Dec 17, 2013

What you need to know about the firms interested in constructing your oil refinery

Many have said Uganda has been too slow in propelling itself into oil production after discovering oil in 2006. Others  - mainly oil companies – have insisted Kenya could be the first oil producer in East Africa. Pressure from the same oil companies – Elly Karuhanga, President Tullow Uganda – has been growing for government to issue production licenses. All that, understandable as it may be, is seemingly not going to let the government barge from it taking its time, including completing an oil refinery. Meanwhile, the expectations from Ugandans continue to grow. With all this, the government seeks to first get the refinery project off the ground. So as the compensation process goes on in the 29 square kilometer piece of land for the refinery, in Kabale, Hoima District, the final six firms and consortia bidding to build the refinery have been released. The diverse list is not dominated by Chinese companies as earlier speculated. So what? You may ask. Well, these firms want to be part of an infrastructure project, that if economical enough, could see a drop in fuel prices and propel Uganda to be self-sufficient, partly tilting the Balance of Payments. According to Bank of Uganda statistics, the value of oil imports in 2012 increased to USD1bn from USD800m in 2011. 

The China Petroleum and Pipeline Bureau (CPP) consortium was first on the list. Projections would indicate that this consortium at best, includes a host of Chinese companies involved in the petroleum production value chain. CPP, is also a subsidiary of the Chinese National Petroleum Corporation (CNPC) which is placing itself a global oil producer. CNPC has assets of over USD480bn more than twenty times the size of Uganda’s GDP. Chinese companies more often than not have the finances from their development banks to spend on big infrastructure projects. Cheap financing is understandable because it doesn’t weigh heavily on the refinery once completed. Notably however, refineries in Chad and Niger, all with a 40percent stake from Chinese companies, in 2012 were operating below capacity as government and the companies failed to agree on oil prices.

From Japan – Ugandans drive lots of Toyota’s from the country – is the Marubeni Corporation, which is the only firm listed on the six. In other-words, it is only the one single company that did not submit a bid as part of a consortium. Internet searches and the company website describe it as a major player in the construction, exportation and marketing of oil and gas projects. It is a conglomerate that has major investments in Health, transportation, industrial machinery, energy, mineral resources, ICT, Finance and Real Estate among others. It is currently part of refinery projects in Kazakhstan, Qatar and Kuwait. In 2012 however, the company was forced pay USD54m in fines after violating U.S. Foreign Corrupt Practices Act (“FCPA”) in a Nigerian LNG Plant construction project.

Ever heard of Petrofac? Well, Petrofac apparently spent $1.5m (£1m) on a private jet for the boss plus $189,000 on client entertainment according to a story written by UK’s Independent. That aside, Petrofac a UK company, registered in Jersey, USA, also submitted a bid with a consortium. Petrofac is involved in various infrastructure projects in the oil and gas sector in Algeria, Tunisia and Malaysia. Its strength is in the petrochemicals segment, which is usually an offshoot of refining. In September 2013, Petrofac led a consortium that won a deal to construct a petrochemicals plant in Kazakhstan.

Russia is a power house in the oil and gas sector. Its companies, like Roseneft and Gazpromm have proven to be major players in Europe. Well, it is rather not surprising that a consortium led RT – General Resources has also expressed interest in the Ugandan refinery. RT – General Resources is a subsidiary of the Russian state corporation – Rostec. Rostec, is also known to be involved in the businesses of firearms, and in October 2013, signed a USD1bn arms deal with the Angolan Government. They also service and supply Russian made helicopters. In Natural resources, they’ve mining activities in Zimbabwe. Interestingly of all the companies/consortia that placed bids for the refinery, RT – General Services is the only one that issued a statement eventually picked up by the news wires. Their consortium includes VTB Capital, the lending arm of the VTB Group a leading Russian financial services – including banking – provider. It is 60percent owned by the Russian Government. Tatneft, another Russian company, is involved in the entire value chain from exploration to marketing, is also part of the consortium. A point to ponder on though is a statement in the Russian media outlet RT, which reveals that Andrey Korobov, the General Director of RT – Global Resources said “The consortium aims to recoup the money spent on the project in a short time due to the high oil price.”

As South Korea ponders on the next move to be made the young North Korean leader, Kim Jong Un their companies have been making inroads in Africa. Samsung has pitted itself against Japanese Companies like Panasonic, Sony and Olympus on one hand and Apple on the other. This time, the largest oil refiner in South Korea SK Energy – a subsidiary of the SK Group - has also put in a bid with a consortium of companies for the Ugandan refinery. Korean media has been reporting declining fortune at home explaining why it has been looking for opportunities in countries like Australia. The SK Group has eight subsidiaries in just the petroleum value chain.

Know a country called Iran? Of course you do. Well, this has nothing to do with Nuclear Weapons but has everything to do with it. In September 2012, there was an EU embargo on Iranian oil imports; that limited any business performed by international companies with ties in the EU. In that month, Vitol a Swiss company, the largest and most aggressive energy and commodities trading company, admitted – well kinda – to have traded some Iranian oil. Okay, if that is complex, remember the famous Iraq UN oil-for-food-program? Vitol also in 2007 pleaded guilty to theft and paying kickbacks to Iraq under this program. It agreed to pay a fine of USD17.3m. So why are we talking about Vitol? It is also leading a consortium of companies that want to construct an oil refinery. Vitol [] is also vertically integrated – involved in the entire oil value chain.

As the Uganda government deals with compensation of Ugandans occupying the proposed refinery land, it now also has to go through a process of finding the best possible partners in the oil refinery. One of these consortia named above will have a 60percent in the refinery of about 60,000barrels per day. In an article I wrote for The CEO Magazine – Honorary mention in the 2012 ACME Oil and Gas reporting awards – a Norwegian expert told me:
 “Worldwide, there are more than 600 refineries with different solutions for state involvement based on history, economics and politics. Each situation must be evaluated  on its own merits, and I am confident that Uganda will find a solution which serves the  country well,” - Sverre Brydøy a consultant with IPAN [The International Petroleum Associates Norway (IPAN), a consulting firm with expertise in exploitation of oil and gas including refinery models.]

In the same article, Dr Keith Myers [previously worked for BP  and rose to the level of Senior Commercial Advisor until  2000, when he quit. He now offers advisory services through Richmond Energy Partners – which he founded – to investors and oil and gas companies.] also noted; 
“I assume that the GOU will wish to have its share of the capital costs paid by others. The providers of capital will want a considerable degree of control over how the refinery operates until their risk capital is repaid. The challenge comes in aligning purely commercial objectives with a political agenda that may compromise profits from the commercial partner's perspective. Refinery joint ventures between State Enterprises and commercial investors work best where objectives are aligned, but the relationships are never easy.”

Dec 6, 2013

On Umeme: let’s get back to the basics

It is the last day of November – 30th to be exact – in 2012. The sun is finding its way through the clouds. We are at the Sheraton Kampala Hotel. The same Hotel where everything was "Kwisha" in 1981. Fast forward to 2013, I once got served milk that had gone bad. I abandoned the cornflakes. Well, on this November day, Umeme had treated us to breakfast and a host of speeches. It was on this day Umeme got listed on the Stock Exchange. And yes, the trading floor was temporarily moved to the Sheraton. “They have been bought off,” they said. “Why are they not telling us the issues? Umeme is cheating us?” they added. Oh well, I wonder how breakfast could be a form of buying us off? But the company got listed, the first since 2009. The price has since appreciated by 36percent and now a share is worth Shs365. Good for the company and good for the USE. Such days are rare for the USE. 


