Money and Life in 2012 by James Abola

When we wrote about this topic in February 2011we predicted that the election year spending would drive the inflation above the 10 percent mark. That prediction came to pass but even in our wildest imagination we never expected that the inflation rate would go up as high as 30 percent!
We predicted that the Treasury bill rate would go up to 15 percent. While we were right about the upward movement in Treasury bill rates, we were way off the point on the percentage – the rates went up to 23 or 24 percent in the course of 2011.
The other prediction was that Libyan firms operating in Uganda would have difficulties as the Gaddafi regime got battered by internal rebels and allied aerial bombardment.
During 2012 the key economic issues for Ugandans and Uganda will be driven by three things: Oil, Government Accountability and Electricity Power.
Oil boom?
Tullow Oil has already earned US$ 2.9 billion from farming down 67% of its Ugandan licenses. One fact that this transaction brings out is that oil will in a short time expose Uganda to the kind of money that the economy has never seen.
The management of oil licenses, oil revenue and local participation are key issues that are covered in the Petroleum (Exploration, Development and Production) Bill, 2012 which is being scrutinised by the parliamentary committee on natural resources.
If and when the petroleum bill is passed into law at least two institutions will be created, namely the Petroleum Authority of Uganda and the National Oil Company. You can be certain that several alert people are already warming up for board and management positions in these two “oily” organisations.
Oil provides employment and entrepreneurship opportunities as Uganda navigates the path from exploration to full scale production. Ugandans are currently being short changed on the two fronts of employment and entrepreneurship.
Ugandans are missing out on employment due to lack of skills and certification. For example there are many Ugandans who do welding and carpentry work but lack trade certification. The Oil sector places stringent requirements for certification because they don’t want to mess their insurance cover if ever there was a problem or disaster.
On the side of entrepreneurship, the biggest challenge is lack of information on available opportunities. There is no information clearing house about oil related business opportunities that Ugandan MSMEs can take up. Information blackout allows sharp and connected entrepreneurs to hog opportunities while oblivious Ugandans watch on.
Electricity
Load shedding will continue frustrating Ugandans in 2012.
The Bujagali generation plant will come online this year but it will not solve the problem of load shedding. Bids for Karuma are now being evaluated. Assuming no delays occur in the procurement process the earliest we shall get power from Karuma is 2017!
In the meantime the development of Karuma Power project presents both challenges and opportunities. There will be the challenge of maintaining and sustaining the rich bio-diversity in the area. There will also be opportunities to support the construction work.
Compensation for no work
Public displeasure on corruption will continue throughout this year.
In the last 3 months, the so called compensation paid to companies owned by Basajjabalaba for loss of tenders to manage markets in Kampala has been a focus for the public displeasure at the misuse of government resources. The head count from this saga is unprecedented in the history of the NRM government and graft: 2 cabinet ministers; 5state house officials have already fallen and there might still be some more to go.
The fight against corruption has entered another phase in 2012 but you can be sure that the corrupt are not sitting idle and twiddling their thumbs either. It will be good to hear that the URA is levying capital gains tax on the likes of Basajjabala too.
For those who are prepared, the year 2012 presents great economic opportunities but for the unprepared it will be a challenging year.