Monday, July 26, 2010

East Africa United

This most colourful of flags is not yet, to the best of my knowledge, widely recognised. It is the flag of the East African Community, comprising Burundi, Kenya, Rwanda, Tanzania and Uganda.

For most of the last year, the best newspaper in the region, the East African, has been running weekly updates on East African Community integration, culminating in the launch of the East African Common Market Protocol on 1st July 2010. This protocol will, we are assured,eliminate the vast amounts of restrictions and regulations often required to do business in the region. In addition to the elimination of trade barriers and border taxes, citizens of East Africa will be able to freely relocate within the community, bringing education and expertise where they are needed most.

However, these changes have not taken place overnight. Even the most optimistic among us recognize that it will take some time before the notoriously tight borders are opened and the pointless red tape eliminated. Conservative expectations are that the necessary legal and regulatory changes will not be implemented in full before 2015 (though given the funereal pace of change in public sectors everywhere this would be quite some achievement). Certainly, not much has yet happened on the ground, if my recent experience of the Malaba border crossing between Uganda and Kenya was anything to go by. Regional studies often highlight the high transaction costs of doing business in East Africa. What better example than a 5 km tailback of trucks on the Kenyan side of the border. Imagine the hidden costs of these delays! With the exception of a few thousand customs service and immigration employees, it is hard to see anyone opposing a borderless East Africa.

It will be particularly interesting to see how the agriculture sector as a whole – and in particular the seed sector – responds to a borderless environment. Regulations (and the effectiveness of regulators) in the seed sector vary widely among the members of the East African Community. In Kenya, regulations are tightly enforced by the Kenyan plant health inspectorate service (KEPHIS), to the extent that most imported seed, especially from other African countries, requires KEPHIS approval. Uganda, by contrast, has a weaker quality control environment for the production and importation of seed , and little or no organizational capacity to implement its rules and regulations. An efficient market would substantially remove the need for Kenyan-style regulation but at least for the time being small-scale farmers with little or no access to market information need the protection provided by a robust regulator. As a general point, harmonisation of standards is fine, as long as it is upwards.

Back to the excellent East African. This week's edition includes some articles on regional private equity, including a piece on African Agricultural Capital on the following link

In my (entirely disinterested) opinion, well worth a read!

Monday, July 19, 2010

Kampala after 7/11

A great deal has been written about the hows, whys and wherefores of the July 11th terrorist attack on Kampala. That the attack was planned and executed by the Somalia-based extremist group Al Shabaab, bent on extracting revenge for the deployment of Ugandan peacekeeping troops in Somalia, appears in little doubt. It is further evidence of the danger that the chaos in Somalia presents to the region and beyond, if any were needed.

The response to the attacks has been swift. Government has promised to hunt down the perpetrators, and to continue the "fight for freedom" in Somalia (whatever that means). A range of security measures have been taken in Kampala, including an order by Kampala City Council that all bars and clubs should close by 10 pm, which has, predictably, been completely ignored. Worse, however, are the lengthy delays in entering shopping malls and other public places. It now takes a minimum of about 30 minutes to drive into the Garden City mall, for example, as all vehicles are searched and pedestrians scanned for terrorist devices. Entebbe Airport, once a shining light of efficiency and briskness among international airports, now requires a three-hour passenger check-in time for security access control, adding yet more disincentive to endure travel by air within the region.

When I was growing up in 1970s Britain, the IRA was a real and persistent threat. In 1972, the Aldershot army barracks - where my father worked as a lecturer to the Paratroop Regiment - were bombed in what was one of the first terrorist attacks in England. Only nine at the time, I had little understanding or appreciation of what had happened. Many other fatal attacks were made throughout the 1970s and 1980s, including audacious attacks on the House of Commons (when war hero and Conservative MP Airey Neave was killed) and, most memorably, on the Grand Hotel in Brighton during the Conservative party conference, when five people were killed and Margaret Thatcher herself narrowly avoided the explosion. It was a different era, of course, and the instruments of control and surveillance that exist now were in their infancy, but I have no recollection of changes in behaviour. Quite the opposite, in fact. Defiance, a refusal to make any concessions to the threat, to allow the threat of terrorism to interrupt day-to-day life, became a matter of pride. One of the more memorable quotes from JRR Tolkein's Lord of the Rings is "It's a dangerous business, Frodo, going out your [front] door." No doubt, but an accurate calibration of risk and return underpins more than just economic wellbeing.

Stubbornness, of course, is not necessarily a virtue, but in this case at least I think the UK had the right approach. To allow daily life to become interrupted by what remains an extremely low risk is, in some respects, a victory for terrorism, an acknowledgment of the irrational fear it provokes.

This is especially true in Uganda, where other high risk areas of daily life go ignored. The casual loss of life in Uganda from preventable accidents is staggering, far exceeding the threat from terrorism. In the last two weeks alone, there have been two cases of boats capsizing (on Lake Albert and Lake Victoria). The death toll from these entirely avoidable tragedies is similar to that of the terrorist attacks. In both boat accidents, for example, no life jackets or other flotation aids were on board. I wonder what action is being taken to reduce this risk in future.

Ugandan roads are even more deadly. There were more than 2,000 reported fatalities on Ugandan roads last year. Road accidents are too frequent to mention. The issuing of Ugandan drivers' licences is poorly regulated. Vehicles are not subject to annual roadworthiness tests. Buses are not fitted with seatbelts or speed regulators and hurtle through villages and towns at breakneck speed. Road surfaces are poor...... The list of causes is endless.

This morning, a traffic policeman, his overfed belly pushing at the seams of his spotlessly white uniform, waved me over and asked to see my driver’s licence. I duly produced it. He then walked slowly round my car and inspected my insurance certificate, before being interrupted by a personal call on his cellphone. After a short conversation, he wordlessly returned my licence to me and jerked his hand in what I took to be an invitation to drive on. During this pointless little charade, a large, overloaded truck shook, rattled and rolled its way past, its exhaust belching out black fumes, its tyres bald and its rear indicators and brake lights apparently not functioning.

Ugandan roads and waterways present a far greater risk to life and limb than terrorists, even after 7/11.