In spite of the huge task ahead of him, President Yoweri Museveni looked buoyant when he was sworn in for his sixth term of office on 12 May, having earlier won the 14 January elections.
The 76-year-old former guerilla, who has been in power since 1986, has a daunting list of challenges ahead of him. Unlike in the past, this time around he is starting a new term when the economy is facing a number of threats, from the impact of Covid-19, mounting external debt and rising unemployment rates.
The central bank – the Bank of Uganda – says the economy declined from its projected 3.5% growth to 0.5% in the last financial year.
In the face of the economic slump, the President has the task of ensuring that the ongoing infrastructure projects involving power generation, road and railway upgrades are completed on time.
The work includes the $1.7bn, 600MW Karuma hydropower plant on the Nile River. Road projects include the $1.55bn, 77km Jinja-Kampala Express Highway, for which the African Development Bank has approved a loan of $230m.
Also on the list of priorities is a new standard gauge railway, which Kenya and Tanzania, fellow members of the East African Community have either finished constructing their work for or are about to do so. This project is important as Uganda is the gateway to other members of the regional bloc – Rwanda, South Sudan and a possible new entrant, the Democratic Republic of Congo.
On the plus side, Uganda is poised to be East Africa’s major oil producer. The President will be keen to ensure that the project is implemented as planned. The country’s future economic growth aspirations partly rest on this. In addition to the 10,000 jobs it is expected to create, the oil revenue will reduce Uganda’s financial woes.
In April, Museveni and his newly installed Tanzanian counterpart, Samia Suluhu Hassan signed agreements with Total and China National Offshore Oil Corporation (CNOOC) to start construction of the $3.5bn, 1,440km oil pipeline to the Tanzanian Indian Ocean port of Tanga from the Albertine region of the western Hoima district to the Tanzanian Indian Ocean port of Tanga.
The agreement gives Uganda a 15% stake, while Tanzania, through its Petroleum Development Corporation, has 15%. Total S.A. has the lion’s share of 62% and CNOOC 8%.
In the short run, however, Museveni will have to deal with the rising external debt. Finance Minister Matia Kasaija says Uganda owes both multilateral and bilateral lenders $18bn, representing 47.2% of its current gross national product. Although it is below the 50% considered the red line by the World Bank and the International Monetary Fund (IMF), current statistics reveal that this June the debt will hit 50.2% of GNP.
Multilateral creditors including the International Development Association (IDA), China Exim Bank, African Development Bank, International Monetary Fund and the World Bank are owed 64% of the total debt. The rest is owed to bilateral lenders such as Japan, EU countries and the US.
Need for reconciliation
On the political front, the President has to reconcile the country, divided by the campaigns in the run-up to the 14 January elections. For the first time in 35 years, Museveni and his ruling National Resistance Movement party lost the poll in the central region, the populous economic heart of the country.
This region, inhabited by the main ethnic group, the Baganda, has been Museveni’s political linchpin. It was in this region that he fought a five-year guerilla war that brought him to power in 1986.
The president also has to deal with the growing international criticism over the country’s human rights record. In February the EU sought the sanctioning of Uganda’s political and military officials over alleged human rights abuses.
The US also announced in April that it had a list of Ugandan officials it would bar from visiting the country. Although the list has not yet been released, there is speculation that it includes some close to Museveni.
The US has for many years funded weapons and training for the Uganda People’s Defence Force. In addition, the US has over a similar period funded 90% of Uganda’s health budget, according to heath budget support statistics from the Finance Ministry. Uganda cannot afford to lose this vital assistance.
In the short run, Museveni’s new government will have to deal with the challenges of balancing the budget, which is currently in massive deficit. Out of the Ush44trn (approx. $12 bn) allocated for the next financial year, Ush21trn ($5.5bn) has to service external debt. Considering that domestic revenue is projected at nearly Ush21.6trn ($5.9bn), it means the country would spend a whopping 96% of its annual domestic revenue on servicing external debt. The onus will be on Finance Minister Kasaija to craft other ways of financing the remaining Ush23trn ($6.1bn) of the budget.
Kasaija has indicated his intentions to expand the domestic tax net, but he is unlikely to succeed in raising the revenue to fill the gap from a population already burdened by numerous taxes.
Bloated government a concern
The President also has the task of justifying the size of his government, which his critics say is too big compared to its economic capacity. Uganda, the 16th biggest economy in Africa, with a GNP of $44bn, has over 530 MPs and 90 Cabinet Ministers, the highest number in Africa.
In comparison, Nigeria, Africa’s largest economy, with a GNP of $443bn, ten times that of Uganda, has 469 legislators in both the Senate and House of Representatives. Neighbouring Kenya, Africa’s sixth-largest economy has 360 MPs and 23 Cabinet Ministers. Although Nigerian and Kenyan MPs earn much more than their Ugandan counterparts, the earnings of Uganda’s MPs are seen by critics as greatly at variance with the country’s economic realities.
One of the toughest jobs Museveni faces is fighting graft, because it has become the norm. His critics say he is not doing enough to combat the vice. He acknowledges the problem but says his government has established institutions to tackle it. He cites the Inspectorate of Government, the State House Anti-Corruption Unit, the police and the courts and faults them for not doing enough to end the problem.
But the President says fighting graft is high on his priority list and that is the reason he established an anti-corruption unit in his office, which is doing a good job.
According to Col. Edith Nakalema, the State House head of the Anti-Corruption Unit, Uganda loses Ush2trn ($320m) annually to graft. But Transparency International says the figure is three times higher, at 15% of GNP.
Nakalema says she has so far charged 248 officials in the courts and secured convictions for 24 of them.
Unemployment is one of the main challenges for the President to address. In a country where about 70% of the population are below 30 years of age, unemployment is pronounced among the young. This particularly applies to those in the 18-24 age group, while figures suggest that up to 80% of those joining the employment market, including 40,000 who graduate from universities annually, cannot find jobs. Ignoring the needs of the youth would be tantamount to political suicide.
The problem of unemployment among the youth is compounded by the education system inherited from colonial Britain, which ignored technical and vocational skills in favour of theoretical knowledge. With the ministry of education launching a new initiative to give vocational training to the youth and adults across the board, that problem could be addressed.
When his current term ends, Museveni will be 81 years old. The challenge he faces is to create conditions that reassure Ugandans that after him there will be a smooth transition, to break the past cycle of violence every time the leadership of the country has changed.
