Ayanda & Asio

The wait. The anxiety. Dozens of steps had been made. The nurses, often, looked at me. Giggled. Then they were back to work. At 1130hours, the wait was over. Ayanda was here. The mother, Asio, was fine. Only she can explain the pain she had been through. 

"She looks like you," she said. "No she doesn't. She look like you," I say. "She looks like you," she said. "No she doesn't. She look like you," I say. [This debate is still ongoing. It will probably never end.] 

A few hours after Ayanda was born, I sneezed. Almost simultaneously, she sneezed too. There was a five seconds silence in the hospital room. Then laughter. Someone remarked: "You can't really deny you're her father." Then there were more giggles. 

That is what Ayanda has been for us in the last one year. She's grown. Called her mother "Auntie" and called her father, erm, no name yet. She smiles often. Then cries. Then pulls the table mats off the table. She will eat. Then she'll refuse. With her big eyes [this is a feature she picked from her mother] she gazes at the world.

Asio is the heroine. I am just the writer. She endured nine months of an extra 3.3kgs. She went shopping for baby clothes. She was induced. She had to push. I was pacing in the corridors. Then there is breastfeeding. Then the lifestyle adjustment. The baby bump. It is called motherhood. In the last one year, I have learnt a lot from her [wait, she doesn't know]. 

The one year has been roller-coaster. 

Immunization. 

I have not missed a single day in the immunization room. These are moments we don't get back once missed. Watching that injection being sunk into her tender skin is painful. You'll feel sorry for her. Of course she will cry and the keeping her quiet is another challenge. Tears will roll down her cheek. 

Often, the breast does the trick. Not my breast. Asio's breast. 

She'll throw her head back and forth. That way, you can't ignore her. 

A few months ago, I walked into a baby shop, without Asio. I got strange stares. With the exception of the shop owner, I was the only male shopper. Clothes were bought. They were perfect fits. I chest thumped. I did it again more recently. And my-oh-my, I could do it again. 

Then there was that moment at the pharmacy when the pharmacist asked: 

"How many kilograms is your child?" 

I replied: "From the last visit to the Dr's about a week ago, she should be 10.5kg." 

She turned, looked at me and said: "Wow, you know your kids weight? That rarely happens with fathers who buy medicine from the shop." 

"It is normal to know a child's weight. A father just has to be interested," I replied. 

Parenting is not that easy. At least you do not need a text book to know that. All children a unique. The experiences are different. There is a lot of sacrifice. In fact, if we have not attended your party, wedding meeting, wedding, introduction and long-nights-out et al, we apologize. Sometimes, the little one needs out attention and we must adhere. She is our responsibility. 

That said, we appreciate the invites. 

Some have asked, what's her name: She is Natukunda Ayanda Aturo. Natukunda in my language - or well I don't have to tell you the language, do I? - means "He loves us." This is also my mothers name. Ayanda is a Zulu name [its meaning; "they augment." Usually given to first a born] This name was picked to celebrate the great African Girl - Our daughter. I do watch Isidingo [since 2001] and the first time I heard the name Ayanda, I liked it. I had to find out what it means. We want her to be great. Aturo means flower in Ateso. In celebration of multiculturalism, integration and intermarriages, a name from her mother had to come in handy. 

So, questions like, what is her christian name? should be answered by this explanation. 

Note, name picking is never that easy. I had a list of fifty. Asio had given me the responsibility of finding a name for our baby. In nine months, I was doing just that. I was pregnant with names. 

Today we celebrate her life. Today, Ayanda makes one more step into greatness. 

Dear reader, I apologize

The newsroom is like a marketplace. We trade news. Some say we peddle rumors. We are criticized more often than not. A reader opens the newspaper and from page one, they shred whatever we are writing.

The majority – of Ugandans - do not have access to the newspapers. On radio stations, time is dedicated for shows on political, health, education and economic issues. The next day we move on to the next story.

Dear reader, the newsroom is shrinking. The journalist – sometimes - is the editor and sub-editor. He has limited time to think. He has to feed you on the news - and more news.

The journalist is a graduate in Mass Communication. He was taught how to write and less on how to report a beat. He is “self teaching” on economics, finance, history, taxation and business. He has to read tones of information in order to report better. He is expected to produce a flawless article.

