REVIVING THE COOPERATIVES: UGANDANS TELL OFF MATIA KASAIJA @ NPA DEBATE
By John V Sserwaniko
To their credit, the management of National Planning Authority (NPA) last week organized a policy discussion meeting at Imperial Royale Hotel where they sought Ugandans’ views on strengthening the ongoing process to revive the cooperatives movement in Uganda. The government conviction, as reflected in NPA-authored NDP II, is that a vibrant cooperatives movement is the best way to increase production and productivity in agricultural sector which ideally is the backbone of Uganda’s economy and employs a larger part of the population. Cooperatives Minister Fredrick Ngobi Gume and Finance Minister Matia Kasaija were in attendance to get views to feed into the policy cabinet paper they are working on. And for MP Kasule Sebunya, who chairs the relevant committee of Parliament, the massively attended consultative meeting was an opportunity to get views and assess the popularity of the Amendments to Cooperatives Act his committee is currently processing.
As they gave their views, Ugandans bashed President Museveni’s government blaming absence of cooperatives on its original political mistakes. Saying it was wrong to abandon and do away with cooperatives after the 1986 takeover, Obote II’s Cooperatives Minister Yona Kanyomozi (1981-1985) said cooperatives died “because of the government mindset that people can only be governed when they are poor.” He said he knows as an elder that the Museveni government deliberately killed cooperatives fearing it would be harder to govern an economically empowered citizenry. Even now, Kanyomozi said there are lots of government mistakes that are going to cripple contemporary efforts to revitalize cooperatives. “Why must you put whatever little cooperative financing you have at the Microfinance Support Center and not UCA [Uganda Cooperative Alliance]?” he wondered before recommending that what was meant to be the Cooperatives College at Kigumba be revitalized to train cooperators as opposed to designating it into a College of Petroleum studies. Dennis Agute, a young cooperator from Sebei, supported Kanyomozi accusing the NRM government of being ill-intentioned towards cooperatives. “You have killed these cooperatives deliberately by imposing on us NRM cadres to be our chairpersons yet they know nothing about cooperatives,” said Agute who moderator Oscar Semweya had originally prevented from talking because of the excessive anger he had exhibited towards government. He referred to Sebei Cooperative Union leader Juma Seiko as one who got the position not because of his good track record as a cooperator but simply because of his NRM connections. Minister Gume later corrected this by telling the meeting that Seiko was no longer SBU chairman. He explained that the current SBU chairman is a well accomplished judicial officer (a Magistrate) who is also a well accomplished cooperator. Ken Lukyamuzi reiterated Kanyomozi’s submissions and said the NRM government carries the political responsibility because their initial phobia towards cooperatives is the reason “the economy is now limping.”
KASAIJA FIGHTS BACK;
Speaking at the end of the policy debate, Kasaija who was also representing Premier Ruhakana Rugunda defended government and read out illustrations of transformation figures to prove to Lukyamuzi “the economy is very vibrant and not limping.” Himself a cooperator (having served as chairman Kakumiro Cooperative Union & former vice chairman for UCA), Kasaija said cooperatives collapsed because of the liberalization consequences for which authorities never had the opportunity to prepare cooperators. “I was born and bred in cooperatives and it’s where I will certainly retire. Government never deliberately collapsed cooperatives. As of 1986, they were performing very poorly and even when government gave them money under crop finance as affirmative action, the money disappeared in thin air,” he said. He explained that liberalization, which ended the Cooperatives’ monopoly when it comes to purchasing members’ produce by bringing in other buyers, was meant to benefit the farmers as opposed to being aimed at killing cooperatives parse. Liberalization brought in middle men who moved and paid farmers faster than cooperatives which had bureaucracy and farmers took too long to get paid. He regretted the fact that in the long term, liberalization killed off cooperatives and yet farmers/members in the end didn’t get economically better. He also responded to BCU Chairman Nandala Mafabi who earlier on, during a panel discussion, had said government indifference had enabled middlemen to continue distorting the operations of the cooperatives network. Nandala said whereas as BCU they insist on high quality coffee from their 300 member primary cooperative societies, the middle men don’t. “They just buy any coffee and this undermines our efforts to insist on quality standards as BCU which hurts our export market,” Nandala said. Another speaker from the audience supported Nandala and argued that the manner in which Kasaija recently doled out the Shs100bn to stabilize the maize prices was indicative of the government’s unwillingness to genuinely empower the cooperative movement. Kasaija said this is untrue “because the money is available to everyone be they private sector, the middle men and you yourselves as cooperatives.” It’s not exclusively for the middlemen, he insisted. Kasaija also referred to the billions government has been investing in MSC to enable the company to extend affordable agricultural loans to cooperatives at an interest rate which is as low as 9%. He said cooperatives seeking to invest in commercial activities access MSC funding at just 14% interest compared to 21% which commercial banks charge. He said for revival efforts to succeed, cooperators too must be ready to operate in a manner that complies with best corporate practices and values including honesty and accept to be autonomously audited. He said integrity was a big problem among today’s cooperative leaders yet trust is critical for the cooperative movement to succeed. “Cooperatives are private businesses and you should be prepare to comply with ethical standards the way Mukwano does. All government does is regulation.” He referred to the ongoing compensation of old cooperative unions for the property and business they lost due to NRA war was a manifestation of the government’s will and good intentions towards revival. Government will also continue using MSC capacity building programs to train cooperators on value addition. In his speech, Rugunda said government can’t afford not to be serious on revival because of the “critical role cooperatives play to enable production and marketing efforts benefit from economies of scale that cooperatives bring.” Kasaija said even the ongoing compensation (which so far seen three unions get reimbursed) was being slowed because of integrity problems as many of the claims are sham, fraudulent and require time for verification. He urged cooperators to take advantage of the ongoing consultation process to give views so that they can positively influence the amendment of the Cooperatives Act into a law they desire to see. He also referred to efforts to revive Cooperative Bank. Kasaija also decried the fact that the moderator kept rushing speakers limiting them to two minutes each which he said constrains free exchange of ideas yet this was a very important consultative meeting. “If it’s the problem of money not being enough, please come to me next time. As long as it’s in your budget I will support you to get that money so that we meet for like two days for people to speak freely for the process to be inclusive. I didn’t like the way my friend here [Dr Lawrence Kyazze Musiitwa of Mubs] was being asked to wind up yet he had a lot more to tell us,” Kasaija said while thanking NPA ED Dr. Joseph Muvawala for convening the consultative meeting.
