Johannesburg:  "No farmers, no future." So says the bumper sticker on farmer Bully Botma's white bakkie, parked just off President Street in Bothaville, South Africa's mealie capital.

Botma is on the phone to his broker, carefully playing the market, to get the best price possible for his recently harvested maize.

"The price has dropped by R25," he says by way of introduction. By the close of trade it will have improved by R2. Botma displays the increasing financial savvy and business acumen required by farmers to make a success of maize farming in a volatile global commodities market.

Leaving the advent of biofuels out of the picture for now, the risks involved in farming, particularly from rising input costs such as fuel and fertiliser, are making the job complicated for established players and nearly impossible for farmers starting from scratch.

"This year it's a disaster," says Botma, when asked about the effect input costs are having on farmers. "Some of those inputs have doubled since the previous season, which is as far as I'm concerned ... ridiculous. If it would go up at the CPIX that's understandable ... but it's ridiculous for lack of a stronger word."

Botma believes that the spike in the cost of items such as fertiliser, fuel and herbicides will stop farmers from growing what he terms "cash crops" or summer crops such as maize and sunflowers. The rising costs of planting crops such as maize -- and its changeable profitability -- mean farmers stay away from them to avoid increasing debt.

While this year's mealie crop has been good, with total yields in South Africa reaching more than 11-million tonnes and prices improving because of soaring global food costs, Botma believes this is being countered by rising inputs.

"It's going to kill a number of farmers that have had a good crop this year. With a [reasonable price] they can get out of their debt," he says. "But they might decide to get out of their cash crops because ... they will not want to put themselves in a position where they can lose what they have."

Rising input costs

Grain SA estimates that in May 2008 input costs for the 2008/09 production season rose by as much as 76,1% from the 2007/08 season for farmers in the eastern Highveld. Input costs reached a total of R6 083 per hectare, on an estimated yield of 3,5 tonnes of maize per hectare. This is up from R3 453 in October 2007. While the maize price has risen to more than R2 000 a tonne, this equates to only a 60% increase year-on-year.

But Grain SA estimates, once the cost of planting, harvesting, moving, storing and marketing the grain is complete, eastern Highveld farmers can expect a total of R554,18 profit per hectare of land at a yield of 3,5 tonnes. Farms can vary in size from small, part-time operations of 300ha to large-scale farms of more than 6 000ha, but the numbers paint a gloomy picture.

"A farmer is a price taker," says Nico Hawkins, manager of industry services at Grain SA. "A farmer's never a price maker, especially a grain farmer."

Hawkins insists the picture is not as dire as it appears. South African farmers are some of the best in the world, he says, and some of them are strong enough to weather these massive shifts in the market. But, he says, the price regimes make it almost impossible for emerging farmers to enter the sector.

"That's why it's so difficult for government and also for us ... to put new farmers on the ground, black farmers," he says. "If you don't help them financially, if you don't subsidise them, there's no way they can start from scratch."

He says that if farmers cannot produce profitably, they will cut production -- as any sound business would -- to mitigate their risk. While consumers might cry foul about rising food prices, they would be far worse off if there was a shortage of food and prices increase even further.

Although food prices have increased over the past year, Hawkins points out that maize is trading at export parity price -- as cheap as it is going to get.

"In the short- and medium-term this level of price is here to stay ... the main reason is input prices," he explains. "If those input prices remain the same and food prices drop, farmers are not going to be able to produce. The price-forming mechanism is out of their hands."

According to Botma, the input costs hit the farmer as a total package. "[Inputs are a] packaged deal," he says. "Per acreage your fertiliser is probably the most expensive. But in the past we didn't even bring diesel into the budget -- it was so minor and now it is a huge part. So is seed, so is labour, so are pesticides, but you can't go without [any of them]."

Fuel price

According to Grain SA, input costs such as fertiliser have gone up, some as much as 126%. The main factor in the increase is the fuel price, says Pietman Botha, senior research agriculturalist at the organisation. Fertilisers are a by-product of the oil, which has seen well-documented price increases in recent months. Furthermore, says Botha, the prices of herbicides and pesticides have increased because of a worldwide shortage.

In addition to this, for a number of years stable food prices globally have meant that consumers have grown accustomed to relatively cheap food. With low prices there has been little incentive for farmers to invest in increased production.

A recent report by the United States Department of Agriculture on factors that have contributed to the increase in food prices noted: "Stable food prices during the past two decades have led to some complacency about global food concerns."

It also noted that as the world's population grows people's eating habits have changed. More meat is consumed, which means more grain is channeled towards animal feed and so the prices for basic foods increase.

So what are farmers doing to manage these changes? For one thing, they do not put all their eggs in one basket. "[Farmers] are not specialising as they used to," says Botma. They will farm cattle and other livestock -- as well as other crops -- to mitigate their risk, he says.

