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Uganda Since 1986: Museveni, the World Bank and the Coming of Neoliberalism

17 min read. Was Uganda’s economic miracle a donor-inspired lie? A new book mines the data and presents an alternative economic history of the Museveni era. By MARY SERUMAGA

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Uganda Since 1986: Museveni, the World Bank and the Coming of Neoliberalism
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Title: Uganda, The Dynamics of Neoliberal Transformation
Editors: Jörg Wiegratz, Giuliano Martiniello and Elisa Greco
Pub.r: Zed Books, 2018
Pages: 408
Reviewer: Mary Serumaga, January 2019

Any political debate about Uganda tends to become polarised very quickly. Champions of the prevailing economic orthodoxy speak of the past 30 years as an almost unqualified development success. Critics of the establishment point to the absence of tangible benefits for a broad range of the population. These positions came into sharp focus in 2018 when the People Power movement gained momentum following the international outcry triggered by the abduction and torture of its de facto leader, R. Kyagulanyi, MP.

It is possible to argue either position depending on where one sits on a sliding timeline between 1986 and the present. After four coups d’état in the 24 years following independence – a time when, as was often pointed out to me by an NRM diehard, ‘Even Kampala Road was murram!’ – the economic developments after the NRM takeover in 1986 look like miracles: the introduction and spread of mobile telephony and the internet, construction and tarmacking of major highways, the availability of foreign currency, freedom to travel abroad, etc. It is this contrast, with its racist undertones – what more does a Third World country expect? – on which the ‘Uganda as a success story’ argument is built. It is the line adopted by champions of neoliberal policies, the IMF (“This is an African success story”, Lagarde in 2017), the ruling junta and the bilateral partners and foreign investors who benefit from the liberalization of key sectors of the economy and dismantling of the public service. They are positioned in or close to 1986.

After four coups d’état in the 24 years following independence the economic developments after the NRM takeover in 1986 look like miracles.

Those outside that elite circle, referred to by the authors of this timely collection of essays on the neoliberal project in Uganda, as ‘the wretched of the earth’, are located in the present day. Economically and spatially removed from elite society, what they witness and experience 33 years after the NRM took power is described thus: “High levels of suicide (especially among the youth), poverty-driven deaths, preventable illnesses and generalised destitution.” There is more: 80% youth unemployment, collapse of the education system, ever-recurring stock outs of essential drugs, high maternal and neo-natal death rates, land-grabbing by the rich, embezzlement of public funds, fraudulent grabbing of commercial banks by the Central Bank for sale to the competition or elimination from the market.

In 2018, President Museveni and his Foreign Minister, Sam Kutesa, were cited in a New York criminal court for receiving bribes in exchange of access to public assets. These things are all connected, and held in place by state brutality.

Those outside that elite circle…’the wretched of the earth’, are located in the present day. Economically and spatially removed from elite society, what they witness and experience 33 years after the NRM took power…is “high levels of suicide (especially among the youth), poverty-driven deaths, preventable illnesses and generalised destitution.”

For ‘the wretched of the earth’, this is the story of ‘Uganda in crisis’.

While affirming the physical, political and economic transformation of Uganda since 1986, the authors interrogate both the drivers of the changes (the regime or its foreign financiers?) and identify the beneficiaries.

First the changes. Taking Nystrand and Tamm’s definition of neoliberal interventions, they can be summed up as: “downsizing of the public sector, including retrenchment of staff; privatisation of social services and social protections; and decentralisation or devolution of state power.”

The main premise of the collection is that in addition to the sliding timeline, the discourse is skewed by the lack of scholarly attention to the ongoing processes of transformation. One important dynamic remarked on is that much of the existing social science analyses has been carried out by donor-funded academics and consultants who have in turn produced studies that have tended to support the ‘Uganda as a success story’ point of view. Their collective check-list has included progress in: governance, poverty reduction and political power dynamics including political settlements, political emergencies, party and electoral politics, patronage politics, conflict management, humanitarian assistance, or peace-making. Testing this proposition, it is clear to see how apologists for the military junta that rules Uganda can be portrayed as developmental. For example, poverty as measured by the neoliberals (dubbed by the authors as ‘official poverty’) fell sharply in the first decade reaching a low of 19% from a high of over 50%. (It has risen two percentage points to over 21% in recent years.)

In 2018, President Museveni and his Foreign Minister, Sam Kutesa, were cited in a New York criminal court for receiving bribes in exchange of access to public assets. These things are all connected, and held in place by state brutality.

However the recent sharp rise in undernourishment of 13% between 2006 and 2015 went largely unremarked. Similarly, wealth inequalities created by the restructuring were overlooked in the celebrations. As with the health sector, analyses of governance have been managed by gatekeepers and reported in Bank-speak. For example, small shifts in Uganda’s Transparency International rankings based on the perceptions of foreign investors have been reported as progress, regardless of the facts presented by Uganda’s own Auditor General, Ombudsman, local media and the public. (Note: Transparency International was discredited by its 2018 award to President Museveni for his ‘fight’ against corruption in the same year that he was named as a recipient of a bribe from the now convicted Patrick Ho.)

Much of the existing social science analyses has been carried out by donor-funded academics and consultants who have in turn produced studies that have tended to support the ‘Uganda as a success story’ point of view.

This narrow approach excludes areas of research that would address the issues raised by the increasingly vocal and genuinely suffering majority:

“The first gap is the impact of global capitalism and global political economy on Uganda. This requires a study of the dynamics of Western and Eastern imperialism and their political, economic and cultural dimensions. The second under-researched area concerns the processes of societal transformation, including class formation, consolidation, struggle and compromise (and related core aspects such as dispossession, exploitation etc.), and the ways in which they shape, for instance, political power and market structures. A third overlooked area is the interaction of local and national power structures and dynamics with international political economic patterns.”

More directly put, the impact of Western and Eastern imperialism manifested in the debt-trap, privatization and the foreign direct investment for which privatization made room, and which provides free assets, has not been adequately scrutinized. Indeed, the emergence of a ruling oligarchy (beneficiaries of said privatization, and FDI), and a faux middle class (founded on patronage and corruption – not production), is treated as anecdotal evidence of something amiss rather than a serious existential issue for the majority. This book is timely in pointing out a lack of interrogation of capital accumulation by the politically connected and its impact on the rest of the population by current social science studies on Uganda.

Nor is due attention paid to the fact that 60 years after independence Uganda is still an exporter of primary commodities because that is what her ‘development partners’ require for their own development. All of this occurs alongside the ‘successes’ such as regular elections, ‘concessions’ or ‘reforms’ such as decentralization, expenditure on civil service reform (without actual civil service reform) and the universal primary education programme (which fewer than 50% of programme pupils complete) and which in turn trigger further disbursements of foreign loans and grants.

The emergence of a ruling oligarchy (beneficiaries of said privatization, and FDI), and a faux middle class (founded on patronage and corruption – not production), is treated as anecdotal evidence of something amiss rather than a serious existential issue for the majority.

The authors confirm this reviewer’s assertions elsewhere that the facts were deliberately distorted. For example, the Bank publishes impressive statistics for vaccination coverage in Uganda ranging between 82% and 93% (Source: World Bank database – Health Nutrition and Population Statistics as updated on 12/18/2017). It has stopped publishing the percentage of immunizations actually paid for by the government of the country which is nowhere near as impressive. If the percentage of coverage funded by government resources is stagnant or falling, that is not just a development issue. It is a crisis. And with changing funding priorities owing to the rise of nationalism in Europe and America, will most likely result in further reductions in health sector aid.