The journalist is told to be objective. Leave emotions at the door. To present the facts – let the reader decide. A journalist is expected to have a high level of integrity. I apologize where we have not been all the above mentioned. We are human, after-all.

A journalist is told to dig deep into an issue. While he is digging. A fire. An eviction. A press conference. A workshop. Mbabazi is sacked. Death. The reader is waiting for the news. The digging is put on hold. Then it resumes. A source lies to you. Another source lies to you. Another one tells you the truth. Then another presents the facts. You’re then given the facts. You write. Story is published. A source calls you. You misquoted him. Then you move on to the next story. Years later, you are reporting the same issue. Nothing has changed.

Knowledge is power. Yes, that is what you have been told. A journalist is expected to have the knowledge on a topic they write. Uganda is facing rampant power cuts. Fact. Umeme is responsible. Fact. UETCL is responsible. Fact. An old dam is responsible. Fact. NSSF bought shares in Umeme. Fact. They sidestepped procurement procedures. Fact. [No they did not. Yes they did. No they did not. Yes they did]. The Standard Gauge railway is good for Uganda. Fact. We need it. Fact. On that single project, our debt will increase by over 100 percent. Fact. Infrastructure is important if we are to grow. Fact. It is perhaps the most expensive railway. Fact. Multinationals avoid taxes. Fact. Liberalization is bad. Fact. It is good. Fact. Liberalization has opened up the banking sector. Fact. We are mortgaging our oil, even before a drop. Fact. See, I am knowledgeable. Not quite. I know the facts; that’s it.

A journalist has no monopoly of knowledge. There are lawyers, accountants, economists and bankers. Most are more educated than we are. We are expected to expose what they are doing wrong – or even right. 

Still, the reader expects no excuses. They expect a story that answers the how, when, what, who, where and when. 

We rub shoulders with influential people. They have an agenda. To be seen as doing good. That doesn’t make us experts. It doesn't make us influential. 

The clock is ticking. We ain’t growing any younger. We want to change the world. You want to be influential. The world is not changing because us. The world says "you write well." That's it. An award here - or not. A grant there. A visa - denied. A scholarship - try again next year. We leave the newsroom. To pursue other dreams. 

Dear Reader, we can’t give you a good story all the time. But we can give you well packaged facts, to keep you reading. We are flawed. We have sold our souls. Money is all around. Hovering above our heads. We've taken it. We've failed you. 

Dear reader, I apologize. 

Is Uganda a liability for Tullow Oil?

Neymar was the poster boy for Brazil in the World Cup. He was all over billboards and adverts during the World Cup. When he got injured, Brazil crumbled. They conceded a record seven goals. Tullow similarly has been the poster company for oil discoveries in Uganda. Tullow risked its dollars. The company, in a statement says they have spent close to US$2.8bn in Uganda in the last 10years.

Over the last one year, we cumulatively could be looking at confirmed unrecoverable liabilities of US$182m. The ruling by the Tax Appeals Tribunal ideally would place the liabilities of the company at between US$450m and US$500m.

Tullow abandoned drilling for oil on Lake Albert – the Ngassa discoveries. This area stretched almost close to the Democratic Republic of Congo on Lake Albert. Flashback to 2009, Angus McCoss, the Exploration Director at Tullow said Ngassahad the “potential to be the largest in the basin.”  He also described it as a “significant oilfield.” 

Fast-forward to 2014, in February, Tullow told its investors that they were abandoning the Ngassa discoveries. Investors were told that “Ngassa has been written off due to offshore appraisal and development being currently uneconomic.” Abandoning this discovery area cost Tullow about US$67m. This means that all the money Tullow spent on appraisal and exploration for these discoveries is a loss. It is not recoverable if oil production starts.

There was more to come: More bad news for the Irish company. In the half year operational update released in early July 2014, Tullow admitted it was forgoing US$115m duefrom CNOOC and Total. In 2012, Tullow sold 66.6% of its assets to the two companies at US$2.9bn. About US$300m of this was placed in a reserve account and would be paid to Tullow as soon as it had shown evidence of some promised "deliverables."

Tullow said this $115m loss was due to delayed project approvals and failure to secure license extensions. The delayed project approvals could not be revealed, as the company tows the confidentiality line. From my understanding though, “delayed project approvals” means the eight production licenses Tullow applied for as far back as 2012. 

