The business process outsourcing sector has lagged behind its targets 5 years down employing just 10,000 people despite having set projections of 20,000 people in the sector by 2014. According to ministry of information permanent secretary Dr. Bitange Ndemo this has been as a result of lack of affordable rental facilities, lack of buildings that meet international BPO standards as well as the delay in the drop of broadband prices.
The government had hoped that with the advent of the submarine cables in Kenya business process outsourcing would sprout employing at least 20,000 people by 2014 and contribute at least 45 billion shillings to the economy. 5 years down the line though these expectations have grown short with the industry facing serious hurdles in infrastructure development especially in buildings that meet international BPO standards and at an affordable rate.
Bandwidth prices have also remained high despite better ICT infrastructure on the ground and less reliance on satellite. This comes even as the government seeks to increase professionals in software development by launching the world’s first globally accepted software certification exam in conjunction with Carnegie Mellon University.
The exam is aimed at marketing local developers and giving access to employment globally with statistics showing demand for software developers will grow by 135% between 2011 and 2013. The ICT board says it hopes to certify between 500 and 1000 developers annually with the 1st exam expected to be in place by April 2013.
Tuesday, February 7, 2012
Friday, January 27, 2012
World Bank and Google join forces to empower mapping communities around the world
The World Bank in collaboration with Google have announced plans to roll out an initiative aimed at making data gathered from Google Map Maker more widely accessible as a means to enabling nations to better prepare for potential disaster. Countries in Africa including Kenya, Uganda and Southern Sudan are piloting this initiative in which the World Bank will make available data to organizations - from governments to NGOs - in a bid to improve knowledge of local regions for planning and monitoring purposes.
World Bank and Google join forces to empower mapping communities around the world
Last week, the World Bank and Google announced a collaborative agreement aimed at improving disaster preparedness and development efforts in countries around the world.
Under this agreement, the World Bank will act as a conduit to make Google Map Maker source data more widely and easily available to government organizations in the event of major disasters, and also for improved planning, management, and monitoring of public services provision.
The free, web-based mapping tool called Google Map Maker enables citizens to directly participate in the creation of maps by contributing their local knowledge. Once approved, those additions are then reflected on Google Maps and Google Earth for others around the world to see.
The Google Map Maker data includes detailed maps of more than 150 countries and regions, and identifies locations like schools, hospitals, roads, settlements and water points that are critical for relief workers to know about in times of crisis. The data will also be useful for planning purposes, as governments and their development partners can use the information to monitor public services, infrastructure and development projects; make them more transparent for NGOs, researchers, and individual citizens; and more effectively identify areas that might be in need of assistance before a disaster strikes.
World Bank partner organizations, which include government and United Nations agencies, will be able to contact World Bank offices for possible access to the Google Map Maker data for their various projects. World Bank country offices in Kenya, South Sudan, Tanzania, Sierra Leone, Ghana, Zambia, Nigeria, Democratic Republic of Congo, Moldova, Mozambique, Nepal, and Haiti plan to pilot the Map Maker agreement.
The World Bank Institute (WBI) and the Global Facility for Disaster Reduction and Recovery (GFDRR) will manage the World Bank’s involvement in the collaboration, building on previous joint mapping efforts. For example in April 2011, members of the Southern Sudanese Diaspora participated in a series of community mapping events organized by World Bank and Google to create comprehensive maps of schools, hospitals and other social infrastructure in this new country via Map Maker technology.
Google has enjoyed a strong relationship with World Bank for many years. As indicated by the World Bank Vice President for the Africa Region Obiageli Ezekwesili, “Today’s technology can empower civil society, including the diaspora, to collaborate and support the development process. This collaboration is about shifting the emphasis from organizations to people, and empowering them to solve their own problems and develop their own solutions using maps.”
World Bank and Google join forces to empower mapping communities around the world
Last week, the World Bank and Google announced a collaborative agreement aimed at improving disaster preparedness and development efforts in countries around the world.
Under this agreement, the World Bank will act as a conduit to make Google Map Maker source data more widely and easily available to government organizations in the event of major disasters, and also for improved planning, management, and monitoring of public services provision.
The free, web-based mapping tool called Google Map Maker enables citizens to directly participate in the creation of maps by contributing their local knowledge. Once approved, those additions are then reflected on Google Maps and Google Earth for others around the world to see.
The Google Map Maker data includes detailed maps of more than 150 countries and regions, and identifies locations like schools, hospitals, roads, settlements and water points that are critical for relief workers to know about in times of crisis. The data will also be useful for planning purposes, as governments and their development partners can use the information to monitor public services, infrastructure and development projects; make them more transparent for NGOs, researchers, and individual citizens; and more effectively identify areas that might be in need of assistance before a disaster strikes.
World Bank partner organizations, which include government and United Nations agencies, will be able to contact World Bank offices for possible access to the Google Map Maker data for their various projects. World Bank country offices in Kenya, South Sudan, Tanzania, Sierra Leone, Ghana, Zambia, Nigeria, Democratic Republic of Congo, Moldova, Mozambique, Nepal, and Haiti plan to pilot the Map Maker agreement.
The World Bank Institute (WBI) and the Global Facility for Disaster Reduction and Recovery (GFDRR) will manage the World Bank’s involvement in the collaboration, building on previous joint mapping efforts. For example in April 2011, members of the Southern Sudanese Diaspora participated in a series of community mapping events organized by World Bank and Google to create comprehensive maps of schools, hospitals and other social infrastructure in this new country via Map Maker technology.
Google has enjoyed a strong relationship with World Bank for many years. As indicated by the World Bank Vice President for the Africa Region Obiageli Ezekwesili, “Today’s technology can empower civil society, including the diaspora, to collaborate and support the development process. This collaboration is about shifting the emphasis from organizations to people, and empowering them to solve their own problems and develop their own solutions using maps.”