Coping with the challenges

According to Ernst Janovsky, general manager for Absa Agribusiness, farmers do a number of things to cope with shifts in the market. Firstly, if they can they get big. "It's economies of scale," says Janovsky. The larger the farm, the lower fixed costs, such as marketing costs and labour, become. Secondly, input suppliers can offer financing to farmers. For instance, a fertiliser producer can finance the cost of the fertiliser inputs if the farmer agrees to use its product, he says.

The same principle can be applied on the offtake side, he says. A miller or food manufacturing company may ask a farmer to grow a crop specifically for its use and it will finance the inputs.

"We will manage the price volatility for the farmer, buy the crop from him and in some cases finance the inputs," he says. The bank will use the farmland as collateral, but if that is insufficient to finance the loan, capital equipment will also be used as security. The bank will also require the farmer to insure the crop against things such as bad weather, if it finances the input costs.

In a place such as Bothaville, says Janovsky, the bank will only finance input costs up to a maximum value of R7 900 a hectare, depending on the average long-term yield of a farmer's land.

The financing facilities are becoming increasingly popular, he says, but "it's not a cheap option". Often to decrease the risk of trading maize the bank will ensure that a farmer fixes his price. While this might lessen the risk, it can also ensure that the farmer could lose out on any potential profits that could be made in an unexpected rise in prices.

There is a concern that if input costs continue to increase it will erode the financial structure, but, says Janovsky, "as long as the commodity price increases at the same rate it is still profitable".

Absa says inputs costs have risen by 60% this year and the bank forecasts that they will rise by another 30% in the coming season.

"But bear in mind they have had a good season and as such they are cash flush and have money to plough back into their operations to cope with the coming 30% increase," he says.

"A farmer is a player in a global market. This exposes him to price volatility," he adds.

In the bag

Storage can play a significant role in how a farmer manages the highs and lows of maize prices. Farmers pay for the off-loading and on-loading of grain to and from a silo, as well as a daily storage fee to keep their grain there. Silos can charge the farmer in the region of R25 a ton to weigh-in grain and the same fee to weigh grain when it leaves the silo.

The longer a farmer waits to store and market his grain, the more expensive it becomes -- waiting for market conditions puts his product at risk and can potentially be as expensive as selling it short.

But silo bags offer an alternative to storage in traditional silos. They are long tubes of highly durable plastic and each can store between 160 and 200 tonnes of product. Grain is pumped into the bags, which are then sealed. Special machines are used to insert and extract the grain and the silo bags maintain the quality of the grain, protecting it from various environmental threats. The bags were developed in Argentina and have been on the local market for three years now.

Just outside Bothaville a silo bag facility is doing rapid business, with truckload after truckload of maize passing through its gates to be stored. Botma says he is charged a one-off weighing-in fee at R25 a tonne and saves on the costs of weighing out. "That's a lot of money," he says.

Botma believes that the increased competition on storage has been good for farmers, preventing silo operators, who were the only storage providers in the market, from arbitrarily increasing prices.

Biofuels

The South African government's cautious policy towards the biofuels industry has seen the exclusion of maize as a biofuels feedstock.

But, says Grain SA's Hawkins, the creation of a third market for biofuels, alongside maize produced for human and animal consumption, could well incentivise farmers to increase production.

"We can understand the government's concern over food security. But what is food security? Is it the availability of food or is it the availability of a lot of cheap food?" asks Hawkins.

"If it's the availability of food, our view point is that you if you create new markets such as the biofuels market then farmers will invest more in production," he says.

Furthermore, he says, if the country regularly begins producing more maize than is needed for local consumption and a drought occurs, for instance, the "point of departure is higher than it would have been if you had not produced the excess for biofuels."

But critics argue that is open to abuse and farmers could begin using land -- required for growing food for human consumption -- for biofuels, quickly shortening supplies and driving up prices.

Hawkins argues that creative policy interventions on the part of government can be used to curb these potential problems. He says that rather than lose out on incentivising farmers, government should combat the effects of rising food prices by increasing social good grants for the poor.

This, he believes, can both secure food supply and help consumers cope should prices get any worse.

*  Article by Lynley Donnelly 

Mbabane:  The traditional core business of the post office - sending letters, selling stamps - seems a bit of an anachronism in the era of electronic mail and cellphones, but new uses are being found for an institution with branches in some of the remotest parts of Swaziland.

Post offices have long been important in facilitating financial transactions, from paying public utility bills to sending and receiving money orders. A pilot programme has taken that one step further - testing the postal service's ability to assist in dispensing humanitarian relief.

The idea was to explore the use of cash transfers in humanitarian crises, with those in need accessing monthly stipends through the nearest postal facility. The trial, launched in November last year, sought to take advantage of the unique community role of Swaziland's post offices, which serve as general meeting points in the rural areas, and the number of outlets, which surpasses the banking system's.

