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The Great Flying Crane Heist

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As the Museveni government rolled out plans to revive Uganda Airlines, was the president’s brother-in-law caught with his hands in the cookie jar? MARY SERUMAGA celebrates a rare victory for a vigilant public.

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The Great Flying Crane Heist
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28 March 2019 was a good day for the Ugandan people. In fact, the entire week will go down in history as the one in which Government was forced to back down from an attempted fraud. There has been a whiff of scandal in the air since the President announced plans to revive Uganda Airlines last year. Created by statute in 1976 and privatised in 2001, the plan was to revive the airline through a Public Private Partnership scheme. With the public still reeling from revelations that an intended PPP for the construction of a private hospital has been transformed into a $300 million build-and-operate contract awarded to a shady Italian firm called Finasi, and wholly financed by a promissory note from Government, last week was the wrong time to attempt the flying crane heist.

The country is notorious for disastrous PPPs. In 2017 the Auditor General reviewed the functions of the PPP Unit and reported: “The position of Director (head of the PPP Unit) had not been substantively filled despite its critical importance to the functioning of the Unit and the PPP Committee. The current Head of the Unit has been in acting capacity since 2015. In addition, the key positions of the PPP unit such as communication expert, project finance expert, legal expert, technical expert, and technical specialist were also vacant. This means that the PPP unit cannot provide the technical, financial and legal expertise to the PPP Committee and project teams established by contracting authorities as required under the Act.” [Emphasis mine]

Who owns the new Uganda Airlines? It does not appear on the books of Uganda Development Corporation, the investment arm of government. The Auditor-General does not include it in his tables of State enterprises, either active or dormant.

This writer commented at the time that keeping all the key technical positions vacant enabled the junta to override the functions of the PPP Unit and implement projects over which there has been no technical, financial or legal oversight.

An old rumour has resurfaced that Sam Kutesa, the President’s brother-in-law and Minister for Foreign Affairs, acquired the brand ‘Uganda Airlines’ and required billions of shillings in compensation to surrender it to the State.

As with the contract to build Lubowa Hospital awarded to Finasi, so with the formation and financing of Uganda Airlines. No procurement procedures were apparent when aeroplanes were ordered, two of which are to be delivered this April at a cost of UGX 280 billion ($75,380,200.00). Nobody could or would answer the question: who owns the new Uganda Airlines? It did not appear on the books of Uganda Development Corporation, the investment arm of government. The Auditor-General did not include it in his tables of State enterprises, either active or dormant, loss-making or profitable.

Privatisation has generally been a massive looting exercise by the junta that rules Uganda. Various family members own or owned various assets divested by the State. Caleb Akandwanaho (aka Gen. Salim Saleh), the President’s immediate younger brother, was forced to resign his seat in parliament after fraudulently acquiring Uganda Commercial Bank.

An old rumour has resurfaced that Sam Kutesa, the President’s brother-in-law and Minister for Foreign Affairs, acquired the brand ‘Uganda Airlines’ and required billions of shillings in compensation to surrender it to the State. Kutesa’s censure by parliament in 1999 for the irregular acquisition of the once State-owned cargo and ground handling service company, the only profitable part of the privatised Uganda Airlines was still fresh in people’s minds. That same year, a parliamentary committee was set up to investigate the sale of the ground handling service to Kutesa’s Entebbe Handling Services (ENHAS) and the sovereign routes.

Privatisation has generally been a massive looting exercise by the junta that rules Uganda. Various family members own or owned various assets divested by the State. Caleb Akandwanaho (aka Gen. Salim Saleh), the President’s immediate younger brother, was forced to resign his seat in parliament after fraudulently acquiring Uganda Commercial Bank, the country’s largest commercial bank.

In a report, policy researcher, Wairagala Wakabi noted:

“At the time, the World Bank noted these and other serious flaws in the privatisation programme. It said a number of privatisation transactions had been unsuccessful and “the program has been widely criticised for non-transparency, insider dealing, conflict of interest and corruption.” Besides this, the Privatisation Unit, the agency responsible for carrying out privatisation, was unable to collect many outstanding payments for firms which were sold on a deferred payment basis, and questions had been raised about the use of the funds in the divestiture account.” Bringing affordable telecommunications services to Uganda: A policy narrative and analysis W. Wakabi, 2009.