The authors predict a future of ‘enclave economies’: large-scale plantations – tracts of land are already being distributed free of charge to foreign investors – tax and other concessions for ‘investors’ in mining, oil and gas. These enclave economies will have minimal linkages to the rest of the economy and will aggravate poverty and accelerate environmental degradation. A proposal for a Chinese fishing project on River Katonga is a case in point. It will come with 300 Chinese staff precluding any possibilities of indigenous job creation, and adding to the current trend of imported unskilled and semi-skilled labour. Fiscal delinking occurs when foreign investors are given tax holidays.

60 years after independence Uganda is still an exporter of primary commodities because that is what her ‘development partners’ require for their own development.

In his December 2018 report, the Auditor General points out for the second time in three years that there is no clear policy regarding tax waivers for investors. In 2016 one hotel was in its fifth year of an open-ended tax holiday. In 2018:

“[…] because of lack of a proper policy, tax incentives are given to Investors without an accompanying budget. Close of financial year debts for the incentives had grown by 83% to UGX 153.6 billion up from UGX 83.8 billion in the previous year.”

Therefore, a lot of development is not accompanied by jobs and only yields limited tax revenues. Activists find that discussions of the impact of corruption on lives unsupported by relevant studies are easily and routinely derailed with one or a selection of approved Bank statistics. It is gratifying to see apologist denials of these simple facts revealed as mere political gaslighting of opposition politicians and activists. The World Bank, through its monopoly of knowledge production about its clients has developed what is called here “Bank Speak’ with which it disseminates “severely a-historical, abstract and flawed accounts” of Uganda’s political-economic history (Mitchell 2002 cited by Wiegratz et al). By becoming the gatekeeper, the Bank has succeeded in manufacturing consents to their global programme of which Uganda has been made a partner through the NRM ruling class, itself a product of the Bank.

The authors confirm this reviewer’s assertions elsewhere that the facts were deliberately distorted.

Apart from important omissions in telling the Uganda story, the veracity of Bank statistics is questioned. Note the authors say ‘veracity’ as well as ‘accuracy,’ again suggesting intent.

Their finding that the World Bank minimizes embezzlement and incompetence in the public service is in line with the misreporting of planning, implementation and outcomes of Uganda’s foundational economic and social reform programmes comprehensively documented in The Case for Repudiation of Uganda’s Public Debt (Serumaga, cadtm.org, 2017). This book makes it clear that in addition to relevant studies, there is a need for an audit to establish completeness, accuracy and timeliness of World Bank and IMF data and other information on which Uganda’s development policies are based.

The authors predict a future of ‘enclave economies’: large-scale plantations – tracts of land are already being distributed free of charge to foreign investors – tax and other concessions for ‘investors’ in mining, oil and gas…[with] minimal linkages to the rest of the economy…

Also debunked is the link between public service reform and poverty reduction claimed by earlier studies. They are inapplicable in much of Eastern and Northern Uganda where poverty has barely been dented. In these studies, deep wealth inequality; wealth concentration among politically powerful beneficiaries of reform programmes, unemployment (and under-employment), and food insecurity is found to be a characteristic of neoliberalised countries (say WB/IMF clients) the world over.

In Uganda, corruption and incompetence, major barriers to implementation of the planned transformation from a peasant to an industrialized economy has created the opportunity to transfer public service delivery functions to the military. Notably Operation Wealth Creation (OWC) which has over the past five years edged out NAADS, the government agency responsible for distribution of and sensitisation about farm inputs (Wiegratz et al). NAADS was established with a repayable US$50 million loan (and the same amount in grants). OWC is run by the President’s brother and, unsurprisingly, has featured strongly in reports of the Auditor General. In 2016 deliveries of farm inputs worth close to UGX 3 billion were unverified; UGX 1.1 billion said to be expenditure on fuel lacked supporting documents. The fisheries department of the Ministry of Agriculture is now also under military command.

The World Bank, through its monopoly of knowledge production about its clients has developed what is called here “Bank Speak’ with which it disseminates “severely a-historical, abstract and flawed accounts” of Uganda’s political-economic history.

In the meantime, accumulated wealth has driven up land speculation, making it unavailable for productive investment.

What is interesting is that the current crop of political commentators and activists, the punditocracy increasingly visible in debates around politics, governance and development happen to have been founded, financed or otherwise supported by International Financial Institutions (IFIs). Advocates Coalition for Development and Environment (ACODE), Anti-Corruption Coalition Uganda (ACCU), Uganda Debt Network (UDN), Civil Society Budget Advocacy Group (CSBAG), Private Sector Foundation Uganda (PSFU).

Apart from important omissions in telling the Uganda story, the veracity of Bank statistics is questioned…Their finding that the World Bank minimizes embezzlement and incompetence in the public service is in line with the misreporting of planning, implementation and outcomes of Uganda’s foundational economic and social reform programmes.

While the book was produced primarily as a source to enable future scholars to avoid the omissions and errors of the past, the introduction alone is invaluable for navigating the miasma of Ugandan political affairs. It goes some way in answering the rhetorical demand put to activists: what are your policy alternatives? After reading this it should become evident what needs to be done.

Part I. The State, donors and development aid

Although much is made of the purported partnership between Uganda and the WB and indeed other development partners, Lie is of the view that the concept of partnership is merely a cover for the WB’s indirect rule over Uganda through its poverty reduction strategy mechanisms. In Donor-driven State Formation: Friction in the WB–Uganda Partnership he demonstrates with evidence that partnership “‘exists when they [government] do as we [WB] want them to do, but they do so voluntarily’” (Lie citing Randel et al. 2002: 8)

The current crop of political commentators and activists, the punditocracy increasingly visible in debates around politics, governance and development happen to have been founded, financed or otherwise supported by International Financial Institutions (IFIs).

He uses the gradual displacement of Uganda government’s Poverty Eradication Action Plan by the WB’s Poverty Reduction Strategy Paper (PRSP) to demonstrate this unequal relationship. The author reveals how Bank staff evaluate the implementation in four visits made during the year, putting a gloss on unfavourable outcomes to allow further disbursements for budget support yet sending messages of disapproval by reducing the amounts released (and disrupting implementation). He calls this process ‘developmentality.’

It is a little irksome that Lie’s chosen example dates from 1999 and no attention is given to the beginning of the relationship, the Economic Recovery Programme circa 1987. It is under this umbrella that work meant to provide the administrative foundation for future work like PEAP and PRSP was done with frankly disastrous results and undermined the possibility of success of later work.

Most importantly the legal implications of ‘developmentality’ are not addressed in the essay, namely that the appearance of voluntary cooperation gives the unsustainable loan agreements some legal standing in the event of attempted repudiation in the future. Lie’s conclusion after he has so ably demonstrated indirect rule by the WB, is that the WB is not hegemonic and that the government has not fallen prey to the donor community is perverse.

Readers of this collection will find a vocabulary with which to capture Uganda’s situation and to relate it to countries facing the same predicament – particularly useful are concepts such as ‘procedural democracy” as opposed substantial democracy. Rubongoya in his essay ‘Movement Legacy’ and neoliberalism as political settlement in Uganda’s political economy describes a transaction between the junta and foreign implementers of neoliberalism. In return for a free hand in forming and introducing policies favourable to their own constituencies, foreign actors provide the NRM the means to consolidate and prolong its grip on the State.