"It was a cash plus food pilot project that lasted six months, but the beneficiaries were happy and we are recommending continuation of the programme to the Ministry of Health and Social Welfare," said Clara Dube, programme officer for the UN Children's agency, UNICEF, which partnered the development organisation, Save the Children, and the Swazi government in the
initiative.

The beneficiaries were orphans and vulnerable children, whose stipends were paid out to their guardians or the heads of child-run households. Special identity documents were issued by the Ministry of Justice to allow the 7,650 households in the scheme to access the money - R30 (US$4) a month for each child, and an additional R45 ($6) per household for non-food items.

At the beginning of the project a lumpsum transfer of R470 ($63) was made to each household to help with agricultural inputs at the start of the planting season; at the end of the initiative in April, a final R350 ($47) was provided to support post-harvest income generating projects.

Swaziland has the world's highest HIV prevalence rate, and according to UNICEF, 200,000 Swazi children will have been orphaned by the pandemic in the next two years. The small mountain kingdom has also faced several consecutive seasons of drought-related food shortages; in 2007, close to half the population of 950,000 was receiving some form of food aid.

Some problems

The cash transfer pilot scheme was "emergency drought relief targeted at central and southern portions of the country", said Nathi Vilakati, programmes coordinator for Save the Children in Swaziland. Beneficiaries were given the option of receiving payments through a commercial bank, and some did.

"The initial idea was to set up an account for each child caregiver and issue him or her a data card, like an ATM [automatic teller machine] card. At the post office the clerk would swipe the card, read the balance on the account and issue the monthly allotment, which would be automatically put into the account by government."

Although a hitch developed with the availability of data cards, and postal clerks laboriously had to write out withdrawal slips, the concept behind the pilot was deemed sound, said Vilakati.

"To get to a bank, rural residents might have to travel long distances and incur travel expenses at a time when bus fares are rising, but a post office is usually in their community," noted Elizabeth Kgololo, communications officer for Save the Children.

But Swaziland's postal service has its limitations, underlined by the experience of pensioners trying to cash their cheques at post offices - as opposed to local government offices - when this became an option in 2006.

"The intention was good, but the post office didn't have the capacity at the time to handle the work. There were long queues; the elderly were made to wait for hours because payments had not arrived. Many were sent back home and had to come again and again," said Kgololo.

There was also a security problem.

"The times when the elderly could pick up their benefit payments were published in the newspapers and broadcast on the radio. Criminals knew when the money would be given out, and they were there to wait for the older people," she said. As a result, pensioners were given
the choice of using a commercial bank.
 

But the cash transfer pilot in Swaziland has proved "important both to guide future emergency responses, especially in a time of rising food prices, and also for the establishment of predictable - and potentially long-term - social transfer systems for vulnerable families," said a Save the Children assessment.

"Often, the challenge for aid agencies is to manage the distribution of the cash safely, appropriately and cost-effectively. The challenge for post offices is how they can offer this service commercially, considering the opportunities for attracting new long-term clients, while also recognising the humanitarian objectives that are driving NGOs, some UN agencies and
government donors in emergency situations," said Save the Children.

As letter-writing falls away, postal services are increasingly facing redemption or irrelevancy depending on their ability to attract and retain customers.

Swaziland's Minister of Communications, Thandi Shongwe, told IRIN: "We can't just wish away post offices, even though technology seems to have taken over most communications systems. We need to infuse them with new ideas."

Gaberone: Malawi's Minister of Economic Planning and Development, Ken Lipenga, has said that Africa is a net food importer importing approximately USD 20 billion worth of food annually so it is the hardest hit by rising oil and food prices.

"Transport, energy, water and telecommunication infrastructures in Africa also lag far behind the rest of the world," Lipenga said. It is through these unimpressive prevailing socio-economic conditions of Africa that heads of state and government of the African Union, according to Lipenga, adopted NEPAD as a novel framework for shifting the goalposts of the continent from poverty to prosperity.

The G8 summit in 2002 accepted the NEPAD framework as an innovative framework, which provided a platform for renewed partnership between the West and Africa. NEPAD was also hailed as a timely intervention that is capable of helping the continent meet the global targets of the Millennium Development Goals.

The minister added that seven years down the line, NEPAD remains the only framework which Africa engages with the West on Africa's development. "So far the implementation of the programme in a number of countries across the continent has resulted in a number of successes and challenges," he said.

The stakeholder engagement workshop is also geared towards taking stock of the NEPAD process in Malawi to see how the country has fared in translating the vision of the continent into tangible achievements and where the country has failed.

In Malawi NEPAD has been conceptualised both at policy and project levels and it has been institutionalised into the country's national and sectoral development policies and plans. In the Agricultural sector, Malawi has built its Agriculture Development Programme around the pillars of NEPAD Agriculture Programme known as the Comprehensive Africa Agriculture Development Programme and the budgetary allocation of 10 percent is in line with the 2003 NEPAD Maputo Declaration.