The current re-nationalisation is proving to be just as opaque. The facts relating to the ownership of the resuscitated Uganda Airlines only began to emerge when the Ministry of Works had to submit a request for a budget supplement to complete payment for the planes. Although the order had been made months earlier, there was no provision for it after Export Development Canada pulled out of negotiations in September 2018. At the time, Canada’s action was thought to be related to the state brutality that erupted in Arua in August. Whatever the reason, the aircraft were ready for delivery this April after payment. The public maintained pressure on government via social media and two opposition MPs Joy Atim Ongom and Winnie Kiiza led the charge in the House. The Ministry tabled its request before a belligerent Parliament. The first objection was that the State had been allocated only two out of two million shares (0.0001%) in Uganda National Airlines Company Limited, (UNAC) the new entity that was going to run the airline. The 1,999,998 unallocated shares became the focus. To whom did they or would they belong? Is UNAC in fact a State Enterprise?

The first objection in Parliament was that the State had been allocated only two out of two million shares (0.0001%) in Uganda National Airlines Company Limited, (UNAC) the new entity that was going to run the airline.

The risk was that having passed UNAC off as a State enterprise thereby securing State funding, the drivers of the project – who remain unknown – could then allocate shares to ‘investors’ via the usual middlemen. The experience of Uganda Telecoms is indicative of this modus operandi.

In the beginning, the State held a 49 percent stake in UTL, selling 51 percent to investors. UTL also retained residual rights to license value added services. Currently the State holds only a 31 percent stake. Furthermore, no value-added service provider can operate without getting past MTN, a potential competitor allowed to begin operating before UTL , formerly the telecoms segment of the old state-owned Uganda Posts and Telecommunications Company, had been relaunched. With its history, infrastructure and brandname, MTN therefore holds a massive advantage in the telco market.

Minister Azuba Ntege gave an uncharacteristically embarrassed response for the NRM government and withdrew the submission to ‘correct the errors.’ The Speaker allowed her a day. The following morning the Minister arrived with fresh forms, updated to allocate 100 percent of UNAC shares to government.

“The sale of the 18 percent public holding was queried by the Public Accounts Committee not least because it flouted the requirement that the shares be valued by at least three qualified valuers (and not a mere broker) and advertised for sale to attract the best offer,” explains Wakabi in his report.

The Uganda Airline operators, whom the Ministry of Works is fronting, have been less fortunate. Minister Azuba Ntege gave an uncharacteristically embarrassed response for the NRM government and withdrew the submission to ‘correct the errors.’ The Speaker allowed her a day. The following morning the Minister attended the Budget Committee with fresh forms, updated to allocate 100 percent of UNAC shares to government. At that point the registrar of companies, Uganda Registration Service Bureau (URSB), announced that the updated articles and memo of the company were null and void. One reason for this was that the share allocation did not reflect the history of the initial allocation of two shares.

During the UNAC debate, Movement MPs pleaded that the State was days away from penalties for non-payment; an earlier deadline had been missed in December and the $27 million deposit stood to be lost.

It seems the effect was that a new entity was being formed with an initial allocation of 100 percent of the shares to the State. If so, that would have raised the question: who ordered the Bombardiers in 2018? It could not have been a company formed in March 2019. The question remains unanswered. Another mystery centres on the entity called Uganda Airlines Limited registered in 1999 and which has had no operations since. URSB even wrote to government in 2017 advising them that Uganda Airlines Ltd could be operationalised. Government preferred to register the new entity, UNAC Limited, in January 2018.

During the UNAC debate, Movement MPs pleaded that the State was days away from penalties for non-payment; an earlier deadline had been missed in December and the $27 million deposit stood to be lost. None addressed the issue that the State was in fact not liable in the event of UNAC defaulting.

A third set of papers was presented with effusive apologies from both ministers: “The registration process had gaps and I regret on behalf of myself, ministry and government. I beg to withdraw those documents,” apologised Minister Ntege. They now held all the shares in their capacities as public servants and not individuals. The government had no option but to accept radical amendments to the report of the Budget Committee that had spearheaded the defence against this latest attempt to raid the Treasury.

