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Public debt has been growing with external debt now valued in the excess of Shs40 trillion ($10.5b). Photo | file

What you need to know:

Government will re-examine ratios of interest payments to tax, interest payments to exports income and debt-to-economic growth balances   

Government is considering changes to future borrowing in the face of mounting pressure to manage debt and repayment, according to Ministry of Finance.  

The changes, according to Ms Maris Wanyera, the Ministry of Finance director for cash and debt policy, will include re-examining ratios of interest payments to tax revenues, interest payments against export earnings and debt-to-economic growth balances. 

“Future borrowing will be biased towards concessional loans and the domestic debt market for purposes of budget support, but we shall not acquire commercial loans for project implementation,” she said.

Debt has been mounting with government last month conceding that it was no longer sustainable. 

However, Finance Minister Matia Kasaija last month said government would continue to borrow unless Ugandans paid more taxes to fund a rise in priority demands. 

Uganda’s debt-to-gross domestic product (GDP) ratio, measured as the level of indebtedness, rose to 54 percent in June from 49.1 percent based on cumulative debt data captured between July 2021 and June 2022. 

Public debt, according to government data, currently stands at Shs73.5 trillion ($19.2b), with external debt valued in excess of Shs40 trillion ($10.5b). 

State Minister for Planning Amos Lugoloobi last month said Covid-19 related borrowing resulted into higher debt levels pushing debt ratio to GDP beyond the threshold of 50 percent.

Therefore, Mr Lugoloobi said, there was need for government to rethink the financing architecture of the National Budget with the view of increasing tax ratio to GDP through focused increase in production and infrastructure, create markets and promote trade.  

“Trade is [one of the least] funded sectors  ... we need to begin planning for trade and markets,” he said.

The East African Community member states are required to maintain a maximum debt to GDP ratio of 50 percent in line with monetary union convergence targets approved in 2013.

It is a benchmark also adopted by the International Monetary Fund.

The latest increment in public debt also points to short-lived opportunities realised from previous economic rebasing exercises - an undertaking to revalue the size of an economy, growth benchmarks plus adjustments in key economic performance indicators such as debt to GDP and tax to GDP ratios.

Uganda’s pioneer economic rebasing exercise was done in 2012 and was followed by another in 2019. 

Data from the 2019 economic rebasing showed the value of Uganda’s economy had grown to Shs137 trillion ($35.8b) while tax-to-GDP ratio had dropped from 13 percent to around 12 percent.

The size of Uganda’s economy grew from Shs148 trillion ($38.7b) in the 2020/21 financial year to Shs162 trillion ($42.4b) in 2021/22.

Findings from the two economic rebasing exercises yielded a debt-to-GDP ratio of 40-50 percent - a scenario that offered technocrats limited space for future borrowing activity.

Latest economic data shows that headline inflation averaged less than five percent during financial year 2021/22 while economic growth stood at 4.6 percent during the same period.

Savings to GDP ratio reached 17 percent by close of 2021/22 while youth unemployment - a leading poverty indicator, was 13 percent in the same period.  

Productive use        

Ms Madina Guloba, the Economic Policy Research Centre senior research fellow at Makerere University, wondered what portion of public debt is put to productive use and the return on investment. 

“Uganda’s economy looks less bankable to lenders because the rate of debt accumulation exceeds the pace of development experienced in this country,” she said. 

“What matters is the motive behind the borrowing. For example, is government borrowing to invest in a new power dam while another that has been under construction for long is yet to generate power,” Ms Mubbale Kabandamawa-Mugalya, an investment manager at Sanlam Investments, said. By The East African

Kenyan High Commissioner to Rwanda Philip Mundai Githiora. Photo: File.
 

Kenyan High Commissioner to Rwanda, Philip Mundai Githiora, has re-assured Rwandans, especially the business community, that the upcoming presidential elections will not interfere with the trade flow from Kenya to Rwanda and vice-versa. 

The Kenyan port of Mombasa is one of the major trade routes for Rwanda, linking the country to the sea. In an exclusive interview with The New Times, Githiora assured traders that his country learned from the past and measures have been put in place to ensure free flow of trade along the Northern Corridor. 

“Today, there is political maturity and over the course of years, Kenya has built seamless systems that are hinged on regional integration and as a result, trade has taken a centre stage. These are reasons why trade won’t be interrupted,” he said. 

Kenyans will go to polls on August 9 to among other leaders elect a new president that will replace the incumbent Uhuru Kenyatta who has served up his two terms. During the post-election violence that occurred after the 2007 elections in Kenya, goods transiting through the Northern Corridor worth $47.5 million were lost in the violence, and owners are still awaiting compensation.

The Mombasa port serves different countries in the region including Rwanda, Uganda, DR Congo, Burundi, and South Sudan, which underscores Kenya’s significance in regional trade.

“Trade has become the center of the East African Community, in fact, the last four times the presidents of Kenya and Rwanda met in this year alone, their conversations always carried an element of trade. It shows how trade is a pivot of the region. I can assure traders that their businesses won’t be interrupted by the upcoming elections,” said Githiora.