Malawi is implementing NEPAD supported projects in fisheries and science and technology and has also forwarded the Agriculture Development Programme and the Shire/Zambezi Waterway project to the NEPAD secretariat for funding.

"We hope NEPAD will aggressively market the projects and secure funding. I urge all countries in Africa to take the Shire/Zambezi project seriously as they will benefit from it and it will reduce transport cost and link all of us," urged Lipenga.

They also mentioned that they hope to deepen the level of engagement in NEPAD issues and develop a plan of action, which will clearly spell out the roles and responsibilities of everybody in order to make NEPAD process to deliver.

"We will also deepen the level of understanding of how NEPAD processes work so that all of us can prepare bankable projects, which can be successfully marketed by NEPAD and we will also expedite further modalities for integration in NEPAD issues both and the nation and continental levels," according to Lipenga. The minister was hopeful that the outcomes of the Malawi workshop and other countries where NEPAD national stakeholders' workshops have been conducted will be forwarded to the summit of Head of State and AU for consideration.

He lamented that Africa is working hard, but have not yet succeeded in implementing value adding programmes and initiatives and that there is evidence that efforts put in place to fight hunger and poverty are tangible and urged African countries to face the challenges and tackle the problem of rising oil and food prices.

NEPAD deputy chief executive officer, Hesphina Rukato, on the other hand, said Africa is rich in resources, but the challenge lies with their mobilisation towards achieving rapid economic growth and she was happy that many countries in the Sub-Saharan Africa subscribe to the ideals of NEPAD.

The workshop is held at a time when Malawi has just joined NEPAD Heads of State and Government Implementation Committee (HSGIC) as part of the four countries representing the Southern African region. The region has until July 2008 been represented by Botswana, South Africa, Mozambique and Angola.

The AU summit of the member states of January 2008 decided that in order to widen ownership and leadership of NEPAD among AU members, it would be necessary to put in place a system by which member states to the HSGIC would rotate every two years and the principle of rotation was effected at the just ended 11th AU Assembly in Egypt. The new membership in Southern Africa includes Lesotho, Malawi, Namibia and South Africa. Journalists from South Africa, Lesotho, Mauritius, Namibia, Zambia and Tanzania attend the workshop.

Johannesburg:  Desmond Tutu, Kofi Annan and other members of Nelson Mandela's global crisis task force turned their attention to world hunger on Wednesday, focusing on soaring food prices.

The Nobel laureates and human rights activists the former South African president brought together as The Elders at his birthday last year have sent peace missions to the Middle East and Sudan's Darfur and spoken out against sham elections and political violence in Zimbabwe.

With the food crisis, they were taking on an issue that some experts say could lead to new wars, and that has touched all parts of the world, rich and poor.

Food riots have broken out in the poorest countries, and the crisis has set back efforts to lift Africa out of poverty.

Tutu, the Elders chairman and former Cape Town Anglican archbishop, called the right to food "fundamental."

Tutu - speaking after the meeting to an audience that included British entrepreneur Richard Branson, a main supporter of The Elders - said world leaders were wasting resources fighting terror instead of poverty.

"We have it in us to make this a better world, a caring world, a compassionate world in which everyone would enjoy the right to food and freedom from hunger," he said.

Another Elder, former U.N. Secretary-General Kofi Annan, said the solution was not just humanitarian aid today, but steps to improve food security tomorrow.

Annan called for a focus on small-scale farmers. He encouraged banks and other lenders to extend services to small farmers so that they can afford fertilizer and other productivity-boosting measures and to help them take on the risks associated with expanding their enterprises.

He added governments needed to improve rural infrastructure, and scientists need to develop better seeds and improve soil in Africa, "the only continent that cannot feed itself."

Mandela, who turns 90 Friday, did not attend Wednesday's meeting, at which The Elders consulted with Olivier de Schutter, appointed by the U.N. last year to study the food crisis, and experts from the development group ActionAid International.

Along with Tutu and Annan, some of the Elders include former President Jimmy Carter; former Norwegian Prime Minister Gro Harlem Brundtland; former Brazil President Fernando Cardoso; and former Irish President Mary Robinson.

Windhoek: The prices of some basic food items will drop on August 1 when the 15 per cent value-added tax previously applicable will be removed.

Frank Khiba, a legal clerk in Ministry of Justice, said yesterday that the Value-Added Tax Amendment Act, which allowed this move, had already been gazetted and signed into law by President Hifikepunye Pohamba.

He was responding a query by The Namibian why these prices had not changed despite the bill having been passed by both the National Assembly and National Council last month.

Khiba said the act would come into force on the first day of the month following the date it was published in the Government Gazette.

He said the amendment act was signed by the President on June 27 and was gazetted on July 15.

The basic food items that will become VAT zero-rated are dried beans, sunflower cooking oil, lard, bread and cake flour.