We are not out of the woods yet. There remains the issue of the two Airbus A330 aircraft ordered from Rolls Royce. It must be pointed out that the vendor, Rolls Royce has a long record of engaging in the kind of business practices for which Patrick Ho was convicted.

The ownership issue was sorted out with a resolution to transfer UNAC to Uganda Development Corporation. Ground handling services are to be re-nationalised regardless of the fact that Kutesa has allegedly sold ENHAS to NAS, allegedly a Kuwaiti entity. It is worth noting that there were rumours of this transaction around the same time that one Patrick Ho was being indicted in a New York court in 2017 for bribing both Kutesa and the President for oil and other business rights. (When Enhas was mentioned in parliament, Beatrice Anywar MP, who recently deserted the Opposition front bench for the NRM, was seen to leave her seat and in highly unorthodox fashion, whisper in to the ear of the Deputy Speaker. He waved her away).

We are not out of the woods yet. There remains the issue of the two Airbus A330 aircraft ordered from Aerospace and powered by a Rolls Royce engine.

In this case there should be more time to scrutinize the business case for the investment, something not done with the earlier ones because of the payment deadline. It must be pointed out that Rolls Royce, which issued a press release welcoming Uganda’s decision and looking forward to developing its relationship with Uganda Airlines, has a long record of business practices for which Patrick Ho was convicted.

Due diligence demands that Ugandans ask: Who negotiated with Rolls Royce for the Airbus aircraft? Did they receive a bribe? Having interrupted a burglary in progress, they need to be on the lookout for other attempts to milk the Treasury.

Following an investigation by the UK’s Serious Fraud Office, it was found that Rolls Royce exchanged bribes for business with officials across the globe. The operation continued for 24 years before Rolls Royce reached a Deferred Prosecution Agreement (DPA) in 2017 under which individual officials would not be prosecuted but Rolls Royce would pay penalties of US$800 million for bribery in Angola, Nigeria and South Africa as well as Azerbaijan, Brazil, India, China, Indonesia, Iran, Iraq, Kazakhstan and Saudi Arabia.

The judge found:

“v. […] substantial funds being made available to fund bribe payments.

vi) The conduct displayed elements of careful planning.”

Due diligence demands that Ugandans ask: Who negotiated with Rolls Royce for the Airbus aircraft? Did they receive a bribe? Having interrupted a burglary in progress, they need to be on the lookout for other attempts to milk the Treasury through this enterprise. The greatest weakness is that private operating capital will have to be found because Isimba and Karuma Dams are ahead of the airline in the financing queue and have not yet found the public funds needed to transmit the power they will generate. There is also the proposed oil pipeline and refinery for which investors are either not forthcoming or remain cautious. How the shares are sold and to whom is key.

Regarding any compensation for ground handling, if this service was illegally carved out of Uganda Airlines and in fact led to its collapse and sale, there should be no obligation to compensate NAS. It would be interesting to find out if in fact NAS is not Sam Kutesa in disguise.

With respect to the Airline, parliament adopted a business plan that they have not seen and whose profitability is questionable. It may have made sense for private individuals to own 99 percent of it, and operate a business for which all funding and liabilities are borne by the government, but it may not make sense for government to own 100 percent, and operate an airline when other regional airlines are struggling. Previous efforts by private entities in Uganda have not been successful, all but one failing for lack of cash, a shortage of which, incidentally, is also haunting Government.

In 2020, the grace period on 19 loans (including for the Entebbe Airport expansion and the Expressway) will expire requiring government to allocate 65 percent of her revenues to debt servicing. With 44 percent of revenues currently being devoted to debt service, the economic situation is already untenable for the majority who use neither the airport nor the expressway. The fiscal crunch is characterised by drug-stock-outs in health centres and lack of teaching materials in State schools. Feeder roads by which smallholders (80 percent of the population) transport their produce are in a dire state. Their maintenance requires UGX 800 billion ($215 million) a year but the government was only able to manage a fixed amount of UGX 417 billion for the three years up to June 2018.