A related transaction took place in Acholi. There, even though the armed conflict continued for two decades after 1986, there was an agreement to treat it as a post-conflict zone. In Our Friends at the Bank? The Adverse Effects of Neoliberalism in Acholi Atkinson reveals that development partners turned a blind eye as increasing amounts of aid intended for development of the ‘post-conflict’ zone were channeled to the armed coercion of the Acholi.

Readers of this collection will find a vocabulary with which to capture Uganda’s situation and to relate it to countries facing the same predicament – particularly useful are concepts such as ‘procedural democracy” as opposed substantial democracy.

Without the more recent experience of the Arua Atrocities in 2018 and the internet connectivity that allowed the news to spread across the country it would be difficult to believe that foreign actors could be so cynical. Yet in August 2018, the donor community that had armed the junta sat silent as elected leaders were abducted and tortured. These essays serve to open eyes and minds to the magnitude of what is at stake for them and why in fact their cynicism is to be expected.

African dependency is a myth created to gain access to resources without which Western populations would have to live within their means and in relative austerity. The myth allows austerity and poverty to be permanently transferred to Uganda and other African countries via neoliberal policies. This reviewer has argued elsewhere that this manufactured poverty is mitigated by emergency aid, post-conflict aid, humanitarian aid and non-specific aid from Western tax-payers. The fears surrounding Brexit and the stocking up of emergency drugs and foodstuffs are a further indication that they enjoy a standard of living subsidized for example by Ugandan farmers, that would be otherwise impossible to maintain.

African dependency is a myth created to gain access to resources without which Western populations would have to live within their means and in relative austerity.

But they are secondary beneficiaries. The primary beneficiaries of neoliberalism are a class unto themselves: the Davos elite which includes individuals in autocratic regimes like the NRM, IFIs and foreign investors all of who became fabulously wealthy and influential via the proceeds from this system. Like their counterparts in other African IMF outposts, billionaires Museveni, Sam Kutesa, Muhwezi were all penniless in their pre-regime lives.

Part II: Economic restructuring and social services

As with many of the findings of these studies, the basic facts will not be new to Ugandans, for instance the rise in poverty alongside increasingly visible trappings of extreme wealth of the oligarchs. In The Impact of neo-liberal reforms on Uganda’s Socio-economic Landscape Asiimwe throws light on the mystery of how development by-passed some and benefited others.:

“Asiimwe’s chapter shows that the economic growth miracle was to a significant extent based on the effect of large sums of aid, which sometimes constituted half of the national budget, creating public-expenditure-driven growth. The reforms induced stagnation, decline or minimal growth in key productive sectors, such as agriculture and industry. Small-scale producers and workers –mostly youth and women – were systematically marginalised by the policy reforms. Asiimwe argues that Uganda’s growth is not based on a structural transformation of the economy, but rather on a deepening of primitive accumulation occurring through corruption – which is the use of extra-economic force to access and control resources – aid dependence, widespread economic trickery and the dumping of low quality foreign products that crowd out local products. Asiimwe observes that donors’ policy preferences systematically produced anti-poor and anti-development effects, as the commodification of health and education left the majority of the population with sub-par access, or denied access altogether.” (Wiegratz et al).

The primary beneficiaries of neoliberalism are a class unto themselves: the Davos elite which includes individuals in autocratic regimes like the NRM, IFIs and foreign investors all of who became fabulously wealthy and influential via the proceeds from this system. Like their counterparts in other African IMF outposts, billionaires Museveni, Sam Kutesa, Muhwezi were all penniless in their pre-regime lives.

The impact of neoliberal reforms on social services has been equally damaging. In Social service provision and social security in Uganda: entrenched inequality under a neoliberal regime Nystrand and Tamm describe how the commodification of basic healthcare and education – they are now consumer products rather than citizen entitlements – has increased inequalities along class, regional and urban/rural lines. Those locked out from access to the services evolve into the ‘chronic poor’.

“Those who have gained from neoliberal reform are, for example, not primarily the Ugandan business sector at large – as the domestic private sector is very weak with the exception of a few large companies and individual businesspersons close to the ruling elite – but rather the ruling elite, which has been able to use donor funding to preserve their power through patronage.” (Nystrand and Tamm citing Whitfield et al. 2015)

Primary health and education, two of what used to be known as priority programme areas, are reviewed in detail, restating familiar data showing low completion rate, high teacher absenteeism (60 percent on any given day), and demonstrating how the majority of UPE pupils never attain functional literacy or numeracy. The result has been migration to proliferating private services to avoid the deterioration and the gradual fall in the quality of public education. The authors thus demonstrate that migration was the goal of neoliberalisation but that decentralized government has failed to either improve or maintain quality.

Ssali in Neoliberal health reforms and citizenship in Uganda also states that quality as well as availability of health services has suffered. Although expenditure per capita on healthcare has increased threefold, service delivery has not improved. Her essay highlights the way in which governments surrendered health services to market forces thus creating two streams, a service for the spatially marginal (the rural population) and poor, and one for the rich. This is borne out by the previously known fact that even where maternal and neo-natal services are available, less than 20 percent of women use them opting for reliance on the extended family and other support networks.

Those who have gained from neoliberal reform are…not primarily the Ugandan business sector at large – as the domestic private sector is very weak with the exception of a few large companies and individual businesspersons close to the ruling elite – but rather the ruling elite, which has been able to use donor funding to preserve their power through patronage.

As with education, so with health. The sector is characterised by inadequate resources and high absenteeism (50 per cent no-shows on any given day). Competence is a major challenge: “It was found that only 35 per cent of public health providers can correctly diagnose at least four out of five of the most common conditions, and only one out of five knew how to manage the most common maternal and neo-natal complications.” Public health and education services have thus become the preserve of the poorest and most physically marginalized. Heavily dependent on donor funding, they are assessed to be unsustainable in the long run. (Nystrand and Tamm)

Part III: Extractivism and enclosures

Commodification of forests was executed via the doling out of concessions to private sector players for management. It has had the same result, namely, privileging of capitalist interests over smallholder indigenous interests. Readers may find Nel’s Neoliberalisation as Ugandan Forestry Discourse useful in understanding the impact of privatization on the crater lakes of Kabarole in 2017, which left fishermen without a livelihood and made the lakes vulnerable to environmental degradation. Wedig discusses this in relation to Lake Nalubaale (Victoria) in Water-grabbing or Sustainable Development? The same applies to more recent sand-mining concessions granted by the President’s brother, Caleb Akandwanaho (aka Gen Salim Saleh) to Chinese investors to the exclusion of indigenous artisanal miners.

As Smith and Van Alstine show in Neoliberal oil development in Uganda, any resistance to rampant dispossession is prevented by the deployment of the armed forces. In the case of oil, it has been the presidential elite Special Forces Command armed and trained by the United States. Military deployment together with the use of Public Order Management legislation to subdue populations that make the debt incurred during this phase of history odious and liable to repudiation.

There is similar commercial pressure for land and similar dispossession for the implementation of the envisaged transformation to an industrialized economy as discussed by Nakayi in The politics of land law reform in neoliberal Uganda.