The removal of the 15 per cent VAT on basic food items is aimed at helping poor Namibians who are finding it hard to cope with skyrocketing food prices.

Government will lose revenue of about N$34 million a year because of the decision. Since April this year, food prices have risen by about 30 per cent.

Lilongwe:  London-listed South African firm Lonrho plc-the conglomerate with a structured portfolio of African investments-and Airport Developments Limited (ADL) have sealed a deal that will see Lonrho developing an international standard cold store and agri-processing and packing facility at Kamuzu International Airport (KIA) in Lilongwe.

The deal would also involve development of a 100-hectare agricultural project adjacent to the airport.

Following the agreement with ADL-a wholly-owned Malawian Government unit, Lonrho will develop a quality control process, agri-processing facility, packing house and cold store for fruit, vegetables and flowers, according to ADL chief executive officer Rodrick Chattaika.

Chattaika said on Tuesday that the facility will provide the necessary infrastructure for the local agricultural sector to start international exports of farm produce and flowers.

"It is envisaged that formal agriculture will supply 30 to 40 percent of the processing plant in-put and that 60 to 70 percent will be sourced from local indigenous small farmers. Lonrho will provide agronomist advice to aid local farmers to increase yields and quality of production," he said.

Chattaika also said Lonrho will pay a nominal ground rent for the 100-hectare farm and the site for the new facility.  The new facility will be located with direct access to the airport apron for ease of handling and will be located at the existing logistics terminal at KIA, he said.

In turn, ADL will receive a royalty payment in relation to the turn-over of the new business.

In a statement released after the deal last week, Lonrho chief executive officer Geoffrey White said an international standard agri-processing facility was essential in Lilongwe considering the way the agricultural sector was growing in the country.

"The agricultural sector in Malawi has grown considerably in recent years and the level of production by local farmers clearly provides the opportunity for export. The development of an international standard agri-processing facility in Lilongwe in conjunction with a large agricultural project will provide benefits to the wider agricultural sector in Malawi bringing better economic returns for indigenous farmers and through advice and training to local farmers improve quality and yields," said White.

Lonrho-then short form for London-Rhodesia-is not a new name in Malawi as it was associated with investments in the sugar industry and other sectors in the country until the early 1990s when it divested.

The company's shares are traded on the London Stock Exchange and is strategically focused on the development of business opportunities in infrastructure, transportation, support services, hotels and natural resources.

Lonrho has over 19,000 shareholders and substantial institutional backing to support its mandate to build a profitable business that plays a fundamental role in the development of the African economy.

"We should insist on a level playing field," the minister said, "especially in agriculture."

He added that developed countries are stalling the Doha Round of talks over this issue. The Doha Development Round, negotiations conducted by the World Trade Organization with the objective of lowering international trade barriers, began in Doha, Qatar, in 2001 and is ongoing.

There have been calls for reductions in agricultural subsidies for the past several years.

Ambassador Crawford Falconer, who chairs the Doha Round agriculture negotiations, released his latest revised draft modalities July 10. The modalities contain formulas for cutting agricultural tariffs and subsidies, but have yet to be agreed upon. Falconer is New Zealand's ambassador to the World Trade Organization.

Moroka co-chaired the opening plenary session of the forum with U.S. Trade Representative Susan Schwab. It is the first time that Botswana has chaired the forum.

Moroka spoke of the tendency for African markets to export raw materials with little value and encouraged them to move away from dependence on single commodities.

Schwab also touched on the issue of diversification. "We haven't seen as much change as we would like," she said, adding that African leaders should think about how to gain access to growing markets such as India.

It is ironic, Moroka said, that African countries close their markets to each other while seeking to open them to countries overseas.

"AGOA-related exports have grown considerably," the minister said.

U.S. Secretary of State Condoleezza Rice opened the proceedings, saying that she is optimistic about Africa's future. "Africa and its people are not reduced to the sum of their challenges," she said.

The minister listed several issues that needed to be considered, such as monetary and employment policies, labor productivity, education and rising fuel and food prices. He said African leaders have looked at the challenges the continent is facing and now seek assistance from the U.S.

After the opening speeches, parts of the conference were closed to reporters. The forum continues Wednesday with discussions about the private sector.

Agriculture Deputy Minister, Daniel Kalenga said the committee will be headed by the minister for Agriculture. It will address the recapitalisation and payment of retrenched and retired workers at the company. He explained that the President formed the committee before he left for Egypt.

Mr Kalenga said workers will be put on paid leave while the company undergoes rehabilitation.

He told ZNBC that government is currently sourcing for K28 billion Kwacha to pay retrenchees and retired workers.

Mr. Kalenga said Nitrogen chemicals is a strategic company which once restored to full capacity will benefit Zambia and the SADC region.

Maputo:   Actions on the ground to use the 506.9 million dollars promised to Mozambique from the United States Millennium Challenge Account (MCA) will start in September, according to Planning and Development Minister Aiuba Cuereneia.