KTDC Unveils new brand
The ministry of tourism has said it will seek increased funding to the Kenya tourism development corporation as the government seeks to support investments in the sector. Speaking during the corporation’s unveiling of a new brand, assistant minister for tourism Cecille Mbarire said this is in line with the government’s plan to open up marginalized area as well as fostering sustainable livelihoods.
The 45 year old Kenya tourism development corporation has in the past been neglected resulting to decreased tourism investments in the country. In the past 5 years however the corporation is back on its feet with a stable balance sheet having reduced the non performing loan portfolio to just 4.8% in December 2011 compared to 89% in 2006. The corporation that rebranded just 6 months ago says it has managed to finance over 1,400 beds all over Kenya in the past year alone and embarked on multi-million shilling projects, namely a Convention Centre at Haller Park, Mombasa, and a Marina in Shimoni.
Managing director Mary Ann Ndegwa says the organizations net Operating profits have also increased by 300% after tax and provisions for bad debt, from 2008/2009 to the latest forecasts for the financial year 20011/2012. The corporation has also announced that 2012 will see the African investment hotel forum held in Nairobi a first in the sub Sahara region bringing together all the major hotel Brands in the world to Kenya. Currently the country is in need of up to 25000 beds to keep up with demand and up to 1 billion shillings needed to finance the sector.
The 45 year old Kenya tourism development corporation has in the past been neglected resulting to decreased tourism investments in the country. In the past 5 years however the corporation is back on its feet with a stable balance sheet having reduced the non performing loan portfolio to just 4.8% in December 2011 compared to 89% in 2006. The corporation that rebranded just 6 months ago says it has managed to finance over 1,400 beds all over Kenya in the past year alone and embarked on multi-million shilling projects, namely a Convention Centre at Haller Park, Mombasa, and a Marina in Shimoni.
Managing director Mary Ann Ndegwa says the organizations net Operating profits have also increased by 300% after tax and provisions for bad debt, from 2008/2009 to the latest forecasts for the financial year 20011/2012. The corporation has also announced that 2012 will see the African investment hotel forum held in Nairobi a first in the sub Sahara region bringing together all the major hotel Brands in the world to Kenya. Currently the country is in need of up to 25000 beds to keep up with demand and up to 1 billion shillings needed to finance the sector.
Tanzania Natural Gas strategy
By Al-amani Mutarubukwa,Businessweek
The government has started working on strategies to prepare Tanzania’s economy to accommodate huge investments in the natural gas sector in anticipation of major commercial discoveries in the next five years.
The imminent commercial discoveries, whose quantity is yet to be determined, will result into “multi-billion dollar foreign direct investments,” which would add significant revenue flows to the government coffers, as well as take a big part of the country’s export volumes, the facts that will, in pure technical terms, make Tanzania a “gas economy” said the minister of Finance and Economic Affairs Mustafa Mkulo in a letter he sent to the International Monetary Fund (IMF) last month.
Tanzania is expected to receive an FDI of around $7 billion from just one company, Ophir Energy and its partners British Gas. Other multinational companies like Petrobras and Statoil are in drilling programmes in 2012.
The country has proven natural gas deposits of about 7 trillion cubic feet. It is estimated that Tanzania will confirm around 60 trillion cubic feet of natural gas from the current 7 trillion cf.
About 3.5 trillion cubic feet of the reserves have already been commercialized with natural gas wells being drilled in Songo Songo and Mnazi Bay gas fields. Tanzania’s gas reserves border those of Mozambique in the Ruvuma basin where commercial natural gas reserves of about $800 billion have been discovered by Eni SpA and Anadarko Petroleum Corp. The reserves are 36 times more valuable than Mozambique’s economy.
“Discussions on how to position the country to best take advantage of the huge natural gas potential have been initiated,” Mr Mkulo added in his letter to managing director of IMF Christine Lagarde.
To prepare the economy for major gas investments the government is drafting a natural gas master plan as well as a gas and petroleum revenue management bill. The bill will cover the budget treatment of gas revenue.
Also the tax regime will be reviewed to ensure adequate cover for the gas sector. This will go hand in hand with development of staff expertise in the Tanzania Revenue Authority (TRA) on tax issues associated with the development and exploitation of gas.
Mr Mkulo further said in the letter that the ministry of Finance, the Planning Commission and TRA will prepare a report by the end of this year identifying what steps will need to be taken to prepare Tanzania’s macroeconomic management for the new gas economy. The institutions will also identify the nature of any corresponding technical assistance needs.
The government is also considering “possible launch of a future generations fund to save a portion of the resource wealth,” added Mr Mkulo.
The government is planning to carry a big project of constructing a gas pipeline from Mnazi Bay in Mtwara to Dar es Salaam to carry fuel for electricity generation purposes. The project would be funded by Exim Bank of China to the tune of $1.058 billion. It is expected to be operational by the end of 2012.
The project includes construction of gas processing plants at Mnazi Bay and at Songosongo, and the pipeline would be technically able to transport a maximum of 700 million standard cubic feet per day, which can generate up to 3,500 megawatts of power.
According to Mr Mkulo, the planned financing package involves a combination of a concessional loan (75 per cent of the total), a commercial loan (20 per cent), and a contribution by the government (5 per cent). “Given the scale of the project, the government will ensure that it has a high rate of economic return, and will share with the IMF the technical and economic evaluation of the project,” he said.
Exploration status
Preliminary exploration reports have also indicated the presence of oil in Mozambique. Similar results are expected in Tanzania soon.
Activities are increasing whereby this year about 23 wells will be drilled off Tanzania, Mozambique and Kenya almost double the number in 2011, according to research from Morgan Stanley.
