American Ambassador Speaks about corruption at Ugandan Energy Summit

Corruption is a major deterrent to investing in Uganda, and while not discussed perhaps the Anti–Homosexuality Bill, if passed, will make these considerations worse

By Melanie Nathan, February 25, 2013.

While the Ugandan Parliament is about to debate the Anti-Homosexuality Bill,  Uganda hosted a key energy and infrastructure summit, to explore private sector involvement lead by The American Chamber of Commerce in Uganda, which  represents the collective interests of the U.S. business community in that country.  It seems that all involved in the Summit chose not to acknowledge the impact that The Kill the Gays Bill will have on investment in Uganda.  However if the Bill is passed it will only be one more reason NOT to invest in Uganda, with pervasive corruption being the number one reason to deter American and international participation in the Ugandan economy.

We report here  the remarks of  Scott DeLisi,  U.S. Ambassador to Uganda in his closing speech to the American Chamber of Commerce, at the Investment Opportunities in Energy and Infrastructure Summit, which was held in Kampala, last week. While the Ambassador did not address the Kill the Gays Bill as an impediment to Uganda’s future he did refer to the pervasive corruption Uganda, noting that no panel had been assigned to discuss the issue of corruption at the Summit:

“To be frank, executives from U.S. companies tell us corruption is a major deterrent to coming to Uganda, and the IMF reports that one in five businesses list corruption as the number one problem they face doing business here.”

The ambassador spoke to the importance of private  sector investment: “They need the energy, the resources, and the dynamism of private sector partners to fuel the process. The task of government is to find a way to open the door for the private sector to play that role –but in a manner consistent with the national vision of Uganda’s future. That, ladies and gentlemen, is the not an easy task. It is, however, a challenge that I think everyone here recognizes is at the heart of what you have discussed today.”

While corruption is the most serious impediment facing Uganda in its quest to improve its infrastructure, the Anti-Homosexuality Bill,  if passed will be stomping further on the toes of  private sector investment from abroad, as the Bill itself renders it operationally impossible for businesses from abroad, with open diversity policies, to function in Uganda.

International activists promise that should the Bill pass, the outcry will be a bellow that will make the anti-apartheid sanctions of the 80’s against South Africa look comparatively miniscule.

Here is the Ambassador’s entire speech at the Sheraton Hotel, Kampala, Uganda

Distinguished Representatives of the Government of Uganda,
Kelley Mactavish, President of the American Chamber of Commerce,
Ladies and gentlemen,
All protocols observed.

Good afternoon.

Thank you Kelley for your warm introduction, and let me say again, as I noted last night, how much I value and applaud the tremendous work of the American Chamber of Commerce in organizing this event. I couldn’t be prouder of our American business community or more grateful for your efforts. Thank you as well to the representatives of the Government for your support and engagement. And, of course, this event would be meaningless without the participation and contributions of so many distinguished women and men from the private sector. Thank you for your presence.

Today’s seminar has highlighted opportunities in energy and infrastructure development in Uganda. I hope, after a long day of discussions and brain-storming you are filled with a sense of the possibilities for profitable partnerships that are both commercially viable and that will shape a new and better future for Uganda’s citizens.

Uganda, as should be evident to any new-comers, has tremendous potential and the recent track record is full of promise. Uganda is blessed with a vibrant culture, hardworking people, and abundant natural resources. This country has incredible natural beauty and parks and wildlife that – if well-managed – will attract millions of tourists and contribute to the national economy for generations to come. Uganda has two growing seasons, fertile soil, and a strategic location that gives it the potential to be the breadbasket of East Africa. Uganda has the headwaters of the Nile River and vast potential to harness hydropower to fuel its economic growth. And, as we all know, Uganda has oil – enough to double its national budget when oil and revenue begin to flow.

Meanwhile, with the completion of the Bujagali dam, Uganda’s power sector is largely able to meet its current energy needs – a major step forward. Uganda has also enjoyed a tradition of strong macroeconomic management which has served the nation well, and the Central Bank’s active policy engagement helped it to tame spiraling inflation in a relatively short time frame last year.

These positives are good news indeed for Uganda…but they are not enough, by themselves, to ensure economic prosperity, growth and job creation. Bujagali Dam has certainly helped meet energy demand, but the vast majority of the nation remains off the grid. I’d wager that it would take many hundreds of megawatts of additional power in the national grid just to meet the suppressed demand from those who have given up pursuing entrepreneurial dreams, for now, due to the overall low levels of national electrification. The Central Bank has indeed performed well and responded effectively to macroeconomic challenges but, in the process, credit has become prohibitively expensive and inflation threatens to make a comeback, creating a new challenge for economic growth.