He was speaking to reporters on Monday after meeting with US Senator William Frist, who is a member of the Board of Directors of the Millennium Challenge Corporation (MCC), which manages the MCA.

It is now almost exactly a year since Cuereneia signed the agreement (known as a "compact") with MCC Chief Executive Office John Danilovich in Washington, under which almost 507 million dollars was allocated mostly for water supply, sanitation and roads in four provinces north of the Zambezi river {Zambezia, Nampula, Cabo Delgado and Niassa}.

Since then the money has not been disbursed. This glacial pace seems typical of the MCC - it took four years of negotiations before the Mozambican compact was signed.

Frist is in Mozambique at the head of an MCC mission analyzing actions in the first year of the lifespan of the agreement. During his stay he will also meet with President Armando Guebuza, and visit some projects implemented by the government's Water Supply Investment and Assets Fund (FIPAG) and by the Ministry of Agriculture.

"The conditions have been established to begin activities on the ground", said Cuereneia. "Mozambique has already set up an agency that will coordinate the actions, and agreements have been signed with the implementing bodies".

The largest slice of the MCA money, 203.6 million dollars, will be spent on water and sanitation. The roads component accounts for 176.3 million dollars. Land tenure and registration activities will account for 39.1 million dollars, and support for farm incomes the remaining 17.4 million dollars.

Cuereneia stressed the importance of clean drinking water for public health and for preventing the spread of parasitic diseases. He said the activities to be developed with the MCA funding will be of major importance in the fight against poverty, enabling the government to undertake activities which it could not possibly undertake with its own limited funds.

The two main implementing bodies are FIPAG and the National Roads Administration (ANE). They will shortly launch tenders to select the contractors who will carry out the building work involved.

For his part, Frist said he was pleased with the steps taken since the agreement was signed on 13 July 2007. "The priority is to work to fight poverty and to ensure sustainable development", he declared. He stressed that the entire programme has been designed by the Mozambican authorities and not by the United States.

The MCA and MCC result from an initiative of President George Bush, with initial funding of a billion dollars in 2004, rising to five billion dollars a year as from 2006. It looks certain to continue, whoever wins the US presidential election, since it enjoys bipartisan support in Congress.

Low income countries are eligible for money from the MCA - but only if the US administration believes that they are, in the words of Bush, "ruling justly, investing in their people and encouraging economic freedom".

So far 16 compacts have been signed, 10 of them with African countries.

Lilongwe:  The proposed 65 percent jump in the budgetary allocation for the fertiliser subsidy programme for 2008-09 will not trigger a corresponding increase in the number of beneficiaries as the new funding will only cater for skyrocketing global fertiliser prices, The Nation has learnt.

In his budget presentation on May 23 before Parliament came to a standstill due to the Section 65-budget controversy, Finance Minister Goodall Gondwe said government has allocated K17.7 billion for the subsidy programme this year, which is K7 billion more than the K10.7 billion approved last year.

Deputy Agriculture Minister Frank Mwenifumbo has told The Nation that the K7 billion increase is to cater for changes in prices of fertiliser on the world market mainly due to the rise in oil tariffs.

In an exclusive interview recently, Mwenifumbo said the price of crude oil had soared from about $60 a barrel in the past 10 months to around $130 with international analysts predicting a $150 per barrel ceiling in the near future.

"As you are aware, we don't manufacture most of the fertilisers here in Malawi. We have to export. Because of the rising in cost of oil, shipping costs have also gone up," said Mwenifumbo.

He disclosed that the number of the subsidy programme beneficiaries will remain at 1.7 million households as was the case last year.

"We are maintaining the same number of beneficiaries. Our target are the vulnerable-those who live on less than a dollar a day," he said.

The deputy minister said pre-registration preparations had already started.

"We want to do everything before the first rains but it would also largely depend on the timely passing of the budget. We would like to finish the whole [distribution] exercise by mid-September," said Mwenifumbo.

Last year the coupon distribution system faced a lot of anomalies. Some areas experienced distribution delays, while in other places the coupons were not enough. Some areas also recorded theft of coupons and politicians got embroiled in the distribution, causing further confusion and controversy.

Mwenifumbo said this year government has put in place tight measures to curb abuse. He, however, refused to disclose the measures.

Open market fertiliser prices in the country recently almost doubled, causing panic among the country's farmers-some of whom do not benefit from the subsidised fertiliser programme.  The hike has seen the price of Super D Compound jumping from K7,950 to K8,950 per 50 kg bag with D Compound selling at K7,380 from K6,530.

The move also sent the price of 23:21:0 fertiliser flying from K4,685 per 50 kg bag to K6,650 with that of Urea skyrocketing from K4,700 to K6,040.  The general price increase has mainly been attributed to growing demand for the commodity on the international market and the rising oil prices.