The generators blare on. Downtown Kampala, traders along Nasser Road are listening to their Radios. Later in the evening they will watch NTV and on Newsnight, Andrew Mwenda will be talking about “daft MPs” trying to get the “Umeme contract cancelled.” We suffer from "lack of intellectuals" to analyse issues, he will say. The Umeme concession is in its 8th year – of 21years. When MPs made recommendations after an adhoc committee report on the electricity sector, one of them: terminate the Umeme contract as they claimed it was signed in bad faith. We got a bad deal. Additionally, Umeme lied. In defense of Umeme – and partly, I agree – Mwenda notes that Umeme has not breached any of the concession terms and in fact continues to invest in Uganda, achieving the targets set for it. They recently added a Shs485bn loan deal from IFC, Stanbic and Standard Chartered for further investment between 2015 and 2018. 

Yes the concession agreement is complex. You'd have to breakdown the key issues, one by one, including taxation. So let’s deal with the basics. Umeme is inefficient – sometimes. Bills are still estimated and the generators are dominant. In Kampala, we lack a smart grid. Sometimes the slightest of winds – even before the rains – we are plunged into darkness. They’re “trying to fix” the grid. It is not that easy – they say. Western Uganda is now expected to experience more than four months of load-shedding as the grid is upgraded. But what do we want? Electricity! Efficient supply of electricity. Where did all this start? Uganda Electricity Board (UEB) used to be the power distributor and generator. We had daytime and nighttime load-shedding. It was inefficient. It had suffered from elite capture. The same “elite” still running some of electricity bodies like UETCL, UEDCL and UEGCL – all replaced UEB. All these companies have a role to play in the energy sector. It is complex. UETCL undertakes most of the high level projects on behalf of government. If the transmission lines are inefficient, we have the right to blame them. 

We delayed power projects yet more people were added on the grid. Bujagali delayed. We blamed butterfly activists and Ken Lukyamuzi. Then desperately to keep our lights on, we brought in thermal generators – at a premium. Government decided to subsidise the tariff. Bujagali “went live” in 2012. We had excess electricity, an "un-smart" grid and an ad-hoc committee report. The company went public, the investor, Actis got back about Shs92bn returns on loans for “upgrading” the systems since 2007. 

With Bujagali and ESKOM – running Kira and Nalubaale – they want a power distributor that can make collections for them to get paid. The lending arm of the World Bank, IFC, and Germany’s KFW etc… are all investors in Bujagali. IFC is also a lender to Umeme and holds a 3percent stake in the company. IFC wants a return on the money invested in Umeme, they also want to make money from Bujagali. One Bujagali official notes that they prefer Umeme as a distributor, that way they get paid on-time to avoid creditors knocking on their doors. The pressure is on Umeme and Ugandans. If we generate more power, where does it go if we lose 24percent of it? Well, the tariff. We are going to have another huge Dam, Karuma. The Chinese will build and finance most of it. If you think the tariff will drop, well, unless UEB makes it back. To pay for all this energy, the tariff is likely to edge higher. If we get more industries, then, maybe then we won’t pay that much. So even with the tariff, Umeme has to collect the money. They have improved that to 94percent -2012. Then comes in bill estimation!! There is a planned roll-out of prepaid meters – already for some people in Kampala these meters can be seen. They are mandatory, you either get one or get abused by a sub-contractor. The roll-out for the whole country is expected to cost USD300m. Who will pay for it? You. While we pay our bills, some government agencies default. Remember what became of Uganda Airlines? The government racked up a bill that they didn’t pay, sometimes. This cost the airline and it is partly why it went under.  

Point here is, yes we need the FDI, but Umeme’s is not doing charity work, neither for themselves nor for us. We have to keep asking the questions, no matter how “stupid” they sound. If we stop asking, then who will, yet we are the ones who pay the price. If the elite can’t explain the basics, then who will? If they assume, “yeah, Ugandans suffer from lack-of-intellectualism-so-let-us-ignore-them” then how do "they" expect the apathy to go away? The more we discuss Umeme, the more open they become. A Ugandan SME needs efficient supply of electricity. 


The first thing any business reporter who wants to write about the stock market is told is: “buy shares.” That way you’ll understand how our small stock exchange works. So that way, you become an investor, sometimes, you forget you're a journalist. So yes, despite the "machinations" about Umeme, the demand for the shares of the company has been on a rise.The reason: Institutional investors. Institutional investors, mostly offshore [Mauritius] seem confident. Umeme Limited, Uganda, is 60percent owned by Umeme Holdings - managed and owned by Actis. For one,it has most sophisticated tax arrangements. The holding company that owns Umeme is domiciled in Mauritius [tax haven]. Prof. Guttorm Schjelderup calls this [tax havens] a facilitator of “sophisticated tax planning.” It is a listed company. Disclosure is not problem. Olympus is a listed company in Japan. Enron was listed on the NYSE. Listed banks have rigged Libor, been fined and the world moved on. 

Nov 26, 2013

Dear Hon. Tumwebaze, thank you for showing us how "things" can be done

"It is a melancholy object to those who walk through this great town, or travel in the country, when they see the streets, the roads, and cabin-doors crowded with beggars of the female sex, followed by three, four, or six children, all in rags, ad importuning every passenger for an alms," Jonathan Swift, A Modest Proposal

Dear Hon. Frank Tumwebaze, 

I would first of all like to thank you for keeping time, at least for once. Last month, we had to wait for an event to kick-off because the minister had delayed by over an hour. He offered no apologies. Instead the emcee would go on to say that they thank the minister for sparing sometime in his busy schedule to come and grace the event. Guess what Hon Tumwebaze, we also had a busy schedule but made it on time to the event. And that minister is not you, it someone else I do not want to mention. So now you understand why I appreciate that you kept time. I just hope we keep up the spirit, maybe that way, this country can move forward.

There is this councillor who was bungled out of City Hall. Did you see that? I mean, there are video clips of “Omussajja wa Bwino” being lifted out of City Hall. Meanwhile while you were busy conducting your role as minister, the police also treated a lawyer like a rag-tag, a nobody, a thug and a goon. The video clips make for some absurd viewing from my point of view. Of course as always, your defense on such matters is always rather interesting to read. It is from this point that I request that since you rub shoulders with the President, maybe we should treat people who steal public funds the same way. Remember the billions that went missing from our coffers and donors decided to pull the plugs? I wonder why we don’t adopt such an approach for them.

I understand that currently most of the culprits including Mr Kazinda himself are “facing the full force of the law,” a phrase that you really like to use most of the time. Our very own courts are doing their jobs, despite the sluggish progress. These courts are constitutional, aren’t they?  You know what though? the KCCA Act that you quote supersedes the constitution. Not so? Please help me understand your emphasis on two-thirds majority in the act yet we’ve a constitution? So I also think considering that a small matter of a court order or even lack of presence of the defense team in City Hall, the best way to deliver a sucker-punch to people in-the-wrong should be so blanket. Let’s crucify them. Not so? 

I know you have a rather assertive way of speaking and sometimes heckling tendencies [refer to The Fourth Estate on NTV] and of course you can always plead plausible deniability; that you had no idea there was a court order. Indeed, how could you have known? In fact I think whoever steals public resources should not be allowed a defense at all. We should lock their lawyers out of the courtroom and use our starved police officers to keep them out. I also want a ministry of rape and defilement to be formed so we can have cases expedited since our courts are wasting their time. Don’t you agree with that?

