Posted Thursday, August 13 2015 at 01:00
The current economic cycle has matured. Cheap Chinese money is drying up. The Chinese Central bank has adjusted its fixed peg to the dollar after exports continued to fall.
Chinese money is now looking for better returns and after years of recrimination, has arrived in a big way in Europe. Africa promised the Chinese for years easy access but precarious legal systems and “brown envelopes” have affected the rate of return on Chinese money.
This in itself is not a bad thing. It will force smart economies to start fixing themselves. Nigeria is running around with a big fat stick chasing a new round of billions believed to have been fleeced in the regimes of Olusegun Obasanjo and his successor Goodluck Jonathan.
As much as $6 billion a month disappeared from Nigeria if President Mohammed Buhari is to be believed. This excludes Abacha’s loot of which just $10 billion has been tracked and handed over to the Nigerians.
Nigeria’s psychological attempt to fix itself and get rid of Boko Haram has created the proverbial problem of the neighbor fumigating up to his fence and returning to the safety of his manyatta.
Foreign investors spooked by a weak naira but prospects of Nigeria finally starting to fix themselves are flocking to Africa’s largest economy in droves. Kenya, the regional powerhouse is just $55 billion in size.
Nigeria is ten times that size and has more than 170 million people or the population of the entire East Africa. The stock exchange is now a bear market and capital flight is starting to bite.
At home Mr Kenyatta has a bigger problem. The next major presidential prospect in Kenya is neither perennial contender Raila Odinga nor his Veep William Ruto.
Rather its Nairobi Governor Evans Kidero. The pharmacist calls the shots in Nairobi and has been eager to wrestle power from CORD leader Odinga.
Kidero if he delivers stands a chance to carry Nairobi turning around Kenya’s notorious electoral clan soccer. It is no secret that the sugar industry in Kenya is in trouble.
Kenyan politicians for years grew rich on the sugar cartel dumping cheap sugar on the market while at the same time skimming clean Kenya’s sugar mills.
Big sugar thrives on low costs, cheap labour and continuous turn around. The bigger people in sugar areas like Mr Odinga already crush molasses.
Mr Ruto is a former minister for Agriculture. Kidero the big fish’s last job was running Mumias Sugar Company where his glitzy story has been torn to pieces so fast the company needed an urgent KShs 1 billion bailout.
Enter Uganda. Changes in technology have democratised sugar production. New low cost millers are scavenging Uganda’s labour reserves, i.e. those which have not been up to much to plant lots of sugarcane. Sugar has delivered on the import substitution side and big sugar is thirsty for more action.
They have set foot in Acholi looking for land in Amuru, have expanded in Busoga and seem not to be done yet. A collapse in the exchange rate presents a new problem, stockpiling.
The cost of energy is rising with the exchange rate deterioration and people all of a sudden may be cutting back on sugar creating another problem. Farmers are rioting or close to rioting because sugar mills cannot crush all the cane while stores are full. This is the story from Kinyara and Mayuge is not far behind.
The Kenyattas were reported in 2014 to have acquired a large stake in the dairy sector and must have found the invisible truth written all over. Ugandan cows produce very little milk, most sold adulterated.
Milk processors have never grown, the politics of bulk transport and high electricity costs squeeze profit margins.
The Kenyattas are also reported to have bought out the Delameres in Kenya, the largest cattle farm in Kenya. So selling surplus milk and beef from Kenya was not hard. And by making a big sugar play he has earned gratitude of the capitalist class in Uganda. I have to stop here.
Mr Ssemogerere is an Attorney-at-Law and an Advocate.
Mr Ssemogerere is an Attorney-at-Law and an Advocate.
kssemoge@gmail.com
http://www.monitor.co.ug/OpEd/OpEdColumnists/KaroliSsemogerere/Milk--Beef--for-sugar-How-Kenyatta-Museveni-granted/-/878682/2829750/-/item/0/-/ya4g1u/-/index.html
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