Agriculture Trading Company (ATC) general manager Richard Chikunkhuzeni told The Nation in April that although two fertiliser companies in the country blend the input locally, 90 percent of the fertilisers come into the country as a finished product.

It is with great pleasure that I, on behalf of Uganda, address this 9th Summit of the African Peer Review Mechanism Forum when our country is being peer reviewed. I wish to commend Your Excellency Meles Zenawi, Prime Minister of Ethiopia, for your able stewardship of the forum. I take this opportunity, on behalf of my delegation, to extend our sincere gratitude to our host, His Excellency Mohammed Hosni Mubarak, the President of the Arab Republic of Egypt, the Government and the people of Egypt for their warm reception.

Allow me also to congratulate my brothers who will be peer reviewed today, His Excellency Umaru Yar' Adua, the President of Nigeria and His Excellency Blaise Campaore, the President of Burkina Faso, for the successful completion of their APRM process and all comrades who have passed through the peer review.

We strongly believe that this process is good for us to generate creative solutions to African governance challenges, as we strive for the betterment of our Continent, Africa.

I wish to recognise the contribution of the APR Panel of Eminent Persons, especially my eminent friend Prof. Adebayo Adedeji, its chairman, who also headed Uganda's Review, for the guidance which has led to the success of the Uganda APRM process. Uganda appreciates having been allotted the seventh position in the queue of countries being peer reviewed.

Your Excellencies, it is now my honour to share with you the experience and outcome of the African Peer Review Mechanism in Uganda.

Uganda one of the pioneers for review

As you know, Uganda was one of the first countries to accede to the APRM process in 2003. However, the process was delayed by the parliamentary and presidential elections in 2006.

Diversity of the independent commission

A key element of the Uganda APRM process was the establishment of an Independent National Commission consisting of 21 representatives from the Government, civil society, the private sector, academia, members of the political opposition, religious leaders, trade unions, farmers, the youth, women, persons with disabilities (PWD's), Parliament and the legal fraternity. Each group was required to nominate a representative to the Commission, which the Government supported to carry out the Country Self-Assessment.

Apart from the diversity of the Commission, the consultations were made with a diversity of stakeholders representing all regions, districts, local authorities, divisions of the Kampala city, special interest groups, expert and professional groups, the Judiciary, Parliament, security, as well as law and order institutions. This enabled the capturing of varied and candid views from all stakeholders. The major challenge of using this approach is that it generates a lot of diverse and often conflicting views, opinions and interests. In many ways, the Country Review Report and this APR Forum is a continuation of the process of building consensus and agreement.

Your Excellencies, the Uganda Country Review Report highlights the achievements, challenges and Programme of Action. Allow me to comment briefly on each of these.

Major achievements of governance in Uganda

The following were identified as major achievements by the National Resistance Movement (NRM) Government:

-Macro-Economic Reforms and Liberalisation,

-Security and Professionalisation of the Army

-Constitutional reform and democracy

-Decentralisation

-Civil Service Reform,

-Education

-Reduction in the prevalence of HIV/AIDS.

The APR Panel has also identified nine best practices worthy of emulation as follows:

-Prompt handling of election petitions for both presidential and parliamentary elections

-Uganda's Macro-Economic management.

-The budget consultative process

-Setting up of a unit within the Uganda

-Investment Authority to promote and support local investors

-Setting up the Uganda parliamentary budget office

-Free universal primary and secondary education.

-Uganda's handling of the HIV/AIDs pandemic.

-Political leadership in the fight against HIV/AIDs

-The Decentralisation process in Uganda.

I now wish to make some brief comments on the achievements of Uganda:

Macro-economic Reforms and Liberalisation (Item 136 page 83)

As a result of the macro-economic measures and reforms, Uganda has experienced an unprecedented growth rate averaging six percent per annum for almost two decades. Inflation has been kept to single digit figures for over 18 years, while liberalisation has attracted both domestic and foreign investors, thus boosting trade.

This achievement is all the more remarkable because it lifted Uganda from a collapsed economy characterised by negative growth rates since the 1970s. Secondly, we have moved the economy from mere recovery to sustainable growth. Thirdly, at the time that these economic reforms were implemented, they were not popular and required strong, unwavering political will. Consequently, we have reduced Uganda's poverty levels from 56% in 1992/93 to 31% in 2005/06.

However, in computing Uganda's total and GDP per capita, the report seems to have used figures that are out of date. The economy is now $14.28b(Atlas method) and the GDP per capita is $482. The average GDP rate of growth in the last five years has been 8.3% per annum. In-spite of the mistake of delaying the construction of hydro-power dams caused by the wrong advice of the World Bank to our officials, the high oil prices and the crisis in neighbouring Kenya, the GDP rate of growth for 2007/08 was nine percent, after adjusting for inflation.