Race, culture and commoditization

A new proposition is that even cultural identity has been commoditized in the neoliberal dispensation. Youth, race and faith are looked at from this perspective. In Youth as ‘Identity Entrepreneurs’; Emerging Neoliberal Subjectivities in Uganda, Vorhöller studies a group of dancers in Northern Uganda and concludes that: “They tend to prioritise short-termism, instrumentalism, flexibility, pragmatism and self-interest and often switch cultural styles and political allegiances depending on situational contexts and according to calculations of expected benefits.

The youth market their youth to the myriad NGOs promoting neoliberal policies and looking for exemplars of how they support and are embraced by the youth. Once sponsored, the youth adapt to the required value system of their sponsors. Another example would be the youth marketing their youth and numbers to political parties. They form savings groups at the behest of the President, which groups are then given cash at public events to demonstrate the regime’s interest in the youth. New enterprises such as radio calling, telephoning radio discussion programmes to push propaganda are performed by groups such as the Lango Radio Callers group. That the group is short-termist and not rooted in ideology or any belief is clear from the fact that it publicly announced its intention to desert the NRM for the opposition if it was not paid the millions of shillings and iron roofing sheets promised before the elections. Besides ethnicity, other identities emerging from youth celebrity culture, academic qualifications and even internet presence are also available for political branding.

The role of Pentecostal-charismatic churches in politics and their rise to prominence (originating in the rise of NGOs and faith-based organisations, the result of the government’s withdrawal from its role as principal driver of development) is covered by Barbara Bompani in Religious Economics: Pentecostal-charismatic Churches and the Framing of a New Moral Order. Bompani posits that PCCs endorsed neoliberal policies by their close relationship with the ruling class, legitimising neoliberalism and provide a moral framework within which those living (or enduring) the neoliberal experience can maintain hope in a country in crisis. It is further argued that they share an exclusionary world view with neoliberalism in which “the sinful, immoral, non-conforming are to be targeted for discipline, reform and legal action.”

The framework provided by this book, its definitions of neoliberal policy and examination of its effects, will facilitate public discussion even of issues as sensitive as race. The elitism created by the exaltation of FDI, where those with access to foreign capital are perpetually entitled to special favours such as tax waivers, is analysed in African Asians and South Asians in Neoliberal Uganda: Culture, History and Political Economy in which Anneeth Kaur Hundle proposes that “the FDI policy opens up new possibilities for racial elite class formation.”

Taken together, this collection of essays is a commendable effort in achieving its objective of determining by whom, why, how and to what effect Uganda was transformed since 1986. A criticism might be that few Ugandan analysts were cited by any of the contributors even where the same ground has been extensively covered by them. Secondly, the book may be slightly behind the curve. Much of this data has been available but is only being published in this context when the effects of the reported activities are leading to seismic changes. The great value of the collection is that it finally ‘mainstreams’ the discourse and will perhaps provoke debate on those issues of which Ugandans have been aware but which have languished in the ‘informal sector’ of scholarship and public debate.

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Mary Serumaga is a Ugandan essayist, graduated in Law from King's College, London, and attained an Msc in Intelligent Management Systems from the Southbank. Her work in civil service reform in East Africa lead to an interest in the nature of public service in Africa and the political influences under which it is delivered.

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Who Is Afraid of Commuter Ride-Hailing Apps? Tech Meets Matatu, and Why Nairobi Does Not Need State-Run Public Transport

8 min read. DAVID NDII explores the disruptive power of ride-hailing apps on public transportation in Nairobi and why both the government and the matatu industry should be embracing the commuter ride-hailing apps instead of fighting them.

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Who Is Afraid of Commuter Ride-Hailing Apps? Tech Meets Matatu, and Why Nairobi Does Not Need State-Run Public Transport
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Technology platforms have become disruptors in unexpected places. They have over the years disrupted the music distribution business, the book trade, and even the hospitality industry, but none has been as turbulent as Uber’s disruption of public transportation.

A couple of days ago, the commuter ride-hailing app services Little Shuttle and SWVL announced that they were suspending their operations. Little Shuttle and Little Cab ride-hailing apps are products of technology company Craft Silicon. SWVL is an Egyptian start-up that has invested in the country to do this specific business. Launched seven months ago, SWVL is reported to have 150 buses serving 100 routes, and has raised Sh1.5 billion from investors to expand its operations.

The National Transport and Safety Authority (NTSA) subsequently issued a statement giving its reasons for the suspensions. The agency explained that the two companies had obtained the “wrong” licence—known as a Tour Service Licence (TSL)—which it deemed to be a violation of Passenger Service Vehicle (PSV) regulations. NTSA also accused the operators of failing to register their vehicles with the authority as required by Section 26 of the Transport and Safety Act No. 33 of 2012. “The two companies have never contacted the Authority to show any intention to operate as commuter service providers”, the NTSA avers.

Technology platforms have become disruptors in unexpected places. They have over the years disrupted the music distribution business, the book trade, and even the hospitality industry, but none has been as turbulent as Uber’s disruption of public transportation.

Section 26 of the Transport and Safety Act, the provision that NTSA claims has been violated, states that “[a] person shall not operate a motor vehicle whose tare weight exceeds three thousand and forty-eight kilogrammes for the carriage of goods or passengers for hire or reward unless the vehicle is licensed by the Authority in accordance with this Part and in such manner as the Cabinet Secretary may prescribe. Violating the provisions, i.e., operating a commercial vehicle without a prescribed licence is a criminal offence that can attract a fine of Ksh. 300,000 or imprisonment for a term of five years.”

The other ground for suspension is that the two operators have violated PSV regulations. To be licensed under these regulations, the operator is required to be a corporate body which may be a company, a cooperative society (SACCO) or other collective registered under the Societies Act, and have a minimum of 30 vehicles owned by the operator or under a franchise arrangement with the owners.

Regulation 7 (f) requires passengers to be “issued with receipts for fares paid, and as from 1st July 2014, operate a cashless fare system.” Another regulation requires “a transport safety management system based on ISO3900.” Obviously, these regulations are not enforced—and therein lies the paradox. The shuttle services that the NTSA has suspended were the closest thing to compliance with the spirit of these regulations that we have seen since the collapse of the Kenya Bus Service (KBS) franchise several years ago. It is in fact not apparent from my reading of these regulations that Little Shuttle and SWVL have violated these regulations in any substantive way.

The NTSA is disingenuous. Investors do not determine for themselves what licences they need. They go to the government and say, look, I want to run a business of the following nature, what do I need? The government then makes the determination and advises the investor accordingly. In the statement announcing the suspension of operations, Little Shuttle’s Chief Executive Officer disclosed that they were operating on the basis of a national Transport Licensing Board (TLB) licence—also issued by the NTSA—which does not restrict them to specific routes. Someone at the NTSA must have determined that a national TLB licence is what they required. Moreover, if it was deemed that there was no suitable licence, the Transport and Safety Act gives the Cabinet Secretary the power to “exempt any person or class of persons or any motor vehicle or class of motor vehicles from all or any of the provisions of this Act.” The NTSA could have advised the investors to apply for exemption.

