- The Washington Times - Thursday, May 23, 2002

KAMPALA, Uganda Early every morning and every evening at dusk, thousands of Ugandan children pick up the family jerry can and lug it to the nearest well for water.

The bright yellow and green plastic containers hold about 5 gallons and weigh about 20 pounds, full. And almost all were made by James Mulwana's Nice House of Plastics.

"Outside Kampala, this is basically the water system for the country," said Mr. Mulwana. "The opportunity is here. I got my investment in manufacturing jerry cans back in one year."

An entrepreneur in Uganda through the bloodiest years, when Idi Amin and Milton Obote were directing the slaughter of Ugandans who opposed their dictatorships, Mr. Mulwana today proclaims his country open for business.

"I've seen quite a few foreigners come here and become millionaires. You could take a $100,000 retirement check and double it here in one year," said Mr. Mulwana, who also owns a battery business, makes ballpoint pens and dabbles in dairy farming. "The risk is there, but the return is quite high."

Toby Maddison, who came to Uganda a few years ago after retiring from the British army and now grows Sweetheart roses for daily export to Amsterdam, agreed.

"Uganda is stable," said Mr. Maddison, who lives outside Kampala with his wife and two children. "The president has done a pretty good job. It may not be a democracy in the Western sense, but it is a government that has behaved reasonably well."

He said he is hosting a group of farmers from Zimbabwe where the government is confiscating white-owned farms in late May. Mr. Maddison said they are coming to look over farming opportunities in Uganda. He predicted that Uganda would continue to improve at least until the next election, and most likely beyond.

"I may be more hopeful than wise. You can't say [civil unrest] will not happen here again. This is Africa. But Uganda is stable now. It is safe. The risks are greater, but I am looking at a return at a higher rate than I could possibly find in another developing economy," he said.

In early May, as Ugandan President Yoweri Museveni made the rounds in Washington, summarizing the case for Uganda, meeting President Bush and speaking at think tanks and business associations, the World Bank was hosting a group of U.S. reporters on the same theme.

"Uganda is one of the success stories in Africa in terms of economic growth," said Robert Blake, the World Bank's country program manager in Kampala. "It is a government that is comfortable with and encourages the private sector."

The chorus is almost unanimous international aid works, and Uganda is proof. It is what was being reported as U.S. Treasury Secretary Paul H. O'Neill and U-2 rock star Bono began a 10-day tour of Africa, including Uganda, this week. Many expect the theme to be trumpeted again when the Group of Eight nations gather in Kananaskis, Canada, to discuss the New Partnership for African Development on June 26 and June 27.

"The president has really controlled this economy very well, and now people are beginning to invest here," said Viren Thakker, director of Southern Range Nyanza, an Indian-owned textile factory in Jinja that recently approved a multimillion-dollar expansion.

"There is political stability. There is opportunity. Come here and invest with no problems," he said, surveying rows of Ugandan girls bent over sewing machines as they made uniforms for the Ugandan army.

But all is not well in "the Pearl of Africa."

The March 2001 election, in which Mr. Museveni won a second five-year term as president with 69 percent of the vote, was violent and widely seen as unfair. Most observers concluded that Mr. Museveni would have won anyway, defeating his former ally Kizza Besigye, now in exile, without the thuggery.

According to the Ugandan constitution, Mr. Museveni cannot run for a third term and must step down in 2006. But based on his aggressive campaign rhetoric and, at times, the violent intimidation of his political opposition, there is a growing fear that he has decided to go the traditional way of the dictatorial "big man."

"We are concerned," said an American expatriate who has lived in Uganda for almost 17 years. The expatriate spoke on the condition of anonymity, as did virtually every aid worker or businessman in Uganda when the topic shifted to Mr. Museveni, democracy and Ugandan politics.

A missionary said Mr. Museveni had recently changed. "In the election he began saying things like, 'I am the only one who can run the country. I am the only one who can control the army.' He is sounding more like [the late Congo/Zaire dictator Joseph] Mobutu. He has been good for Uganda, and we hope he will step down, but this is Africa and constitutions can be changed," the Protestant missionary said.

