starve as President threatens to reject help
We live in two worlds: the rich north and the desperately
poor south. Millennium Development Goal 8 aims at creating
a global north-south partnership to help poor countries
like Uganda improve their lot. In the last of our eight-part
series on MDGs, RICHARD M. KAVUMA writes
on limited progress amidst the rope pulling between donors
and President Museveni’s government
It is a Wednesday
in May in a Kampala diplomatic meeting and no one realises
the impending attack. Only yesterday, President Museveni
was in radiant mood as he addressed this third donor group
consultative meeting. These meetings are important because
donors, who fund more than half of the national budget,
critique the country’s performance on indicators like good
governance, corruption and budget discipline.
But now the
President must appraise the donors.
of ' we will not give you money because you don’t dance
this way; we will not give you money if you don't dance
that way' is squandering the partnership [between the donors
and myself]," Museveni said.
The Monitor newspaper of May 17, 2001, Museveni quarrelled
on: "I don’t know why you want to recreate all this
tension all the time. So much of this arrogance, I find
very annoying. It should not be there. I advise you against
it. You [donors] are talking about a country as if it is
a province of another… This issue [of do this] here, [do]
this there, is nonsense. We will not listen to that.
“If you don't
convince me [to do something], don't expect to [force me
to do it]. Does partnership mean compliance, or does it
before that stinging attack from Museveni, world leaders
had met in New York and agreed on the Millennium Development
Goals poor countries must achieve by 2015. Goal 8 envisaged
a global partnership for development, a vehicle for achieving
the other goals. Under this partnership, poor countries
like Uganda would get trade access to protected Western
markets; increased development aid; cancellation of external
debts; technology transfer and increased, effective access
to essential medicines. On their part, the developing countries
would be expected to show commitment to democratic governance,
fight corruption and reduce poverty.
Five years after
that Museveni tirade, the language may have changed, but
the quarrel remains. Just a year ago, Museveni moved to
reduce reliance on “paternalist" donors, after they
slapped aid cuts on him over governance issues. So has anything
come of the deal struck under Goal 8 in New York?
Giant strides have been
made to increase Official Development Assistance (ODA).
For instance, ODA from the European Union rose by 50 percent
between 2000 and 2005, the bulk of it going to Sub-Saharan
Africa. However, there remains doubt whether rich countries
will meet the 2015 target of giving at least 0.7 percent
of their annual Gross National Income as ODA to poor countries.
Only Denmark, Luxembourg, Holland, Norway and Sweden have
reached that target.
According to Tom Vens,
the First Secretary at the EU Delegation in Kampala, by
2010, the EU hopes that each member state will be giving
at least 0.51 percent of GNI as ODA annually, while the
average for the group should be at least 0.56 percent.
“This means that from
2010, we will increase ODA by 20 billion Euro per year,”
said Vens, also head of the Economic, Trade and Social Sectors
In Uganda, foreign aid
has increased from Shs 533 billion in 1993 to over 1,750
billion this year. But Uganda has had a turbulent relationship
with donors, with many cutting aid as Uganda fails to meet
Although the EU’s aid
budget has risen significantly over the last five years,
Uganda’s own share of the aid has not increased as much.
In fact, it has reduced relative to the share of other developing
countries. And the problem, Vens says, is the governance
question, where Uganda has been repeatedly found wanting
on issues of democratic governance, human rights and corruption.
Last year, several European
countries withdrew aid because of governance issues. One
of the reasons behind the aid cuts was the creation of 20
new districts, which will only serve to increase public
expenditure. According to a 2001 analysis by the United
States Agency for International Development (USAID), each
new district cost government over Shs 1billion a year.
The donors are also unhappy
with the government’s budget discipline, whereby money approved
for certain sectors is either overshot or diverted to other
“Corruption is very critical
and we have now heard that there is commitment to do something
about it,” Vens said, referring to President Museveni’s
recent vow to fight corruption. “To be practical, we are
eager to see the recommendations of the [Global Fund] Commission
of Inquiry acted upon and that money which changed hands
Justice James Ogoola recently
led a probe into the Global Fund to fight HIV/AIDS, Malaria
and Tuberculosis after the fund was suspended over corruption.
The commission unearthed
chilling corruption shame, even implicating ministers and
their aides. During the hearings, it was clear that unscrupulous
government and NGO officials had stolen or squandered money
meant to help the fight against HIV/AIDS and mitigate its
impact. With Justice Ogoola breathing down their necks,
the culprits repeatedly forged receipts and accountability
documents, angering some commissioners.
“The receipts are forged
and the trips did not take place,” Commissioner Tumusiime
Mutebile told witness Samuel Baraza, an aide to former junior
Health minister Mike Mukula.
In one incident, Baraza
signed for Shs 5.312 million for his boss to inspect Tuberculosis
centres in Mbale, Kotido, Moroto and Nakapiripirit districts.
Although the minister only went to two districts, Baraza
presented accountability for all the money to the cent.