The reports for huge gas deposits have drawn the interest of the world’s largest oil and gas exploration companies such as BP, Petrobras, Statoil, Exxon Mobil and Shell.
Experts say Tanzania will be a focus of drilling this year.
Shell teamed up with Petrobras last October to explore Tanzania’s coast. BP had been in talks on East Africa projects with Ophir.
Ophir and its partner BG Group Plc have so far found about 4 trillion cubic feet of gas in Tanzania.
Ophir, which is buying Dominion Petroleum Ltd, will be joined by Mubadala Oil & Gas of Abu Dhabi to explore Block 7 in Tanzania. The company plans to import LNG to meet the Persian Gulf nation’s growing demand for gas.
Statoil ASA, Norway’s largest oil company plans to drill a well this year at an exploration block in Tanzania in partnership with Exxon Mobil.
Analysts say the amount of investment in gas exploration and infrastructure will run into billions of dollars. Petrobas and Ophir Energy Plc alone are spending close to $2 million (Sh3.1 billion) per day in Tanzania.
Incentives
Tanzanian government last June abolished the Value Added Tax on petroleum products imported to be used as fuel by gas and oil exploration companies. Mozambique and Tanzania may eventually rival Qatar and Australia as the world’s biggest suppliers of liquefied natural gas (LNG).
The East African deposits found so far are large enough to justify construction of at least eight LNG production trains, according to estimates by the companies.
Today Qatar has 14 trains operating, while Australia has at least six trains producing and about $250 billion in projects under construction or planned. w Experts say, the gas industry development will be a catalyst to the predominantly agriculture economy by stimulating other sectors such as supply services and thus rendering a variety of employment to the youth.
However, they urge the government to be keen on the sector from the early begging to avoid future remorse over blunder contracts like those previously seen in the mining sector.
“It is high time we open up new areas for revenue sources. However, we would like to see the government taking charge as a large player just like South Africa and Norway, whose economies are thriving smoothly on their natural resources,” Dr Razack Lokina, a lecturer at University of Dar es Salaam said.
The Energy and Minerals Parliamentary Committee Chairman, January Makamba warned that even as the government was ambitious to transform the nation into a gas-driven economy, it was important to put legal framework and institutional capacity first in place.
“We need to develop technical schools and faculties in universities specifically to develop enough skilled personnel for the industry such as gas economists, petroleum engineers, auditors and so forth,” Mr Makamba said.
Mr Zitto Kabwe, the shadow minister for Finance and Economic Affairs said reforms should be done as early as practical to enable the country prepare well for the exploitation of the resource wealth from hydrocarbons.
“Tanzania must from the beginning institutionalise governance issues in the oil and gas by ensuring transparency in contracts as well as total commitment to Extractive Industry Transparency Initiative (EITI),” said Mr Kabwe who is also the MP for Kigoma north (Chadema).
He added that the EITI bill must be brought to Parliament to ensure transparency and accountability.
Gas exploration is governed by the Petroleum (Exploration and Production) Act 1980.
“I personally think this law needs to be updated. In fact, it doesn’t even mention gas – it talks generally about “hydrocarbons” but the substance of the law dwells on oil. As a result, gas sector in Tanzania is regulated by individual contracts – something that is not ideal,” Mr Makamba said.
According to Mr Makamba, who is also the MP for Bumbuli (CCM), the planned Gas Master Plan should be linked to the Power System Master Plan so as if gas is going to be key to power issues, gas planners have an idea about what power planners are thinking.
Currently, Tanzania use gas in industries and in power generation using the existing Songas pipeline, which is under pressure to meet increased gas demand.
The country also imports liquefied natural gas (LNG)/cooking gas for the retail market.
The government has started working on strategies to prepare Tanzania’s economy to accommodate huge investments in the natural gas sector in anticipation of major commercial discoveries in the next five years.
The imminent commercial discoveries, whose quantity is yet to be determined, will result into “multi-billion dollar foreign direct investments,” which would add significant revenue flows to the government coffers, as well as take a big part of the country’s export volumes, the facts that will, in pure technical terms, make Tanzania a “gas economy” said the minister of Finance and Economic Affairs Mustafa Mkulo in a letter he sent to the International Monetary Fund (IMF) last month.
Tanzania is expected to receive an FDI of around $7 billion from just one company, Ophir Energy and its partners British Gas. Other multinational companies like Petrobras and Statoil are in drilling programmes in 2012.
The country has proven natural gas deposits of about 7 trillion cubic feet. It is estimated that Tanzania will confirm around 60 trillion cubic feet of natural gas from the current 7 trillion cf.
About 3.5 trillion cubic feet of the reserves have already been commercialized with natural gas wells being drilled in Songo Songo and Mnazi Bay gas fields. Tanzania’s gas reserves border those of Mozambique in the Ruvuma basin where commercial natural gas reserves of about $800 billion have been discovered by Eni SpA and Anadarko Petroleum Corp. The reserves are 36 times more valuable than Mozambique’s economy.
“Discussions on how to position the country to best take advantage of the huge natural gas potential have been initiated,” Mr Mkulo added in his letter to managing director of IMF Christine Lagarde.
To prepare the economy for major gas investments the government is drafting a natural gas master plan as well as a gas and petroleum revenue management bill. The bill will cover the budget treatment of gas revenue.
Also the tax regime will be reviewed to ensure adequate cover for the gas sector. This will go hand in hand with development of staff expertise in the Tanzania Revenue Authority (TRA) on tax issues associated with the development and exploitation of gas.
Mr Mkulo further said in the letter that the ministry of Finance, the Planning Commission and TRA will prepare a report by the end of this year identifying what steps will need to be taken to prepare Tanzania’s macroeconomic management for the new gas economy. The institutions will also identify the nature of any corresponding technical assistance needs.