In 1701, Jonathan Swift in A Mediation Upon a Broomstick wrote, "But a broomstick, perhaps you will say, is an emblem of a tree standing on its head; and pray what is man, but a topsy-turvy creature, his animal faculties perpetually mounted on his rational, his head where his heels should be, grovelling on the earth! and yet, with all his faults, he sets up to be a universal reformer and corrector of abuses, a remover of grievances, rakes into every slut's corner of nature, bringing hidden corruption to the light, and raises a mighty dust where there was none before, sharing deeply all the while in the very same pollutions he pretends to sweep away."

Before you interrupt me on this point, please note that the short story is a satirical piece, so in case you haven’t read it, please do read between the lines.

I hope you understand my point Hon. Minister. Meanwhile we all understand Kampala can be a filthy city and well, Jenifer has done a fine job. You know I'm business reporter, right? Even when a CEO is doing a fine job, she/he is answerable to a board. That board must consist of non-executive members to play that oversight role to keep the CEO in check. Oh, well, there is parliament and councillors, they can always keep her in check. What is interesting though, is the Lord Mayor and the Executive Director never appeared to agree on anything but we still got things done. Didn’t we? Maybe, whoever we disagree with in our places of work, we should push them out. Kick them out in fact. Blackmail them into making a mistake, and then let them fall “into the cups” – like we say.  Do you know those wonderful "middle sectors" we have on Jinja Road? We beautified them but now they have partly been destroyed due to reconstruction of a 6lane road. Was this part of the broader plan for KCCA? I do not know. 

You know Hon Minister, when a company has built a good brand, is making money and shareholders are happy, rarely does the head of the board chairman be offered for chopping. If he is incompetent, then he’ll be kicked out. Like many of us will be if we under perform at work.  Well, Hon Minister, KCCA is a better organization than ever and what I’ve been wondering is that for all those under performing ministries, why don’t have the PS’s moved or sacked the same way. I mean why not? Did you read the latest Auditor Generals report? Oh dear, oh dear, Statutory bodies are losing tax payers money, but surprise, surprise, we still have the bosses seated at the top comfortably. Why not adopt the same moves you used to remove these people?

Let me conclude my letter by saying, I appreciate the work you are doing; I mean who knew an elected leader would be impeached? Maybe it is about time we also impeach under performing public officials. You have orchestrated a political and legal masterstroke and now, Lukwago & co will spend hours, days and months on a legal wild goose chase as you make amendments to the KCCA Act. In the meantime, "they" could gain political capital and sympathy.

Thank you for your time Hon. Minister.

Yours Sincerely,

NB: Some say they are tired of sausages. I think they should be specific and tell us whether they don't like the Fresh Cut ones - because of the advert - or Sausage King. 

Nov 14, 2013

Forget the cross-listing pomp, it is but just that

Coffee!! At best, it is Nescafe, not Good African Coffee or Star Café. A tale of Ugandan Hotels. A tale for another day.


Here is the context. The Uganda Securities Exchange is vibrant, well, sometimes: Only on days when a company lists – locally – or cross-lists. The pomp there after glides away with limited activity except for companies like Umeme and Stanbic Bank. Uganda Clays used to be in that category, but it’s been unimpressive over the years for the reasons that are mostly copy and paste each year. Debt and low sales. This week, Uchumi one of the largest Supermarket chains in East Africa was cross-listed on the USE after the doing the same on Rwanda Securities Exchange (RSE). This is a "big company," currently valued at US$70m. For the USE – without a CEO & acting CEO – this is much welcome boost, considering this will be one of its best performing year if numbers are anything to go by. Its market capitalization – in simpler terms, the value – will increase and the white boards will have one more ticker symbol: UCHM.

A cross listed company is ideally having a company floated on another stock market that is not its primary listing. The NSE – an exciting market & largest in EA – is Uchumi’s primary listing, and now the USE – located in an arcade along Kampala road – is its secondary listing. Ideally, this listing is a good move. On the first day, 9,000 shares are traded creating a turnover of Shs5.2m. If the momentum remained the same, then the USE would be an exciting place to hang-out. Well, this is not the case. Like they say – I do not remember who came up with the phrase – “numbers don’t lie” but sometimes can also be deceptive.

The USE has a total 8 cross-listed companies including Kenya Airways, Jubilee Insurance, Centum Investments – I believe one of EA’s best Investment companies -, EABL – I wonder why UBL, their subsidiary is not listed locally -, Equity Bank, KCB and now Uchumi. In the history of the USE, the highest or best trading year – 2010 - for cross-listed equities was when shares worth Shs4.6bn were traded. This was for EABL. EABL has also recorded the highest turnover of any cross-listed company. In 2011, Centum traded at least Shs3.6bn worth of shares, but it was in that same year that it cross-listed. Institutional investors gobbled up the shares. 

Picture from Daily Monitor 

UMEME is the only cross-listed company from Uganda on the NSE and it has only traded once – only 1,000 shares back in September. It made headlines, we were happy. I wrote this, “The challenge for Umeme now will be having enough liquidity to satisfy the demand in Nairobi – if they do get overwhelming demand.” These numbers are not the deceptive ones. Cross-listing simply doesn’t make sense, at face value so they will say. Again they will add, I am being too simplistic. "What does an award-less journalist know?" First, in my simplicity, why would I buy shares for a company listed in Kenya, yet I could just make a call to my Nairobi broker to get me some shares? Of course considering that brokerage firms here in Uganda are huffing and buffing, sometimes due to declining business. So just to support my Ugandans in order for them to earn commission of trades, I’d buy the shares. But “meh,” it is my money not theirs. 

The second issue is that cross-listed companies will come on day one and allocate shares to Ugandans. In fact Uchumi has lined up at least 265.4million shares for the USE but will there be demand? The boards will indicate blues and reds on the white board. I know, yes we still use these.  The blue marker is for bids and offers, whereas the red is mainly to indicate a done deal. After this “event” we’ll have some snacks, chat about the market and we’ll write all the lovely stories. The next few days, the counter name will fade or gather dust. Uchumi makes the claim that cross-listing will allow it raise money to expand. I laugh. Ideally cross-listing helps raise money. Investopedia reads: “Some of the advantages to cross-listing include having shares trade in multiple time zones and in multiple currencies. This gives issuing companies more liquidity and a greater ability to raise capital.” Our markets are not well developed. It is not our fault. People don’t understand.

Uchumi is planning a rights issue – shares given at a discount price to share holders in order to raise money. Did they need to cross-list to raise the money? Yes & No!!! Some Ugandan shareholders already owned part of the company after they used the NSE. Only demand will tell. But history tells us, the shares might not be gobbled up. 

Third is the small matter – read big matter – of transfer of shares through an electronic system. It worked for UMEME, then the USE CEO left, and now there’s information asymmetry. If the system worked, transfer of shares would be rapid, but if it doesn't  then buying a cross-listed company from this market would be “erm” a nonstarter - again. 

But why do companies do it? Visibility is one. Uchumi, already a known company is not only a supermarket chain but is now listed in Kenya, Uganda and Rwanda. Investor confidence is up ahead of raising capital for expansion. And yes we are East Africa, a Community. Who wouldn't want to be part of this? Since Uchumi is part of the USE, any developments make the headlines. Investors are happy. Money will be raised.
They will say this is simplistic, but that it what it is. I’m a journalist. I walk to the USE. The brokers will say, “owolugabo” has come. Cross-listing is an event. It should be more than just that but that is only if our markets become more integrated. Kenya, Rwanda and Uganda are not Tanzania. 


I like tea. Anytime is tea time. I sniff the leaves. The plantations have some great aroma. Kericho Gold – Kenyan made tea – is what I like. We have Ugandan tea. Its packaging is poor. It is ordinary. 