Tullow applied for Production Licenses for Mputa, Nzizi, Kigogole, Nsoga, Ngara, Ngege, Kasamene and Wahrindi. A production license is like owning land with its title. Before you secure that land title, you cannot construct on the land or even use it as security for a bank loan. Similarly, a production license is what companies use to secure financing for eventual commercial production of oil. There is potential investment of about US$10bn to US$22bn ifproduction licenses are approved. Now, the three companies are equal partners in the licensed areas. Tullow was given the task to make some key deliverables, but it hasn’t. It has paid the price.

The final nail in the coffin or the cherry on the cake, depending on how you view this, was the ruling by the Tax Appeals Tribunal that Tullow pays US$407m to Uganda Revenue Authority (URA). This is the income tax [Capital Gains Tax] accrued from the 2012 sale of its assets to Total and CNOOC for US$2.9bn. Tullow disputes this valuation, noting that it is entitled to an exemption as per the highly guarded and confidential Production Sharing Agreements (PSAs) signed with government. Tullow paid US$143m as income tax before it went to the Tax Appeals Tribunal. 

 It insists this is actual tax to be incurred. The ruling and order by The Tribunal to pay the remaining US$264m will not be reflected on their accounts because the company is not going to pay that money. It will be challenging the ruling in both local and international courts.  This could drag on for years. 

Tullow with all these "challenges" though, has made money. Tullow said it has spent US$2.8bn in Uganda for the last 10years. But the company also sold a stake to CNOOC and Total at US$2.9bn. This is even before the first drop of oil. However such developments on delayed projects, tax obligations and write-offs bring back the same old question, Is Tullow here to stay? The best answer is, “it will be understandable if they exit.”

Tullow officials have sent mixed signals on their plans for Uganda. In February, Paul McDade the Chief Operating Officer Tullow, told the Wall Street Journal that Kenya was “more supportive” and that first oil was more of “national priority.” McDade’s comments were scathing.  He further said “Kenya will be easier to develop and the government is very enthusiastic for us to get underway with that development and get first oil as soon as possible.” 

These statements do contradict what David Onyango, the deputy spokesperson of Tullow Uganda told the Daily Monitor back in November 2013. He said, “No consideration has been given to any scenario or option other than a long term partnership with Uganda that delivers shared prosperity and benefits for the country and the company.”

The Ugandan government though remains unscathed. They have turned out to be tough negotiators. At the back of their minds the belief is that with the current oil finds, Tullow can leave and there will be other companies clamoring to takeover. They also consider Tullow's mixed signals on an exit is playing politics and trying to pile pressure on government to issue those licences. 

Interestingly, after the ruling by The Tribunal on taxation issues, Aiden Heavy the CEO Tullow Oil Plc hints at resolving this dispute by negotiating with government. 

"Tullow believes that the TAT has erred in law and Tullow will challenge the EA2 assessment through the Ugandan courts and international arbitration but hopes that further direct negotiation with the Government can resolve this matter." 

What you - may - need to know. Q & A on Actis selling its stake in Umeme

So there has been all this talk about “Umeme on sale,” if the Uganda’s leading newspaper is anything to go by. The headlines then changed to “20 firms interested in Umeme.” Kindly shrug that number. What matters is who eventually buys the shares in Umeme. So what’s the story? Here is my attempt to break down what this is all about.

Who is selling what?

Actis is the single largest shareholder in Umeme Holdings – domiciled in Mauritius. Umeme Holdings owns 60percent of Umeme Limited, which is Uganda’s largest power distributor with about 500,000 customers. Actis until November 2013, owned100percent shares in Umeme Holdings. On November 30th 2013, about 38percentshares of Umeme were floated on the Uganda Securities Exchange. Actis has now made the decision to sell part of the 60percent in Umeme to variousshareholders. So yes, Umeme is on sale, but not all of it. Still it is a sale.

Read: How Actis minted billions in Uganda, from just two companies

Who is selling what to whom? 

My guess is as good as yours. I do not know. NSSF perhaps? IFC? Who could it be? Norfund. I do not know. There are quite a number of potential investors that can buy up the shares ranging from pension funds, investment banks, sovereign wealth funds and "others." 