In his statement, the Little Shuttle CEO alludes to cartels: “I am not sure if the decision to stop us was from the authorities or they were under pressure from the public transport cartels.” There is a whole range of actors that this could apply to, either working independently or in concert. There are the investors, that is, the vehicle owners, the crew who operate the vehicles and control the revenue, route cartels who control access to particular routes and the police extortion racket. The industry has also been associated with money-laundering syndicates. As one of the biggest cash businesses around, it is as close to the ideal laundromat as you can get.

A key challenge that bona fide investors in the matatu industry face is that they are hostage to crew and route cartels. Precisely because PSVs do not issue receipts as required by law, the owners have no way of keeping tabs on revenue. Moreover, even if they could do so, they would still be compelled to give the crew leeway to pay bribes. Students of economics may recognise this as a principal-agent problem. 

The principal-agent problem arises in contractual relationships where the principal (the vehicle owner) cannot observe whether poor performance by the agent (the crew) is because of external factors (e.g. poor market conditions) or lack of effort or dishonesty on the part of the agent. We say that the interests of the principal (maximum effort by the agent) and the incentives of the agent (maximum income for least effort) are not compatible.

To mitigate this problem the industry has come up with a fixed daily revenue target, which in essence changes the contract between the owner and crew from a wage to a vehicle lease. In economic theory, we call this the incentive-compatible contract. An incentive-compatible contract seeks to motivate the parties to achieve mutually beneficial outcomes. This particular incentive-compatible contract has an extremely high social cost. 

Because the crew gets to keep the revenue above the daily target, they are motivated to maximise the number of passengers, and this they do at the expense of road and passenger safety. The cashless system the government sought to enforce would have gone some way towards resolving this problem, which is probably partly why it was resisted—not to mention the resistance by those others with vested interests in a cash business, notably the money-laundering syndicates and the police extortion cartel.

The ride-hailing apps portend a more robust solution to this problem; because of the ubiquity of mobile payments, they can easily combine revenue tracking and cashless payments. And since the revenue is tracked electronically, this makes it possible to enter into a wage contract between the owner and the crew. Crew on a wage contract have no incentive to compromise safety in order to maximise revenue.

That said, it is not evident that the commuter ride-hailing services are an immediate threat to the matatu industry. The two suspended services appear to be more of an alternative to personal cars than direct competitors for matatus. This can only be a good thing in terms of reducing congestion on the roads. Still, the development has caused sufficient concern somewhere, perhaps because the reputation of the disruption caused to the conventional taxi industry precedes Little Shuttle and SWVL. But it is also the case that sometimes these regulatory hurdles are extortion rackets that are intended to extract bribes or a share of the business.

The principal-agent problem arises in contractual relationships where the principal (the vehicle owner) cannot observe whether poor performance by the agent (the crew) is because of external factors (e.g. poor market conditions) or lack of effort or dishonesty on the part of the agent.

There is another vested-interest candidate—the government itself. It is now one and a half years since the government hastily painted some red lines on some of Nairobi’s thoroughfares and declared the lanes thus demarcated dedicated Bus Rapid Transit (BRT) lanes. The red paint has since faded. It is said that the buses are being assembled in South Africa, after local samples failed to make the grade. But other than the now faded lines, there is no evidence of actual BRT infrastructure being built. A BRT system is a metro light rail on the cheap but it also costs. The first phase of the Dar es Salaam system covering 21 kilometres took three years to build at a cost of $140 million (Sh14 billion) while the second phase covering another 19 kilometres will cost $160 million (Sh16 billion).

Nairobi is one of several African cities that do not have municipal public transport. For all their notoriety, matatus, dala dala and tro tros manage to move the cities quite efficiently. They are accessible, responsive, affordable, flexible as well as colourful and entertaining. A number of surveys conducted in Nairobi over the last decade or so indicate that public transport—predominantly matatus—accounts for between 50 and 55 per cent of commutes in the city; 40 per cent of commuters walk, while between 8 and 12 per cent use private cars.

By way of comparison, London’s elaborate public transport system comprising of buses covers 35 per cent of the commutes. The iconic underground moves 10 per cent. For all the congestion hullabaloo, a recent paper titled Commuting in Urban Kenya: Unpacking Travel Demands in Large and Small Kenyan Cities, published in the academic journal Sustainability, observes that average commuting journeys in Nairobi are comparable to those of major cities in the United States such as New York and Los Angeles.

This data is telling us that Nairobi is none the worse for lack of a municipal public transport system. Municipal systems are hugely expensive to build and to run, requiring operational subsidies. At £17.6 billion (Sh2.3 trillion) and counting, CrossRail—London’s new train system which has been under construction since 2009—is billed as the most expensive public infrastructure project in Europe. As observed, the Dar es Salaam BRT has already cost $300 million (Sh30 billion) and is nowhere near solving the city’s congestion problem.

There is, in fact, a parallel between what the commuter ride-hailing apps are trying to do and the story of mobile telephony in Africa. The phenomenal growth of mobile telephony in Africa is, to a large extent, a leapfrogging of the largely non-existent landline telephony. The same applies to the innovations around mobile telephony, notably mobile money, reflecting the poor reach of financial services referred to nowadays as financial exclusion. Mobile telephony systems and services are estimated to account for close to 9 per cent of Africa’s GDP, only marginally below manufacturing at 10 per cent, which is remarkable for a sector that is only two decades old.

To mitigate this problem the industry has come up with a fixed daily revenue target, which in essence changes the contract between the owner and crew from a wage to a vehicle lease. In economic theory, we call this the incentive-compatible contract

Like landline telephony, public urban transport systems are characterised by rigidity. Customers must go to the bus or train and follow fixed routes and timetables, just as in the old days when we used to have to go—sometimes for miles—to reach a telephone. To send money urgently, you went to the Post Office to send a telegraphic money order which was physically delivered to the recipient who in turn physically went to cash it at the Post Office.

The disruptive power of ride-hailing apps is what the Little Shuttle CEO refers to in his memo as “supply and demand software technology.” In plain English, this is about using customer ride request data—how many customers want to travel, when and where—to provide services that are responsive to demand in terms of capacity, routes, scheduling and pricing. But this is not entirely new; one of the reasons why matatus eclipsed scheduled bus services is precisely because they were more responsive.

As observed, between 8 and 12 per cent of Nairobi’s estimated three million commuters use private vehicles This works out to something in the order of 300,000 commuters and, assuming two people per car, 150,000 vehicles that spend eight hours or more hogging parking spaces—Sh150 billion worth of idle capital, over and above fuel, pollution and congestion costs.

Nairobi’s public transport imperative is to put more of these people on matatus and this seems to be precisely what the suspended ride-hailing services had set out to do. A smart government would be doing its best to make commuting by private vehicles costly. How so? For starters, the Nairobi County government needs to go back to a time tariff for street parking. Leaving a private car in a street parking all day should be extremely punitive. I would propose a rate of Sh100 per hour. We may also want to think about applying congestion charges on the city’s main arteries: Mombasa Road, Waiyaki Way, Thika Road, Jogoo Road, Ngong Road and Langata Road.

Assuming that each of the minibuses serves 40 commuters who would otherwise travel in private cars, we are talking of each bus displacing 20 private vehicles on the road. If only 20 per cent of driving commuters take to these services, we are talking of replacing 30,000 cars with only 1,500 minibuses. This would certainly have a discernible impact on de-congesting the roads. And the less congested the roads become, the faster the trips, the more attractive using public transportation becomes, and the more profitable the entire industry becomes. Far from fighting them, both the government and the matatu industry should be embracing the commuter ride-hailing apps.