Oct 24, 2013

On moving on & journalism

“Ever since they left Thies, the women had not stopped singing. As soon as one group allowed the refrain to die, another picked it up, and new verses were born at the hazard of chance or inspiration, one word leading to another and each finding, in its turn, its rhythm and its place. No one was very sure any longer where the song began, or if it had an ending. It rolled out over its own length, like the movement of a serpent. It was as long as a life.” Sembene Ousmane [God's Bits of Wood]

Journalism often rewards those who are patient and excellent in their work. The rewards do not necessarily have to be monetary – but can be. In most cases, we look to either become journalism scholars or win an award[s] or even get a job with Reuters, Bloomberg, FT & the Beeb among others. Like staring at a barrel or as if on gun point, the pressure in the newsroom is immense especially in a country where we have a high turnover and limited retention. This month – mid this month to be specific – I made the decision to leave The CEO Magazine – a niche business publication -, Uganda has a few of these. My time at the Magazine has been rewarding - career-wise - but also one that has exposed me to the good, bad and ugly of journalism and all stakeholders involved. There was also the pressure to jump ship and leave journalism altogether, but then like Eva Chen said “Don’t find a job, find your passion.”

Passion to write about the corporate culture, companies and the economy: Passion to tell stories. The need to scrutinize how companies operate or even how government entities are run. The more we put out such stories, the more readers continue to ask the questions, considering they are taxpayers, bank customers or even consumers.

 Some of these stories, no matter how good, are not told. If they are, then there is always something missing. The CEO Magazine offered me this opportunity, but it could only go so far. One of the challenges in today’s newsrooms is how to keep the editorial independent of marketing and advertising. This perhaps requires a whole different approach to the news – especially if you have workers to pay. It also perhaps needs a new crop of investors with the resources to at least run a newsroom without necessarily looking at the profit in the medium term; Investors willing to plough back profits into the publications. Ultimately, the investor needs to make a return on investment but also publications need to be reputable, trusted and be credible sources of information. Striking this balance is becoming ever more complex – pressure on journalists is mounting even if we don’t want to admit it. A lot has been said about the online, but the trouble is how to monetize online. How do you invest in your newsroom? Simply going online can be suicidal, it requires careful thought and research.

The solutions to some of these problems require some new approaches, which I have been studying but can’t place my hand on one – not just yet. Governments maybe a threat – a big one – to journalism but I believe advertising is becoming another big one and the pressure on media owners is also relenting. I leave The CEO Magazine, a better reporter – we all have our shortcoming. It hasn’t been easy though.

One the more disappointments in my time at The CEO Magazine was the UK Border Agency. In March, the prestigious Reuters Institute offered me an opportunity to go for a one week course on business and economic reporting in London. I spent about Ushs370,000 on a Visa Application – this amount for a reporter is not easy to churn out. The UK Border Agency denied me a Visa on the grounds that I did not satisfy them enough on whether I’d return, even after Reuters had written a letter indicating they would pay for my accommodation and meals. I have no land titles, my bank account is well – I’d rather not say – considering a journalist’s salary. It is such things that tend to be turn-offs but well we persevere and move on. There are many other incidences – I will not talk about them – but then why lament. Why not look to developing my career and maybe one day the rewards will come. 

So many will ask, where are you going? Well I’ll be joining the wonderful team at UgandaRadio Network – a news agency - for further professional development. 

Oct 6, 2013

Ugandans; Why you should give a damn about the mining sector

Last week, Uganda hosted a Mineral Wealth Conference, whose main focus was looking at how to invest in this sector. Mining has over the years – since 2006 – been living in the shadows of the oil sector – and rightly so. The mining sector is only 0.3percent of Uganda’s GDP. In 2006 when the first major oil finds were made, the minerals sector was struggling – at least less than 20 exploration licenses were issued then. By end of 2010, a donor funded project led to an airborne survey of the whole country to indicate the “mineral potential” of Uganda – with the exception of Karamoja. As soon as the survey was completed, there was a “gold rush.” License applications shot up from 70 to an incredible 625 by mid-2012. Additionally, the tax revenues from this sector shot up from Ushs25.1bn in 2010/11 to Ushs431bn in 2011/12, a rise of more than 1600%.

Ushs431bn appears to be a large sum of money, but it isn’t. Uganda has been exporting iron ore – at least until a directive by President Museveni last year stopped this. The iron exports, some receipted others not, have made their way to DRC and Kenya. Interestingly though, more than 70percent of exploration licenses offered have not submitted any returns/results – including some big companies like Steel Rolling Mills. Steel Rolling Mills holds about 7 exploration licenses for iron ore – can be used in making of steel – but it has not submitted returns to the Department of Geological Survey and Mines, preferring to rely on scrap metal and other imports. No value addition to minerals; guess who is losing out? Uganda.

The Department of Geological Survey and Mines (DGSM) is understaffed, with at least only one person supervising almost five districts. Supervision of activities on these mines has proven to be difficult. The department admits this. In some instances, the department officials have been denied access to mines, for instance the Kasese Cobalt Company Limited (KCCL) and some gold mines in Masindi - an Indian firm is said to have been mining Gold using an exploration license. Of course, there is the "invisible powerful hand" that usually pulls the strings. With this limited supervision of the sector, one can only tell how much money Uganda is hemorrhaging from “illegal” mining activity. With the Uganda government jubilant about funding 80percent of its Ushs13trillion budget, this money is not enough to meet the financial needs of this country. We could do with some extra cash.

The limited attention the department gets is telling as it receives limited funding, even the commissioner admits it. All the money that the department receives goes to URA. The department only gets allocations from the ministry of finance. The officials from the department are also susceptible to bribery by mine owners, simply because they don’t have “enough” money. At the end of the day, Uganda is the one losing out the most. Some people acquire licenses just to “hawk” them around, even when they have no record or experience of mining. In 2012, there was the clear case of Hima Cement, with experience in limestone mining lost a license to a little known EA Gold Sniffing. EA Gold Sniffing’s interest wasn’t to explore for limestone, but rather to sale it to the highest bidder – Canada’s Brandenburg Corp.

Mining can also further deepen the cleavages that exist in a country. Communities maybe distorted by companies coming to do some mining. Uganda mining potential is getting more hype, but with civil society mostly concerned about the oil, mining communities are fighting their own battles. In Tororo, residents of Sukulu are fighting for their land as NILEFOS, a subsidiary of the Madvhani Group struggles to compensate them. The mining act clearly states that to mine minerals underground, one must acquire surface rights – from land owners. At the end of land valuation in Sukulu, total compensation totaled to Ushs135bn with each household proposed to get an average of Ushs53m. The amount was said to be high and the parties involved don’t want to pay. This could morph into forced evictions if we are not careful. 

Additionally, mining distorts communities and can easily take them away from agricultural activities, lead to child labor and massive school drop-outs. Some of these are happening, but as long as the country downplays them, the situation could get out of hand.

Finally, you’ve probably heard that Kilembe Mines were finally taken over by a consortium led by Tibet-Hima of China. In October this year, the company started work on the mines in a Private Public Partnership with government. The Uganda government in 1997/98 entered an arrangement to own 25percent stake in Kasese Cobalt Company Limited. The government, through Kilembe Mines secured an $8m loan from the European Investment Bank to acquire this stake. To-date, the government has never received dividend payment because profits have never been declared. Revenues are depleted by shareholder loans – provided by the 75% shareholder - meaning priority goes to paying this off. Currently, MFC Industrial owns 75% stake in KCCL through complex offshore subsidiaries. In August 2013, the company officially started restoring the land as “copper tailings” – where cobalt is mined – run out. At the end of the whole period what Uganda has gained are just tax revenues – even so, the company has evaded taxes before. Again, who is losing? Uganda.