FREDRICK GUME’S SPEECH;
Kasaija’s counterpart Fredrick Gume said it’s utopian for cooperators to expect cooperatives similar to what prevailed before 1986. He said that won’t happen. For instance he said there is no way one can do away with middlemen even when they weren’t anywhere in the picture in the 1960s. Cooperatives only have to improve the way they do business so that they can compete and become more appealing to more farmers than middlemen. He also rejected claims that government wasn’t well-intentioned. He gave the example of cooperators growing fruits in Soroti who are going to operate more productively in partnership with a Korean investor GoU got for them. Nandala had complained of government’s failure to enforce section 10 of the Investment Code Act that prohibits foreign investors from engaging in primary production activities of things like coffee, cotton and livestock. But Gume said GoU had ensured maximum protection for the Soroti cooperators including allocating them 20% shareholding in the fruit processing factory which will gradually grow into 100% as the Koreans exit. He expressed fears overcoming middle men wouldn’t be easy because, whereas they get capital from their home countries at just 1% interest, “our cooperatives are financially exhausted.” He referred to integrity problems being widespread among both the middlemen and cooperators’ leaders. Whereas middlemen cheat farmers by using faulty weighing scales, cooperate unions’ leaders resist being properly audited yet accountability is very important in modern cooperatives. He called for the introduction of cooperatives as a subject in the education curriculum all the way to the University. However, both Gume and Kasaija skipped answering the tough questions that were raised by a cooperator from Lango Cooperative Union (LPU) which specialized on cassava production in its hey days. She accused government of indifference and wondered why their starch-processing factory was questionably given to Mukwano Group now planning to compete with LPU cooperators “instead of being compelled to buy our cassava as raw materials.” Whereas Uhuru Institute’s Jane Amuge enumerated cooperatives-related laws that need to be repealed, Mubs’ Dr. Musiitwa Kyazze demanded that Kigumba Cooperative College be revitalized to 100% concentrate on cooperative training “as opposed to running programs which compete with ours at Mubs.” He wants BoU compelled to publish Justice Ogola report on what collapsed cooperative bank to avoid similar mistakes. He also decried the minister and registrar of cooperatives’ powerlessness in the running of cooperatives. He also wants the powers of UCA diminished. Amuge demanded for proper census to establish the actual number of cooperatives in Uganda. She said that of the 18,000 cooperative societies believed to exist in Uganda, more than 25% are ghosts and actually don’t exist. She said from the verificational study and profiling exercise Uhuru Institute undertook sometime back, only 55% of the societies can be said to exist with certainty.
At the start of the meeting, NPA’s Head of Policy & Research department Dr. Asuman Guloba made a powerful presentation emphasizing that the revival of cooperatives was long overdue. He enumerated steps GoU must immediately take to expedite the revival process including releasing the Cooperative bank liquidation report for lessons to be learnt and mistakes avoided. NPA is proposing that GoU gives the bank an interest-free loan and later on recover its money through IPO for the public to buy shares in the bank. BoU should be directed to initially waive the minimum capital requirements to enable the bank to be revived because it’s the only one from which cooperators can get affordable credit. The NPA chief researcher also proposed transfer of the agri-credit fund from BoU to the cooperative bank as well as the money currently being operated in MSC. There should also be a Cooperative Tibunal for disputes resolution emulating Kenya and Malaysia. Guloba explained that Kenya is an irresistible model for Uganda to learn from because it’s one of Africa’s most success stories when it comes to cooperatives. Dr. Guloba noted that 45% of Kenya’s GDP is contributed by cooperatives-related activities compared to Uganda’s 3%. Kenya cooperatives movement has Shs230bn (Kenyan money) in accumulated savings. In France it’s the worth of 300bn Euros, according to UCA CEO Ivan Asiimwe who had a lot to say but was cut short for time. In the document Guloba presented, NPA is also urging government to benchmark on the funding model Nyakatonzi cooperative union in Kasese, Banyankole Kweterana & Nandala’s BCU have been using to remain afloat and operative through the difficult period. They respectively partnered with RABO bank in Netherlands, KCB through a UK funder and HSBC Equator Bank of USA. Among the causes for earlier cooperatives’ failure, according to NPA, was the collapse of cooperative bank and the subsequent restructuring of cooperative loans into commercial loans under Stanbic bank. The NPA dossier also highlighted what collapsed past cooperatives including wars during which they lost assets that had been established on borrowed cash. Others are lack of transparency and accountability by their leaders, introduction of liberalization without adequately preparing cooperatives on the necessary adjustments, inappropriate regulatory framework and extreme want of entrepreneurial skills. For comments, call, text or whatsapp us on 0703164755.