"Due to corporate governance restrictions, Umeme  cannot comment further until the transaction has been completed," a statement from Umeme reads. 

Why is Actis selling - part  of - its shares in Umeme Holdings?

Actis is aprivate equity firm. It invests, grows the business and sales to the highest bidder[s]. Then it will move on to the next country and do the same for any other business. In 2012, it divested its entire interest in Banque Commercialedu Rwanda. In 2013, it also sold a 45.05percent stake in Dfcu Bank, Uganda sixthlargest bank by assets. It previously held a 60percent stake in the bank. On this transaction, Actis sold the stake at 119billion Uganda Shillings to NORFUND and Rabobank. There seems to be a similar arrangement with Umeme, considering that Actis will still hold a minority stake in the company.

It also exited Xiabu Xiabu, a Chinese restaurant chain and XP Investimentos a brokerage firm in Brazil.

Actis has been busy since it sold a stake in Umeme, Dfcu and BCR. It acquired Compuscan,” the largest independent credit bureau in Africa.” Compuscan is headquartered in South Africa and in Uganda; it provides the famous financial card required by all commercial banks before you take-out. The takeover amount was not disclosed.

It also made a 36percent equity investment in the AutoXpress Group, a tyre company in East Africa that distributes Pirelli and Dunlop brands among others.

In 2013 it also invested perhaps the largest chunk of money in Cameroun. At $220m, it acquireda 56percent stake in Cameroun’s national grid company, inclusive of two independent power plants.  It also went into the pharmaceutical industry in India, when it bought a stake in Symbiotec Pharmalab Limited (“Symbiotec”) at US$48m. It also spent US$95m on one of South 

Africa’s largest payments company, Paycorp.

Other acquisitions include Upstream, a mobile marketing and e-commerce Company and Jiashili Food Group, a Chinese Biscuit manufacturer.

Has the sale got anything to do with parliament adopting the proposal to terminate the concession?

Tough question, huh? Well it depends on how you look at it. The first divestment came at a time the whole ad-hoc committee on the energy sector was debating the contract of Umeme and Eskom. The second divestment comes at a time when parliament has adopted the recommendation for the Umeme contract to be terminated. A decision by cabinet has not been made, but considering the submissions made by Irene Muloni, the energy minister at the time of the debate, the concession is going nowhere.

My understanding is even if Actis partially exits, the concession that would be cancelled is one made with Umeme Limited, so either way, government can still terminate - if it makes the decision. Government would still compensate Umeme Limited investors for the termination of the contract. Still a win for investors!! Whoever they will be!!

Does the Actis exit have any implication on the share price?

Well, trading of Umeme shares has been suspended for now as the transaction is concluded. The reason trading is suspended is one to avoid some “insiders” from hiking or downgrading the price. [You need to read the book: The Last Tycoons:The Secret History of Lazard Frères & Co. It provides some good insight on mergers and acquisitions of listed and non-listed companies.] If the price goes up, then it works in favor of Actis and if it falls, whoever is buying gets a juicy deal. This is not unprecedented. In 2013, trading of Dfcu shares was suspended to allow the completion of the Actis, Rabobank and NORFUND deal.

The Dfcu shares were trading at shs1,000 per share then. Currently they’re trading at Shs1,215 per share, a Shs215 rise since mid-2013. Umeme’s share price is currently Shs360, up from Shs275 at the time it went public. One cannot predict the share price of company, but what the USE has proven to us is that if the fundamentals of a company are right, the price will rise or remain stable. If the fundamentals are wrong, then investor confidence is dented, take for instance what is happening with Uganda Clays and NIC [It is currently recovering, although it is still trading below IPO price].  

It should be noted that institutional investors hold the largest chunk of shares of USE listed companies. If they sneeze, the price could dip or rise. For now, the political chatter on Umeme is not moving them just yet.

What is Umeme worth?

My conservative calculation of Umeme's value is Ugx584.5bn [No of Shares x Current share price]. The Actis ownership is 60 percent, which is about 975.6 million shares valued at Ugx351bn. If, Umeme were to remain with a minority shareholding, say 15.5 percent after selling 44.5 percent, it could make close to Ugx300bn tax-free money. [This is speculation. Just to point you to you the potential valuation of Umeme and the sale.]