We ought to wake up and smell the coffee before it is too late. 

Sep 5, 2013

Africa is rising. Ask the Investors!!! How Actis minted billions in Uganda, from just two companies

Private equity exits in Uganda are rarely heard of, large ones at that. Actis, a British private equity firm, came to the forefront in Uganda in 2005 as it came in to manage a portfolio of assets run by the Commonwealth Development Corporation (CDC). In 2012, Actis begun a partial exit from Uganda – exit is not a word they like to use though – after selling a 38 percent stake in Umeme by taking the power distributor public. Later in 2013, May to be exact, they sold a 45 percent stake in Dfcu Bank, Uganda’s sixth largest bank. Actis in its partial exit from Ugandan companies’ has exhibited the country as fertile ground for investment returns.

The Umeme shareholder loan
Umeme at the time of listing was valued at $178m, of which $66.73m or 38percent was sold to the public through an IPO in November 2012. The eventual listing, as Actis’ Tashi Lassalle notes was meant “to allow retail and the people of Uganda to invest.” She adds, “From our experience the ownership of a national utility company by domestic customers model works well...” On the other hand, however, Umeme had a debt burden, not that big though, but one where it was forking out interest payment of 12percent. Close to US$27m or Ushs66.9bn was the outstanding balance of this shareholder loan to Umeme Ltd, from Actis through a holding company called Umeme Holdings in Mauritius. The IPO was meant to raise money to pay-off the outstanding balance of this loan.

Essentially the accounting geniuses at Actis insist they have not taken any dividends out of Umeme’s profits since 2005, at least until it went public and posted a profit at the end of 2012. Shareholders carefully structured a loan to Umeme, which they say had a high interest bearing. In fact, they concentrated on building a pool of retained earnings, now at Ushs141bn from a partly Ushs42bn in 2007.

“...the Company has not paid dividends since its inception, although Umeme has paid an increasing level of shareholder loan interest for the past three years as a means of distributing cash to shareholders,” reads the Umeme IPO prospectus. At 12percent interest, Umeme shareholders, since 2009, got paid. Furthermore, interest on a loan has to be paid despite the performance of the company, in this case, the loan carefully hedged shareholders against non-payment just in-case the company makes losses. Luckily, the company has only posted a loss of Ushs2.8bn in 2010, since 2007.

The shareholders loan, initiated in 2005, was to cater for capital investments in the utility company, a requirement for the concession. The Umeme IPO prospectus reads that the loan was “ provide funding to Umeme related to the original target investment of US$65m..... The loan had a grace period of 4 years and repayment of the loan principal was expected to be in 7 equal annual installments effective 2009.” By end of 2011, Umeme was required to have paid back Ushs37.7bn of the loan, but it had only paid a total Ushs25.7bn since 2009. On this capital investment, they were guaranteed a handsome 20 percent return, annually.

At the end of the day, after a shareholder loan injection of Ushs47.6bn in 2005 and 2007, Actis walked away with an estimated Ushs92.6bn – a few billions short of the retained earnings of 2011 - after interest and principle. After posting Ushs57.1bn net profit in 2012, the very first dividend payout totaled Ushs24.3bn [Ushs15 per share]. Actis, through Umeme Holdings has over 975million shares [60.08%], translating into a total dividend payout out of Ushs14.6bn - before withholding tax of 15percent - , another handsome payday.

Furthermore, Actis insists it has created investor value in Umeme as a business. At a recent AGM, the Company Directors noted that they’ll keep continue “...generating sufficient profits to sustain and build the business while providing value to shareholders.” Currently, Umeme is trading at Ushs360 a 23.6percent rise from Ushs275, the IPO price. Value created; Perhaps.

The US$42m Dfcu stake sale
Actis started managing the Commonwealth Development Corporation (CDC) 60.02percent shareholding in Dfcu Bank in 2004. In the same year, Dfcu went public with 30percent stake, as government and the World Banks’ IFC divested their interest in the bank, at Ushs230per share. On the day Dfcu was listed in 2004, the share price surged to Ushs305.

Since then, Dfcu has grown and Actis, is quick to express the investor value created for the last 10years.
“Today, DFCU is the 5th largest bank by assets, with an estimated asset base of US$387m (2012), representing approximately 7% of the total bank assets in Uganda. This represents 5x growth in the asset base – a 9 year CAGR of 18.5% (2003: US$84m to 2012: US$387m),” notes Actis’ Lassalle.

Five months after selling a stake in Umeme, Actis sold a 45.05 percent stake in Dfcu – retaining 15percent – to Robabank (27.54 percent) and NORFUND (17.54 percent). The sell was the largest equity block trade facilitated by the Uganda Securities Exchange (USE) and Actis, sold at Ushs1030 per share, translating into a take home of Ushs111.9bn (US$42m).

From a small time bank, to a big time bank whose asset base had been expanding, the partial exit a handsome return to Actis. Since 2004, Dfcu has posted net profits, the highest being Ushs31.5bn in 2011, and maintained a dividend of policy, on average, of 37percent of profit after tax. Actis, since 2004 has been earning a dividend from the 60.02percent (111,923,594 million shares) shareholding in Dfcu. For instance, between 2005 and 2012, Actis has earned over Ushs21.1bn in dividend payouts – excluding withholding tax. Furthermore, Actis was able to sidestep Capital Gains Tax obligations - on stake sale - to Uganda Revenue Authority, considering that as a listed company in Uganda, it doesn’t apply.

No wonder Michael Turner, Director of East Africa, Actis Capital LLP, notes “this [transaction] was unique in the history of Uganda.” Actis, with two partial exits in Uganda, has shown that there’s a return on investment but only if you are as smart as they are.

Aug 16, 2013

Americanah: Forget the love story tag, this is an "intelligent book"

Riveting.  Subtle. Intelligent. Loaded. Blunt. Americanah is one such book. Chimamanda Ngozi Adichie, undoubtedly is a good story-teller. Her use of short sentences and a touch of poetry, makes it worthwhile to read Americanah. Americanah is no ordinary story, which is why I’d insist it is an intelligent book. The setting is in three continents; Europe, America and Africa. The protagonists: two love birds, Ifemelu and her childhood boyfriend Obinze. The story is a rather complex one, considering that race is widely covered in the book.

The other issues, love perhaps, almost similar to any other love-story you can ever read. Ifemelu grew up in Nigeria and likes reading books. She is indifferent to her mother, who is religious – likes keeping up appearances in church. Adichie, intelligently, writes the story without losing track of the reader and avoids making it more of commentary or some sort of crusade. Ifemelu leaves Nigeria just like many others – due to instability – to get a "good" education in America, leaving behind her boyfriend, Obinze. Obinze and Ifemelu are cut from the same cloth. Incomplete without each other. In the modern day, they seem like snobs. But they ain’t.

“Obinze laughed, vaguely bored, but happy that she was happy.” 

In America, Ifemelu, is confused by the American society but she refuses to make it change her. She refuses to adopt some mannerisms and is not pretentious – unlike her Aunty Uju. Adiche, smoothly develops Ifemelu’s character and I could certainly feel that I knew her. She uses humor - lightly - to describe the simplest of things.

“Ferdinand had a steely, amoral face; if one examined his hands, the blood of his enemies might be found crusted under his fingernails.”

She chips in with dialogue and then glides into the matter of race. Ifemelu is human. She gets depressed after failing to get a job so she can pay her tuition. She then “pleases a man” to get paid. She is disgusted. She is ashamed and cuts off all communication with Obinze.