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Should Africa’s Tallest Skyscraper Be Built in a Kenyan Village?

10 min read. The proposed construction of a 61-storey building in Watamu has generated both hopes and fears among local residents, who view the project as either a white elephant with serious environmental consequences or a godsend that will bring much-needed jobs and prosperity to the coastal area. RASNA WARAH examines the pros and cons of this multi-million-dollar project.

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Should Africa’s Tallest Skyscraper Be Built in a Kenyan Village?
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If all goes according to plan, construction work on a 61-storey skyscraper – which is being mooted as the tallest structure in the whole of Africa – will soon start in Watamu, a sleepy fishing village and tourist resort about 20 kilometres south of Malindi along Kenya’s coastline.

But lack of clarity on how the developer managed to get approval for the Sh28 billion ($280 million) project is raising concerns about whether this is another white elephant or phantom project. Questions are also being raised about whether the building is economically feasible and environmentally sustainable.

On its website, Palm Exotjca is marketed as an exclusive development with “chic residential suites, premium commercial space, eclectic restaurants and a vibrant casino”. Three Italians are said to be managing the project: The chairman Giuseppe Moscarino is a veterinarian and neurosurgeon from Rome whose passions are “art, architecture and Africa’s extraordinary beauty”; the managing director is Oliver Nepomuceno, who is described as the manager of several commercial and investment companies and joint ventures; and Lorenzo Pagnini is listed as the lead architect.

The main investors in the project are said to be the Italian billionaire Franco Rosso, along with investors from Switzerland, Dubai and South Africa. According to the developers, an engineering firm in India will handle the structural design aspects of the building while a Chinese company will undertake the construction work. Local engineering and architectural firms will also contribute to various aspects of the construction phase.

When completed, the 370-metre-high building, whose shiny artistic exterior will resemble the trunk of a palm tree, will comprise 270 hotel rooms, 189 luxury suites and apartments and social amenities, such as a shopping mall, a business centre, a theatre, a cinema, a nightclub, a fitness centre, a wellness spa, a children’s play area and four swimming pools – all of which invoke images of Dubai or Las Vegas.

The problem is that Watamu is not Dubai or Las Vegas. This fishing village and beach resort with a population of 14,000 barely has the infrastructure to service a level 4 hospital, let alone a skyscraper of this size. MAWASCO, the water utility company, already has problems meeting the water demand in Watamu and there are no signs that it intends to increase supply during the construction phase of the project or when it is completed. The Kenya Power and Lighting Company has promised to upgrade the Kakuyuni sub-station with a 23 MVA transformer and 25 kilometres of an overhead line, but only on the condition that the developer pays for the upgrade, which will cost Sh161 million.

Moreover, Watamu is hardly a vibrant tourist destination and commercial hub along the lines of Rio de Janeiro or Miami. What were the developers thinking when they came up with the idea and how do they expect to fill up all these hotel rooms and apartments?

Other such projects, such as Flavio Briatore’s Billionaire Club in Malindi – which was marketed as “a club for the world’s richest” – also had ambitions to attract the wealthy from around the world, but Malindians have yet to see Bill Gates or the Saudi Prince Mohamed bin Salman check in. On the contrary, Briatore has threatened to sell his other hotel, Lion in the Sun, in Malindi because he says that the unattractive business environment and poor infrastructure in the town are keeping foreign tourists and investors away.

In an article published in Coastal Guide, Issue 20, July 2019, Damian Davies, the general manager of the Turtle Bay hotel in Watamu, questioned the viability of the Palm Exojca project and whether the investors will get a profitable return on their investment. “There are lots of properties for sale in Watamu that aren’t selling; who will buy an apartment in a tower some distance from the beach when no one is buying beautiful beach properties?” he asked. “We don’t want a start-up that for economic reasons isn’t finished: a partially completed skyscraper.”

Red flags

Malindi and Watamu are currently experiencing a slump in tourism. Hotels are either shutting down or scaling down.

Many Italian residents are selling their villas to go back to Europe or to move elsewhere. But there is simply no market for these properties. Those that do manage to sell their houses often do so at below-market rates, mainly to Kenyans from Nairobi looking for a holiday home.

Italian and other tourists are flocking to other destinations in East Africa, such as Zanzibar, which have not been tainted by the threat of terrorism, and which have more superior amenities and infrastructure. The idea that this luxury development will be the magnet that will pull in tourists and foreign investors could simply be wishful thinking.

At a public participation meeting organised by NEMA at the site of the building on 3 October, Mr Moscarino, the chairman of Palm Exojca, explained that this exclusive development will bring another type of high-end visitor to the area and is not competing with the hotels in the vicinity. He added that he was very proud to be associated with the tallest building in Africa.

However, let us say that the project is viable and there is a market for it, this question still remains: Why build such a tall structure in a village that is not a commercial hub and where most buildings are just one-storey tall? Wouldn’t it be incongruous with its surroundings? Wouldn’t it be like building a skyscraper in the middle of a desert? If you have to build the structure, why not build a scaled-down version?

The answer perhaps lies in the fact that skyscrapers are more about ego and prestige than about economics. Very tall structures, such as the Petronas Towers in in Kuala Lumpur and the Burj Khalifa in Dubai, are a kind of phallic symbol representing strength and virility. The skyscraper is to the modern world what the obelisk was to the ancient Egyptians – a monument that projects mystical power and status. But is this what Watamu needs?

Kilifi County has given the go-ahead to the project perhaps in the belief that it will generate jobs and stimulate the local economy, but Najib Balala, the Cabinet Secretary for Tourism, is not convinced that this is the kind of project that Watamu requires. He feels that a more suitable location for the project might have been Mombasa or Nairobi. He has also advised the National Environmental Management Authority (NEMA) not to approve the project. “That 61-storey skyscraper on a small plot in Watamu must not be built,” he is reported to have said.

What raises a red flag is the fact that the Palm Exotjca website lists its address as One World Trade Centre, Suite 8500, New York, but that address seems to be a virtual one intended to impress high-end clients. The other address is a plot number and P.O. Box number in Mombasa, but there is no email or phone number provided. The phone number listed on the website is a Washington DC number that goes unanswered. One concerned resident who has been following up on the matter said: “When we call the phone number listed on the website, no one answers it and has not for over a year. So why is it so difficult to find the real phone number if Palm Exotjca really wants to sell high-end apartments?”

According to residents’ associations and other concerned groups in and around Watamu who have raised their objections regarding the project with NEMA, Vitamefin Limited, the company that is listed as the owner of one of Palm Exojca’s plots in Watamu, was previously registered in the US Virgin Islands. However, the Virgin Islands Official Gazette, Volume XLIX, Number 78, shows that this company was struck off the register of companies on 1 May 2015 for non-payment of annual fees.

NEMA says that it has conducted an Environmental and Social Impact Assessment (ESIA) that shows no adverse environmental or social impacts related to the project. But Augustine K. Masinde, the National Director of Physical Planning in the Ministry of Lands and Physical Planning, disagrees. In a letter to the Director-General of NEMA dated 12 July 2019, he raised concerns about the conformity of the proposed development with physical planning laws and zoning regulations. He also said that certain issues, such as the environmental suitability of the parcel of land for the proposed development and availability and adequacy of requisite infrastructure and services, needed to be clarified. “In view of the foregoing, we advise that you suspend the approval of the proposed development to allow proper review and audit to establish its sustainability,” stated the letter.

