/bulletin/africa-needs-new-ways-fund-energy-projects

 

Public -Private -Partnerships

I actually do not think you are going out on a limb. I think you are adding a relevant dimension to the debate. I personally do not care if the originator of a project belongs to the NRM or not.

But process and transparency in handling public business is important just like structures and institutions are important in politics. Otherwise you end up with a kleptocracy and cronysm where insiders use public money for private business with impunity.

I am a believer in public -private partnerships. I believe that when used properly, they can be leveraged for development.

Basajjabalaba is a prime example of what happens when public private partnerships are misused.

Personally I had no problem with the government using strategic funding to prop up certain industries and promote local business.

In the beginning the issue with Basajjabalaba was over expansion when he expanded his fathers hides and skins business too rapidly and got over extended. Japanese businessmen came after him for I believe it was 800,000 USD so the government stepped in. This was one of few local export industries that needed to be saved.

Now this is where things got pear shaped. Instead of handing it to the technocrats Museveni gave an order to the governor to lend money to a private business from the central bank! Interest free. Guaranteed against the businessmans titles. then it later turned out he defaulted on the repayments and even went as far as to get duplicate title deeds reissued which really is fraud and sold them!

The powerful Japanese post world war II ministry for trade and Industry used to vet and influence mergers and takeovers as well as financial bailouts of ailing but strategic industries in line with an overal template for development.

A person like Basajjabalaba would have been forced to take on a partner of more repute and managerial skill as a precondition to the financial bailout. Or the government would have demanded a share in the companies stock and used their vote to get sits on the board. If the industry was strategic but the founder was incapable of moving it forward or otherwise hampered, he would be forced to be a junior partner or a non managing shareholder. That way the industry was bailed out. it was put under new management with a more capable management. And the founder still got his shares but did not control the running of the company.

The other way of doing it was what was done to Sembule which run into trouble at the same time as Basajja. Sembule too run afoul of loans. It was at the time the only functioning steel rolling mill and rapidly expanded in a climate of 40% loans. it too became a victim of its own success as well as the fact that th Sembuya and Buule children run around the factory like their playground.

The idea in this case is to remove the family from management an bring in professional managers to run the company till the money is recouped. In the case of Sembule, it was bailed out but the company day to day running was taken out of the founders hands for ten years to recoup the money. The company stayed alive, employees continued to work and the founders still got their company back after ten years.

Bailouts can be structured for a win – win rather than a lose lose situation. Bassaja has billions of public money invested in his companies yet the state has no control of their money. He comes up with schemes to get out of paying. The state never got any shares in exchange for their money. etc etc.

With regards to Bujaghali, I was against Lukyamuzi’s populist games! electricity is a very important part of recovery economics and should be one of the most important government projects in the first ten years. Without it, industry and growth is hampered. For years Museveni has talked investment and industrialisation yet with Ugandan’s electricity supply, it is a joke. Which serious industrialist will wish to invest in a country where you get electricity sometimes 2 to 3 days a week? Bidco was a more complicated project!

The reason process matters is transparency promotes public goodwill. The reason that Ugandans do not trust certain members of ths government is that over the years, they have proven themselves to be kleptomaniacs. the people who run down Uganda airlines sold it to themselves for peanuts when they were line ministers. the man who presided over dismantling UTC now comes back as the saviour of public transport. I hate boda bodas. they create a disorderly city, are poorly trained and are a responsible for a bulk of the major accidents and injuries to limb and life! I would love nothing more than to see a light rail train to Entebbe from Kampala, one to Jinja, another to Mpigi etc. this would decongest the city centre and improve transport.

As far as am concerned, if a public private partnership is involved, there has got to be transparency in the procurement and allocation process. One also has got to know how the governments interests are being safeguarded.

I have not gone into the Greenland bank crash and the public money that got sunk into that one as well as the significant loss of private savings and depositis due to poor government regulation and supervision!

Public Land giveaways

This whole thing of customary land was always going to be a problem.

Technically the government can allocate idle and even occupied land if there is a suitable development project for it. What I have a major probem with is the allocation of prime land for free or nominal fees to insiders and cronies who then offload that land within days for tens of billions of shillings.

Begs the question if there are people so ready to pay for the land why is the government giving it away free instead of releasing it to the highest bidder by auction?