The government is also considering “possible launch of a future generations fund to save a portion of the resource wealth,” added Mr Mkulo.
The government is planning to carry a big project of constructing a gas pipeline from Mnazi Bay in Mtwara to Dar es Salaam to carry fuel for electricity generation purposes. The project would be funded by Exim Bank of China to the tune of $1.058 billion. It is expected to be operational by the end of 2012.
The project includes construction of gas processing plants at Mnazi Bay and at Songosongo, and the pipeline would be technically able to transport a maximum of 700 million standard cubic feet per day, which can generate up to 3,500 megawatts of power.
According to Mr Mkulo, the planned financing package involves a combination of a concessional loan (75 per cent of the total), a commercial loan (20 per cent), and a contribution by the government (5 per cent). “Given the scale of the project, the government will ensure that it has a high rate of economic return, and will share with the IMF the technical and economic evaluation of the project,” he said.
Exploration status
Preliminary exploration reports have also indicated the presence of oil in Mozambique. Similar results are expected in Tanzania soon.
Activities are increasing whereby this year about 23 wells will be drilled off Tanzania, Mozambique and Kenya almost double the number in 2011, according to research from Morgan Stanley.
The reports for huge gas deposits have drawn the interest of the world’s largest oil and gas exploration companies such as BP, Petrobras, Statoil, Exxon Mobil and Shell.
Experts say Tanzania will be a focus of drilling this year.
Shell teamed up with Petrobras last October to explore Tanzania’s coast. BP had been in talks on East Africa projects with Ophir.
Ophir and its partner BG Group Plc have so far found about 4 trillion cubic feet of gas in Tanzania.
Ophir, which is buying Dominion Petroleum Ltd, will be joined by Mubadala Oil & Gas of Abu Dhabi to explore Block 7 in Tanzania. The company plans to import LNG to meet the Persian Gulf nation’s growing demand for gas.
Statoil ASA, Norway’s largest oil company plans to drill a well this year at an exploration block in Tanzania in partnership with Exxon Mobil.
Analysts say the amount of investment in gas exploration and infrastructure will run into billions of dollars. Petrobas and Ophir Energy Plc alone are spending close to $2 million (Sh3.1 billion) per day in Tanzania.
Incentives
Tanzanian government last June abolished the Value Added Tax on petroleum products imported to be used as fuel by gas and oil exploration companies. Mozambique and Tanzania may eventually rival Qatar and Australia as the world’s biggest suppliers of liquefied natural gas (LNG).
The East African deposits found so far are large enough to justify construction of at least eight LNG production trains, according to estimates by the companies.
Today Qatar has 14 trains operating, while Australia has at least six trains producing and about $250 billion in projects under construction or planned. w Experts say, the gas industry development will be a catalyst to the predominantly agriculture economy by stimulating other sectors such as supply services and thus rendering a variety of employment to the youth.
However, they urge the government to be keen on the sector from the early begging to avoid future remorse over blunder contracts like those previously seen in the mining sector.
“It is high time we open up new areas for revenue sources. However, we would like to see the government taking charge as a large player just like South Africa and Norway, whose economies are thriving smoothly on their natural resources,” Dr Razack Lokina, a lecturer at University of Dar es Salaam said.
The Energy and Minerals Parliamentary Committee Chairman, January Makamba warned that even as the government was ambitious to transform the nation into a gas-driven economy, it was important to put legal framework and institutional capacity first in place.
“We need to develop technical schools and faculties in universities specifically to develop enough skilled personnel for the industry such as gas economists, petroleum engineers, auditors and so forth,” Mr Makamba said.
Mr Zitto Kabwe, the shadow minister for Finance and Economic Affairs said reforms should be done as early as practical to enable the country prepare well for the exploitation of the resource wealth from hydrocarbons.
“Tanzania must from the beginning institutionalise governance issues in the oil and gas by ensuring transparency in contracts as well as total commitment to Extractive Industry Transparency Initiative (EITI),” said Mr Kabwe who is also the MP for Kigoma north (Chadema).
He added that the EITI bill must be brought to Parliament to ensure transparency and accountability.
Gas exploration is governed by the Petroleum (Exploration and Production) Act 1980.
“I personally think this law needs to be updated. In fact, it doesn’t even mention gas – it talks generally about “hydrocarbons” but the substance of the law dwells on oil. As a result, gas sector in Tanzania is regulated by individual contracts – something that is not ideal,” Mr Makamba said.
According to Mr Makamba, who is also the MP for Bumbuli (CCM), the planned Gas Master Plan should be linked to the Power System Master Plan so as if gas is going to be key to power issues, gas planners have an idea about what power planners are thinking.
Currently, Tanzania use gas in industries and in power generation using the existing Songas pipeline, which is under pressure to meet increased gas demand.
The country also imports liquefied natural gas (LNG)/cooking gas for the retail market.
Uganda struggles to satisfy its energy demand
By Nelson Wesonga, the Monitor UG.
The power sector is facing arguably its sharpest criticism since the government liberalised the industry in 1999. Manufacturers and the private sector, though agreeable to the need for more power, have expressed displeasure over the recent increase of electricity tariffs by between 36 and 69 per cent due to the partial withdrawal of power subsidies.
The increase was announced at a time when the country was grappling with rising demand for power, which outstrips generation by 5.3 per cent annually.
According to the Electricity Regulatory Authority, only 350MW is supplied yet demand peaks at 445MW. Ms Nokwanda Mngeni, the chief executive officer of Eskom Uganda partly attributes the inadequate generation to the limitation on the amount of water that Eskom is allowed to release in the process of generating power.
She says much as Eskom, Uganda’s largest generator of electricity, has the capacity to generate 380MW, the amount of water it is allowed to release is not enough to run the turbines.
