Friday July 24, 1992. The Monitor, a weekly newspaper, hit the streets. Its lead story, written by Richard Tebere, was titled ‘This privatisation drive stinks badly’. The article was informed by the government’s plan to sell 100 parastatals.
Mr Tebere wrote then: “On the face of it, it (privatisation) makes a lot of sense. For why should taxpayers continue to subsidise loss-making and corruption-riddled corporations?
“But a critical look below the surface reveals a lot of dirt. In fact, the whole privatisation business stinks. There is no transparency at all or any agreed formula.”
Mr Tebere observed then that just like ‘retrenchment – an International Monetary Fund (IMF) inspired activity – privatisation was screwed up in the narrow interests of those who are playing the ball’.
Mr Tebere would later, during a press conference addressed by Mr Museveni, ask the head of state to shade more light on privatisation – since it had caused a lot of confusion.
In response, Mr Museveni said he does not know the procedure the Divestiture Board had initially followed when advertising the corporations up for privatisation.
According to Mr Museveni then, the coordinator of the board had been “negotiating quietly with these people”.
He – Museveni – advised the coordinator to put in place a formula and then advertise those processes.
“…the public asset to be sold must be valued, then it must be advertised in foreign papers but not in local ones,” Mr Museveni said.
At the time Mr Museveni was addressing the press conference, none of the corporations that had been sold had been valued, he seemed to suggest.
Though he directed the board to follow a given formula, Mr Museveni also seemed to suggest that desirable as it were, valuation could keep off potential buyers.
“Immediately, all the companies [that were interested] lost appetite in buying the factory because the $48 million is not something people have in the cupboard,” Mr Museveni said.
In 1992, one United States Dollar was equivalent to Shs1, 163.
In other words, $48 million was equivalent to Shs55.8 billion.
Apparently, many foreign companies had around that time been eying Hima Cement factory.
However, Uganda drew the blinds on them because it wanted to get the market value for the companies, or something close to their actual value.
During the same press conference, Mr Museveni said: “…coming to the policy issues, it is desirable to sell these assets? My answer is that it is very desirable that these assets are sold either wholly or partly or as joint ventures or involving outside management.”
But the president should perhaps have been more cautious because Mr Tebere had already pointed out that the selling of public assets was not transparent.
From reading Mr Museveni’s response to the issue of privatisation, he did not know about some of the parastatals that the board had sold.
During that press conference, the journalist Teddy Sseezi Cheeye claimed that though Nile Breweries had Shs 900 million on its account, the Divestiture Board sold it at Shs500 million.
Mr Museveni said: “I don’t know Nile Breweries was sold.”
Though Richard Kaijuka, then minister of Finance, at that press conference disputed Cheeye’s claim, Mr Museveni said the issue of Nile Breweries had to be sorted.
Fast forward to 2015
On Monday, March 16, 2015, Mr Museveni said his administration would not privatise any other government institution.
“We are not going to allow more privatisation of government institutions,” the New Vision online quoted Mr Museveni to have told government officials during a meeting at the Office of the Prime Minister in Kampala.
Mr Museveni said, probably in jest, that if the government did not stop privatisation, “next time, people may even propose privatisation of State House”.
Government officials who fail to manage public institutions, Mr Museveni said, should be replaced.
They should also be asked why they are not performing.
The Daily Monitor later (on March 31, 2015) reported that before the National Resistance Movement captured power in 1986 from Tito Okello, Uganda had at least 130 parastatals.
Most of those, the paper added, have since been sold’ through sale of assets, share sale, joint ventures and pre-emptive rights’.
It said the others have been disposed of through initial public offerings, concessions, auctions, debt equity swap and repossessions.
From these transactions, the government raised at least Shs200 billion.
Referring to the Privatisation Unit, the paper said by June 30, 2011, the government had conducted 95 sell off transactions and 39 liquidations.
To justify privatisation, the government claimed many of the parastatals had failed to operate at full capacity; they were making losses.
Mr Suruma, who in the early 1990s was the managing director of the Uganda Commercial Bank, voiced opposition against the selling off of public enterprises, particularly entities like banks. His views on the direction of the economy often clashed with those of current Bank of Uganda Governor Emmanuel Tumusiime-Mutebile, who was then a leading technocrat in the ministry of Finance and led the drive for market fundamentalism.
Mr Museveni would later say during his State of the Nation Address that he did not want poor investors since he is swamped with poor Ugandans.
Various explanations have been fronted for what has been widely adjudged as a failure of the privatisation programme. In an opinion piece published in this newspaper on October 28, 2016, Prof Samuel Sejjaaka, the former deputy principal of Makerere University Business School, said: “What we got wrong was the fact that some investments had such critical and strategic positive externalities, we could not leave them to the private sector.”
Prof Sejjaaka added: “Strategic importance was sacrificed to reduce the public sector borrowing requirement, and many of our people bore the social costs of structural adjustment. Many died miserable and broken – they were collateral damage, I suppose. And so we surrendered the commanding heights of our economy to a new colonialism, dressed as foreign capital.”
He stressed that privatisation should have come more regulation, which he said did not happen, or if it did, it was feeble and inept.
“And so the ‘investors’ who initially ‘bought’ the Nile Hotel did not meet their end of the bargain. Others who ‘bought’ public assets did a lot of asset striping, while others just took us to the dry cleaners. Today the national airline is no more, and the successor ‘Air Uganda’ did not inherit any of its assets. Uganda Railways is a shadow of its former self and the power crisis is still here,” he wrote.
“I say all of this with hindsight. After all, a fool is always clever after the fact. But this animal, privatisation, was indeed fool’s gold. We paid a high price to ‘correct’ the ills of the seventies and early eighties. But in the process of righting the wrongs, we sold our birthright. For, in the absence of clear performance indicators (working regulatory framework) and the retreat of the state, we did acquire a new set of colonial masters. They didn’t use force to recolonise us and not that privatisation was wrong. It is just that we didn’t know what we were doing, and we lacked a national ethos, to make decisions for posterity.”
By identifying the “stench” in a policy that had almost gained total acceptance in the mainstream at that time, The Monitor’s first lead story set the tone for critical, incisive reporting.