The riveting bit about Americanah, is how characters are developed  - using some anecdotes. For instance, Ifemulu’s mother is a “church hopper” as she looks for the prosperity gospel – bringing out the religious theme of how Nigerian pastors like the prosperity theme.

Obinze, while in the UK, before he is deported, is also developed as one who resents being pretentious, still likes reading and of course keeps thinking about Ifemelu. While in the UK he hustles, does a job using someone else's name and card. Working hard to raise money to pay-off some Angolans for a sham-wedding. It is in the description of Obinze's time in the UK that Adichie keeps the reader on tenterhooks, anticipating what will happen.  He then turns up in Nigeria, becomes land-owner & joins the real-estate business. He however falls into the trap of a “marriage of convenience” - just like his other colleagues - to a flawless lady, Kosi.

“Still, he had wanted her, chased her with lavish with single-mindedness. He had never seen a woman with such a perfect incline to her cheekbones that made her entire face seem so alive, so architectural, lifting when she smiled.” 

Ifemelu is also now dating a flawless man, Blaine, who she admires because of his intelligence. All this while though, Obinze is on her mind.

Adichie, tries as much as possible to make her two protagonists superior - above all. They are no saints but they've a conscience. Ifemelu goes on to start a blog about race and her encounters in United States. She earns from it. Her blog posts are included in the book – at some point I “almost got tired” of reading them. Ifemelu can also be rather annoying – that you could hate her – as spontaneously she decides to leave the US and go back Nigeria. She leaves Blaine.

[Two days before I bought this book, I had read this interview  and I must admit - after reading both - it is almost like the book is an semi-autobiography.]

Back in Nigeria, Ifemelu doesn't really hate it but after meeting some other returnees, she feels indifferent. Why? Because they want to eat in fancy looking places. She returned to feel at home not to get back to a life she left in the USA. She blogged about it, and her childhood friend Ranyinudo was not pleased.  When she gets a job at a magazine, her dream is to turn it around with creative writing, but she is hit by the reality.
In conversation with with her workmate Daisy, she doesn't mince her words.

Ifemelu: “It makes no sense that Aunty Onenu likes to run three profiles of these boring women who have achieved nothing and have nothing to say. Or the younger women with zero talent who have decided they’re fashion designers.”
“You know they pay Aunty Onenu, right?” Doris asked. “They pay her?” Ifemelu stared. “No, I didn’t know. And you know I didn’t know.”  
“Well, they do. Most of them. You have to realize a lot of things happen in this country like that?”  
Ifemelu: “I never know where you stand or if you stand on anything at all”

She would later quit her job and started blogging again. The love story then makes a return in the final chapters of the book as her and Obinze meet again. The passion is rekindled for the two love birds. From this point, Adichie has already made her point. This is finely written but complex book, and Adichie does a good job to drive her point home – be yourself, stop pretending and please, don’t try to please everyone.

Chimamanda Ngozi Adichie [Picture from]

Aug 10, 2013

Mining speculators "rear their ugly heads"

Kenya recently cancelled mining licences due to irregularities in the awarding process. I wrote this piece in December 2012; however, it wasn't published. I've decided to share it.

You may have probably watched the Bank Of Uganda Governor Emmanuel Tumusiime-Mutebile in video clips saying “I have the capacity to burn their fingers.” He was referring to speculators who were betting on the Uganda Shilling making it volatile and making money out of it. However, speculation and currency trading cannot be separated, so maybe Mutebile’s words just remain threats. In yet another government department, The Department of Geological Survey and Mines (DGSM), there are indications they want to crack the whip on speculators holding exploration and mining licences, but doing no work.

Uganda’s mineral sector is already experiencing letdowns even before it takes off significantly to the level of Tanzania – East Africa’s largest Gold Producer. Such is the case that in 2012, a little known company East Africa Gold Sniffing acquired a limestone exploration licence after the previous holder – Hima Cement a Subsidiary of the Lafarge group – did not apply to renew the licence in the provided time. Even if someone at Hima Cement was incompetent enough not to notice that the 21 year old license was expiring, analysts note that it could have at least lost out to a reputable and known limestone mining company.  Hima Cement which says it contributes about Ushs45bn in revenues to the government instead lost the license to East Africa Gold Sniffing a company, with little – if not no experience in mining at all.

East Africa Gold Sniffing is categorized as one such speculator that exploited the loopholes within the legal framework to acquire a license. To begin with, records from the DGSM (July 2012) indicate that there are 582 licence holders around the country, of those 5 are for Kilembe Mines, 4 to Hima Cement, 6 to Steel Rolling Mills and 6 to Tororo Cement. The rest, are held by individuals and various companies – both genuine and obscure. For instance, there a host of about seven companies, which in total hold about 26 licenses of which the contact person for all the companies is one Pravin Ghelani. The companies registered are registered as Fergie Minerals and Metals Mining Company, Esimo Industries Uganda Limited, Esta Industries, Nelvo International, Hard Rock Engineering and Doher Industries Limited. Notably though, none of these companies have filled returns for their mining activities.

When Ghelani was contacted by The CEO Magazine, he declined to comment.

There are other companies holding licenses, that have not submitted any returns. Notably, some of them are represented by one Law Firm which has a link to East Africa Gold Sniffing. Kusaasira Dennis is an oil, gas and minerals attorney with Kusaasira and Co. Advocates and Consultants – a law firm mainly handling oil, gas and mining ventures. His law firm represents five companies, of which there is one active one. The companies held a total of 61 licenses and by June 2012, none had submitted returns, an indication of speculative tendencies.

According to Edwards Katto the assistant commissioner at DGSM, the country is losing out on much needed revenues because some license holders are holding back, “waiting for the highest bidder.” Uganda accrued fiscal revenues of $14.6m in 2011 from the mining sector. However Katto notes that the country could have earned more if other licence holders were in production. The bulk of the mining revenues come from Hima Cement, Tororo Cement, and Kasese Cobalt Company.

Katto further notes that the speculators make Uganda’s mining sector expensive for investment. “If speculator holds a licence, they will lookout for the highest bidder to buy their stake,” he says. “The country here will lose out because either the big companies would rather wait for a new licencing regime, rather than acquire a speculative company at a higher price,” he adds.

Why speculate?
The legal framework currently allows anyone who has the money to hold a license, which makes it easy for the speculators to pounce. According to DGSM, a one year prospective license costs about Ushs150,000, acquiring an exploration license will costs about Ushs650,000 with Ushs10,000 paid annually for the three years. A retention license for two year costs about Ushs450,000 and a mining lease – held for 15 years – will cost Ushs2million and annual fees per hectare of Ushs10,000. According Johnny Sassirwe the Chairperson of the National Artisanal and Small-Scale Miners Association, this allows Ugandans based in the mining communities to participate in mining activities and attract international investors.

“There is an opportunity for local small-scale miners to benefit if the cost of acquiring a licence is low. This encourages local participation. Also, if a big mining company approaches us with a good offer, then we can easily sale,” Sasirwe points out.

Furthermore, Kusaasira – of Kusaasira and Co. Advocates - uses the section thirty of the Mineral Act of 2003 to emphasize that they are working within the required legal framework.

“ The Mining Act allows farm-downs or total transfer of interests or share in mineral rights, with the consent of the Commissioner, and consent only to be withheld only if the proposed transferee does not quality to acquire the mineral right in question,” Kusaasira adds.