According to Mr Mugisha Shilingi, the director of Water Resources Management, Eskom is allowed to release 800 cubic metres of water per second because that is the sustainable amount.
As a result of limited supply, power consumer have to endure 12 hours of load shedding daily, something that affects industrial productivity and compels some businesses to run on diesel generators.
The government had envisaged that within 10 years power generation would have increased from less than 100MW to about 400MW.
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Boosting industrialisation
And, with more generation, industrialisation would be boosted and also allow electricity consumers to pay lower tariffs.
But, eleven years later, the prevailing situation has raised calls for the repossession of the generation and distribution functions of former Uganda Electricity Board assets from private players.
In November last year, city traders took to the streets to protest against load shedding, which they said had increased the cost of doing business since they had to buy expensive diesel to power generators.
There are also allegations that power distributor, Umeme, despite denials, has not invested in transformers, distribution cables, poles, and prepaid metres that would have helped to reduce commercial losses to less than 30 per cent.
Work on the 600MW Karuma Hydropower Project is expected to begin in June and should be completed in five years –at a cost of about $2.2 billion. However, independent experts say the dam cannot be completed in fewer than 10 years, which means that unless other sources of power are tapped in the short term, Ugandans will still face the same power crisis they are presently facing.
“The country will need to refocus on hydropower, geothermal and biomass generation as well as gas,” says Mr Aston Kajara, the state minister for Privatisation.
“We proposed the increment because we would not want the government to directly subsidise power consumers, Mr John Julius Wandera, the public relations officer of ERA told Saturday Monitor recently.
The government, which was previously against increases of power tariffs because they result in civil strife and disruptions to the economy, believes this is the only sustainable way to go about the matter.
Mr Wandera says the government usually delays to remit money for the subsidies, which prompts generation to switch off their generators due to accumulated areas.
With other projects like the 600MW Karuma Project yet to take off, and with oil extraction not expected until the end of 2012, power consumers should not expect any respite from load shedding and high tariffs.
Renationalising the sector
According to Mr Caleb Akandwanaho (Salim Saleh) the government should repossess the assets of the former Uganda Electricity Board (UEB), and should also invest in a 200MW heavy fuel oil (HFO) generator to eliminate private firms which only target to make profits.
However, oil extraction that is expected to begin at the later part of this year is likely to bring respite as the president recently promised Ugandans that at least one well will be dedicated to producing power.
Mr Akandwanaho chaired the Interim Review of Electricity Tariff Committee whose recommendations have not been implemented two years since it released the Report on Electricity Tariff Reduction, September 2009.
The power sector is facing arguably its sharpest criticism since the government liberalised the industry in 1999. Manufacturers and the private sector, though agreeable to the need for more power, have expressed displeasure over the recent increase of electricity tariffs by between 36 and 69 per cent due to the partial withdrawal of power subsidies.
The increase was announced at a time when the country was grappling with rising demand for power, which outstrips generation by 5.3 per cent annually.
According to the Electricity Regulatory Authority, only 350MW is supplied yet demand peaks at 445MW. Ms Nokwanda Mngeni, the chief executive officer of Eskom Uganda partly attributes the inadequate generation to the limitation on the amount of water that Eskom is allowed to release in the process of generating power.
She says much as Eskom, Uganda’s largest generator of electricity, has the capacity to generate 380MW, the amount of water it is allowed to release is not enough to run the turbines.
According to Mr Mugisha Shilingi, the director of Water Resources Management, Eskom is allowed to release 800 cubic metres of water per second because that is the sustainable amount.
As a result of limited supply, power consumer have to endure 12 hours of load shedding daily, something that affects industrial productivity and compels some businesses to run on diesel generators.
The government had envisaged that within 10 years power generation would have increased from less than 100MW to about 400MW.
Share This Story
Share
Boosting industrialisation
And, with more generation, industrialisation would be boosted and also allow electricity consumers to pay lower tariffs.
But, eleven years later, the prevailing situation has raised calls for the repossession of the generation and distribution functions of former Uganda Electricity Board assets from private players.
In November last year, city traders took to the streets to protest against load shedding, which they said had increased the cost of doing business since they had to buy expensive diesel to power generators.
There are also allegations that power distributor, Umeme, despite denials, has not invested in transformers, distribution cables, poles, and prepaid metres that would have helped to reduce commercial losses to less than 30 per cent.
Work on the 600MW Karuma Hydropower Project is expected to begin in June and should be completed in five years –at a cost of about $2.2 billion. However, independent experts say the dam cannot be completed in fewer than 10 years, which means that unless other sources of power are tapped in the short term, Ugandans will still face the same power crisis they are presently facing.
“The country will need to refocus on hydropower, geothermal and biomass generation as well as gas,” says Mr Aston Kajara, the state minister for Privatisation.
“We proposed the increment because we would not want the government to directly subsidise power consumers, Mr John Julius Wandera, the public relations officer of ERA told Saturday Monitor recently.
The government, which was previously against increases of power tariffs because they result in civil strife and disruptions to the economy, believes this is the only sustainable way to go about the matter.
Mr Wandera says the government usually delays to remit money for the subsidies, which prompts generation to switch off their generators due to accumulated areas.
With other projects like the 600MW Karuma Project yet to take off, and with oil extraction not expected until the end of 2012, power consumers should not expect any respite from load shedding and high tariffs.
Renationalising the sector
According to Mr Caleb Akandwanaho (Salim Saleh) the government should repossess the assets of the former Uganda Electricity Board (UEB), and should also invest in a 200MW heavy fuel oil (HFO) generator to eliminate private firms which only target to make profits.
However, oil extraction that is expected to begin at the later part of this year is likely to bring respite as the president recently promised Ugandans that at least one well will be dedicated to producing power.