A memo to NEMA – submitted on 21 July this year on behalf of the Watamu Association, the Kilifi Residents Association, the Kilifi County Alliance, Watamu Hoteliers, Local Ocean Trust, Watamu Marine Association, A Rocha Kenya, Watamu Against Crime, Watamu Property Managers and the Jiwe Leupe Community Association – lists several problems with the project, including:

  • The project is disproportionate in scope and scale, both technically and financially. The substrata along the Kenyan coast is highly unsuitable for very tall buildings.
  • There has been lack of meaningful public participation by the developers and the ESIA team.
  • Watamu lacks the skilled labour force to put up such a structure. The immigration of a large, well-paid skilled workers into Watamu has the potential for significant social, cultural, economic and moral hazards.
  • The area lacks the required infrastructure, including water and electricity supply, for such a large-scale project.

Lack of sufficient and meaningful public participation is of particular concern to the residents, as it was with the proposed coal-fired plant in Lamu. In the case of Lamu, lack of public participation was a key consideration in the National Environment Tribunal (NET)’s ruling. In its 26 June 2019 jugement, NET ordered Amu Power, the key player in the proposed Lamu coal project, to halt construction of the plant and to undertake a fresh ESIA for the project. It noted that the ESIA carried out for Amu Power was flawed in one key aspect: it did not involve public participation, which is a constitutional requirement. It noted that lack of public participation was “contemptuous of the people of Lamu”.

Mike Norton-Griffiths, the chairman of the Watamu Association, says that the major flaw in the project is in the planning. He says that nine completely independent projects are buried in the ESIA, each requiring an ESIA and planning permission, and each needing to be completed before the main project. Yet this has not been done.

There are also serious environmental concerns. Watamu is home to the Arabuko Sokoke Forest, the famous Gede ruins and a marine park that is the breeding ground for turtles and other marine life. There are concerns that improper handling of wastewater and sewage from the project – both during the construction phase and when it is completed – could negatively impact the biodiversity in the region.

Simmering tensions

The above concerns were partially addressed on 3 October at the public participation meeting organised by NEMA, which I attended. A Kenyan engineer recruited by Palm Exojca made a detailed slide presentation explaining how the development will deal issues such as wastewater and even birds who could die accidentally by crashing into the tall shiny structure. (Much of this presentation was lost on the local communities attending the meeting, but that did not deter him from going on with the hour-long presentation.)

The meeting, which was attended by NEMA, county government officials, some representatives of residents associations, and a large group of people from the community, at times appeared stage-managed and intended to allay any fears that the project was unviable or environmentally unsustainable.

But what also came out loud and clear at the meeting was that the local residents view the project as a contest between the national government and the county government of Kilifi and between the (mostly British) expatriate community and the Italian investors. Speakers at the meeting emphasised that this was a project supported by the county government and that the national government should not interfere with it. “Those opposed to this project are enemies of devolution and enemies of the people,” said one very vocal community leader, whose statement was met with roaring applause from the audience.

Supporters of the project, including the governor of Kilifi County, Amoson Kingi, believe that the project will bring in much-needed jobs to the area and will boost tourism. Community members at the meeting repeatedly cited employment as the main benefit of the project. (The majority of the local residents will neither be able to afford the amenities offered at Palm Exojca, but they do hope to find low-paid and semi-skilled jobs in the luxury development.)

It is hard to argue with the sentiments of the majority of the local people, who have been marginalised for decades and who suffer from high levels of poverty and underdevelopment. (Kilfi County is among the six poorest counties in the country.) A project like this could change their fortunes in significant ways by generating hundreds of jobs both directly and indirectly. When you have not seen any real development in your area for years, despite the presence of a large numbers of beach hotels, a project like is hard to resist, even amid environmental concerns. As one speaker at the meeting pointed out, “Nobody talked about how the beach hotels in Watamu would affect turtles. So why should this development, which is not even on the beach (it is 366 metres from the ocean) be of concern?”

The project has also unveiled simmering tensions between the indigenous local residents and the largely British expatriate residents. Kilifi North MP Owen Baya, a vocal supporter of the project, claims that the British people living in Watamu are opposed to the project because it will “block their view of the ocean”. But he does not say how the influx of wealthy foreigners into Watamu when the building is completed will affect the local population. Will it give rise to other types of tensions?

There is also the issue of double standards. Someone I spoke with who did not want to be named told me that the Europeans living in Watamu live there only half the year; they spend the rest of the year in Europe. “These people can enjoy First World amenities, like theatres and nice roads and pavements, whenever they want to. But they want Watamu to remain a backwater whose unspoilt natural environment they can enjoy whenever it is convenient for them. But what about the locals who have never been to a cinema or even travelled outside their county? Don’t they deserve a taste of modernity?”

The locals clearly view the Italian investors as a godsend that will bring much-needed employment and development to the area. One MCA even referred to Mr. Moscarino as “our small God”.

“Even London began as a small village,” said another speaker. “We want Watamu to become a city like Dubai.”

Owen Baya, the Kilifi North MP, told the audience that until a hundred years ago even Nairobi was just a swamp, and wondered why there was so much resistance to this particular project.

At the meeting, Mr. Moscarino gained additional points with the locals when he sold the development as a social responsibility project. He told the cheering crowds that the developers will build a hospitality school and a secondary school in Watamu and that up to 2,000 local people will be hired as drivers, carpenters, construction workers and the like during the construction phase. It was obvious that he was exploiting the fact the majority of residents are too poor and illiterate to refuse such a generous offer. His statement was met with loud cheers.

As I left the NEMA meeting, I did wonder whether if, for any reason, the project is not completed – and the promised jobs and schools never materialise – what effect this will have on the local people. Will dashed hopes lead to even more resentment?

We can only wait and see if indeed the local people’s dreams will be realised in five years when the construction of Palm Exojca is expected to be completed. Palm Exojca could either be the catalyst that spurs development in Watamu or the Trojan horse that introduces vices that threaten to destroy a way of life. It could also be a case study in how economic opportunities often trump environmental concerns when it comes to “development”, especially in areas that are poor and marginalised.

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That Sinking Feeling 2.0: Who Is to Blame for Tanzanian’s Ferry Disasters?

5 min read. Systematic overloading of poorly maintained state-owned vessels, compounded by human error, explains why Tanzanian marine transport is so dangerous, but who is answerable for mass deaths on Tanzania’s lakes? nobody, it would appear writes BRIAN COOKSEY

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THAT SINKING FEELING: Who is to blame for the MV Nyerere ferry disaster?
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On the 20th of September 2018, the ferry MV Nyerere capsized in shallow water at the tiny port of Ukara Island on Lake Victoria. Nearly 230 men, women and children drowned, most of them trapped inside the upturned hull. About 40 people were rescued by small boats. The vessel had a capacity of 100 passengers. Many of the dead were buried on the lakeshore, identities unknown, victims of Tanzania’s shoddy, state-run ferry services. President John Pombe Magufuli immediately declared four days of national mourning and flags flew at half-mast on public buildings. “Negligence has cost us so many lives . . . children, mothers, students, old people”, he lamented, ordering the arrest of “all those involved in the ferry.” Three days later, Prime Minister Kassim Majaliwa set up a seven-person Commission of Enquiry led by the former Chief of the Defence Forces, General George Waitara, to establish the cause of the accident and bring those responsible to book. The commission was given a month to report. That was the last the public heard of it, for the commission has shown no signs of life in the twelve months since the accident, during which period the political opposition, media and civil society organisations have kept quiet on the issue of state accountability for the accident. For who else can be held accountable when a state-owned and state-managed boat capsizes? There was no stormy weather to blame. A few commentators, including the state-owned Daily News and commentator Nkwezi Mhango, went so far as to blame the victims for knowingly, recklessly, boarding an overloaded craft. Writing in The Nation, Professor Austin Bukenya recommended “discipline” among passengers who should know better than to clamber onto overcrowded ferries. Presumably, they should wait for the next (uncrowded?) one. . .