The current licencing regime has been “first come, first served,” is easy to maneuver if you have prior information on the status of particular mining area. Once an individual has this information, they can apply for a licence and get it if they are first ones to do so. The Hima Cement and East Africa Gold Sniffing case is yet to be resolved as the latter has dragged the government to court for “suspending” the licence. The challenge is, the government may be required to compensate – heavily – if the licence is to be cancelled because the policy was clear, “first come, first served.” The Brandenburg Energy Group – a Canadian Mining Company – had written a Letter Of Intent (LOI) to East Africa Gold Sniffing to acquire 100% stake in the company. Brandenburg expressed interest after East Africa Gold Sniffing had just been given the limestone exploration licence.

“EA Gold has appealed the decision of the Minister, and EA Gold has stated that it is confident that the Exploration License will revert to EA Gold; in which case, EA Gold will be in position to complete the transaction with Brandenburg,” reads a statement from the Brandenburg Group.

Kusaasira does point out that the end result is for licence holder is to make money and that if prices of the minerals on the global market are too low, then “why produce?”
For instance, Gulf Resources which holds the lucrative Vermiculite mining rights in Manafwa district had to suspend mining operations earlier this year becomes of declining global prices. Gulf Resources was producing about 22,000tonnes vermiculite per annum but was forced to scale back to 18,000tonns by Dupre Minerals Limited, a UK based company which was purchasing 100% of the produce. According to the company website, this was a result of the economic woes in Europe.

“Gulf Industrials Limited (ASX: GLF) wishes to advise that on an interim basis it has stopped production at its Namekara Vermiculite Project in Uganda until stock levels are reduced to a manageable level. Dupré Minerals Limited (“Dupré”), a leading UK based vermiculite distributor and the exclusive distributor of the production at Namekara Vermiculite Project continues to purchase the company’s vermiculite at reduced levels until the vermiculite markets pick up,” reads a statement from Gulf Industrial Limited.

On the other hand, the mining act doesn’t make it clear when it comes to the offences and mentions that anyone who submits false returns will be fined one hundred and fifty currency points – Ushs3million (Each currency point is Ushs20,000). However, the law makes it clear that a location license can be revoked by the commissioner if “within a period of six months from the date the licence was granted or renewed no mining operations have commenced under the licence.”

The location lease is one that is meant for small-scale miners who can spend a maximum of Ushs10m. The same licence differs from the mining licence in that it is meant for minerals that do not require specialized technology. Notably, the same revocation restrictions do not apply to the mining licence.
On this point DGSMs’ Katto agrees that there is a loophole but is quick to say that they begun issuing notices to non-complaint, inactive mining companies with licences.

“We are currently blacklisting these companies and serving them with a letter of notice.” However, there is a far greater challenge for DGSM – funding. “With limited funding,” Katto notes, “supervising and monitoring licence holders will remain a challenge.”

Licencing suspended
The Uganda government in early November placed a moratorium on issuing new licences as reported in The East African newspaper. The moratorium is partly a move to deal with speculators as the department moves into competitive bidding for the mining licences – a move they say would attract genuine mining companies into the business.

This however does not guarantee production also. For instance when Rio Tinto – a global mining and minerals company - held a mining licence for vermiculite in Manafwa between 2006 and 2009, but the only work documented was drilling of 64 wells for resource recognition, setting up of transportation infrastructure and market research. Sources within DGSM confirmed that no actual vermiculite was extracted for purposes of selling during the period Rio Tinto was holding the licence. This meant that the mining company held onto the licence until they sold their interests to Gulf Resources a subsidiary of Gulf Industrial – a listed company on the Australian Stock Exchange (ASX).

“Competitive bidding alone is not the solution if speculators are to be reduced in number. Remember, you cannot have a market without speculators because some will still beat the system. Broader reforms like increasing the minimum investment amount and punishments for deliberate failure to carryout mining activities are needed,” says Martin Drito, an MP for Madi-Okollo in Arua.
 He has wealth of experience in the minerals sector and an advisor to the president of Guinea on mineral policy between 1998 and 2004.

Jul 22, 2013

A tear shed for Uganda's business journalism

“Africans are one of the most resilient, innovative and creative business people in the world. To navigate poor and decaying road networks, maddeningly corrupt and inefficient bureaucrats, government regulations that frustrate and hinder business operations, a lack of reliable electricity or water, all demand ingenuity, agility and determination. I doubt western entrepreneurs operating in such an environment could last long.” Andrew Rugasira 

A few months back, “the seer”penned a damning indictment on the state of business journalism in Africa – partly excluding South Africa. As a journalist, I responded to him on twitter – 140 characters are not the best response to a 1000 word piece. I said “maybe you are reading the wrong business publications.” In Uganda, we have two business publications that have survived the "4 year litmus test". I have worked for both: The East African Business Week [2009-2012] and The CEO Magazine [2011 – to-date]. In his writing, Kalyegira notes that:
“Nobody saw this coming. Our amateurish business reporting means that the reading public can never get an accurate picture of business conditions in Uganda. The Ugandan news media is fragile for the most part. There are too many broadcast stations and print publications chasing too few advertisers and so almost no media house dare report the facts about Uganda’s corporations, lest they are denied adverts.”
This is a correct assessment of the state of business journalism in Uganda, but it is only part of the problem. It is not new for companies to shove press releases in the face of journalists, and well, we just add a few sentences before handing it to our editors. Of course for some of these companies, they want to get their “monies worth” by being in the press since they are the advertisers. But, does this mean the Ugandan business reporter can’t go beyond the mumble jumble in a press release? Yes they can, but who will talk to them and give them the details? People talk of government bureaucracy, but some these corporations are just as worse. Worse still, for any inquiry, it takes a company so much more time to respond – if at all – but takes a short time for them to give you press release [For immediate release].

Working for East African Business Week and CEO Magazine, there is a trend I’ve noticed over the years. These two are small publications are not considered that "important" compared to New Vision, Observer, and The Daily Monitor. Being small – but dedicated to business reporting – they are ignored by the corporate companies when it comes to responding to queries by journalists. The top three get priority – understandable – but yet a dedicated business publication gets treated as a third class citizen. Interestingly, it is the smaller publications that get the “vomit copy” of all sorts of press releases that MUST be published.

These two so called small publications do take time to write business stories and go beyond product launches, however, they are very much limited on how far they can go. 

Obviously, for the likes of New Vision and Daily Monitor, the business reporters have much less flexibility on what they can write. They are limited to two pages of business news and in most cases the analysis bit is lacking. In fact Kalyegira writes; 
“Most African business reports focus on public relations: Launches of new brands, re-launches of old brands and products, opening of complexes, showrooms, plants and competitions and promotions.”
These small publications need money and in Uganda – it seems – any "perceived" negative reporting about a corporate company, you are banished from their advertising list. Then what happens to the reporters? Where does the money come from? To further compound the problems, Ugandans would rather read online newspapers then buy a copy off the shelf, even if they are to wait for a story to be uploaded at 5pm.

I’ve been here, I’ve seen what people buy, and it has nothing to do with business publications - save for a few. They are simply not interested. At the CEO Magazine, we do business analysis and business reporting, but people would rather buy gossip. At times I ask myself “do people really read my stories?” At times when I get comment, I'm so delighted. In one forum, a Ugandan commented that my writing was “fantastic fiction” that was “clouded with financial jargon.” In as much as I disagreed – partly - with his assessment of my writing, I felt proud because I was being noticed. But that's it!!! We toil for information. Data is hard to find. We are called all sorts of names. Told off by company executives and also denied access. 

It is also common for companies to have the theory "he knows nothing about us" or "he knows about what he is writing." In fact they'd rather organize a media briefing that has a high number of reporters, than one where they have a few quality business reporters.

