Closed shops during Covid-19 lockdown
The year 2021 had mixed experiences – fuel shortages, an Ebola outbreak, the announcement of the Final investment decision (FID) into the oil and gas sector – all of which shaped the direction of many businesses. SAMUEL MUHINDO highlight what made 2022 a roller coaster ride for the business community.
JANUARY
The country was hit by fuel shortages in the second week of January 2022, triggered by the imposition of a $30 testing regime on fuel truck drivers from Kenya. In protest, the drivers refused to pay the ‘exorbitant’ amount, causing a 130km traffic snarl of fuel trucks from the Kenya-Uganda border into Kenya.
As more trucks lined up along the border, the fuel crisis worsened. The shortage in fuel across the country pushed fuel prices to above Shs 7000 in some areas. The government eventually bowed to the pressure and allowed the truck drivers into Uganda.
After approximately two years of the pandemic-prompted shutdown, Uganda reopened its schools in January 2022. The reopening came as a life-saver for approximately 600 school owners who had put their schools up for sale to offset debts accrued due to the pandemic.
Although there had been some efforts at remote learning, several students stopped learning in March 2020 when the closure had been announced. The reopening of schools also exposed parents to the unregulated and exaggerated tuition costs in Uganda.
Bank of Uganda’s stalwart Governor Tumusiime Mutebile passed away, bring the curtain down on a more than 20-year leadership in country’s main financial institution. Mutebile’s death sparked speculation on who would replace him, a speculation that still hovers Uganda’s banking industry today.
FEBRUARY
On February 1, 2022, Total Energies EP Uganda, CNOOC Uganda Limited, the Uganda National Oil Company (UNOC), and the Tanzania Petroleum Development Corporation (TPDC) announced the Final Investment Decision on the Lake Albert Development oil projects.
This is a commitment by the participating oil companies to invest nearly $20 billion into the projects and a commitment to see Uganda’s first oil by 2025.
On February 24, 2022, Russia invaded Ukraine. This was proceeded by a barrage of sanctions against Russia. This caused a logistical nightmare as most raw materials like oil, construction equipment, and wheat could no longer reach Africa in time. This subjected Uganda to deal with the scarcity of some commodities and imported inflation.
MARCH
Arguably the largest bank in Uganda, Stanbic bank – the financial institution that acts as a key indicator for the health of the financial sector – released its 2021 results with loans and advances growing by three per cent to Shs 3.7 trillion from Shs 3.6 trillion in 2020.
There was a five per cent increase in customer deposits to Shs 5.7 trillion in 2021 from Shs 5.5 trillion in 2020. The bank’s profit after tax was Shs 269 billion, a slight increase from Shs 242 billion in 2020. This is a fair growth considering that more economies across the globe were opening up as the pandemic subsided.
APRIL
The Democratic Republic of Congo officially becomes the seventh member state of the East African Community at an event hosted by then Kenya’s President Uhuru Kenyatta in Nairobi, Kenya. With DRC’s admission, the bloc now counts for about 300 million people. It also boasts a combined GDP of $250 billion.
Although DRC is endowed with vast minerals like gold, cobalt, copper etc, it also comes with an insecurity burden into the bloc. The Eastern Congo has for a long time been a haven for different rebel activities exporting the effects of insecurity into the region.
MAY TO JUNE
Uganda introduces the annual budget without fresh tax measures. The budget adopted an increase in the salaries of science teachers, medical doctors and other scientists.
The new budget also designated money for the implementation of the much- touted parish development model (PDM). PDM is projected meant to catapult about 39 per cent of Uganda’s impoverished population into the money economy.
The PDM programme was allocated Shs 1 trillion ($263.6 million) per financial year. The government disburses Shs 100 million ($26,133) per parish per financial year to reinvigorate food, commodity, and money markets at the community level.
The idea is to turn each household into an economic production unit, able to add a valuable commodity/service in both agriculture and the business chain. By September 2022, thieves had raided the money vaults of the programme.
Bank of Uganda also increased the Central Bank Rate for the first time in about four years from 6.5 per cent to 7.5 per cent. The CBR was increased to contain inflation firmly around the medium-term target of 5 per cent.
JULY
Government tasks the ministry for Finance to urgently provide Shs 135 billion for the procurement of food to alleviate the hunger crisis in the Karamoja Sub-region. This followed complaints of inadequate interventions by area members of Parliament.
The hunger crisis left almost half a million people at risk of starvation to death. At the same time, the bigger part of the country was grappling with high prices of food items. This was occasioned by the poor yields in the preceding season.
AUGUST
Kenya goes to the polls in a hotly contested election between former Prime Minister Raila Odinga and then outgoing Vice President William Ruto. To avoid a repeat of the 2007 post-election violence in Kenya that culminated in the shortage of basic commodities in Uganda, the country closely followed events in Kenya. There were advisories for importers into Uganda to try the Dar es salaam port in Tanzania as an alternative to Mombasa.
SEPTEMBER
The European Parliament passes a resolution against the development of the East Africa crude oil pipeline project due to its purported effect on the environment and abuse of human rights.
The resolution jolts Uganda’s oil industry and political class, creating some unity against the resolution. The EU parliament resolution sucks in nearly everyone into the oil debate – from the president, the Parliament, the business community, right up to the cultural kingdoms.
There was a general call to the European parliament to back off. Uganda sees the oil industry as the economy’s redeemer from all the financial distress. The government of Uganda announces an Ebola outbreak in the districts of Mubende and Kassanda.
A highly publicized Ebola outbreak is a big blow to the tourism and hospitality sector that was on the road to recovery from the previous Covid-19 pandemic. They pushed prospective guests into cancelling their bookings to Uganda. Museveni assents to seven laws aimed at combating money laundering and terrorism financing in Uganda.
These seven laws would bring the country to standards set by the Financial Action Task Force – a global inter-governmental organization policy-making body established by the G7 group of countries; Germany, the United States of America, Canada, France, Italy, Japan, the United Kingdom, and the European Union states.
The task force’s major purpose is to establish international standards and to develop and promote policies, both at national and international levels, to combat money laundering and the financing of terrorism.
OCTOBER – NOVEMBER
Airtel Uganda receives permission to delay its listing on the Uganda Securities Exchange. Under the terms of its licence, Airtel was required to go public by December 15, 2022. Airtel would be required to offer 20 per cent of its shares to Ugandan investors.
This follows their May 2022 application to the Uganda Communications Commission (UCC) for a one-year extension citing unfavourable market conditions.
DECEMBER
The government of Uganda informed the country’s main electricity distributor Umeme Limited that it would not renew the concession agreement when it naturally expires in 2025.
The announcement marked over three years of speculation since President Museveni had last indicated uneasiness with Umeme’s impact in Uganda’s electricity industry. Museveni blamed this for the high electricity tariffs charged in Uganda.
It is hoped that by 2025, the Uganda Electricity Distribution Company Limited shall have built the capacity to take over Umeme’s roles in the sector.
Source: The Observer