Remember, Actis lent Umeme about Ugx47.6bn between 2005 and 2007. By the time the loan repayment was complete in 2012, Actis had received an estimated Ugx92.7bn. This added to the dividend of Ugx14.2bn in 2013, then you can see why Umeme was a fine investment for Actis. 

www.goldroof.net

What does this mean for the electricity user in the country?

Well, hard to say. That depends on the investors that are coming in and their vision for the company. Power supply is still somewhat erratic and what Ugandans need to know, is whether this will reduce. Will the tariff reduce? Does Umeme’s image change? Well, no to all of these. First of all, the change in investors could bring in some new faces on the Umeme board, which perhaps could change the strategy of Umeme – or not. Power supply to improve will depend on whether there is commitment to invest in improving infrastructure. 

Umeme recently took-out a loan of US$195m from the IFC, Stanbic and Standard Chartered for capital investment. It also requires close to $300m for investing in rolling out pre-paid meters to the whole country. If you’re experiencing poor power supply, it is likely that would remain the same.

How does Uganda benefit from this transaction?

Wait, before you say Capital Gains Tax will be paid. In 2011, there were amendments made to the Income Tax Act. One of them was that any sale of assets in a Private Limited Liability Company, the company that has sold will be subject to a Capital Gains Tax assessment by URA. This, if you remember is a subject of two major legal battles between URA and Heritage Oil over the sale of its assets to Tullow Oil. The other one is between URA and Zain, which arose out of Bharti Airtelacquiring Zain’s assets in 2010.

Umeme is a publicly traded company listed on the USE. The rules are different. Actis, which will be selling is not subjected to Capital Gains Tax. CGT was not applied when Actis sold Dfcu shares to Norfund and Rabobank. Government opting not to impose such a tax share transfer of listed companies was mainly to encourage the growth of the capital markets.

Notably, the benefit for Uganda is that it makes it a fertile ground for FDI. It is rather comfortable for a company to know that it can come invest in Uganda and then exit at will by selling to other investors. Some of our brokerage firms and law firms, will also have a share of the pie when the bill their clients.  

When the top six banks sneeze, the entire banking sector catches the cold

None of the top six banks posted losses. There was “just” a decline in profitability. They still made money. Inside the boardrooms however it’s a whole different story. The CEO’s have questions to answer. How to turn around a less than impressive year? 

The top six banks are Stanbic, Standard Chartered, Crane Bank, Centenary, Barclays and Dfcu Bank respectively. The top three saw their profits dip by 22.11%, 26% and 41% respectively to Ugx101.8bn, Ugx97.6bn and Ugx47.2. The other three, recorded a rise in profits by 3%, 4% and 5% respectively to Ugx58bn, Ugx39.8bn and Ugx34.8bn. The top six banks account for at least 82% of the entire banking sector net profits.

 In 2012 profitability of all commercial banks was Ugx586.5bn. This dropped by 21% to Ugx462bn in 2013. The top six banks account for Ugx379bn – 82%  - of the entire commercial bank profits.

The trouble for these banks was slowed operating income if compared to 2012. In 2012, the top six’s’ income had grown above 15% however in 2013, none of the banks had above 15% growth in income. In fact for Stanbic and Standard Chartered Bank, income fell by more 12% and 14%. Overall the entire banking sector recorded a 19% decline in income to Ugx1.9trillion. It should be noted that the top six contributed at least 81% of this income.

The less than impressive income by banks was mostly as a result slowed growth of money they make off lending. In 2012, interest income was surging with only Dfcu posting a rise of less than 11%. The rest were above 18%. Despite Stanbic Bank and Standard Chartered being diversified, their non-interest income also did not grow as well as it usually does.

The banks blame the economic environment as being unfavorable. Philip Odera, the CEO Stanbic Bank says banks still had to deal with the effects of the 2011 rise in interest rates, which led to an increase in loan defaults and provisions for these bad debts. Even at Bank of Uganda they admit the less than impressive performance of the sector was due cautious lending by banks and the poor performance of the real estate sector.

