Monthly Archives: October 2011

Museveni, why his own no longer find him awesome:

By Stephen Twinoburyo

These must be uncomfortable times with probably sleepless nights for Museveni. Since his ‘re-election’ last February, Uganda couldn’t have been in a worse state. The signs were evident from the moment his ‘victory’ was announced. Coming on the heels of the jubilant and money-flowing campaign, the lack of celebrations coupled with immediate heavy deployment of heavily armed soldiers in all the country’s major towns must have been ominous.

Post-election scenes in Kampala earlier this year

The swearing-in ceremony itself was held amidst chaos, the better taste having been received by Nigeria’s president, Goodluck Jonathan, whose convoy was pelted with stones. Stoning a presidential convoy, local or foreign, is unprecedented in Uganda. This followed the convoy of the army chief, Gen Aronda Nykairima, also coming under a similar attack a few days earlier in Kampala – this too unprecedented.

A greater part of the first half of this year saw Walk-to-Work protests that the government’s security forces responded to with untold brutality. Museveni himself changed from what many knew and even made King Herod look better if in charge of a kindergarten of first-born sons. The economy, predictably took a dip.

Predictably, Museveni blamed all this on the opposition and people that were ‘bent on seeing his government fall’. Many of the country’s ills could of course be traced back to Museveni’s style of leadership in which he fused his family with state power, removed any distinction between state coffers and his pocket,  became the only person that could solve anything in the country, became the primary issuer of major contracts and tenders, made government ministries an extension of his home, promoted/covered/turned a blind eye to massive corruption and plunder of the country’s resources by his own, singularly gave away the country’s prime assets and became unaccountable to any institution, instead becoming the institutions himself.

What is however significant in the recent months is that members of his own party are beginning to challenge him and for the first time, openly defy him. Recently, his wife, a cabinet minister and member of parliament, who had been accustomed to patronising addresses to pliant party members, was heckled by her own in parliament while she was defending lack of transparency and allegations of corruption in the country’s oil deals. For the first time in Uganda’s history, ruling party MPs allied with opposition legislators to move a motion against government, effectively barring the government from concluding any more oil deals until checks and balances are put in place, a move anybody would find sensible. Not just in parliament but all over, voices of dissent and challenge towards the authority within the NRM structures are increasing.

Why are Museveni’s own now turning against him? This is not surprising in the lifespan of a strongman or despot when on the wane. We saw this in Libya when Gaddafi’s own started edging away from him when it became clear that he was on a one-way trip. In the lifecycle of Museveni’s presidency, he’s at the exit end and his end doesn’t look nice. What we are seeing is what’s called self-preservation. Few would want to be part of his destiny and want to curve out their own destinies. These people are beginning to look post-Museveni.

Secondly, many of the NRM supporters, especially the young ones are tired of carrying Museveni’s baggage. Museveni and his inner clique are so distanced from the common man and live a life of opulence but it’s these common party members that are daily confronted by their communities and families asking them to explain the direction the country is taking. While Museveni, his family and close ones continue to benefit disproportionately, the rank and file of the party that are taking the heat and may be the ones to carry all the sins post-Museveni.

This is not to mention how he has turned ministers into is lap boys/girls, often abruptly summoning them for night meetings at State House, then keeping them waiting til he appears  at 1 am and addresses them til 5 am. I am told many hardly get a chance to meet or talk to him individually however much they want to, and when they do, it’s to beg him for either favours or mercy. They are actually a pitiful sight before him. He’s now been tightly shielded by his now fabulously wealthy family and inner circle. Allegiance therefore from those who serve him is non-existent. It’s just survival and they will be quick to be on the side of his enemy to bring him down.