In A brief chronological history of Uganda Airlines, Kikonyogo Douglas Albert gives an insight into the vicissitudes of the air transport sector. In 2001 Africa One opened and closed within the year owing to limited capitalization; East African Airlines with a single ageing Boeing 737-200 running flights within East Africa, to Dubai and South Africa lasted five years before an investment shortfall forced it to close in 2007. Royal Daisy Airlines founded in 2005 lasted five years.

Government ventured back into the industry in 2006, investing in a 20 percent share of Victoria International Airlines regular flights to South Africa, Sudan and Nairobi. This venture too suffered from inadequate capitalization and closed after only 2 months. Finally, the Aga Khan Group’s Air Uganda started regional operations in 2007 and stopped in 2014 after the International Civil Aviation Authority Organization November raised technical queries.

Signs of incompetent management have manifested sooner than expected. Although the Ministry states 12 pilots have been recruited at UGX 42m ($11,307) a month and 12 co-pilots at UGX 38 m ($10,230.17), and promised Parliament to table their professional records, on 31 March it transpired the airline may actually not have pilots. Documents were leaked to NTV Uganda investigative journalist, Raymond Mujuni, showing that owing to a dispute over pay, they have not reported to work objecting to salaries apparently lower than those of Kenya Airways and Rwandair pilots. The pilots also want permanent terms (which would make them eligible for massive pensions – Uganda has no public service pensions fund and billions are owed to Uganda Communications Employees Contributory Pensions Scheme (UCECPS) pensioners in arrears).

The airline immediately tweeted a disclaimer urging the public to ignore the report. Given the choice of R. Mujuni, a competent investigative journalist, and the shady airline company, a vigilant public might be more inclined to believe the pilots are on strike. Now that it is a public enterprise, the Auditor General and Inspector General of Government will need to pay particular attention to the Flying Crane. An important line of enquiry is whether the jobs were advertised and whether or not the recruits are beneficiaries of the controversial State House scholarship scheme, the educational arm of the junta.

As it is, the airline is to be launched in April. So far there has been no marketing of the maiden flight. The challenges ahead notwithstanding, after 33 years of fiscal abuse by Yoweri Museveni’s regime, Uganda was able to stop another heist of public funds. What made it even more beautiful was the fact that the methods used were parliament and the media.

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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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Haiti: The Struggle for Democracy, Justice, Reparations and the Black Soul

Only the Haitian people can decide their own future. The dictatorship imposed by former president Jovenel Moïse and its imperialist enablers need to go – and make space for a people’s transition government.

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Haiti: The Struggle for Democracy, Justice, Reparations and the Black Soul
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Haiti is once again going through a profound crisis. Central to this is the struggle against the dictatorship imposed by former president Jovenel Moïse. Since last year Mr. Moise, after decreeing the dismissal of Parliament, has been ruling through decrees, permanently violating Haiti’s constitution. He has refused to leave power after his mandate ended on February 7, 2021, claiming that it ends on February 7 of next year, without any legal basis.

This disregard of the constitution is taking place despite multiple statements by the country’s main judicial bodies, such as the CSPJ (Superior Council of Judicial Power) and the Association of Haitian Lawyers. Numerous religious groups and numerous institutions that are representative of society have also spoken. At this time, there is a strike by the judiciary, which leaves the country without any public body of political power.

At the same time, this institutional crisis is framed in the insecurity that affects practically all sectors of Haitian society. An insecurity expressed through savage repressions of popular mobilizations by the PNH (Haitian National Police), which at the service of the executive power. They have attacked journalists and committed various massacres in poor neighborhoods. Throughout the country, there have been assassinations and arbitrary arrests of opponents.

Most recently, a judge of the High Court was detained under the pretext of promoting an alleged plot against the security of the State and to assassinate the president leading to the illegal and arbitrary revocation of three judges of this Court. This last period has also seen the creation of hundreds of armed groups that spread terror over the entire country and that respond to power, transforming kidnapping into a fairly prosperous industry for these criminals.

