As Jolly Kaguhangire takes over as head of Uganda Investment Authority, she finds a body which needs total redemption. Question is; can she fix it? ALON MWESIGWA navigates the authority’s bumpy history.
Imagine a metals fabrication factory blazing in a residential place. Or choking on smell from an oil and fat factory right next door. This is exactly what will happen to residents close to the Namanve industrial park when it is fully operational.
The Uganda Investment Authority (UIA), the body overseeing the allocation of land to investors, has given at least 48.5 acres of land initially planned for residential housing to industrial use, according to the auditor general’s 2015/16 report.
The land was allocated to companies – AK Oils and Fats (38.5 acres) and National Enterprise Corporation (10 acres), a manufacturer of metals. This, the audit says, tampers with the industrial park’s master plan.
Yet, this is the much lesser of misdemeanors that have happened at the country’s investment body in the last 26 years – where politics, sometimes fraud and poor business environment, have bogged it down.
Last week, the minister of state for investment, Evelyn Anite, named Jolly Kaguhangire, a former Uganda Revenue Authority (URA) commissioner, to head it.
Some analysts think UIA has done well given the environment it is operating in.
Paul Lakuma, a senior research fellow at the Makerere-based Economic Policy Research Centre (EPRC), said: “There is little UIA could do given the business environment.”
REDEMPTION NEEDED
“You cannot attract an investor with the current [high] electricity tariffs, the bureaucracy experienced in registering a business, the competition from the substandard goods, the informal sector, and cheap imports from Asia and high cost of credit.”
In this critical review of the authority’s life through assessing various documents, including parliamentary and audit reports, we find an authority that needs redemption.
Can Kaguhangire fix it?
First, it was the authority’s very first executive director George Rubagumya that tested how hard, or even impossible, it is to run an organisation with so many vested interests. For starters, UIA deals with investors, allocates land and touts investment opportunities in the country. Many people, including those with higher powers, want a piece of this.
Rubagumya, a lawyer, resigned after serving for about seven years. Charles Onyango-Obbo then summed up Rubagumya’s stay at UIA after he met him in the USA in 2004.
“At UIA, Rubagumya was a harassed man despite the trappings of executive privilege,” Obbo wrote in his Daily Monitor column ‘Ear to the ground’ on March 10, 2004.
“He became an unlicensed punching bag and official fall guy for government leaders who blamed him whenever investors complained even about weather. In the end, George was sacked. Eventually, he returned to the US where he settled back into the life of a lawyer-cum-consultant.”
In that environment of infighting, intrigue, and sheer pull of strings, not much can be written home about Rubagumya’s term. He was replaced by Yob Okello, who had worked at the United Nations Industrial Development Organisation in Australia.
He resigned after one year. His appointment, however, had coincided with the peak of privatisation in the country. His direct contact with investors earned him foes and friends. The process [privatization] was too scandal-laden for him to handle.
In a 2001 paper, economists Arne Bigsten and Steve Kayizzi-Mugerwa said: “The privatisation scandals in Uganda, brewing for most of the second half of 1998, reached a head with the resignation of two key members of the government directly responsible for privatisation.”
Okello and Matthew Rukikaire, the then state minister for privatisation, were the officials.
MAGGIE KIGOZI
Things looked up for the authority when Dr Maggie Kigozi was appointed in 2001. Her presence grabbed headlines and she became a fixture at conferences and sold the country’s investment climate.
A year into office, she won UIA the corporate location prize for the best investment promotion agency in Africa and the Middle East in 2001. She talked at diaspora forums and wowed Chinese and Indian investors in equal measure. By 2010, according to press reports, UIA was posting glowing numbers with foreign direct investment quoted at about $800m that year.
Yet even Kigozi found harsh critics of her handling of land issues. The most visible was the 2006 sale of Shimoni Demonstration School land for Shs 3.6bn to Saudi investor, Prince Sheikh Alwaleed bin Talal, to build a hotel for the 2007 Commonwealth heads of government meeting.
The deal was laced with politics but, nevertheless, tainted her image – and she was accused of being the “orders-from-above implementer” and a real estate agent while transferring land to some powerful people.
A positive for her came when she opposed the giveaway of land in Mabira to Sugar Corporation of Uganda Limited (SCOUL), citing environmental reasons. She failed to get UIA to finish the establishment of 22 industrial parks countrywide, with her most undoing being the Kampala Industrial and Business Park (KIBP) at Namanve. She told journalists in 2010 that infrastructure development was the biggest challenge, which was beyond her own making.
She left in 2011 after serving two terms and was replaced by Dr Frank Sebbowa, who left the office at the end of last year. To assess Sebbowa’s performance, one needs to look no further than the 2014/15 report by the parliamentary committee on statutory authorities and state enterprises (Cosase), headed then by Kyadondo East MP Ibrahim Ssemujju Nganda.
Sebbowa’s first undoing, the report said, was the lack of a UIA board for two years – 2013 to 2015. This meant the former state minister for investment, Ajedra Aridru, performed the board’s role. The report notes the executive director played a shadow role with the minister sometimes approving investors’ applications for land.
“In extreme cases, investors have gone to the minister directly and he has been directing management to give them land without due process of appraisal undertaken – this amounts to micro-managing land in Namanve industrial park,” the report said. The absence of the board caused confusion, the report concluded.
Cosase noted that a whistleblower accused Sebbowa of recruiting relatives and children of his friends, although it noted that it was unable to verify the claims.
Writing in the New Vision last year when the authority marked 25 years, Sebbowa said while financing had been a challenge to the development of serviced land (land with water, electricity, roads and possibly built warehouses) for investors to install their factories, he was “proud that Luzira and Bweyogerere industrial parks were fully functional while Namanve, Mbarara and Soroti are at various stages of development and occupation by investors.”
During his tenure, Sebbowa notes that they cut foreign trips to conventions and conferences in preference to internet-based research of investor markets. Under his term, UIA participated in the setting up of an electronic one-stop center, www.ebiz.go.ug (eBiz). This aimed at helping investors bypass bureaucracy and corruption that comes with paperwork and moving from one entity to another.
Yet, even with all this, brokers still take investors directly to the president, bypassing the authority. The president himself calls the shots, directing which investor should be given land and where. This denies the authority the much-needed autonomy to carry out its work.
But it is the latest auditor general’s report for the year ended June 2016 that sums up affairs at UIA. The report lists lots of irregularities that include uncollected revenues from land leases as “investors withhold payment of premiums; unspent money, which was not returned to the treasury; and an investor who was allocated 11.6 acres of land fully subsidized despite not qualifying for this allocation due to the nature of its investment.”
And to Lakuma, the authority has concentrated on foreign investors and failed local ones.
Can Kaguhangire fix it? Only time can tell.
amwesigwa@observer.ug