Museveni being welcomed at the Kyankwanzi NRM political school

Museveni has been using the same methods since 1986. Whenever he has wanted to push his way through his party members, he has always called them in small groups or in retreats, isolated from the rest, and intimidated them into compliance. Recently, after the heated parliamentary oil debate, he invited his party legislators to his political indoctrination bush retreat and having them dressed in military uniforms, tried to intimidate them into pliancy and even threatened to go back to the bush if they don’t use their majority in parliament to reverse the earlier parliamentary motion and give him powers to sign oil deals as he pleased. As expected, some legislators on all fours disowned the earlier parliamentary motion and profusely repented. However a few brave ones stood their ground and even walked out of the engagement rather than agree to ‘sell’ the country. That’s vintage Museveni. He doesn’t seem to realise that the times have changed. All the three deposed North African leaders could not have imagined that what happened to them could have done so and in fact one year ago, were all powerful, in total control and with military might at their hands that would make that of Museveni look like Sunday school toys. In addition, all their countries were more stable than Uganda. So, is Museveni taking any lessons?

It is interesting that Museveni who came from the bush to power in 1986 promising to fight corruption and bad governance is in 2011 threatening to go back to fight those that have risen up to confront these ills in his government. But of course Museveni thinks he’s talking to the same pliant NRM and is not realising that the present NRM members can see through the stupidity of his talk and challenge him on that. He is way too comfortable and is neither capable of going to the bush nor surviving there. It was just empty talk. Empty as the talk was, it jolted me out of the slumber that I have been in over the last few months. Not to be beaten into the bush by him, I quickly rushed to the bush myself and picked my weapon – keyboard. There is a lot now to fight for and diligently fight, I will.

Museveni threatened these MPs, some born around the time he came to power, that he will go back to the bush.

Walk-to-Work also played an important role in emboldening the people. Through Walk-to-Work, Museveni received the first ever challenge to his power and for the first time, looked vulnerable. That awe that surrounded him among many Ugandans, suddenly evaporated even among his own. The international condemnation and foreign press analyses showed many Ugandans that Museveni is now a liability. Foreign outlook aside, the conduct of his security men, coupled and encouraged by his statements of arrogance and callousness, made even many of his own feel ashamed and disappointed.

Groups like Activities for Change together with facebookers, twiiters and bloggers have played an instrumental role in sensitising the people and being able to disseminate information quickly. Museveni’s statements are immediately challenged or the daftness of such ridiculed and this information quickly passed around. His errors can now not escape scrutiny. Besides, many people after 26 years of his rule, and now realising that not much has been achieved apart from the shameless corruption and enriching of a small connected group, are ready to stand up to him. It may also be interesting to note that all the Banyankole Bairu senior NRM members who came with him in 1986, except Kahinda Otaffire, have left the movement and government.

Just as the invisible hand wrote on the wall before King Belshazzar during his merry-making and moment of feeling completely in charge, the writing is there on the wall for Museveni and God has given him many Daniels. I repeat here what Daniel told King Belshazzar: “God has numbered the days of your reign and brought it to an end. You have been weighed on the scales and found wanting.  Your kingdom is divided and given to the Medes and Persians.” That very night Belshazzar, king of the Babylonians, was slain…


Posted by on October 24, 2011 in Stephen Twinoburyo's blogs


Is this the Uganda Oil Gala?

Posted by Stephen Twinoburyo.

It looks more like a family reunion: Ba-‘something’ kweterana!:

I don’t know if anybody can think of a better name or description…..

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Posted by on October 14, 2011 in Stephen Twinoburyo's blogs


What Euro zone Crisis means for Uganda

By Enock Nyorekwa Twinoburyo.

Enock: Examines lessons from the Euro zone crisis.

From late 2009, fears of a sovereign debt crisis developed among fiscally conservative investors concerning some European states, with the situation becoming particularly tense in early 2010. This included euro zone members Greece, Ireland, Spain and Portugal and also some EU countries outside the area. In the EU, especially in countries where sovereign debts have increased sharply due to bank bailouts, a crisis of confidence has emerged with the widening of bond yield spreads and risk insurance on credit default swaps between these countries and other EU members, most importantly Germany. The pronounced sovereign debt increases in only a few eurozone countries has become a perceived problem for the EU area as a whole. If it wasn’t for the euro, Greece’s debt crisis would be an isolated problem — one that was tough for the country, but easy for Europe to bear.

