Another case of high-level corruption in Uganda

from Foreign Policy..

October 31, 2012, By Jackee Budesta Batanda

Recently Ugandans had one small cause to celebrate. The World Bank announced that their country had moved up in the rankings in its annual ease of doing business survey. And not only did Uganda move up — it also overtook regional rival Kenya, which had long enjoyed a much better rating in this area. The ratings are important, of course, because foreign investors quite understandably prefer to put their money into places where there are fewer obstacles to business.

But that little bit of good news was quickly supplanted by a more ominous story. Ugandan social media have been avidly following this week’s revelation that Ireland has suspended aid to the Ugandan government after an audit showed that over 4 million Euros ($5.2 million) had ended up in the unauthorized account of the prime minister.

According to the Irish Independent newspaper, 16 million Euros ($21 million) given directly to the Uganda government for aid purposes has been suspended. The paper adds that aid given to non-governmental organizations will continue.

Ireland is one of the countries that have been supporting the development of northern Uganda. Under the Peace, Recovery and Development Program (PRDP) run by the Office of the Prime Minister, the aid money was supposed to be channeled to the recovery of the war-torn region.

Now a UK newspape, The Daily Mail, reports that Britain has joined Ireland in suspending aid to Uganda. Although no British funding was affected by the scandal, the country has decided to suspend aid to the Office of the Prime Minister. The article recalls a 2011 controversy when aid money was diverted to buy a $50 million Gulfstream jet for the Ugandan President.

The Office of the Prime Minister’s Website explains the origins of the PRDP:

“Following the resolution of the conflict in Northern Uganda, the Government, in collaboration with its partners, developed the Peace, Recovery and Development Plan (PRDP) to provide a framework for the post-conflict reconstruction of Northern Uganda.

The PRDP covers 40 districts in the north and east of the country, including those that were covered under NUSAF 1. The Plan, which is in line with the Poverty Eradication Action Plan (now being transformed into the National Development Plan), seeks to strengthen coordination, supervision and monitoring of all development programs in Northern Uganda to achieve better results.”

The story of corruption in the Office of the Prime Minister has filled the pages of Ugandan papers over the last couple of weeks. One Ugandan newspaper, The Daily Monitor, documents how officials embezzled money meant to help the needy. The article reports that:

“Billions of shillings meant to help Ugandans affected by two decades of war rebuild their lives ended up building mansions for corrupt OPM officials in Kampala and buying luxury vehicles.

As parents in war-ravaged northern Uganda tied their children affected by nodding disease to trees, corrupt technocrats in the ministry were flying off to exotic holiday destinations.”

Such was the sense of impunity of those involved in the scam that a cashier whose monthly salary is less than Shs1.5 million ($580) regularly “lent” the government hundreds of millions of shillings, which were paid back to his personal bank account. “Funds advanced to the cashier’s personal account were described as a refund of borrowed cash, making it appear as if the cashier lent government money from his personal savings,” the audit report noted.

The Office of the Prime Minister has since suspended 17 officials from its office, the finance ministry and Bank of Uganda involved in the scandal. The Prime Minister, Amama Mbabazi (shown in the photo above), declined to take responsibility for the embezzlement and met with donors in the capital to apologize and reassure them that the further investigations will be conducted. The prime minister has been implicated in various corruption scandals in the country and has been vindicated by the president each time.

The Ugandan paper The Independent reports on what the president is doing to fight corruption. However, many Ugandans think he is not fully committed to the fight. Social media activity on the embezzlement scandals in the Office of the Prime Minister deftly captures the frustrations the ordinary citizens face.

But the implications of the scandal go far beyond the tarnished reputation of the Office of the Prime Minister. You can hardly expect foreign investors to be thrilled when they hear of such dismal doings. So this story is a good example of how the country as a whole, not just those immediately affected, is damaged by the activities of our corrupt officials.

Link to the article:  http://transitions.foreignpolicy.com/posts/2012/10/31/another_case_of_high_level_corruption_in_Uganda

Tanzania sacks head of state-run power firm over graft

from Reuters..

Oct 31, 2012 | Dar Es Salaam

Tanzania’s state-run power company said on Wednesday it had sacked its managing director over allegations of embezzlement of public funds and abuse of office.

The Tanzania Electric Supply Company (TANESCO) board said an audit report confirmed Managing Director William Mhando flouted company regulations and was guilty of conflict of interest in awarding a tender to his own private company.

“The Auditor and Controller General has found clear evidence of abuse of company procedures and abuse of office against the managing director,” the company said in a statement.