Expenses also grew and more notably were expenses to cover-up for the bad debts that were written off. The provisions grew by 34.8% in 2013 down from 157.4% in 2012. The top six banks accounted for 60percent of these provisions, with Standard Chartered Bank, Stanbic Bank and Crane Bank accounting for Ugx46.6bn, Ugx50bn and Ugx44bn respectively.

In terms of market share – calculated using deposits – the top six hold 63% in 2013. With the exception of Centenary, Dfcu and Barclays, the rest of the top six lost a market share. Stanbic’s share dropped by 3%, Standard Chartered also lost 1.2% and Crane Bank also declined by 1.4%. The slip up by these banks means that KCB, DTB, Ecobank, Imperial, Tropical, ABC, Housing Finance and Cairo International Bank increased their market share by at least 0.5%. The top six still control the largest chunk of banking assets, despite the 1% drop in their market share to 64%.

The implications of this less than impressive means that income tax contributions from commercial banks also declined by more at least 13%. 

2013, best year ever for Uganda Securities Exchange, here is why

At the Uganda Securities Exchange (USE), it is business as usual. After the first five minutes of trading, there is a long lag where brokers read newspapers, discuss football, politics and once in a while a trade will come. 2013 wasn’t any different. In terms of numbers it was. At the end of 2013, the stock market turnover was Ugx197.7bn a rise of more than 500percent from Ugx30.5bn in 2012. A big leap indeed. 2013 was arguably, the record breaking year for the USE. Trouble is, Joseph Kitamirke the CEO, who left mid-2013 has not been replaced. Many have asked, what was different in 2013?

Dfcu Group was the difference. The bank accounted for more 58percent [Ugx112.95bn] of the entire turnover at the stock exchange. If compared to 2012, this counter only had Shs1bn in trading turnover. Umeme came in second with turnover of Ugx44bn and Ugx30.7bn for Stanbic Bank in third. All these were record breaking figures for these stocks.

Dfcu is Uganda’s sixth largest bank in terms of assets – Ushs981.1 and customer deposits – Ushs591bn. At the end of 2012, it was Uganda’s 7^th most profitable bank despite a 5.4percent fall in profits to Ushs29.8bn offering dividends of Ushs37.1per share to shareholders. In 2013, Rabobank from the Netherlands – bought a 27.54percent stake in Dfcu. Also, NORFUND increased its stake in the Dfcu to 27.54percent in the bank after buying an additional 17.54% in Dfcu. The transaction was valued at Ugx111.9bn, accounting for 99percent of the entire turnover on the Dfcu counter.

“The more we do this, the more ready we will be when other transactions come on board,” then CEO, Joseph Kitamirike said. The USE has never handled a transaction of this magnitude and for two brokerage firms, African Alliance and CfC Stanbic Securities- now SBG Securties - , it was a handsome payday for them. Such transactions are not common for listed equities in Uganda, so it is the number one reason why the stock market performed “well” in 2013.

Umeme also completed its first full year on the USE in December 2013 and had a turnover of Ugx44bn, which is 39percent of the total turnover of the USE. Umeme has been an active counter since the company listed in November 2012. Institutional investors were particularly interested in this counter, arguing that it had been largely undervalued at the time it listed. Its shares were also available to trade for those willing to exit and enter. It also recorded the highest price appreciation of about 35percent.

Stanbic Bank turnover was also up by 137percent to Ugx30.7bn in 2013. This leap was also due to increased activity on this counter. Stanbic Bank is Uganda’s largest bank by assets, customer lending and deposits.  Again, the demand on this counter was driven by interest from pension and mutual funds that were reviewing their investment strategy. This as the banking sector is expected to have recovered in 2013, after the Non-Performing Loans (NPLs’] that dogged the sector. Analysts were bullish then, with one of them telling this columnist in 2013 that “......we expect better growth in the second half and in 2014 in terms of interest income as credit growth improves and recoveries on non-performing loans while noninterest revenue will grow as deposits continue to improve.”

The USE was however dealt a significant blow when the CEO, Joseph Kitamirike was not given a new offer by the governing council. The performance was undoubtedly the best in the history of the exchange, but once again two counters, Stanbic and Umeme present that organic growth. 