The 13 years of military occupation by United Nations troops through MINUSTAH and the operations of prolongation of guardianship through MINUJUSTH and BINUH have aggravated the Haitian crisis. They supported retrograde and undemocratic sectors who, along with gangsters, committed serious crimes against the Haitian people and their fundamental rights.

For this, the people of Haiti deserve a process of justice and reparations. They have paid dearly for the intervention of MINUSTAH: 30 THOUSAND DEAD from cholera transmitted by the soldiers, thousands of women raped, who now raise orphaned children. Nothing has changed in 13 years, more social inequality, poverty, more difficulties for the people. The absence of democracy stays the same.

The poor’s living conditions have worsened dramatically as a result of more than 30 years of neoliberal policies imposed by the International Financial Institutions (IFIs), a severe exchange rate crisis, the freezing of the minimum wage, and inflation above 20% during the last three years.

It should be emphasized that, despite this dramatic situation, the Haitian people remain firm and are constantly mobilizing to prevent the consolidation of a dictatorship by demanding the immediate leave of office by former President Jovenel Moïse.

Taking into account the importance of this struggle and that this dictatorial regime still has the support of imperialist governments such as the United States of America, Canada, France, and international organizations such as the UN, the OAS, and the EU, the IPA calls its members to contribute their full and active solidarity to the struggle of the Haitian people, and to sign this Petition that demands the end of the dictatorship as well as respect for the sovereignty and self-determination of the Haitian people, the establishment of a transition government led by Haitians to launch a process of authentic national reconstruction.

In addition to expressing our solidarity with the Haitian people’s resistance, we call for our organisations to demonstrate in front of the embassies of the imperialist countries and before the United Nations. Only the Haitian people can decide their future. Down with Moise and yes to a people’s transition government, until a constituent is democratically elected.

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Deconstructing the Whiteness of Christ

While many African Christians can only imagine a white Jesus, others have actively promoted a vision of a brown or black Jesus, both in art and in ideology.

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Deconstructing the Whiteness of Christ
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When images of a white preacher and actor going around Kenya playing Jesus turned up on social media in July 2019, people were rightly stunned by the white supremacist undertone of the images. They suggested that Africans were prone to seeing Jesus as white, promoting the white saviour narrative in the process. While it is true that the idea of a white Jesus has been prevalent in African Christianity even without a white actor, and many African Christians and churches still entertain images of Jesus as white because of the missionary legacy, many others have actively promoted a vision of Jesus as brown or black both in art an in ideology.

Images of a brown or black Jesus is as old as Christianity in Africa, especially finding a prominent place in Ethiopian Orthodox Church, which has been in existence for over sixteen hundred years. Eyob Derillo, a librarian at the British Library, recently brought up a steady diet of these images on Twitter. The image of Jesus as black has also been popularised through the artistic project known as Vie de Jesus Mafa (Life of Jesus Mafa) that was conducted in Cameroon.

The most radical expression of Jesus as a black person was however put forth by a young Kongolese woman called Kimpa Vita, who lived in the late seventeenth and early eighteenth century. Through the missionary work of the Portuguese, Kimpa Vita, who was a nganga or medicine woman, became a Christian. She taught that Jesus and his apostles were black and were in fact born in São Salvador, which was the capital of the Kongo at the time. Not only was Jesus transposed from Palestine to São Salvador, Jerusalem, which is a holy site for Christians, was also transposed to São Salvador, so that São Salvador became a holy site. Kimpa Vita was accused of preaching heresy by Portuguese missionaries and burnt at the stake in 1706.

It was not until the 20th century that another movement similar to Vita’s emerged in the Kongo. This younger movement was led by Simon Kimbangu, a preacher who went about healing and raising the dead, portraying himself as an emissary of Jesus. His followers sometimes see him as the Holy Spirit who was to come after Jesus, as prophesied in John 14:16. Just as Kimpa Vita saw São Salvador as the new Jerusalem, Kimbangu’s village of Nkamba became, and still is known as, the new Jerusalem. His followers still flock there for pilgrimage. Kimbangu was accused of threatening Belgian colonial rule and thrown in jail, where he died. Some have complained that Kimbangu seems to have eclipsed Jesus in the imagination of his followers for he is said to have been resurrected from the dead, like Jesus.