Systematic overloading of poorly maintained state-owned vessels, compounded by human error, explains why Tanzanian marine transport is so dangerous. Unknown numbers die when small private vessels—mitumbwi (dug-out canoes) and ngalawa (canoes with sails and outriggers)—capsize. But the large steel boats run by the state are supposed to be orders of magnitude safer than the traditional modes of water transport.

Since the MV Bukoba capsized and sank in 1996, with the loss of an estimated 1,000 lives, Tanzanians have continued to die in large numbers in further ferry disasters, including two in Zanzibar waters within less than a year of each other claiming more than 1,800 lives. To date, no government official or private operator (the Zanzibar ferries were privately owned) has been held responsible for any of these disasters.

Accidents Waiting to Happen

Overcrowding ferries is systematic and intentional. A 200-passenger ferry is allowed to carry, for example, 400 passengers. The 200 “official” passengers are recorded on the vessel’s manifest, the 200 “unofficial” ones are not recorded and their fare is pocketed by the officials responsible for the management and the safety of the ship. Income that should be used for maintenance and repairs is similarly pocketed, leading to regular breakdowns and the suspension of services, thus increasing the overcrowding problem. Those anonymous corpses buried on the beach at Ukara are the “collateral damage” caused by rent-seeking government officials. A ferry service that is privately-owned and managed would deprive these officials of their rents; that is why ferry services remain a state monopoly.

Large-scale accidents on Lake Victoria are therefore arguably the result of a state monopoly of formal ferry services which dates back to the colonial period when the East African Harbours Corporation provided ferry services for the three East African countries. President Magufuli is committed to the improvement of lake transport, but it is taken for granted that the state will run the show. Magufuli has commissioned four new ferries and ordered the rehabilitation of old ones.

Marine Services Company Ltd (MSCL) and Tanzania Electrical, Mechanical and Electronics Services Agency (TEMESA) are the two official agencies responsible for running cargo ship and ferry services on Tanzanian waters. Prior to its incorporation in 1997, MSCL was the marine division of Tanzania Railways Corporation (TRC). The rationale for restructuring MSCL was to make it and other parts of TRC semi-independent “business units” to increase efficiency and profitability. According to its website, MSCL “operates ferries, cargo ships and tankers on Lake Victoria, Lake Tanganyika and Lake Nyasa. It provides services to neighbouring Burundi, DR Congo, Zambia and Malawi.” Over the years, these services have steadily dwindled. While MSCL used to run nine sizeable passenger and cargo vessels, breakdowns and lack of maintenance have left the company with only two. Laid up since 2014, the MV Victoria and MV Butiama are finally being rehabilitated at a cost of Sh26 billion, or $11.4 million, but will not be operational before March 2020 according to MSCL project manager Abel Gwanafyo, quoted by the Citizen newspaper on 8 August. Since the “rehabilitation” is only partially complete (22.5 per cent in the case of MV Butiama) further delays may be expected. The rehabilitation is part of a Sh152 billion ($67 million) shipbuilding and infrastructure development project launched by the President in August last year. At the launching ceremony, Magufuli revealed that he once considered disbanding MSCL but changed his mind because of the “exemplary performance” of the company’s new CEO, Eric Hamissi, in beginning to turn the company around.

While MSCL runs larger ships over longer routes, TEMESA—which is an executive agency under the Ministry of Works—serves short river crossings as part of the road network. Established in 2005, TEMESA operates double- and single-ended Roll on-Roll Off (‘ro-ro’) car ferries, mainly in remote locations where traffic volumes do not justify the construction of bridges. TEMESA’s “mission” involves “running safe and reliable ferry services”, including the ill-fated MV Nyerere. As a result of last September’s disaster, the President summarily suspended TEMESA’s Director General Dr Musa Mgwatu and its advisory board.

Finally, after the MV Nyerere disaster Magufuli took to task the country’s transport regulator, the Surface and Marine Transport Regulatory Authority (SUMATRA), summarily suspending its board of directors. In November 2017, the president signed the Tanzania Shipping Agencies Act which established the Tanzania Shipping Agencies Corporation (TSAC) to take over SUMATRA’s responsibility for marine transport regulation. According to lawyers Clyde and Company, TSAC was to become operational in February 2018. With a narrower scope than SUMATRA, it was hoped that the new agency would operate with greater efficiency and bring increased transparency to Tanzania mainland’s marine transport sector. The appointment of board members from the private sector as well as from government should, according to Clyde and Company, allow TSAC “to operate with an effective commercial approach.” It is unclear why SUMATRA rather than TSAC, was taken to task over the MV Nyerere accident.

The ferries the government commissions for service on Tanzanian lakes are mostly built by Songoro Marine Transport Ltd, owned by Mr Saleh Songoro and Sons of Mwanza. Mr Songoro bought the company—which was set up with aid from the Netherlands—when it was privatised in 1998. Songoro has a good working relationship with Dutch firm Damen Shipyards, one of the world’s largest builders of small ships. But a private shipbuilding monopoly serving monopoly state agencies is not going to solve the problem of inadequate and accident-prone transport services on Lake Victoria. The chronic shortage of lake transport is the maritime equivalent of poor urban public transport, which Dar es Salaam suffered during the days of the Usafiri Dar es Salaam (UDA) public transport monopoly. Private minibuses (daladala) were permitted in 1985, much to the relief of Dar es Salaam’s long-suffering citizens. The inhabitants of Lake Victoria’s shores are still waiting for their maritime daladala to come on stream.

Would Private Ferry Services Reduce the Death Toll?

Would privately owned, privately run ferry services be safer and more efficient than what we have now? It is possible that private services would be equally prone to rent-seeking and inefficiency in the absence of transparent and accountable contracting and regulation. On the other hand, private operators are more likely to maintain their vessels in order to maximise profit than state-run services, where all income flows are potentially vulnerable to self-destructive rent-seeking. They are also more likely to take safety issues more seriously than a state-run service, since private operators are more likely than civil servants to be held accountable in the event of a major accident. Since the ruling elite includes those who have little belief in or respect for the private sector, we could expect a more determined search for culprits and sanctions, especially if the boat-owners were Asians, Arabs or Caucasians.

President Magufuli has been widely praised for instilling discipline in government offices, hospitals and schools and sacking top officials deemed not to be performing and promoting those who are. But accountability is personal, not institutional, and the president clearly does not want to challenge all agencies equally. Since there is no public debate over privatising lake transport, we can expect Lake Victoria ferry passengers to continue being the potential victims of overcrowded and dangerous ferry services.

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