Mhando was suspended in July to allow investigation of claims he awarded a contract worth more than 880 million Tanzanian shillings ($554,500) to a company he jointly owned with his wife and children.

A source familiar with the investigation in Tanzania’s government told Reuters Mhando will likely face corruption charges in court following his dismissal.

Phone calls to Mhando for comment went unanswered.

Tanzania’s energy sector has over the past five years been hit by widespread graft allegations amid significant gas discoveries and a chronic energy shortage.

The Speaker of Tanzania’s National Assembly in July disbanded the parliamentary energy and minerals committee after some of its members were accused of corruption and potential conflict of interest over their alleged involvement in deals with TANESCO.

In 2008, former Prime Minister Edward Lowassa and two other ministers were forced to resign after a parliamentary probe linked them to a scandal over a power generation contract.

President Jakaya Kikwete sacked six cabinet ministers in May, including the energy and minerals minister, over the corruption allegations in their ministries.

He also pledged to follow up the ministerial sackings with disciplinary action against heads of state-run institutions implicated in graft allegations.

Investors have long complained of graft as one of the main reasons for the high cost of doing business in Tanzania.

($1 = 1587 Tanzanian shillings)

(Reporting by Fumbuka Ng’wanakilala; Editing by George Obulutsa and David Cowell)

Link to the article: http://www.reuters.com/article/2012/10/31/tanzania-corruption-idUSL5E8LVDQX20121031

HOW 4G AFRICA DEVELOPS ITS BUSINESS IN THE WORLD’S FASTEST GROWING CONTINENT

from BD-Insider..

Posted on October 25, 2012 by Baldwin Berges

I met Anat Bar-Gera of 4G Africa at the Singularis African Investment & Development Summit in Addis Ababa, Ethiopia.

In this 8 minute interview Anat speaks about how 4G Africa successfully developed a broadband internet access service in Cameroon, how awareness can be built by creating a landmark and why education and broadband are great allies.

VIDEO: http://www.youtube.com/watch?v=oF-aZuHU3aI

It is a fascinating example of how a great business development strategy adapts to local market conditions.

4G Africa www.4gafrica.com, known in sub-Saharan Africa under the name YooMee www.yoomee.com, is an innovative company, founded by a team of telecom entrepreneurs who have been actively involved in emerging markets for the last decade. Together they possess broad experience in establishing broadband wireless and mobile networks.

The company is targets countries in Sub-Saharan Africa with the overall aim to reduce the digital divide The goal of 4G Africa is to offer high speed internet, as well as value added services and multi media, using broadband wireless networks, based on globally standardized 4G technology.

Sub-Saharan Africa has one of the world’s fastest growing economies, yet lacking the proper copper infrastructure, so broadband penetration serves only 1% of the total population.

The services of 4G Africa are designed for both the residential and Small-to-Medium size enterprise markets. The product range of 4G Africa includes internet access, hosting and email addresses, among other services. The network design provides fixed and nomadic wireless connectivity for the home and office, as well as mobile services to customers. 4G Africa’s first wireless broadband service was launched in Cameroon.

Link to the article:  http://www.bd-insider.com/how-4g-africa-develops-its-business-in-the-worlds-fastest-growing-continent/

Guest post: Africa, following in Asia’s footsteps

[reposted from Diverging Markets]

from FT’s beyondbrics..

October 25, 2012,  By Charles Robertson of Renaissance Capital

What is most surprising about Africa’s boom? Probably not the six-fold surge in oil revenues, which will rise to $300bn annually (three times Africa’s estimated annual infrastructure needs) by the end of this decade – most recognise China’s impact on African commodity exports. Nor the services sector growth, which despite the commodity headlines in fact accounts for over half of the GDP gains since 2002, three times more than the mining and mineral sector.

Many do know that Kenya leads the world in mobile banking and that half a billion sim card sales in seven years have created a communications revolution across Africa. It does still surprise a few that in sub-Saharan Africa 5-6 per cent annual growth is happening at all, after 20 miserable years of 2 per cent average growth from 1980-2000, and that Africa sailed through the western financial crisis as if the decline of the west was of minor irrelevance to Africa’s rise. It is a quiet but interesting reversal of the late twentieth century, when Africa was a minor irrelevance to the west.

But what surprised us most is the uncanny similarity of the African boom since 2000 to that of India since 1980 and of developing Asia since 1970.

Link to the whole article:  http://blogs.ft.com/beyond-brics/2012/10/25/africa-following-asias-footsteps/#axzz2ABdr8rtb

 

ZIMBABWE: Remittances saved the country from collapse

[reposted from Diverging Markets]

from IRIN Africa..