In the months ahead, the Ugandan government must make important national decisions about the country’s development. It must take the lead to not only define a vision of economic growth that is relevant to the needs of a modern Uganda but must also offer a viable plan for its implementation. Moreover, that implementation plan must be backed by a focused government commitment to actually act upon it, and to provide the resources and sustained engagement necessary to make the vision a reality. Otherwise, the vision, however lofty and commendable, will never be more than a dream.

Governments, however, cannot do it alone. They need the energy, the resources, and the dynamism of private sector partners to fuel the process. The task of government is to find a way to open the door for the private sector to play that role –but in a manner consistent with the national vision of Uganda’s future. That, ladies and gentlemen, is the not an easy task. It is, however, a challenge that I think everyone here recognizes is at the heart of what you have discussed today.

I believe that everyone in this room, whether from government or the private sector, recognizes that the dream of a strong, stable, and productive Uganda requires — as a base — the development of essential infrastructure and energy resources to drive economic growth and to unleash the potential that is inherent in this nation’s tremendous natural gifts.

In today’s Uganda, leaders must identify new, creative ways to finance the infrastructure needs of the coming decades to build prosperity for the nation. And one undeniable truth that has been discussed today is that Uganda needs more power to fuel its growth and development.

The resources are there. Hydropower. Geothermal power. Oil. Solar. Wind. All must be addressed and all must be considered as Uganda seeks to ensure access to power in all corners of Uganda so that investors can tap into the potential of the entire nation and not just a small percentage of the country.

It is not enough to meet the needs of urban centers. Power must be provided across the country to allow productive growth in all regions. To achieve that, Uganda will have to consider options that are more financially and technically complex, options that will preserve the environment, and options that will win the consent and participation of local populations.

The Ugandan government recognizes that it must encourage the investment necessary to create jobs for millions of young Ugandans who need the skills and steady work to support their families and aspire to a better future. It must create regional trading networks to access the tremendous trade opportunities available to Uganda within the East African community market because that broad access will also attract investors and spur growth.

The challenges are many. How to ensure credit becomes more easily available to businesses and entrepreneurs who rely on it to start, grow, or change? How will the government reassure investors that it is serious about improving its business climate, serious about cutting red tape, serious about championing the role of the private sector in Uganda’s development? How will it stop the insidious threat to the nation’s future posed by pervasive corruption?

I know that we often hear these concerns voiced, but you, as potential investors, need to add your voices to the chorus of those who insist on change. The Ugandan government must, as a critical first step, be crystal clear in its message that it will not allow, will not tolerate, individuals seeking to enrich themselves at the expense of the interests of the nation and its citizens.

Although I know that no panel today was assigned the topic of corruption, we cannot speak seriously and candidly about developing infrastructure or energy projects if we avoid discussing this issue.

We have all read the tragic stories about the way donor development funds were diverted away from their intended purposes to the detriment of the nation and its citizens. The government’s partnership with the donor community is seriously threatened by this and other incidents of pervasive corruption. Moreover, I fear that remedial efforts to address the most immediate donor concerns, although important steps, will do little to tackle the underlying reality that this unchecked virus is inextricably linked to the framework of governance in Uganda today. Aid and investment may still come, but if real changes are not made we risk the same results of unfulfilled expectations, misdirected and stolen funds, and a failure to advance the national agenda.

President Museveni has said he is determined to tackle corruption in Uganda. I commend him for that. As former Secretary of State Hillary Clinton said, “Corruption is the cancer that eats away at the entrepreneurial spirit and hopes of millions of people.” To be frank, executives from U.S. companies tell us corruption is a major deterrent to coming to Uganda, and the IMF reports that one in five businesses list corruption as the number one problem they face doing business here.

American companies can, as has been true in so many other nations, be tremendous drivers of growth. And by doing business with American companies, the private sector can help in the fight against corruption. Our companies abide by our Foreign Corrupt Practices Act and are held to the highest standards of transparency and fairness. They won’t undermine Uganda’s institutions. American companies want to do business in Uganda, but they can only do so if there is a level playing field ensured by policies that enshrine good governance and transparency.

We must recognize that this disease of corruption violates the basic trust between citizens and the government, undermines the development priorities that we are all working so hard to achieve, and causes investors to turn their backs on Uganda seeking destinations where bribery, kickbacks, and other forms of corruption are not the subtext of every negotiation. Over the next few months, the donor community will be watching carefully to see what steps Uganda takes to ensure that the perpetrators are punished regardless of their status or station, and that systems are repaired so these unfortunate actions can’t be repeated. I believe that the business community will, and should be, watching with similar concern.

