Uganda will pocket about Shs 575 billion in five years in direct development assistance from Denmark but the lack of a conducive investment climate keeps Danish investors away.
Majbrit Holm Jakobsen is the Danish Head of Mission to Uganda. In an exclusive interview recently with The Observer, she explained to Simon Rasmussen why some Danish investors are hesitant to invest in Uganda.
Corruption, delayed justice at the Commercial Courts and fraudulent land transactions contribute to a list of challenges foreign investors grapple with when weighing an investment move to Uganda. Below are excerpts:
Seen from a Danish perspective, what are the ideas behind Danish development cooperation with Uganda?
Denmark is, through our new country programme, which started this year, providing 945m DKK (Shs 575bn) over a five-year period. The programme focusses on two thematic areas.
One is human rights and democratic governance. The other is inclusive growth and employment. Under the good governance and democracy support programme, we support a number of state and non-state institutions. These include; the Inspectorate of Government (IG), which functions as both the anti-corruption and ombudsman institution.
With Danish support, the IG is able to investigate corruption complaints and if they find enough evidence, they can prosecute the cases in court and hopefully get a conviction of the culprits.
We also support the ministry of Finance’s programme for better public financial management. For instance, Danish support has helped the ministry clean up what is known as ‘ghost’ workers and pensioners and the government of Uganda has saved quite a lot of money, which instead has been used for better service delivery.
We are also one of seven donors behind a multi-donor basket called the Democratic Governance Facility (DGF) through which support is given to government and civil society institutions that work for the many topics related to democracy and human rights in Uganda.
Legal aid to people who cannot afford it, for instance, and support to organizations that work for freedom of expression and anti-corruption. Uganda Human Rights Commission is an important partner here, as is the parliament with its legislative role.
Denmark also supports the United Nations Population Fund (UNFPA), which deals with women and young people’s sexual and reproductive rights, such as access to prevention and information about family planning services and social empowerment.
In the area of growth and employment, Denmark has a special focus on the private sector dealing with agricultural products. We provide a lot of support to subsistence farmers, in particular in northern Uganda. The farmers are trained in good agricultural practices in order to improve yields from their small plots of land.
We also link farmers to markets so they can make an income. Because northern Uganda hosts many refugees, this farming programme is for both Ugandans and refugees. Moreover, Denmark supports small and medium-sized enterprises that wish to add value to their products.
For example, instead of Uganda just exporting raw coffee beans, we would like to support more value addition here in Uganda, so Ugandan companies refine the coffee beans to get a better price at the international market.
We also support initiatives for enhanced regional economic integration in East Africa. Uganda’s income would go up with more efficient trans-border collaboration. I think we see some interesting results here.
For instance, in the past it would take 40 days to get a container from Mombasa to Kampala. It now takes about three to four days. And this really matters for companies considering investing in Uganda, when for instance; the risk of your produce going bad during transit is now considerably lower than before. I should also say that given that young people constitute the majority of Ugandans, we have a special interest in creating employment opportunities for the youth.
So, the development assistance to Uganda, is it on 50/50 basis on the two thematic programs?
No, around one third is contributed to good governance and democracy, and around two thirds are for growth and employment.
Are you generally happy with how Danish money is spent?
Well, Uganda is pretty high on Transparency International’s Index on corruption, and we also notice this in our development cooperation. Unfortunately, we have multiple corruption cases both with public authorities, private companies and civil society organizations.
We are not naïve, and we do what we can to prevent these cases and to handle them when we discover them. This is also why we as an embassy spend a lot of time monitoring our partners to ensure that activities are actually being implemented as agreed.
Usually, when people are thinking about corruption, they think about corrupt public officials. However, our experience has shown that corruption exists in all areas of society. We see corruption as a major challenge in Uganda, which is also why we support the IG.
Please give an example of a typical type of corruption case you have dealt with.
One example could be that the embassy provides funds to a partner to conduct a number of activities, for instance a workshop. Afterwards, we ask for accountability and are provided with signatures from at least 150 participants.
When we start checking whether all these people actually participated in the workshop - and were given an allowance, we then realize – that perhaps only 100 people actually attended, while the rest have never heard about any workshop.
This is a clear indication that some people have run away with money meant for an activity, which is not only illegal but also completely against the idea of trying to do something good for the people of Uganda. Corruption in Uganda is systemic and endemic - and it is at all levels of society.
In light of the recent political developments in Uganda, how is the relationship between Uganda and Denmark?
Generally, the relationship between Denmark and Uganda is good. DANIDA (Danish Development Agency) has provided aid to Uganda for about three decades. When I travel around Uganda, in rural areas, most people will not necessarily know about the Danish embassy, but when I tell them that I work for DANIDA, then people illuminate.