Mr Akandwanaho chaired the Interim Review of Electricity Tariff Committee whose recommendations have not been implemented two years since it released the Report on Electricity Tariff Reduction, September 2009.
Wednesday, January 25, 2012
TOURISM SECTOR PLAYERS CALL FOR A MARCH 2012 ELECTION
Players have called for a speedy decision on the election date as the ambiguity could hurt the tourism industry. Restaurant and food cafes chairman Deniz Elsek however says a March 2013 election would be beneficial to the sector as the traditional December which falls in the high season has kept back tourist who fear the outcome of the elections. Just yesterday economic analyst called for a clear election date to help businesses plan. This is as it still remains unclear as to when the country will hold the next general elections with August 2012, December 2012 and March 2013 all available dates. However for the tourism sector August and December fall in the peak season and any election held in this dates have led to a significant reduction in tourist inflows. Thus the suggestion by players in the sector to have elections set for March. Currently hotels especially at the coast are enjoying high numbers and are hoping that the general election will not break the momentum. At the same time tour operators have called on the Kenya wildlife its efforts in ensuring that domestic animals are kept out of parks. Citing Tsavo east national park the stakeholders say the influx of cattle to national parks has elicited complaints from tourist and they fear that this might result to a bad image of the park. In the meantime, a group of 20 tourists from Germany on holiday in the country have taken to planting trees to conserve the environment inside the Tsavo East National Park. Led by Silke Mathias the group says they have decided to plant 400 indigenous tree seedlings within the confines of the lodge.
WB projects global slowdown, with developing countries impacted
The world economy has entered a dangerous period. Some of the financial turmoil in Europe has spread to developing and other high-income countries, which until earlier had been unaffected. This contagion has pushed up borrowing costs in many parts of the world, and pushed down stock markets, while capital flows to developing countries have fallen sharply. Europe appears to have entered recession. At the same
time, growth in several major developing countries (Brazil, India and, to a lesser extent, Russia, South Africa and Turkey) is significantly slower than it was earlier in the recovery, mainly reflecting policy tightening initiated in late 2010 and early 2011 in order to combat rising inflationary pressures. As a result, and despite a strengthening of activity in the United States and Japan, global growth and world trade have slowed sharply.
In this context, prospects are very uncertain…
Indeed, the world finds itself, in January 2012, living a version of the downside scenarios discussed as a risk just 6 months ago when the June edition of Global Economic Prospects (GEP) was released. As a result, forecasts have been significantly downgraded in this edition of GEP.
The global economy is now expected to expand 2.5 and 3.1 percent in 2012 and 2013 (3.4 and 4 percent when calculated using purchasing power parity weights), versus the 3.6 percent projected in June for both years. High-income country growth is now expected to come in at 1.4 percent in 2012 (-0.3 percent for Euro Area countries, and 2.1 percent for the remainder) and 2 percent in 2013, versus a June forecast of 2.7 and 2.6 percent for 2012 and 2013 respectively.
Developing country growth has been revised down to 5.4 and 6 percent versus 6.2 and 6.3 percent in June. Reflecting the growth slowdown, world trade, which expanded by an estimated 6.6 percent in 2011, will grow only 4.7 percent in 2012, before strengthening to 6.8 percent in 2013.
However, even achieving these much weaker outturns is very uncertain. The downturn in Europe and the slow growth in developing countries could reinforce one another more than is anticipated in the baseline scenario, resulting in even weaker outturns and further complicating efforts to restore market confidence. Meanwhile, the medium-term challenge represented by high debts and slow trend growth in other high-
income countries has not been resolved and could trigger sudden adverse shocks. Additional risks to the
outlook include the possibility that political tensions in the Middle East and North Africa disrupt oil
supply, and the possibility of a hard landing in one or more important middle-income countries.
While the situation in high-income Europe is contained for the moment, if the crisis expands and markets deny financing to several additional European economies, outturns could be much worse, with global GDP more than 4 percent lower than in the baseline. Although such a crisis, should it occur, would be centered in Europe, developing countries would feel its effects deeply, with developing country GDP
declining by 4.2 percent by 2013.
In the event of a major crisis, the downturn may well be longer than in 2008/09 because high-income countries do not have the fiscal or monetary resources to bail out the banking system or stimulate demand to the same extent as in 2008/09. Although developing countries have some maneuverability on the monetary side, they could be forced to pro-cyclically cut spending – especially if financing for fiscal
deficits dries up.
Global Economic Prospects: Uncertainties and vulnerabilities
January 2012
Contagion spreads to developing countries…
The heightened market volatility since August 2011 has differed qualitatively from earlier ones because this time the credit default swaps (CDS) spreads have increased by an average of 117 basis points (bps) between the end of July 2011 and early January 2012, as did those of almost all Euro Area countries, including France and Germany, and those of non-Euro Area countries, such as the United Kingdom.
For developing countries, the contagion has been broadly based. In addition to higher bond spreads and CDS rates, developing-country stock markets have lost 8.5 percent of their value since July-end. This, combined with the 4.2 percent drop in high-income stock-market valuations, has translated into $6.5 trillion, or 9.5 percent of global GDP, in wealth losses.
Perhaps more importantly, capital flows to developing countries have weakened sharply as investors withdrew substantial sums from developing-country markets in the second half of the year. Overall, gross capital flows to developing countries plunged to $170 billion in the second half of 2011, only 55 percent of the $309 billion received during the like period of 2010. Equity issuance plummeted 80 percent to $25 billion with exceptionally weak flows to China and Brazil accounting for much of the decline. Bond issuance almost halved to $55 billion, due to a large fall-off in East Asia and emerging Europe. The decline in syndicated bank loans was much less marked, largely because such activity remained very depressed following the 2008/09 crisis.