Even if Ugandans and their leaders begin to turn the tide on corruption, their partners, like the United States with its tremendous commitment to working in tandems with Uganda on development priorities, will continue to seek assurances that the nation’s vision of the future is sound. Do they have the political will to manage oil revenues in a way that will ensure sustainable, inclusive economic growth? Will they make the right decisions about how to best use scare resources to nurture a healthy, productive, educated society so their country can move forward? Will they plan well for their explosive population growth and create jobs for the millions more young people who will be searching for work each year?

These are all challenges currently at the center of vigorous debate in Uganda as the country charts its path to a more prosperous future. And healthy democratic societies need to engage in debates like this. However, while many questions merit debate there is one issue on which everyone can agree: in order to meet those challenges Uganda must grow its economy, and the true driver of economic growth in Uganda will not be government. It will be the private sector.

It will be people like you gathered here today who will bring to Uganda the entrepreneurial vision and investment that will expand and diversify Uganda’s economy and increase its exports. It will be investors like you who bring more power to Uganda’s national grid, expand the use of renewable energy, refine and export Uganda’s oil, and build the infrastructure Uganda needs to improve its business climate and enhance the productive sectors of its economy.

In his new strategy for sub-Saharan Africa, President Obama makes clear his commitment to Africa: He says, “We will work with our African partners to build strong institutions, to remove constraints to trade and investment, and to expand opportunities for African countries to effectively access each other’s markets and global markets, to embrace sound economic governance, and diversify their economies beyond a narrow reliance on natural resources, and—most importantly—create opportunities for Africa’s people to prosper.

As we support these efforts, we will encourage American companies to seize trade and investment opportunities in Africa, so that their skills, capital, and technology will further support the region’s economic expansion, while helping to create jobs here in America.”

And this – encouraging U.S. companies to seize trade and investment opportunities in Africa – is what our American Chamber of Commerce has done today in hosting this Energy and Infrastructure Investment Summit. The U.S. government is also doing its part to encourage more American companies to invest in Africa, and last year launched a number of new initiatives to increase American commercial ties to Africa: The U.S. and East African Community announced a new Trade and Investment Partnership; President Obama launched his Doing Business in Africa Campaign, and; former Secretary of State Hillary Clinton announced the U.S.-Africa Clean Energy Finance Initiative to drive private sector investment in the renewable energy sector last year.

I will work tirelessly to support these efforts and encourage American investment in Uganda during my tenure as Ambassador here. And I hope to work together with you in those endeavors. Uganda needs investment in energy and infrastructure to arrive at its bright future and everyone with a stake in seeing Uganda’s economy grow has a role to play.

I will work closely with the American Chamber of Commerce and I want to meet regularly with the broader Ugandan business community to discuss the challenges and opportunities here. I want to coordinate with the donor community to make sure our efforts are having maximum effect in enhancing trade and development. I want to ensure we do our part to nudge Uganda closer to that bright future.

In fact, in recent months, I have been working closely with an American firm who wants to brighten Uganda’s future by investing $1.2 billion dollars in a geothermal project that would bring 2000 jobs to Uganda and 150 megawatts to the national power grid. I have spoken to the President and numerous Ugandan officials about this project, and with the recent signing of a Memorandum of Understanding between the company and the Ministry of Energy, I think the deal is very close to being concluded. And I eagerly await the announcement.

As President Obama has so eloquently said, “Africa is a fundamental part of our interconnected world. Africa and its people are partners with America in creating the future we want for all of our children.” With your investments, your vision and your engagement, you can move Uganda forward and ensure that the bright future we all want for Uganda arrives soon and doesn’t linger forever just over the horizon.

I know that my remarks today have moved beyond the specifics of infrastructure and energy but you have addressed those throughout the day, and I hope have identified key opportunities, built partnerships, and begun to shape partnerships that may define a new future for Uganda. We must, however, ensure that it is a future that is built indeed on a shared vision and commitment. We must insist on a future in which corruption does not undermine our goals before we even begin to move forward. And we must work together to create a future that all Ugandans aspire to and share in.

Energy and infrastructure development are essential to unlocking the door to that future. But good governance, transparency, and true partnership between the government and the private sector are critical for capitalizing successfully on the opportunities.

Let me again thank the American Chamber of Commerce for making today possible and let me encourage all of you to commit to a new engagement in Uganda in which all participants, including the citizens of Uganda, can benefit and prosper.

Thank you.

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