Kimbangu’s status among his followers is however similar to that of some of the leaders of what has been described as African Independent Churches or African Initiated Churches (AICs). These churches include the Zionist churches of Southern Africa, among which is the amaNazaretha of Isaiah Shembe. Shembe’s followers see him as a divine figure, similar to Jesus, and rather than going to Jerusalem for pilgrimage, his followers go to the holy city of Ekuphakameni in South Africa. The Cameroonian theologian, Fabien Eboussi Boulaga, in his Christianity Without Fetish, see leaders like Kimbangu and Shembe as doing for their people in our own time what Jesus did for his people in their own time—providing means of healing and deliverance in contexts of grinding oppression. Thus, rather than replacing Jesus, as they are often accused of doing, they are making Jesus relevant to their people. For many Christians in Africa, therefore, Jesus is already brown or black. Other Christians still need to catch up with this development if we are to avoid painful spectacles like the one that took place Kenya.

This post is from a partnership between Africa Is a Country and The Elephant. We will be publishing a series of posts from their site once a week.

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In Magufuli’s Shadow: The Stark Choices Facing Tanzania’s New President

One immediate concern is what steps Hassan will take on the pandemic, and whether she will change direction.

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In Magufuli’s Shadow: The Stark Choices Facing Tanzania’s New President
Photo: Flickr/Gospel Kitaa
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The sudden death of Tanzania’s President John Pombe Magufuli has thrown the East African nation into a period of political uncertainty.

Vice-president, Samia Suluhu Hassan, has been sworn in as his successor, making her Tanzania’s first woman president.

The transition is all the more challenging given the major rupture – both political and economic – caused by Magufuli’s presidency. Magufuli, who won a second term in October 2020, dramatically centralised power and pursued an interventionist economic policy agenda. He courted controversy on a number of fronts, most recently, by claiming that Tanzania – contrary to mounting evidence – was Covid-free.

Hassan has called for unity and counselled that now is not the time to look at what has passed but rather to look at what is to come.

Despite the 61-year-old leader’s forward-looking stance, questions remain about how Magufuli’s legacy will shape her time in office.

The authoritarian turn

Magufuli oversaw the marginalisation of opposition parties and a decline in civil liberties. His first term was defined by heightened intimidation and violence against opposition leaders, including disappearances and physical attacks.

Thanks to five years of repression, the October 2020 general elections saw the opposition all but wiped out of elected office. The ruling Chama Cha Mapinduzi now controls all local government councils. It also holds 97% of directly elected legislative seats, up from 73% in 2015.

In addition, media freedom and civil liberties were also restricted. A law passed in 2018 imposed jail terms for questioning the accuracy of official statistics.

But Magufuli’s authoritarian tendencies were not unprecedented in Tanzania. For instance, the rule of his predecessor Jakaya Kikwete was also marred by human rights abuses as well civil society and media repression. Kikwete also cancelled Zanzibar’s 2015 election due to a likely opposition victory.

It remains to be seen whether Hassan will adopt a more liberal approach, loosening restrictions on opposition parties, the media and civil society. Even if she does, the damage will take time to repair. Opposition parties, for instance, may well struggle to regain their strength. Among other setbacks, they have lost almost all local elected representatives – a core element of their organisational infrastructure built up painstakingly over decades.

Centralising power in the party

Another key pillar to Magufuli’s legacy is the centralisation of power within the Chama Cha Mapinduzi.

In the early years under founding president Julius Nyerere, Tanzania’s ruling party was dominated by the president and a hierarchy of appointed state and party officials. But, following economic liberalisation in the 1980s and Nyerere’s retirement from politics, the party became steeped in factional rivalries. These were spurred by new political alliances and an emerging private sector business elite.

This factionalism reached its height under Kikwete amid accusations of widespread corruption. Magufuli’s nomination as party presidential candidate only occurred because the rivalry among these factions left him as the unexpected compromise candidate.

Once in office, though, Magufuli quickly signalled he would be nobody’s puppet. He used his position as ruling party chairman to create a “new” Chama Cha Mapinduzi. This involved breaking with party heavyweights, including Kikwete, suppressing factional organising, and consolidating his own support base.