Harare, 20 February 2009 (IRIN) – The official sanctioning of foreign currency as legal tender in Zimbabwe to tackle hyperinflation is bringing into sharp relief how remittances have staved off the country’s complete collapse in recent years.

Before Robert Mugabe’s government officially endorsed foreign currency, long queues would form outside banking halls to exchange foreign bank notes for Zimbabwean dollars, but since the use of foreign currency has been permitted the queues have shifted to commercial banks, where money transfers are processed.

An executive at a commercial bank in the capital, Harare, who declined to be named, told IRIN that the bank had opened two additional counters specifically to deal with money transfers.

“We would not have survived these harsh times had it not been for our son and daughter in England,” Zodwa Nyathi, 58, of Cowdray Park, a working-class city suburb, told IRIN as she waited in a queue outside a commercial bank. Both her son and daughter pursued tertiary education and decided to remain in the UK after they had completed their studies.

Money in the pocket

Foreign currency remittances from Zimbabweans living outside of the country – excluding hand-to-hand transfers – were expected to double in 2009 from an estimated US$361 million in 2008, according to projections by the International Fund for Agricultural Development, a UN agency dedicated to eradicating rural poverty.

Other estimates have put all remittances from expatriates in Britain to Zimbabwe at about US$1 billion annually.

“If this is true, it puts a new dimension on this issue – it shows that the actual Zimbabwe-origin population in the UK is much bigger than estimated, and that they are sending much more money home than we ever imagined,” Eddie Cross, a prominent member of the Movement for Democratic Change (MDC), told IRIN.

“This would explain where all the foreign currency that keeps this country going, is coming from; it explains why many more people are not actually dying from the present crisis in terms of hunger, malnutrition and neglect.”
About seven million of Zimbabwe’s official population of 12 million, or more than half the people, are receiving food aid, although this does not factor in the millions thought to have left the country in recent years.

Dollarizing

Cross said the remittances explained the government policy of printing money, which fuelled hyperinflation and enabled the ruling ZANU-PF elite to access hard currency and fund their lifestyle.

Zimbabwe’s central bank estimated in 2008 that locals were spending an estimated US$950 million annually on basic commodities in neighbouring states, a trend believed to have precipitated ZANU-PF’s decision to dollarize after the local currency collapsed under the weight of hyperinflation, officially estimated in July 2008 at 231 million percent.

Steve Hanke, professor of applied economics at the Johns Hopkins University, Baltimore, US, and hyperinflation specialist, estimated inflation in Zimbabwe at 89.7 sextillion percent in November 2008.

It is thought that more than three million people – at least a quarter of the population – have left for neighbouring states and further afield to Britain, the US and Australia, to escape 94 percent unemployment, hyperinflation and a humanitarian crisis at home.

Link to the article:  http://www.irinnews.org/Report/83053/ZIMBABWE-Remittances-saved-the-country-from-collapse

Africa’s 10 Most Business-Friendly Countries

from Investing in Africa..

The World Bank released its 2013 Doing Business report this week. The document ranks all the world’s nations on how hospitable they are to starting and running a business.

Ranking criteria include everything from construction permits to taxation to the accessibility of credit.

Let’s count down the top ten easiest African countries to do business and list some of the recent reforms they’ve undertaken that make them favorites of African entrepreneurs and CEOs.