My sense is that DANIDA is a good brand in Uganda, and many people have been connected with DANIDA through our many programmes within health, water and sanitation, roads, agriculture and so on. My impression is that a lot of Ugandans have benefitted from DANIDA’s interventions in the past three decades.
Now, the recent events in Arua [by-election] did not go unnoticed in the Danish media, and it did trigger questions about our relationship and partnership with Uganda.
Recently, the Danish minister of Development, Ms Ulla Tørnæs, was in Uganda, and she had frank discussions with government representatives about human rights violations, freedom of speech and space for the independent media and civil society organizations.
By virtue of the good bilateral relationship, we can discuss these kinds of things in an open and frank manner. We do not always agree, and that is fair enough, but the important thing is that we can discuss and exchange views.
If you were to categorise the human rights into political, economic, social and cultural rights, which ones have been most threatened in Uganda?
Well, that is a hard question. But if you look at events in the recent months, it seems like media freedoms, the right to assemble and freedom from torture and cruel treatment have been under pressure.
The pictures of the Reuters journalist, James Akena, being badly beaten by soldiers on the streets of Kampala were very disturbing. The latest directives from Uganda Communications Commission (UCC) directing radio and television stations on what to broadcast and what not to broadcast, is another example of concern.
Uganda’s Constitution clearly spells out these rights, but we also know from the annual reports from the Uganda Human Rights Commission that they are not always respected.
On the economic rights, Uganda has made tremendous progress on poverty reduction. Unfortunately, the latest statistics indicate that poverty levels in Uganda are on the rise again – both percentage wise and in actual number of people.
It seems the right to employment, the right to food, the right to access clean water are also under pressure. Uganda remains among the twenty poorest countries in the world, which is also why Denmark continues our engagement here.
An important step forward if Uganda is to become a middle-income country would be to see more foreign investors in the country. The challenge now is that potential foreign investors hear about the recent political events in the media, and then they think twice before investing in Uganda.
The same goes for the tourism industry. Having lived in Uganda for more than five years, I know how much Uganda has to offer to tourists, but images of violence and a heavy military presence on the streets, might get tourists from Europe, the USA and Asia to re-consider coming to Uganda.
What is the level of Danish investment in Uganda?
It is difficult to give an exact figure, but it is on a relatively small scale. However, there is quite some interest in Uganda from Danish companies, but many reconsider when they talk to Danish investors here and share their experiences with corruption, lack of clarity on land issues, bureaucracy and commercial court cases that take years to settle.
As a Danish embassy, we do encourage Danish investors to invest in Uganda. At the same time we have to give them a realistic picture of the investment climate.
What is the volume of trade between the two countries?
It is very limited – only around 100 million DKK per year – but we would like to see it grow of course. There is quite some interest in Denmark in Ugandan products that are organic or ‘fair trade; so, this is clearly an area we are looking into.
Besides the Shs 575bn in direct development assistance, DANIDA also has what we call Business Instruments, used to support different partnerships and collaboration between Danish and Ugandan companies.
So, one of the things that you focus on is partnerships supporting growth and investments, because right now it is hard to attract trade from private investors?
The long-term goal is of course to see a Uganda that requires less development assistance – so we can focus more on trade and investments. That is also why our development programme focuses on private sector agricultural development and job creation.
If more Ugandans get meaningful jobs, they will pay taxes and thereby create more public revenue, which can be used for service delivery. At the same time, if Danish support can assist in reducing the level of corruption in Uganda, then this will also contribute to a better investment climate in Uganda.
In light of all the challenges you have mentioned, why is Denmark still willing to provide development assistance to Uganda?
In the Danish policy paper for Uganda, the Danish intentions are stated quite clearly. Denmark wants to contribute to stability in the country. Uganda is surrounded by countries that are unstable such as DR Congo, South Sudan and Burundi.
We see Uganda as a country, which takes on a number of global responsibilities – which we appreciate. For instance, Uganda is the country providing most soldiers to AMISOM in Somalia; so, clearly Uganda takes its share when it comes to fighting international terrorism.
Moreover, Uganda is also the African country hosting the largest number of refugees. Denmark acknowledges and appreciates these efforts, and we would like to support Uganda in continuing with this.
That is also why our country programme has a large focus on both refugees and the Ugandan communities that so generously host the refugees. Take a district like Arua, which I have visited numerous times: one in four people living in the district is a refugee, of which the majority has arrived within the last two years. Such an influx of course puts the district under pressure.
All of a sudden, there will be more kids in the classrooms, more people at the health clinics, trees are cut down for firewood at an alarming rate and so on. As Denmark, we stand ready to support Arua and other district hosting refugees in managing this.