The EU debt piling and the Euro zone currency crisis, threaten not only the collapse of the Euro currency but the future of European Union and the health of world economy. The EU consists of 27 countries of which 17 countries share the EU currency .These economies depend so much on government spending as a percentage of GDP in that austerity will negatively impact on growth and still leave a high debt to GDP ratio. According to the EU’s statistics body Eurostat, Italian public debt now stands at 120% of GDP, ranking as the second biggest debt ratio after Greece (with 142.8%)

There are fears of a possible Greek default that continues to sway the financial markets; Portugal and Ireland are going through deep recession (just about the solvent camp) whiles the likes of Spain and Italy are solvent but illiquid. The likely debt default by Greece could spell Turmoil in the Euro zone and the EU at large, as there are fears of contagion. This could spark the debate on getting rid of Greece which would permanently undermine the security of troubled economies the famous PIIGS(Portugal, Ireland, Italy, Greece and Spain) of EU as well create the divide between the 17 countries of the Euro zone and remaining EU ten.

There is no simple solution to EU debt crisis but for certainty a rescue plan calls for collective support to the insolvent and illiquid countries, and imminently supporting Greece in its inevitable debt restructuring as well as shoring up the European banks to withstand sovereign debt default. Thanks to the Germany Parliament that voted on September 29, 2011, in favour of expanding the powers of the European Financial Stability Facility (EFSF).Under the plan, the EFSF will be enlarged to €440bn (£382bn)-see It will also be given the ability to give “precautionary loans” to struggling European countries, buy EU government debt, and provide funding to shore up the capital reserves of European banks. The vote approves the increase of Germany’s guarantees from €123bn to €211bn. Germans approval though still faces the ratification challenges by other Euro zone countries, By 28th September 2011-Five countries (Estonia, Austria, Malta, the Netherlands and Slovakia) were yet to ratify the measures The biggest concern being Slovakia since it did not participate in the first Greek bailout of 110 billion Euros in May 2010.. As much as the bailout would wade off the immediate threat of a Greek default, the real debate remains on whether there will be enough funds to bail out larger economies such as Italy. Today banks don’t have money and so don’t some governments in Europe

The Euro crisis may also be only the first episode in which post-financial-crisis vulnerabilities converge to such devastating effect, implying that similar dangers for developing countries could emerge from sovereign debt crises. The Crisis in EU will likely have implications on all frontier markets including in our economy (Uganda) esp. the banking sector due to increased financial volatility and the economy as a whole The transmission mechanism of this crisis will likely be felt through the entire financial services industry:

Most EU’s big spenders like Germany, France and Spain are taking necessary budget cuts as remedy to current debt crisis coupled with afore mentioned hard hit economies and this could  imply that Ugandan exports could be affected.According to Uganda statistical abstract 2011-the Common Market for Eastern and Southern Africa (COMESA) and the European Union (EU) regional blocs remained the major destinations for Uganda’s exports with respective market shares of 59.0% and 17 %.Uganda exports coffee, tea, fish, flowers, vegetables and tobacco to EU countries. Uganda’s tourism sector which fetched USD 660 Million in 2010and Remittances from Ugandans abroad will likely reduce as a lower euro reduces the purchasing power of European tourists travelling to developing countries, and the value of remittances originating from Europe.

Due to the global nature of interconnected financial markets, Foreign Direct investments are likely to reduce. Due to rising interest rates on loans in Europe today and the apparent negative real interest rates, both foreign direct investments and portfolio flows are likely to reduce. The World Bank President Robert Zoellick intimated ahead of the Global Finance Leaders in washington the week of 19th September 2011 that stock markets in developing countries have been hit hard and capital flows have declined sharply since August when the euro zone’s debt crisis intensified.  The markets have witnessed a flight-to-quality phenomena of late. Gold, Silver, the Yen and the Swiss Franc have seen tremendous growth in demand due to their perceived safe haven status, and this has pushed the price of the commodities to historical highs while the currencies have firmed strongly against the dollar.  However it should be noted that over the last few years, China and India have been major providers of FDI to Africa and to Uganda in particular. While the FDIs from the EU to Uganda have been majorly to the nascent Oil and Gas industry which implies FDI levels may not necessarily reduce significantly. The Euro crisis may constrain trade and other bank credit available to developing countries as it raises questions about the viability of European banks—especially those based in developing countries whose assets likely include large amounts of their own government’s bonds. But all international banks will be viewed as having either direct or indirect (through other banks) exposure to the developing countries-Uganda inclusive