The real-side effects of the post-August turmoil are somewhat difficult to discern, in part because the slowing of industrial production growth in several large middle-income countries preceded the resurgence of financial tensions in August. Indeed, activity in Europe and Central Asia, the United States and Japan has accelerated since August. Trade data, on the other hand, suggests a clearer impact from the post-
August turmoil and weakness in Europe. Global trade volumes declined at annnualized pace of 8 percent during the three months ending October 2011, mainly reflecting a 17 percent annualized decline in European imports. Developing-country exports declined at a 1.3 percent annualized pace in the third quarter of 2011 and have continued to decline through November, with the sharpest contractions in South
Asia (following very rapid export growth in the first half of the year). Exports from East Asia have also been falling at double-digit annualized rates, in part because of disruptions to supply chains caused by the flooding in Thailand.
Developing countries are more vulnerable than in 2008…
Whatever the actual outcomes for the world economy in 2012 and 2013, several factors are clear. First, growth in high-income countries is going to be weak as they struggle to repair damaged financial sectors and badly stretched fiscal balance sheets. Developing countries will have to search increasingly for growth within the developing world, a transition that has already begun but is likely to bring with it
challenges of its own.
One of the most positive elements of the recession of 2008/09 was the speed with which developing countries (other than those in Central and Eastern Europe) exited the crisis. By 2010, 53 percent of developing countries had regained levels of activity close to, or even above, estimates of their potential output. This time, developing countries look to be more vulnerable if there is a sharp deterioration in
global conditions.
Even though fiscal conditions are still generally better in developing countries than in high-income countries, government balances have deteriorated by two or more percent of GDP in almost 44 percent of developing countries and some 27 developing countries have government deficits of 5 or more percent of
Global Economic Prospects: Uncertainties and vulnerabilities
January 2012
GDP in 2012. As a result, developing countries have much less fiscal space available to respond to a new
crisis.
Should conditions in high-income countries deteriorate and a second global crisis materializes, developing countries will find themselves operating with much less abundant capital, less vibrant trade
opportunities and weaker financial support for both private and public activity. Under these conditions, prospects and growth rates that seemed relatively easy to achieve during the first decade of this millennium may become much more difficult to attain in the second, and vulnerabilities that remained hidden during the boom period may become visible and require policy action.
In this highly uncertain environment, developing countries should evaluate their vulnerabilities and prepare contingencies to deal with a downturn.
If global financial markets freeze up, governments and firms may be unable to finance growing deficits. Countries should engage in contingency planning, prioritizing social safety nets and infrastructure spending to assure longer-term growth. Problems are likely to be particularly acute for developing countries with external financing needs that exceed 5 percent of GDP. Where possible, they should pre-finance to avoid abrupt cuts in government and private-sector spending.
A renewed financial crisis could accelerate the ongoing financial-sector deleveraging process.
Several countries in Eastern Europe and Central Asia, reliant on high-income European banks, are particularly vulnerable to a sharp reduction in wholesale funding and domestic bank activity. Deleveraging of banks in high-income countries could result in a forced sell-off of foreign subsidiaries, and affect valuations of foreign and domestically-owned banks in countries with large foreign presences. And slower growth and deteriorating asset prices could rapidly increase non- performing loans throughout the developing world. To prevent domestic banking crises, countries
should engage in stress testing of their domestic banking sectors.
A severe crisis in high-income countries could put pressure on the balance of payments and government accounts of countries heavily reliant on commodity exports and remittance inflows. A severe crisis could cause remittances to developing countries to decline by 6 or more percent, with particularly acute impacts among the 24 countries where remittances represent 10 or more percent of GDP. Oil and metal exporting countries would also be affected in a major crisis. The fiscal balances
of major oil and metal exporters could deteriorate by 4 or more percent of GDP. Although lower food prices would reduce incomes of producers (partially offset by lower oil and fertilizer prices), it would benefit consumers.
time, growth in several major developing countries (Brazil, India and, to a lesser extent, Russia, South Africa and Turkey) is significantly slower than it was earlier in the recovery, mainly reflecting policy tightening initiated in late 2010 and early 2011 in order to combat rising inflationary pressures. As a result, and despite a strengthening of activity in the United States and Japan, global growth and world trade have slowed sharply.
In this context, prospects are very uncertain…
Indeed, the world finds itself, in January 2012, living a version of the downside scenarios discussed as a risk just 6 months ago when the June edition of Global Economic Prospects (GEP) was released. As a result, forecasts have been significantly downgraded in this edition of GEP.
The global economy is now expected to expand 2.5 and 3.1 percent in 2012 and 2013 (3.4 and 4 percent when calculated using purchasing power parity weights), versus the 3.6 percent projected in June for both years. High-income country growth is now expected to come in at 1.4 percent in 2012 (-0.3 percent for Euro Area countries, and 2.1 percent for the remainder) and 2 percent in 2013, versus a June forecast of 2.7 and 2.6 percent for 2012 and 2013 respectively.
Developing country growth has been revised down to 5.4 and 6 percent versus 6.2 and 6.3 percent in June. Reflecting the growth slowdown, world trade, which expanded by an estimated 6.6 percent in 2011, will grow only 4.7 percent in 2012, before strengthening to 6.8 percent in 2013.
However, even achieving these much weaker outturns is very uncertain. The downturn in Europe and the slow growth in developing countries could reinforce one another more than is anticipated in the baseline scenario, resulting in even weaker outturns and further complicating efforts to restore market confidence. Meanwhile, the medium-term challenge represented by high debts and slow trend growth in other high-
income countries has not been resolved and could trigger sudden adverse shocks. Additional risks to the
outlook include the possibility that political tensions in the Middle East and North Africa disrupt oil
supply, and the possibility of a hard landing in one or more important middle-income countries.