Rwanda-Kenya trade

The envoy went on to detail in numbers how the two countries have been trading with each other over the course of years saying that since 2000, Rwanda Development Board recorded 55 Kenyan investors ploughing roughly $400 million into Rwanda while other Kenyan investors have at various points helped Rwanda mobilise close to $1 billion from external sources over the last 15 years.

According to the Observatory of Economic Complexity (OEC), a leading data visualisation tool for international trade data, during the last 24 years, the exports of Rwanda to Kenya have increased at an annualized rate of 8.15%, from $2.86 million in 1996 to $18.7million in 2020.

The CEO of the East African Business Council, John Bosco Kalisa also told The New Times that in the upcoming Kenyan presidential elections, “there are no indications of violence and truly a lot has changed in the past years. If you read the Kenyan terrain well and how campaigns are going, you can only anticipate a calm environment, that’s why I encourage the business community to carry on with their business.”

The two front-running candidates in the upcoming Kenyan elections are current Deputy President William Ruto and former Prime Minister Raila Odinga.

The other two candidates are George Wajackoyah and David Mwaure. Registered Kenyan voters living in Rwanda will vote from the Kenyan High Commission in Kigali and according to the commission, 1090 will vote from the commission’s office. Edwin Musoni, New Times

 

Ms Jamila Eymoi at the Mandera Law Courts on January 19, 2022. She was sentenced to serve 30 years in prison after being found guilty of illegal possession of a firearm and ammunition. Manase Otsialo I Nation Media Group

Early last year, Ms Jamila Maalim Hussein Eymoi fell in love with a military officer in Somalia and crossed the border to settle with her newfound lover in Bulahawa, a town conjoined to Mandera town. 

She did not follow immigration laws when she crossed the border. This is simply because it is not normal for anyone to ask you about your travel documents when crossing into Somalia or returning to Kenya.

There is no official immigration point, let alone immigration officers, except police officers purporting to guard the border as they collect Sh50 from anybody crossing into Bulahawa or into Mandera.

“You don’t really need anything like a passport because nobody will ask you about it at the border. You only need Sh50 for the police officers,” a regular traveller between the two towns said, requesting not to be named.

Bulahawa in Somalia, Mandera in Kenya and Suftu in Ethiopia are so connected that a local can wake up in Mandera, have breakfast and cross into Suftu for lunch and then into Bulahawa for supper before deciding where to spend the night.

“We have people with wives housed in each of these three towns and they keep just going round and it has become a normal life for them,” our source said.

On an unspecified day in April last year, Ms Eymoi crossed back into Kenya from Somalia and just like any other person, she paid her “immigration fee” to the police officers and her luggage was not checked.

She proceeded to her uncle’s house at Busley estate with Mandera town.

She told her host that she had come for treatment at Mandera County Referral Hospital and that she would travel back to Takaba in Mandera West immediately after she was treated.

Mr Hussein Nunow Sheikh, her uncle, handed her ‘sick’ niece Sh200 for transport to the hospital. 

Ms Eymoi had managed to trick her uncle to believe that she had indeed travelled from Takaba and that she was sick.

On April 20, 2021, Mr Sheikh was shocked to return home in the evening to find well-armed security officers in his compound.

The officers were with Ms Eymoi, who had gone for treatment.

Mr Sheikh told a Mandera court that the officers and his visitor entered his house and seized an item under a bed that his niece used.

“I was summoned to go to the Mandera Police Station, where I was informed that the item found in my house was a firearm,” Mr Sheikh told the court.

Mr Sheikh said it was Ms Eymoi who lifted the mattress on the bed and removed an item.

According to police, Ms Eymoi crossed the border with the stolen firearm and went to hide it at her uncle’s house, where she spent a night.

She left Mr Sheikh’s home, alleging that she was going to hospital, only to visit another home near the Kenya-Ethiopia border.

Security agencies in Bulahawa had raised the alarm about an AK-47 rifle stolen by a woman who had crossed into Mandera town with it.

Police officer Johanes Nyangige told the court that a liaison officer from Somalia reported a missing firearm to them.

He said the photographs and phone numbers of the suspect were provided and upon tracking, Ms Eymoi was arrested near the Kenya-Ethiopia border in Mandera town.

She took the officers to her uncle’s house, where they recovered the said firearm.

Mr Nyangige, in his evidence, said they seized a dismantled firearm wrapped in paper bags and rugs. 

The recovered firearm had a magazine loaded with 13 rounds of ammunition.

The accused was also found in possession of several identification cards belonging to different people, a driving licence belonging to one Mohamed Ali Mohamed and an Equity Bank card for Ms Halima Hussein Mohamed.

On April 22, 2021, Ms Eymoi faced three charges in Mandera court and admitted all, only to deny them when the matter came up for presentation of the facts by the prosecution a week later.

After a long court process characterised by adjournments, Mandera Senior Resident Magistrate Kimani Mukabi noted that the prosecution case was cogent and watertight.

Ms Eymoi was put on her defence after the court established that she had a case to answer on May 28, 2021, but she introduced a lawyer on July 9, when the matter had been set for defence hearing.