10. Kenya (Global Rank #121)
  • Enhanced electronic filing systems which eased the process of paying taxes, reducing the average time required to file taxes from 393 hours to 340 hours.
  • Made contract enforcement easier by introducing a new case management system for the resolution of commercial disputes.
  • Reduced the amount of red tape involved in registering a new business. As a result, the start-up process is two days shorter than it was in 2010.
 9. Uganda (Global Rank #120)
  • Clarified mortgage rules which reduced the risks involved in lending (and borrowing) to homeowners.
  • Established a private credit bureau. The agency now maintains credit information on 3.7% of Ugandan adults from 0% just three years ago.
  • Streamlined its court system, shortening the amount of time to resolve a case by an average of 20 days since 2010.
8. Zambia (Global Rank #94)
  • Eliminated the minimum capital requirement for starting a business, encouraging potential entrepreneurs.
  • Consolidated its border post with Zimbabwe to ease the flow of goods and allowed customs declarations to be submitted online, reducing the average time to import and export goods by roughly 15% since 2010.
  • Brought its court system into the cyber-age, allowing electronic reference of cases, laws, and records.
7. Namibia (Global Rank #87)
  • Reduced the time and expense required to connect to the electrical grid. On average, it now takes 38 days. Last year it took 55.
  • Adopted new legislation that clarifies the procedures for liquidation.
  • Computerized the system for registering a new business, slashing registration times.
6. Seychelles (Global Rank #74)
  • Over the past five years, eliminated the social security tax and reduced labor and corporate income taxes. The three cuts resulted in the effective tax rate dropping from 48.4% in 2008 to 25.7% today.
5. Ghana (Global Rank #64)
  • Granted an operating license to a private credit bureau, providing credit info on nearly 6% of the adult population. The country now ranks 23rd in the world in access to credit.
  • Drastically reduced the amount of time it takes to launch a new business. It now takes just 12 days compared to 42 in 2008. Moreover, the minimum capital requirement has been lowered considerably and now equates to just 4.3% of per capita income. It was more than 20% of per capita income five years ago.
4. Botswana (Global Rank #59)
  • Upgrades at the country’s busiest border post with South Africa have slashed the length of time for import and export of goods by nearly a week.
  • Streamlined business start-up procedures; reducing the length of time to get a business rolling by over 40% (47 days since 2008).
  • Technology upgrades in the Botswana court system have sped up the resolution of commercial disputes, reducing the average court case from 987 days in 2008 to 625 days presently.
 3. Rwanda (Global Rank #52)
  • Now one of the easiest places in the world to start a business (Global Rank #8), entrepreneurs can be up and running in just three days time and registration fees are negligible.
  • A private credit bureau boasts very deep credit information on over 7% of the adult population. Consumers have the right to inspect their own credit reports.
  • Shortened the length of time required for connection to the electricity grid from 55 days in 2011 to 30 days today.
2. South Africa (Global Rank #39)
  • The best place in the world to obtain credit. Credit rating agencies have access to a wealth of data and legal protection for lender and borrower is unparalleled.
  • Instituted a customs modernization program that reduced export times from 30 days in 2008 to 16 days now and import times from 35 to 23 days.
  • Simplified the tax code to reduce tax prep times from 350 hours per year five years ago to 200 hours per in 2012. Also reduced the effective tax rate from 37.1% to 33.3%.
1. Mauritius (Global Rank #19)
  • Eased property transfers by implementing an electronic record-keeping system and by statutorily limiting the length of time it takes to receive land title. It now takes just 15 days to register property in Mauritius. Five years ago, it took 210 days.
  • Instituted a wide-ranging and deep public credit registry. Credit info is now available for the majority (56%) of the adult population.
  • Recruited more judges and added more court rooms to reduce judicial backlog, shortening the average court case by more than 100 day

Link to the article:  http://investinginafrica.net/2012/10/africas-10-most-business-friendly-countries/?goback=%2Egde_2225001_member_179136323

“Go South, Young Man”: The Africa Scramble

[reposted from Jason Wulterkens]

Submitted by Tyler Durden on 10/27/2012

While those in the power and money echelons of the “developed” world scramble day after day to hold the pieces of the collapsing tower of cards in place (and manipulating public perception that all is well), knowing full well what the final outcome eventually will be, those who still have the capacity to look, and invest, in the future, are looking neither toward the US, nor Asia, and certainly not Europe, for one simple reason: there is no more incremental debt capacity at any level: sovereign, household, financial or corporate. Because without the ability to create debt out of thin air, be it on a secured or unsecured basis, the ability to “create” growth, at least in the current Keynesian paradigm, goes away with it. Yet there is one place where there is untapped credit creation potential, if not on an unsecured (i.e., future cash flow discounting), then certainly on a secured (hard asset collateral) basis. The place is Africa, and according to some estimates the continent, Africa can create between $5 and $10 trillion in secured debt, using its extensive untapped resources as first-lien collateral.

Africa is precisely where the smart money (and those who quietly run the abovementioned “power echelons”), namely China and Goldman Sachs, have refocused all their attention in the past year precisely because they both realize that Africa is the last and only bastion of untapped credit growth and capacity. But you won’t read about it in the mainstream papers: the last thing those who are currently splitting up Africa into its constituent parts want is for the general public to become aware what is in play. You will, however, read about it on these pages (see here and here and here). Also, if you are a Goldman client, you will certainly know all about it, as the firm ventures out with reverse inquiry indications of interest to its wealthy clients giving them the right of first equity refusal, and slowly but surely providing “financial services” to the last great hope for the developing world, which ironically is what most still consider the poorest continent…

Africa in geographical perspective…

Link to the article:  http://www.zerohedge.com/news/2012-10-27/go-south-young-man-africa-scramble?goback=%2Egde_58967_member_179544641