Such corruption scandals
– and Uganda has plenty – seem to vindicate the adage that
“foreign aid is what the poor in rich countries donate to
the rich in poor countries.”
This unstable relationship
appears to be one of the reasons behind Kampala’s new policy
of reducing reliance on donor money. Finance figures show
that donor funding was projected to fall from 57 percent
in 1993 to 39 percent this year. In an article published
in the September 2005 edition of the Institute for Development
Studies (IDS) magazine, Damoni Kitabire, a macro-economic
advisor in the Ministry of Finance, argues that Uganda is
right to reduce dependence on donor aid.
Too much aid, Kitabire
argues, also makes the country vulnerable in case the donors
move to cut aid and affects her sovereignty, both of which
are not consistent with the desire for an “equal relationship”
The economic explanation
is that reducing the fiscal deficit is in line with the
Poverty Eradication Action Plan (PEAP) objectives to reduce
aid dependence and promote export-led growth; scrutinise
aid and increase its efficiency; as well as keeping the
external debt sustainable. Kitabire also argues that at
present levels, Uganda can’t absorb all the aid and ensure
With a lot of money needed
to improve health and education services, this move to reduce
aid-dependence looks nonsensical. In fact, in the same IDS
magazine, White Howard argues that MDGs can (only) be achieved
if aid is significantly increased.
“Concerns about the absorptive
capacity of recipient governments are overstated. Capable
specialists in fields like education and health are present
in strength at intermediate levels across Africa, their
skills untapped owing to inadequate funds,” Howard wrote
in an article titled, ‘A case for doubling aid.’
But Tom Vens believes
government will not reject good aid. Instead, it will scrutinise
aid more closely to ensure it is in line with government
priorities. Still, Vens believes that controlling public
expenditure is a better way to reduce the fiscal deficit.
of contention for long was the channel for delivering aid.
Most donors are said to prefer project support (funding
specific projects directly) as opposed to budget support
(giving a lump sum to government to allocate in accordance
with its budget priorities) as the main channel for delivering
aid. Kitabire said in his article that increased aid could
lead to many misaligned and costly projects not in line
with PEAP objectives or set spending priorities.
then, Kampala’s aid policy is to encourage donors to move
to budget support instead of project support. On the other
hand, donors feel that project support allows them to ensure
that money does exactly what it is meant to do. In fact,
last year, donors who cut aid meant for budget support re-channelled
it to project support, particularly to northern Uganda.
In 1996, the World Bank
and International Monetary Fund launched an initiative to
write off debts of some of the Heavily Indebted Poor Countries
(HIPC). This initiative was expanded two years later. Uganda
became the first ever HIPC beneficiary, with $700 million
debt relief over a repayment period of 30 years. In 2000,
Uganda got another $1.3 billion in debt relief over 20 years.
The World Bank and IMF
boards determine which country qualifies for debt relief
upon achieving agreed terms.
Most of Uganda’s crippling
debt has been with the International Development Association
(World Bank, IMF and African Development Fund). But last
month, Finance Minister Ezra Suruma announced that under
the Multilateral Debt Relief Initiative (MDRI), the institutions
had cut Uganda’s debt from $4.5 billion to only $0.5 billion.
Suruma said that having
come out of the debt trap that had cost the country $200
million annually in debt service, Uganda would put more
resources into education and infrastructure development,
Such large debt-relief
figures can be misleading, however. One would imagine, for
instance, that suddenly Uganda will have $4 billion available
to spend. But because debts are repaid in installments over
many years, it is the annual repayment installments, which
government no longer has to pay, that become available.
In 1998, the year the $700 million debt relief was granted,
Uganda got only $45 million. In fact, since 1998, the country
has accumulated just $590 million from HIPC, according to
Ministry of Finance figures.
Commenting on the MIDRI
cancellations, the World Bank chief in Kampala, Grace Yabrudy,
said Uganda was being rewarded for two decades of good macro-economic
policies. She then urged more investment in critical sectors
such as health, education, roads and energy.
“In this respect, continued
good performance and tangible progress on Uganda’s anti-corruption
programme will help to secure additional IDA resources in
the future to support these critical investments,” Yabrudy
Yet again, Yabrudy’s statement
contained that ‘paternalistic’ condition – that governance
issues must be put right in order to get substantial or
more aid. It is a condition that proud leaders of developing
countries hate to hear. At an EU consultative workshop in
Kampala last month, the EU Head of Delegation in Kampala,
Sigurd Illing, lamented that most African states were suffering
a crisis of legitimacy (lack a genuine contract with the
people) and weakness (unable to deliver basic social services
by themselves.) Illing said that the promotion of development
had to go hand in hand with the promotion of democracy.
Basil Kandyomunda, Chief
Executive Officer of the consultancy firm Development Options
Team, says that it would be naïve for Uganda to expect development
assistance without meeting the donors' minimum standards.