Mr Ibrahim Yussuf, her lawyer, sought adjournment of the proceedings to give him more time to study the case.

On August 2, 2021, the defence lawyer sought another adjournment, asking the prosecution to recall all witnesses.

There were at least three other adjournments for different reasons, but the matter was fixed for hearing for three consecutive days starting on March 14, 2022.

The accused jumped bail on March 16, and an arrest warrant was issued as the defence lawyer withdrew his services.

Ms Eymoi was arrested on March 26, 2022 in Moyale as she attempted to cross into Ethiopia.

In his ruling, Mr Mukabi stated that the accused person’s defence consisted largely of mere denials that could not shake the corroborated and strong chain of evidence by the prosecution. 

“The court record is also clear that when the accused was first arraigned before this court for plea taking on April 22, 2021, she unequivocally admitted being in possession of the subject rifle, only to later backtrack the same when the matter was deferred for facts a week later,” Mr Mukabi said.

In her defence, Ms Eymoi said she was arrested because of abandoning her children and not because of the firearm. She denied all the charges, alleging that she had been framed.

She faced three charges, including illegal possession of a firearm, illegal possession of ammunition and entering Kenya through an illegal point.

“The upshot of the matter is that I proceed to enter a plea of guilty on behalf of the accused on counts one and two. The accused is convicted on those two counts and is acquitted on the third count,” Mr Mukabi concluded.

She will serve 20 years for illegal possession of a firearm and 10 years for illegal possession of 13 rounds of ammunition.

The custodial sentence will run concurrently from March 31, 2022 when she was remanded. By Manase Otsialo, Daily Nation

 

Angry residents on Sunday blocked Lokitanyala–Kitale highway in Moroto in northern Uganda for several hours in protest over delayed compensation by the government.

The locals blocked the road at the junction between Tapac trading centre and Kosiroi demanding compensation for the 42-kilometer stretch. Several trucks from the Tororo Cement factory were denied access to the Kosiroi mining site where they ferry limestone. The same road is also used to connect to Amudat district through Looro sub county.

Charles Tokon, a resident of Tapac trading centre says ever since they filled compensation forms early last year, they have not received any response from Uganda National Road Authority (Unra) and yet they promised to compensate them within a period of six months.

"Unra said they would pay us within six months but I’m wondering what is happening because they are not communicating and now we are under pressure because our landlords are demanding money," explained Tokon.

Tokon said they are just tossed around whenever they try to raise the matter before Unra officials. Emmanuel Lorot, another resident, says the delays in payments are going to affect the road construction project because they are not willing to allow the works to continue before they are paid.

Lorot said the roadworks have left their gardens, homes and trees destroyed but Unra is delaying giving them the money that they would have used for constructing somewhere else. Robert Lomongin, whose house was destroyed, urged the government to consider the skyrocketing prices while valuing their property for compensation.

"Prices for building materials have increased and we may not be able to replace our houses, so we hope Unra is considering that too," he added.

John Achia, the Tapac sub-county chief said the affected persons were told to go and rent as they wait for payment which was expected in about six months from December last year. He attributed the delays in compensation to the government processing of finances that requires the system upgrade since it’s a new financial year.

According to him, the affected persons will be paid as soon as the government is done with the issues of accountability. He urged the community to be patient and allow work to continue as they wait for the government's response to their concerns.

Eng Benjamin Enyuku, Unra deputy resident engineer admitted the delays saying they had assured to pay the affected persons within the period of six months but unfortunately some changes have affected the process.
Enyuku says the affected people were asked to provide their details for compensation and everything was approved and only awaiting government action. He said the locals should not worry because the government is ready to pay their money after working on a few

Enyuku said they will be meeting the affected persons this week to have all the concerns addressed amicably to avoid any protests from the community soon. The construction of a new highway linking Moroto to Kenya is being upgraded to bitumen II grade and the contract is an extension of the job done on the Soroti –Katakwi-Moroto road section at a total amount of Shs 646.8 billion. - URN/The Observer

 

Former Tanzanian President Jakaya Kikwete will lead a delegation of election observers from the East African Community (EAC) deployed to monitor Kenya's general vote next week.

The EAC mission comprises of 52 observers drawn from key governance and independent institutions and civil society organizations across the seven-member states, excluding Kenya.

The team will be in Kenya until August 12.

Kenya is scheduled to hold its general elections on August 9, with voters choosing the country’s next president.

Four candidates, Deputy President William Ruto, former Prime Minister Raila Odinga, George Wajackoyah and David Mwaure are in the running.

The EAC election observer delegation will be tasked with among other things monitoring compliance of the process to national and international standards.

"We are here to assess the level of preparedness of the key electoral stakeholders for this election. We are also looking at the level of compliance of the electoral processes and management and how they meet international, regional and national standards including established laws, principles and practices," The East African newspaper quotes Kikwete.

"Our mission will interact with a number of key stakeholders in pursuit of peaceful elections. Among these will be IEBC, political parties, candidates, the judiciary, security organs, media and civil society."

Kenya's Independent Electoral and Boundaries Commission (IEBC) says it is ready to hold a credible election and has urged Kenyans to maintain peace during the entire process. - CGTN

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