Press and Journalists Act "violates the freedoms of speech, expression, the press and other media" - Petition

... from The African Center for Media Excellence 

PRESS RELEASE

On Friday March 14, 2014, the Centre for Public Interest Law (CEPIL), in cooperation with the Human Rights Network for Journalists and the Eastern Africa Media Institute, a tripartite initiative known as the Partnership for a Free and Independent Media, filed a constitutional petition challenging major sections of the Ugandan Press and Journalists Act.

This petition, recorded as Constitutional Petition number 9 of 2014, challenges the Press and Journalists Act, Cap 105, on the grounds that the law violates the freedoms of speech, expression, the press and other media, as contained in Article 29 of the Constitution, as well as other key provisions that provide for protection of fundamental human rights. The Partnership believes that this law violates key principles of freedom of the press and other media, and restricts the Fourth Estate in Uganda in a way that is not justifiable in a free and democratic society.

The petition identifies a number of areas where the Act is in contravention of the Constitution, including unduly restrictive licensing conditions for journalists; unclear, inconsistent and overly broad powers of the Minister and the Media Council to punish journalists; a code of ethics that holds journalists liable for disseminating “incorrect or untrue” news or allegations and requires them to disclose their sources if there is “an overriding consideration of public interest”.

One area of particular concern is the licensing requirements for journalists. The petition states that, “section 26 [of the Act] is inconsistent with article 29(1) and 40(2)(a) of the Constitution in so far as it provides for application to the Council in order for a person to practice journalism.” The petition further goes on to say that “sections 28 and 29…restrict the right of a person to practice journalism unless the person has enrolled, acquired an accreditation card, and complied with all the terms the Council has set and has complied with all orders under the Act.” Such restrictions, taken together with other sections of the Act, unduly limit the ability of journalists to practice their craft and create the potential for political persecution of journalists who hold divergent views from those in the licensing authorities.

The dangers of the licensing process are compounded by the procedures by which complaints can be instituted against journalists (sections 31 and 32), the procedures by which journalists can be suspended (sections 34 and 39), the way in which the Council implements its own orders made against a journalist (section 35), the ability of the Disciplinary Committee to institute proceedings of its own motion against journalists without adequate guidelines or controls (Section 40(2)), and a complaints procedure against journalists that fails to meet basic principles of natural justice (Sections 31, 32, 33). The overall impact of these sections of the law is to compromise severely the ability of journalists to practice their craft due to fear of persecution from the state.

Other elements of the Act that violate the Constitution include its requirement that journalists join an association to practice journalism (sections 27(1) and 28), the requirement that journalists pay a fee to get or renew a license to practice journalism (sections 27(2), 16(1), 27(1), and 29(2)), and the requirement that what is published is not contrary to public morality (section 6(a)).

Finally, the definition of practicing journalism (section 27(5)) is far too broad and does not even require a link with a mass media outlet. It would therefore subject most individuals working for civil society, all academics, and even students or employees of the telephone company who collected information for the purposes of compiling a telephone book, to the authority of the Minister and Media Council. Mass media and electronic media as defined in section 1 is overly broad, as the former not only includes electronic media but also posters and banners while the latter includes any communication to the public by any electronic apparatus, thus including every website, regardless of its content. All these would therefore be treated as persons practicing journalism and would be required to register and obtain licenses at the penalty of imprisonment on default.

Overall, the Act violates the freedom of the press and other media, as guaranteed in the Constitution, and provides an extremely restrictive environment for journalists that will compromise their ability to carry out their duty in a professional way, free of fear from persecution by the state.

About the petitioners:

The Centre For Public Interest Law is a non-profit, non-religious and non-partisan organisation registered in September 2009, which aims to protect public interest in
Uganda using law as a tool.

The Human Rights Network for Journalists—Uganda, a nonprofit and non-partisan organisation founded in 2006 enhances the promotion, protection and respect of
human rights through defending and building capacities of journalists to effectively exercise their constitutional rights and fundamental freedoms for collective campaigning through the media.

The Eastern Africa Media Institute (EAMI), Uganda Chapter was founded in 1997 as an umbrella organization of 29 media associations and organizations spread all over the country. EAMI is a nongovernmental and non-profit organization committed to the values of a free and independent press, united, strong and vibrant media development in the country in order to attain a free, responsible media and a democratic society.

For further information please contact Sheila Atim, Centre for Public Interest Law, at 0312-106022 or sheila@mbgadvocates.com.