There are also constant reminders from media owners to reporters that they have to do more to attract advertisers. Well, unless you are owned by a large media company, which can afford to make a loss on one of its publications, then perhaps one has to forget the "hard hitting work" that we parade as business reporters. Additionally, business reporters in this country have lesser opportunities to go and learn more on how to report better. People who report about Human Rights, Conflict, Health and Education among others, can easily get the “value addition” through fellowships and scholarships, whereas for the business reporter; you-are-on-your-own. No one is willing to invest in you, but you must invest in yourself – by spending the little you get to earn.

Many will say; “you hobnob with Uganda’s CEO’s. Why would it be hard for you to get opportunities?” Well, they are simply not interested. If they are, they’d rather take a reporter for a trip to their company, than improve the state of business journalism. Admittedly, I must say, business journalism is as good as dead – locally – at least that’s my impression and observation. It can only be revived by quality reporting, which can only be done by being part of large media organization. It is also not entirely surprising that one can easily jump ship, leave business journalism and join the corporate world. The realities of reporting have changed, passion is dying – slowly – and well, light at the end of the tunnel seems elusive – at least locally.

Jul 8, 2013

In the Press: Monitor, when a story deserves more than just a massage

He has a right to criticize, who has a heart to help.

Abraham Lincoln 

The Auditor General’s report makes for good reading, as always considering it punches holes in government business.

The story on Page 4 of today's Daily Monitor is damning on a company called Phenix Logistics, one of the exporters and producers of garments in Uganda – local content – of which the government owns 94 percent.

The story, in the headline, reads "Money spent on Phenix a waste of state resources, AG tells govt."  

Quote from the AG’s report: “The government has continued to inject funds in a loss making company, with the latest being the guarantee of a loan from JBIC amounting to Shs4.2billion….” So does the AG here say the government is wasting money? The problem is that Phenix Logistics is loss making.

The Daily Monitor goes on and reads “…which also wonders [The AG’s report wonders?] why govt keeps increasing its shareholding in the firm yet it has never received any dividend..” But it is already loss making. How do you receive a dividend if you’re loss making?

“However, in the same year [2000], the firm borrowed Shs4.2billion from Uganda Development Bank, which it later failed to pay.” So Ugandans would want to know why Phenix Logistics borrowed this money. What was it for?

Interestingly, the Monitor story further explains that each time Phenix failed to pay a debt, it was converted into equity – not exactly a bad thing though – from 0 to 49percent then to 79percent and more recently to 94percent.

So what did all the money borrowed do? What is the production capacity? What are the challenges – if any – or inefficiencies going on at Phenix? How cheap are their products on the local market compared to the imported garments? How much has the plant benefited from AGOA? How many people does it employ? What is the export value of the products? Has it paid taxes? Is production subsidized? The private sector failed to make it profitable,  the government is failing. What exactly is the problem at Phenix Logistics? We have several private sector businesses that are not yet profitable – Orange, Airtel, Warid, UTL – but still their owners keep pumping money into them, in order to prop up performance, and maybe they’ll be profitable – or not. Such is the nature of business.

Jun 30, 2013

Ugandan media serves Easter Eggs on Christmas

Just because your voice reaches halfway around the world doesn't mean you are wiser than when it reached only to the end of the bar. Edward R. Murrow

Charred bodies, some unidentifiable, of 29 people, including children - and still counting - made it to the cold room [mortuary] in Mulago. This, after a horrific accident last evening, at the Numungoona Roundabout, about 7kms from the Kampala City Center. At about 10pm [EAT] last evening, Ugandan television channels were playing music of all kinds, presenters were hosting some pseudo pretentious musicians and others; classic boxing. On social media, the National Broadcaster - UBC - was updating "tweeps" with what has happening in Namungoona, but when you flipped to the TV station, music, music and music.  

The TV stations were in oblivion and detached from one of their roles - to inform. The excuse, often, is that there are limited resources to cover such stories where they have to rush to the scene - even UBC will complain yet it is taxpayer funded. However, for a TV station not to even have a breaking news ticker, it is rather baffling since that doesn't require resources. Most of our media organisations - NTV, The Daily Monitor, Vision Group and WBS - have journalists who have highly placed sources in The Uganda Police, Uganda Red Cross, Hospitals and Government, so was it very hard for at least a call to be made to confirm the story and get a breaking news ticker rolling. Furthermore, for a journalist, ones job is to go after a story, not so? This was after-all a big story for the reporter and media house.

There were some reporters -Uganda Radio Network, Simba, Akaboozi and CBS - on the scene, and also social media enthusiasts. Even so, a channel like NTV could have just made a call to have a reporter on air - from Uganda Radio Network - update the country on what was going on. We slept. I wept. 

Last month, a great, young and passionate journalist Michael Hastings died, in a perfect send off, his editor wrote

"Great journalists take themselves and their work seriously because it is serious; they know the power they wield."

The big story here is the  fuel tanker exploding and people dying - not common. But for the media, if you are not on-sight to take pictures of how the authorities have reacted - at that time - what story do you plan on telling? Only "she said, he said." Surely we can do better than this. As the media, we wield power. If the authorities know that the media is going to be breaking the news story as it happens, they'll probably be more competent in handling some of these accidents. This is because they know they are being watched by Ugandans. The police instead of issuing a presser 12 hours later, will perhaps be on-sight to update journalists regularly.

Surely, why do we have to wait to put poll questions; "What do you think should be done to control accidents in Uganda." Journalism is about passion: You've got to love it. Before Hastings passed on, he'd offered advice to journalists. 

"Mainly you really have to love writing and reporting. Like it's more important to you than anything else in your life--family, friends, social life, whatever." 

Such a journalist, will give the media owner food for thought [Why don't we air this story? He is at the scene. It could be a scoop]. There's is no way we can keep demanding for media freedom, yet we've failed to utilize even the limited freedom we appear to have. When reporting from then scene, you get the feel the of story, access people's reactions and get your five senses tickled. There is no better way of story telling than vivid descriptions, you'll probably win an award as a result. This also involves the viewers actively, leading them ask the questions -if any - they'd want their government to answer. 

Some will say this is idealism of the highest order. How do I gain from all this? Why should I be up all night to cover such a story? Who cares? What about my sleep? Henrik Ibsen's 1882 play, An Enemy of the People, the protagonist, Dr Thomas Stockmann wants to do right and tell the truth, but everyone else around him thinks this is not a good idea. But he won't back-off, no matter what: 

"The strongest man in the world is he who stands most alone." 

So as journalist, your obligation is to tell the truth or to state the facts and explore them in full but by not waiting for the storm to calm - after homes have been destroyed - and then you instead rush to ask what the government is doing to help. Sorry, you missed out on the big story: The people affected, what was the early warning system like, who died, what were they doing, how were the responses by the authorities...

"...What am I trying to say? Saying that you will not do anything because you cannot solve everything is a lame and, frankly, very poor excuse. Do your part and then you will have the authority to ask of others what they are doing to make this country better," David FK Mpanga a lawyer and a regular Saturday Monitor Columnist who wrote in a piece once titled "What are you doing to make a Uganda better country?" 
For the media owners, perhaps having night duty reporters who can take on stories that happen effective 20:00 hours till 05:00 hours is a good idea? Who will tell the story of what is happening at the scene before we move on to "The police said the drivers were under the influence" and "What is with Ugandans and siphoning fuel?" 

In late May when anti-government protests started out in Turkey, the local media was criticized for having shows about penguins instead of what was going on in their backyard. The protesters got angry and torched some of the broadcast vans of the local stations because they felt they'd been ignored. For Ugandans, it may not get to this level, but surely one can understand if they throw the rotten Easter Eggs the media served them on Christmas Day. 

Note: We[media] feed Ugandans on so much junk, by they time we get to know it, they'll be obese - on emptiness.