The State Department's most recent report card on human rights in Uganda, issued in March, raises some disturbing questions. It details arrests, harassment and physical intimidation of Mr. Museveni's political opposition. Several Besigye supporters were killed during the election campaign and others are being accused of treason.

Kampala residents talk freely about the "safe houses" that are scattered around Kampala where police can take those arrested for beatings and torture.

Safety and stability

"Uganda is a success. There is economic liberalization and reform," a State Department official said on the condition of anonymity. "We have concerns with regard to political liberalization and governance, but we tend to see the potential. We remain bullish."

James Smither, London-based Africa analyst for Control Risks Group, called Uganda a "generally welcoming business environment." He cited corruption as a serious business and development impediment and said Uganda's "donor dependent" government spent far too much effort trying to secure new aid, rather than solving the country's problems.

But he said the Museveni government is stable and Uganda is generally safe for Western families, with little of the street crime, rapes or carjackings rampant in South Africa, Kenya and Nigeria.

Mr. Smither said Uganda's domestic political squabbles do not pose an immediate problem for foreign investors. "You have to be diligent because of corruption, but there are a lot worse places to be in Africa," he concluded.

The Heritage Foundation, in its annual report on economic freedom around the world, lists Uganda as "mostly unfree" in its 2002 survey.

Uganda won its independence from Britain in 1962. Seriously fractured along tribal (north vs. south) and religious (Anglican vs. Catholic) lines, the country spent the next 25 years ruled by either Milton Obote or Idi Amin, who slaughtered hundreds of thousands of their countrymen in their brutal efforts to stay in power.

In 1982, Mr. Museveni formed the National Resistance Movement and "went to the bush" in revolt. Leading an army that included many orphans created by the Obote and Amin dictatorships, he triumphed in 1986. And instead of a new cycle of killing and retribution against his opponents, Mr. Museveni appointed a broad-based government and set about rebuilding the country.

Bumpy road to progress

In the 16 years since he came to power, Uganda has been transformed and is often held up as model for the rest of Africa. When Mr. Museveni took over, he took over a state heavily damaged by the years of civil strife. Uganda's gross domestic product (GDP) was 73 percent of what it was at independence. But it has doubled in past 12 years, averaging 6 percent real growth annually. It has negative inflation, with food prices about 25 percent less than last year's.

The government claims Uganda's debt, at about $4 billion, is under control, but an April report from the World Bank and the International Monetary Fund expressed concern. The Ugandan shilling's exchange rate is stable. Poverty defined for Uganda as less than $330 a year has dropped from 56 percent in 1992 to about 35 percent in 2000.

Economic reforms that encourage foreign investment are in place. The government's utilities are being privatized. In 1997, Mr. Museveni used funds freed up by debt relief to introduce "universal primary education."

The schools are crowded, extremely poor and the education rudimentary, but enrollment of barefoot children who sit three-to-a-desk through the seventh grade has more than doubled from 2.9 million to 6.6 million today. Uganda boasts a 67 percent literacy rate.

Ten percent of the population has HIV/AIDS, but Mr. Museveni has won international acclaim for being in the forefront of African leaders who have worked diligently and successfully to curb its spread.

Mr. Museveni's army is fighting a protracted guerilla war in the north of the country against the Lord's Resistance Army (LRS), a group listed by the State Department as a terrorist organization that kidnaps children and forces them to fight.

While the LRS has been accused of gruesome tactics, such as forcing opposition villagers to cook and eat their relatives before being killed themselves, the Ugandan army also has been accused of violating human rights in its zeal to defeat the LRS. More than 500,000 Ugandans have been displaced in the ongoing war.

And there remain serious infrastructure problems.

Uganda is landlocked, and roads that might be used for export are either nonexistent or so bad they may as well not exist. So an agriculture-based export economy the only way Uganda can grow in this astonishingly fertile country is hampered because exports must be flown out or spend weeks being trucked to the nearest port in Mombassa, Kenya. This seriously undermines Uganda's ability to take advantage of U.S. trade preferences offered to Kampala under the African Growth Opportunity Act, which expire in a five years.

Less than 5 percent of the country has electricity, and rolling blackouts have only recently stopped in Kampala. A new hydroelectric dam is scheduled to be built, but environmentalists are holding up construction because it will destroy extraordinary scenery and rapids below the source of the Nile.

