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Contracts given to ghost firms turn investors away from Uganda

Saturday May 16 2015
EASchmidt

Kristian Schmidt, head of EU delegation in Uganda. PHOTO | FILE

Julius Barigaba spoke to the head of EU delegation in Uganda on the EU’s partnership and lessons the EAC can draw from the Union.

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What lessons do you think Uganda and East Africa can draw from the EU?

Uganda doesn’t need any lessons from Europe. Being landlocked, Uganda cannot develop without regional integration. On that one, I would say Uganda would be a very constructive member of the European Union... if we were not on different continents.

I think there are many lessons from the European Union integration process that can be looked at, also, the mistakes that we have made, in order for East Africa not to make the same mistakes.

The creation of a single market is an obvious model to copy. It has served Europe very well; it certainly has pushed it to economic growth.

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We have learned that it’s not just open markets but that you have to open up other areas of Customs facilitation. Now East Africa is working on visa facilitation for the tourism industry.

The EU is made up of 28 member states, and 500 million consumers. You need to get that critical mass that makes you an attractive place to invest in. A foreign investor coming to Uganda will make that decision also because from Uganda, any production and distribution is not just for the Ugandan market but the East African market.

The East African Community also has a very ambitious plan for a common currency. I think they have a lesson to learn from the recent European financial crisis: that you need more than just a common currency and political vision for that. You need institutions and the political will to pool sovereignty on certain decisions. Europe overcame that by creating a banking union. This is something that Uganda and East Africa should keep in mind.

If you want a single currency, then the central banks have to lose sovereignty and you have to accept that the monetary policy is no longer something that will be decided in the individual capitals.

Apart from these, the main lesson I would say is: Are there certain things you want to do as a region? You have to realise that you cannot do these as standalone nations. You have to actually take charge of your destiny whether it’s in the region or the world.

You have to pool sovereignty. That doesn’t mean that a nation loses sovereignty; it means that a nation regains influence on something that it wasn’t dealing with. Take for instance, climate change. This is not something that any nation alone can deal with. So, to say that I will lose sovereignty by deciding with others is wrong. By deciding with others, you are actually able to influence an issue that otherwise is beyond your control.

That sort of post-national thinking is what we can learn from the European Union.

Together with other envoys from EU member states, you met President Yoweri Museveni recently. What did you discuss?

This was a six-hour discussion in Rwakitura [on April 24 ]. We covered the whole development agenda, starting with economic and trade issues. We made it clear that Uganda and East Africa is an interesting market.

We realise that this is more than just a development co-operation and we should have an equal partnership with trade and foreign direct investments. We told the president that for that to happen, there needs to be a better business climate, we need to see a level playing field, we need to see clean public procurement, etcetera.

Europe is still Africa’s biggest export market and we are still the biggest source of foreign direct investment. But let’s not take that for granted, and let’s make sure that conditions are there for this partnership to continue.

We then moved to the political issues, and discussed elections. We were happy to hear from the president that for him, free and fair elections next year were the objective and ambition.

We reminded the president of some of the observations made by various election observer missions, some of the outstanding recommendations that had not been implemented; we discussed electoral reforms and also some of the new things that are becoming issues such as monetisation of politics which is part of the assessment whether the elections are free and fair.

We specifically discussed the space for civil society – the new NGO Bill that is being discussed in parliament.

On human rights, we discussed how to address issues that were raised in the Uganda Human Rights Commission’s report, on mainly police human rights violations, gender equality, violence against women and legislation on that point.

We discussed regional security issues – Burundi, South Sudan and radicalisation in the Horn of Africa. 

A good business climate, clean procurement, free and fair elections, non-monetised politics and space for civil society are ingrained in the political, cultural and economic psyche of Europe. Are you convinced that these can be actualised in Uganda and East Africa?

The president started his remarks by going back to where Uganda came from in the 1980s – the NRM government came to power on the back of dissatisfaction over the lack of free and fair elections. The president described to us the technical improvements made in election organisation.

All these technical aspects of elections, like voter registration, have been improved. You can argue for and against how the ID cards are being used but you can’t disagree with the fact that it will be more difficult to get mistaken identities.

In answering your question, it is important to recognise the gradual improvement in how elections are organised, if you take that long perspective. We have observed that while that is true, there are some gaps still remaining. One is the independence of the Electoral Commission.

The other emerging issues relate to this culture of monetisation of politics, the power of the incumbent, the fusion of state and party in the election campaign. We are not the ones to raise them first; they are being raised by civil society, by the Uganda Human Rights Commission, strong voices in parliament and by the judiciary. These are issues that have to be taken into account when we discuss whether the election is free and fair.

There are still steps that Uganda could take between now and elections in 2016 to make sure that everyone will agree that these are free and fair elections. 

From your meeting with the president and other government officials, did you get the sense that there is political will to set up an independent electoral commission?

Yes, I do believe that, but I also believe that it won’t come easily or automatically. 

The EU is a major partner in the road transport sector. One of the biggest problems in that sector is corruption in the tendering of road projects. Is Uganda’s “zero tolerance” policy on corruption being sufficiently enforced?

I don’t think it’s sufficiently enforced, and a lot more needs to be done. And I know this is recognised both by the ministry, and I would even say, the president.

We are a very important partner in that sector and I am pretty confident that all the funds that we have allocated have been implemented because they are following EU procedures.

But that for me is not enough to feel satisfied; there are systemic weaknesses in many of these tendering procedures, which means that value for money is not ensured for the Ugandan citizen.  

Uganda has every interest in as many as possible companies coming in — serious companies that are interested in staying to create jobs, invest and build quality. But they run away scared. Whenever they open a newspaper and see all these headlines — that you can give a contract to a non-existent company— any serious contractor who sees that will actually think twice about coming to make a bid in that kind of procedure. You are risking your money.

The ultimate effect of that is that the market in Uganda is very narrow, and you allocate contracts to friends or improvised contacts. That is very bad. We believe this sector calls for a serious systemic improvement.

How much have you engaged government at ministerial level or even the presidency over these concerns about corruption?

Of course, we have had a lot of engagement, and we feel now that there is political will to do something about this; there is a new leadership at the Uganda National Roads Authority; there is a new minister for works with whom we share these views. So we feel there is awareness of this problem and a will to do something about it.

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