With the EU debt crisis investors are switching to more stable currencies like the Dollar. In the week (22nd -26th September 2011) the Euro hit the record low (as per that time period) against the yen as investors thought safe haven in Japanese yen. The same week, the Ugandan currency hit an all time low of 2920-(Daily Monitor,27th September 2011.Prosper page 6).  Against the backdrop of envisaged reduction of exports, FDI, and remittances, the Ugandan currency could depreciate further.

Reducing development aid: Uganda’s main bilateral partners are from Europe  so as EU countries are pressed to cut budgets or least some of the countries are insolvent or illiquid, the development aid budgets will likely reduce as evidenced by some of the EU bilateral development partners who are reducing on the number of the partners countries they give development aid. Since the Global crisis in 2008, the development assistance has been on the reducing trend and projected to reduce further. The reduction may not solely be attributed the crisis but also on the fact the with Crisis, there is an increased demand for results and accountability from the Donors.

Source: IMF estimates and projections

The Euro Crisis coupled with the US credit rating worsening and China showing signs of weakness, especially in exports and labour costs that have been rising steadily due to second round inflationary effects, the Crisis could be more devastating for Uganda than it was in 2008-. This time around there is slim silver lining for Uganda compared to the previous crisis. The fundamentals of macro-economic stability are poorly calibrated this time around. Inflation is edging higher (September headline inflation at 28.3%), the local unit is depreciating unabated, import cover is slightly above 3 months, corruption which acts as a quasi-monetary easing mechanism is still rampant, the fiscal regime is too lax given the economic cycle not forgetting the aforementioned transmission mechanisms FDIs, remittances and reduced exports . This is also backed by the World banks president’s statement that poorer countries had less fiscal space compared to 2008 to counter an economic downturn and some were “walking a monetary policy tightrope” trying to balance inflation pressures and effects of the euro zone crisis. Against that backdrop of likely reduced economic activity and growth, the banking industry progress will also likely slump which calls for even tighter measures on lending to avoid high default rates

It is not all doom from the Euro crisis for Uganda and Africa as a whole- While Europe is preparing for a difficult consolidation course, whose nexus is still uncertain, Uganda should now have the chance to shift into a higher gear, use the benefit of a lower level of debt (though rising) and a younger population to make possible investments that signify a more sustainable use of capital than we have experienced in the past few years.

Uganda too should:

  • Closely monitor and tightly regulate the operations of foreign banks and of their links with domestic banks which may be prudent in the current circumstances.
  • Rely less on exports to the industrial countries and more on their own domestic demand and regional trade
  • Continue tightening of the monetary policy to help revamp the investor interests since apparently the current inflation is higher than the treasury bills( negative real interest rates)Fiscal prudency in line with the national development plan investments needs to be  exercised complimentary to current monetary measures. The continued increase in interests though should be carefully done not to hurt investments as well encourage default rates
  • Buttress its balance sheet by turning some of its assets into valuable assets that perform well in a downturn, like the one we expect. Gold bullion is a natural start. Silver and diamonds are also fair bets. A strong balance sheet will ensure that Uganda comes out of the global downturn on a much stronger footing.
  • Exercise transparency of oil resources and management probably through joining international Extractive Industry Transparency Initiative .The oil proceeds could help bolster public investments, re-build reserves and as well reinforce economic activity.


Enock is a macro economist with the Royal Dutch Embassy in Kampala. He writes here in his personal capacity.

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Posted by on October 3, 2011 in Stephen Twinoburyo's blogs