While the situation in high-income Europe is contained for the moment, if the crisis expands and markets deny financing to several additional European economies, outturns could be much worse, with global GDP more than 4 percent lower than in the baseline. Although such a crisis, should it occur, would be centered in Europe, developing countries would feel its effects deeply, with developing country GDP
declining by 4.2 percent by 2013.
In the event of a major crisis, the downturn may well be longer than in 2008/09 because high-income countries do not have the fiscal or monetary resources to bail out the banking system or stimulate demand to the same extent as in 2008/09. Although developing countries have some maneuverability on the monetary side, they could be forced to pro-cyclically cut spending – especially if financing for fiscal
deficits dries up.
Global Economic Prospects: Uncertainties and vulnerabilities
January 2012
Contagion spreads to developing countries…
The heightened market volatility since August 2011 has differed qualitatively from earlier ones because this time the credit default swaps (CDS) spreads have increased by an average of 117 basis points (bps) between the end of July 2011 and early January 2012, as did those of almost all Euro Area countries, including France and Germany, and those of non-Euro Area countries, such as the United Kingdom.
For developing countries, the contagion has been broadly based. In addition to higher bond spreads and CDS rates, developing-country stock markets have lost 8.5 percent of their value since July-end. This, combined with the 4.2 percent drop in high-income stock-market valuations, has translated into $6.5 trillion, or 9.5 percent of global GDP, in wealth losses.
Perhaps more importantly, capital flows to developing countries have weakened sharply as investors withdrew substantial sums from developing-country markets in the second half of the year. Overall, gross capital flows to developing countries plunged to $170 billion in the second half of 2011, only 55 percent of the $309 billion received during the like period of 2010. Equity issuance plummeted 80 percent to $25 billion with exceptionally weak flows to China and Brazil accounting for much of the decline. Bond issuance almost halved to $55 billion, due to a large fall-off in East Asia and emerging Europe. The decline in syndicated bank loans was much less marked, largely because such activity remained very depressed following the 2008/09 crisis.
The real-side effects of the post-August turmoil are somewhat difficult to discern, in part because the slowing of industrial production growth in several large middle-income countries preceded the resurgence of financial tensions in August. Indeed, activity in Europe and Central Asia, the United States and Japan has accelerated since August. Trade data, on the other hand, suggests a clearer impact from the post-
August turmoil and weakness in Europe. Global trade volumes declined at annnualized pace of 8 percent during the three months ending October 2011, mainly reflecting a 17 percent annualized decline in European imports. Developing-country exports declined at a 1.3 percent annualized pace in the third quarter of 2011 and have continued to decline through November, with the sharpest contractions in South
Asia (following very rapid export growth in the first half of the year). Exports from East Asia have also been falling at double-digit annualized rates, in part because of disruptions to supply chains caused by the flooding in Thailand.
Developing countries are more vulnerable than in 2008…
Whatever the actual outcomes for the world economy in 2012 and 2013, several factors are clear. First, growth in high-income countries is going to be weak as they struggle to repair damaged financial sectors and badly stretched fiscal balance sheets. Developing countries will have to search increasingly for growth within the developing world, a transition that has already begun but is likely to bring with it
challenges of its own.
One of the most positive elements of the recession of 2008/09 was the speed with which developing countries (other than those in Central and Eastern Europe) exited the crisis. By 2010, 53 percent of developing countries had regained levels of activity close to, or even above, estimates of their potential output. This time, developing countries look to be more vulnerable if there is a sharp deterioration in
global conditions.
Even though fiscal conditions are still generally better in developing countries than in high-income countries, government balances have deteriorated by two or more percent of GDP in almost 44 percent of developing countries and some 27 developing countries have government deficits of 5 or more percent of
Global Economic Prospects: Uncertainties and vulnerabilities
January 2012
GDP in 2012. As a result, developing countries have much less fiscal space available to respond to a new
crisis.
Should conditions in high-income countries deteriorate and a second global crisis materializes, developing countries will find themselves operating with much less abundant capital, less vibrant trade
opportunities and weaker financial support for both private and public activity. Under these conditions, prospects and growth rates that seemed relatively easy to achieve during the first decade of this millennium may become much more difficult to attain in the second, and vulnerabilities that remained hidden during the boom period may become visible and require policy action.
In this highly uncertain environment, developing countries should evaluate their vulnerabilities and prepare contingencies to deal with a downturn.
If global financial markets freeze up, governments and firms may be unable to finance growing deficits. Countries should engage in contingency planning, prioritizing social safety nets and infrastructure spending to assure longer-term growth. Problems are likely to be particularly acute for developing countries with external financing needs that exceed 5 percent of GDP. Where possible, they should pre-finance to avoid abrupt cuts in government and private-sector spending.
A renewed financial crisis could accelerate the ongoing financial-sector deleveraging process.
Several countries in Eastern Europe and Central Asia, reliant on high-income European banks, are particularly vulnerable to a sharp reduction in wholesale funding and domestic bank activity. Deleveraging of banks in high-income countries could result in a forced sell-off of foreign subsidiaries, and affect valuations of foreign and domestically-owned banks in countries with large foreign presences. And slower growth and deteriorating asset prices could rapidly increase non- performing loans throughout the developing world. To prevent domestic banking crises, countries
should engage in stress testing of their domestic banking sectors.
A severe crisis in high-income countries could put pressure on the balance of payments and government accounts of countries heavily reliant on commodity exports and remittance inflows. A severe crisis could cause remittances to developing countries to decline by 6 or more percent, with particularly acute impacts among the 24 countries where remittances represent 10 or more percent of GDP. Oil and metal exporting countries would also be affected in a major crisis. The fiscal balances
of major oil and metal exporters could deteriorate by 4 or more percent of GDP. Although lower food prices would reduce incomes of producers (partially offset by lower oil and fertilizer prices), it would benefit consumers.
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