Corruption is rife, and many businesses, including the World Bank, factor in an extra 10 percent to 15 percent on every project to cover corruption. It is called "giving out lunch," said a businessman who regularly "tips" officials to move his wares in and out of customs.

Transparency International ranked Uganda in 2001 third-most corrupt of 91 countries it surveyed, just after Nigeria and Bangladesh.

But at least one Danish economist with years of experience in Africa said she thought that Uganda's corruption was petty when compared with other parts of Africa where massive official skimming is the norm.

"It is the kind of corruption where there are no bids, or an official gives a contract to his brother-in-law," said Janne Teller, who was in Uganda while the Danish government announced it was reducing some of its aid because of official corruption.

"The [Kampala] government budget process is pretty open and transparent, without the same kinds of opportunities for corruption you see in some countries," Mrs. Teller said.

There is press freedom, with several newspapers and dozens of radio stations that report on the government. The media regularly criticize the president, his government and his ministers. The biggest complaint heard about Mr. Museveni and his National Resistance Movement is his so-called "no-party democracy."

In theory, every Ugandan is a member of the "Movement." And given Uganda's 25-year history with "bad multiparty democracy" under dictators Obote and Amin, Uganda's constitution bans the creation or participation of new parties in the political system. Opposition is permitted, but only within the Movement. Most Ugandans appear to approve, at least for the time being.

"We have had parties. It is better now," is heard over and again, in random interviews.

"We are still suffering a hangover from the past regimes," said Keith Muhakanizi, a director in the Finance Ministry, when asked about political pluralism. "It is a question of looking at our history and deciding how best to proceed."

Getting back on course

Still, after 16 years, the opposition is restless and growing. Calls for lifting the ban on parties dominated the news almost every day in early May. Uganda's independent newspaper, the Monitor, had front-page stories about demands for new parties, including a story of opposition meetings sponsored by the Irish Embassy in Kampala.

The government newspaper, the New Vision, printed rebuttals, detailing why Ugandans neither need nor want political pluralism.

"Sixteen years is enough. The Movement has gone off course. It was supposed to be transitional. It muzzles the opposition. It ought to be open to competition and political pluralism," said Anne Mugisha, a former official in the Museveni government who left Uganda under cover of night 18 months ago after being told she was about to be arrested.

Mrs. Mugisha, who campaigned for Mr. Besigye, recently set up an office in Washington to lobby for multiparty democracy in Uganda. She wants the international aid agencies to set democratic benchmarks and tie them to aid for Uganda.

"Museveni has his areas of good performance, but all the good work he has done will go up in smithereens unless he is willing to open up and get into a dialogue. Museveni could go down in history like Nelson Mandela, but he is choosing to be like Obote and Amin," said Mrs. Mugisha, echoing a signed Monitor newspaper editorial in Kampala that listed the similarities between Mr. Museveni and Mr. Amin.

Kampala's nicer hotels and restaurants are filled with men and women in town to do business selling John Deere tractors, putting in a fiber-optic cable system or snagging a cell-phone contract. As international donors provide 52 percent of the Uganda's national budget, it is not uncommon to meet consultants from Europe, South Africa, the United States and Japan representing an alphabet soup of international donor organizations.

Religious organizations and missionaries provide 50 percent of all social services.

"Too many of Uganda's educated are leaving the country, or going into donor work, rather than becoming entrepreneurs or working for the government," said a European World Bank consultant in Kampala to do agricultural-sector analysis. "Uganda has serious infrastructure problems roads, power, in particular. And no one is paying taxes."

But others businessmen who have invested here, foreign aid workers and educated Ugandans who remember what Uganda was like before Mr. Museveni took over, look at the same problems and are guardedly optimistic.

"I know Mr. Museveni, and I think he is a good man," said Veronica Moss, head of Mildmay, a British HIV/AIDS clinic outside Kampala. "He's not perfect, but at least he wants what is best for the country. He has said he will retire in 2005, and I think he will."

Others are betting the same.

"I am optimistic," said Mrs. Teller, the Danish economist. "I have seen much worse in Africa."

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