“If you are a head of
a household and you fail to provide for your people, then
you should be ready to meet some standards of those who
help you,” says Kandyomunda, formerly with Uganda Debt Network.
“You could be failing to provide for your people because
you are a drunkard or because you are wasteful. So if your
helpers say that you should not be wasteful, I think they
have some right.”
And when donors say that
let there be drugs in hospital, or that the roads should
be done, they are pushing for facilities for ordinary Ugandans,
not the leaders. Which raises the paradox, that donors show
more concern about human rights abuses, poverty, and a sense
of general deprivation than local governments do. In fact,
it is not unusual for opposition parties and the civil society
to appeal to donors whenever they feel oppressed by the
Can we trade?
One of President Museveni’s
most repeated pleas is that Uganda needs trade and not aid.
Museveni says aid has never developed a country but argues
that fair trade would help get Uganda out of poverty.
Europe and America have
given developing countries like Uganda preferential access
to their markets under the Cotonou Agreement and the Africa
Growth and Opportunity Act (AGOA) respectively. Under these
arrangements, selected developing countries can export all
their products “except arms”.
But how much of this opportunity
has Uganda taken? Experts argue that Uganda must address
production bottlenecks if it is to become better integrated
in global trade.
In the case of the EU,
for instance, Uganda’s export revenues from fish, flowers
and coffee have been increasing but only marginally. For
AGOA, little countries like Lesotho are making much more
money than Uganda.
According to Estella Aryada,
the Operations Officer at the EU Delegation in Kampala,
Uganda for instance, failed to fill its quota to sell sugar
to the European Union. Instead, countries like Mauritius
seized the opportunity. (Although Europe opened its markets,
products like sugar, bananas, beef and rice have remained
subject to quotas. These quotas are being reviewed after
the World Trade Organisation rejected them).
Basil Kandyomunda believes
that the West has tried to open up their markets but Uganda
has failed to take advantage. He gives the example of Lesotho,
a leading exporter of cotton textiles under AGOA. Lesotho
does not grow cotton but is more organised than Uganda,
whose farmers could have been organised to produce cotton
for spinning. In 2004, Lesotho sold textiles worth $446.5
million under AGOA while Uganda could only earn $4 million.
Last year, Lesotho reaped $388 million from AGOA textiles
against Uganda’s $4.8 million.
For Kandyomunda, providing
an enabling environment in a country like Uganda goes beyond
ensuring that there are no rebels shooting at the city.
The government must work towards providing policies, information
and minimum infrastructure to ensure that Ugandans take
advantage of trade opportunities.
Echoing the same view,
Estella Aryada argues that from hundreds of items that qualify
to be exported to Europe or under AGOA, the government should
have selected commodities that Uganda can most profitably
sell and actively promoted them.
The Ministry of Finance,
in a statement prepared for The Weekly Observer,
acknowledges that there are production and supply bottlenecks
that come with mistakes: “These bottlenecks, along with
other supply-side constraints (such as the high cost of
finance, deficiencies in trade-related infrastructure, weak
institutions and weak regulations), present the most intractable
hurdle to export growth.”
Another hurdle is that
these big markets are distant and therefore very expensive
to reach, which is partly because Uganda is a landlocked
country. The cost of transporting coffee or bananas, for
instance, through Kenya up to Europe Canada makes them expensive
and less competitive on the market.
Another limitation is
that once Uganda’s items are on the market, they have to
compete with more established brands with huge advertising
budgets. As Aryada noted, it is not easy for Uganda’s Star
Coffee to outmuscle Nescafe on the European market. And
until we can sell substantial volumes, the trickle down
effect to the farmer in Mubende remains marginal.
Aryada also notes that
countries like Uganda must also meet prohibitive health
standards for their products to be acceptable. And this
is still a problem because many in the south feel the standards
are unrealistic, even unnecessary. In fact, the Ministry
of Finance cited the standards as one of the reasons for
Uganda’s low export volumes.
“Non-tariff barriers have
the effect of prohibiting the entry of Uganda’s products
into overseas markets and thus, even where tariffs are low
or zero, export volumes are still low because of these measures,”
said the ministry statement.
Obviously, the rich countries
still have many problems. For instance, each American cotton
farmer is said to receive $35,000
(Shs 63.7 million) per year while Europe provides an annual
average of $3,000 (Shs 5.4 million) per cow in subsidies.
In stark contrast, nearly 40 percent of Ugandans live on
less than $365 a day. With such support to western farmers,
exports from Uganda, even if tax-free, can expect stiff
Yet as President
Museveni pointed that accusing finger at the donors in that
consultative meeting five years ago, the other four fingers
were pointing at him. A sign Uganda is simply not organised
enough and has not done enough to deserve more from the
rest of the world.
General African exports to USA ($million)
Uganda’s exports to EU (million Euro)
Uganda: various economic
Foreign Direct Investment
Foreign aid inflows
Total debt service
debt service after HIPC relief
Annual HIPC relief