Where I live the government releases land in phases to developers or through developers and individuals by auction. Individuals can also bid for plots. That way the government gets revenue for the land instead of giving it away free to developers enriching them.

Karooro Okurut and Margaret Muhanga walked off laughing with almost twenty billion free. Basajja walked off with 22 billion. a few other well connected indiciduals walked off with free land too! Interestingly when they applied for and were given this land it was not for the express purpose of speculation. It was for specific industries they claimed they were going to build. They very quickly within days became billionaires not because of business acumen or good business projects but because of cronism!

Land from Butabika hospital was taken away for development. It ended up in private hand including plots for the first sons and daughters. The list of who and whos who got land from Butabika hospital read like a who is who of the NRM. The problem here is a alack of transparency where connecetd individuals use their positions to steal publicland which ends up in private pocket without the government or private institutions getting anything.

Where I live, Butabika hospital would have mad a case to the upervising minsistry to sell off some of its land. It would have been parcelled out into lots and those lots auctioned. The proceeds would have gone into a fund that would have been used to develop the hospitals infrastructure. Government would not have to borrow from the world bank for this!

The same would be true for the land stolen from Nakasero primary school, kitante, Shimoni, Kololo etc. All of these are prime plots that have enrished individuals to the tune of tens of billions without the school or the supervising ministry getting a cut. The schools remain rundown and the government will never give them capitation grants for infrastructure development. The university i attended for one of my degrees is one of the richest in the southern hemisphere. it has land, builings shares etc. The land and assets it owns are used and managed by the university for its development of course with the permission of the supervising ministry given its a public university!

Public private partnerships can be leveraged for development but transparency is a must in order to get public confidence and cooperation.

The Army in development

Rwanda has got the right idea with regard to the role of the army in development.

Paesant armies worldwide particularly revolutionary armies offer manpower that can be used for public projects.

Soldiers can build schools, clinics, roads and bridges for civilian populations. army buliding and construction units can be used as training grounds for all sorts of tradesmen. Soldiers wuld leave the army ith a trade. Soldiers and officers training colleges can offer ceryicicates and diplomas and even degrees that are usefull in civilian life. Armies offer good leadership training.

In Rwanda, the army is involved in bulungi bwansi. in Uganda, the army used to order people around with guns instead of putting the guns down and jining the people in communal activities.

I always believe that the IDP’s were a lost opportunity for public relations and getting herats and minds in the north.

Imagine if the army had gone to the north, put the guns down, built quality housing units for the displaced people, provided food and water, run clinics and built schools? They would have built a city, gained skills, and most important of all got the populations support for both the army and the government!

Salim Saleh appeared to have ideas like this as he tried to establish farms in the north. The problem was that in light of the politics and the mistruct it appeared like the army had displaced people from their farms and was taking over their land!

Of course the politicians steeped in opposition culture did not help as many seemed to think they had to oppose everything the government did.

There is nothing in the law to prevent the government from allocating idle “Communal land” which is not occupied nor used. People have this misconception that because it is communal land it cannot be touched. Private title and legal ownership has higher importance but many of the people in the areas that claim communal ownership dont have documented legal title!

Rwanda is ahead on this.

Conflict of interest

The land speculation can only be curbed by having procedures, transparency and following them not adhoc decisions where the president says give Karooro land and it is found at the expense of UBC.

If a local or other investor is allocated land for any reason, they have to adher to the contract if that land is provided for a specific purpose! So Karooro allocated land to “build a shoe factory” cannot turn around and sell it for tens of billions a few days after receining the title deed to another investor and walking off with the loot!

Kutesa should not have been able to get ENHAS when he was the supervising minister! There are lots of examples. And while the transport issue in Kampala should be sorted, they should have taken the time to ensure transparency!

When hastily signed PSA’s are signed that end up favouring “investors” whose main investment is kickbacks and bribes. you end up with PSA’s like UMEME’s and Heritage’s wheer the government and public purse continue to haemorrhage money for years financing fictitious claims they have little control over!

Addition: Is it any surprise now that the PEB/KCCA bus deal flopped? As for the UPDF and NAADS, its a bad idea. Here you have a paesant army which has barely evolved in 30 years taking on major projects like national ID’s and NAADS. WHat is the NRA’s track record and why should it be entrusted with public projects and money?