Magufuli’s new base was a cohort of freshly appointed party officials as well as civil servants and cabinet ministers. His loyalists likened these changes to a revival of Nyerere’s Chama Cha Mapinduzi. But, in our view, the comparison is misleading.

Like Magufuli before her, Hassan will be taking office – and party leadership – without her own political base. She will also have to contend with revived factional manoeuvring as sidelined groups try to regain an upper hand.

Hassan could align with a loyal Magufuli faction, which includes influential figures within the party. But, early indications suggest she intends to follow the advice of “party elders”, notably Kikwete. The former president reportedly attended the party’s most recent central committee meeting on Hassan’s invitation.

Aligning herself with Kikwete will likely lead to the reemergence of the internal factional rivalries that characterised the former president’s tenure.

Implications for economic policy

If president Hassan does continue to take a political steer from Kikwete, one likely outcome is that there will be a change in economic policy. In particular, a return to growth that’s led by a more business-friendly approach to the private sector.

Calls are already being made for such a course of action..

The danger for Hassan, however, is that under Kikwete this model was associated with high levels of corruption and unproductive rent-seeking.

A careful reassessment of the Magufuli era is needed to guide future policymaking.

Magufuli used his control over the ruling party to pursue an ambitious policy agenda. This was also linked to his political project of centralising power.

Although this trend actually began under Kikwete, Magufuli accelelrated a move towards more state-led investment. Under his leadership, both state-owned and, increasingly, military-owned enterprises were offered strategic contracts.

This ambitious programme initially won him praise. But over time, his authoritarian decision-making, mismanagement, and lack of transparency prompted a more critical response.

Many state enterprises remained cash-starved, relied on government financial support, and registered losses.

When the government’s controller and auditor general called for more scrutiny of public finances, his budget was slashed. And he was ultimately forced to retire and replaced by a Magufuli loyalist.

Alongside state investment, the president also sought to discipline private sector actors. Some observers suggest that this led to more productive investment, notably by domestic investors. But others point to renewed crony capitalist ties.

Magufuli’s most high profile corporate battle was against Canadian-owned Barrick Gold and its former subsidiary, Acacia Mining. From the two, he demanded USD$190 billion in tax arrears and a renegotiation of operating terms.

Many saw this resource-nationalist approach as an inspiration and a model for African countries seeking to take greater control of their mineral wealth. But in the end – partly due to externally imposed legal and economic constraints – Magufuli walked back on some of his demands. Instead he opted for cooperation rather than confrontation.

He negotiated a joint venture in which Barrick took a majority stake of 84% and Tanzania the remaining 16%. Key elements of the nationalistic mining legislation passed in 2017 were also reversed.

On the plus side gold overtook tourism as Tanzania’s biggest foreign-exchange earner. In addition, some small-scale miners saw their livelihoods improve. Results were more mixed elsewhere, especially for Tanzanite miners in the country’s north.

Ultimately, Magufuli leaves behind a mixed economic legacy. It combines misdirected authoritarian decision-making with positive efforts to pursue an active industrial policy. Reining in unproductive domestic investors and renegotiating adverse contracts with foreign investors were part of this agenda.

There is a risk, given this complex mix, that Tanzania’s policymakers may learn the wrong lessons from his presidency, leading back to the flawed model existing before.

Significantly, neither Magufuli nor his predecessors managed to achieve more inclusive growth. For this reason poverty levels have remained stubbornly high.

The pandemic and beyond

One immediate concern is what steps Hassan will take on the pandemic, and whether she will change direction.

Whatever she does, the health emergency and associated economic crisis will likely define her presidency. It could indeed define the economic trajectory of the African region in years to come.

Both Kikwete and Magufuli ruled through an economic boom period. Commodity prices were high and access to international finance was fairly easy. This gave them latitude to choose between various development approaches.

If Tanzania reverts to the status quo of the Kikwete years, the risk is a reemergence of rent-seeking but without the same highly favourable economic growth conditions. Indeed, as external conditions worsen, Hassan may find her options far more limited.The Conversation

This article is republished from The Conversation under a Creative Commons license. Read the original article.

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