Security and Professionalisation of the army (Item 137 page 83)

Soon after Independence, holding power in Uganda and control of the State shifted from civilians to the armed forces. The military regime under Idi Amin (1971-1979), constituted of a semi-illiterate and highly indisciplined army that had been recruited on ethnic basis, ultimately, became a major source of insecurity and instability in Uganda.

The challenge in 1986, when the NRM came into power, was to transform the negative characteristics of the inherited army into an instrument of peace and security, as well as a professional body. Strict disciplinary measures were introduced in the army, especially to curb the killing and harassment of civilians. The army currently undergoes a high standard of training and education that is the basis for appointment and promotion. We are proud to note that Ugandan security forces are now of the calibre that is often called upon to undertake UN and AU missions in other countries.

Due to the historical role of our army, Uganda Peoples Defence Forces (UPDF), in liberating and reconstituting the failed State of Uganda and, in order for this force to comprehend and appreciate the nature of politics and the need for civilian oversight, the army has been given representation in Parliament. This has ensured good relations between the armed forces and other stakeholders and has enabled them contribute to good governance.

The claim by the Country Review Report that "...observers note that the UPDF has become a critical component of the President's patronage network,"(item137) is incorrect and portrays lack of understanding of army recruitment procedures.

Recruitment into UPDF, Uganda Police and Prisons forces is according to district quotas on the basis of competition - physical, academic as well as passing the appropriate medical tests.

Constitutional reform and democracy (item 138 page 83)

Your Excellencies, I note with satisfaction the panel's recognition of the Constitutional and Democratic reforms that have been carried out in Uganda over the last 20 years. I would like to emphasise that these reforms have been achieved through peaceful means.

It is important to remember that Ugandans went through 13 years of protracted struggles to remove dictatorial and fascist governments and, since that time, the National Resistance Movement (NRM) Government's primary mission has been to re-establish and consolidate constitutionalism and democracy in Uganda.

Uganda used a participatory and democratic approach in the designing and adoption of the 1995 Constitution of Uganda.

Its amendment requires a majority of not less than two-thirds of all Members of Parliament and the decision should be ratified by at least two-thirds of members of District Councils in each of, at least, two-thirds of all the Districts of Uganda. It is also referred to a decision and approval of the people in a Referendum for entrenched clauses. Since 1996, Uganda has held free and fair elections and since 2006, elections are now held under a Multi-party system.

Decentralisation (item139-140 page 83-84)

We do appreciate the observation of the APR Panel that Uganda has developed a remarkable decentralised system of governance, worth emulating by other African countries. It is important to emphasise the fact that the present system of local government is based on the post-1986 reforms introduced by the NRM Government.

This system was practiced in the liberated areas during the liberation struggle (1981-1986) and it was found effective.

The decentralised system has since then served the country well by ensuring efficient delivery of services through bringing them closer to the people and transfer of political power (political decentralisation) rather than mere administrative decentralisation.

The recentralisation of the role of the chief administrative officer (CAO) (district accounting officers), is to strengthen the accountability in the decentralisation system.

The local politicians being responsible for appointing the CAO was found to be self-serving and, therefore, fueling corruption. It was found that the accounting officer must be protected from local partisan and vested interest pressure. Government is committed to further strengthen the decentralisation system.

Currently, 33% of the national budget is transferred to local governments and in the last two consecutive years, $27m has been provided each year as compensation for Graduated Tax removal.

This financial year, a new law was passed to enable local governments collect new types of local taxes. We shall continue with $27m Graduated Tax compensation this year and Equalisation Grants for districts which may not be able to collect enough taxes.

Civil Service Reform (item141-143 page 84)

Indeed, the NRM Government recognises that promoting rapid economic growth is very much dependent on an effective and efficient civil service.

In Uganda, the structure of ministries and local governments has been streamlined and rationalised and their roles and functions redefined.

However, we still face the challenge of producing civil servants committed and responsive to efficient and effective delivery of critical services and the promotion and growth of the private sector.

Education (item 144 page 84)

Lessons from recently transformed economies (Asian Tigers) demonstrate the need for heavy investment in human capital.

This required expansion and extension of knowledge and awareness to a broad section of the population.

In order to build the basis for transforming Uganda's economy and society, our Government launched the universal primary education (UPE) in 1997 and, more recently, in 2006, we have embarked on universal secondary education (USE). The introduction of the UPE policy was spontaneously successful as enrolment for it jumped from 2.5 million to 7.2 million in a span of five years.

The response to the shift in lifting the burden of financing education away from households towards the public sector, has had a knock-on effect in multiplying privately-funded university and tertiary institutions.

We have now implemented the APR Panel recommendations to make UPE compulsory, beginning this Financial Year 2008/09.

Reduction in the prevalence of HIV/AIDS (item145-146 page 84-85)

Uganda's success in the dramatic reduction in the prevalence of HIV/AIDS from 30% in the 1990s to now about six percent in 2007 is testimony that consistent political commitment combined with simple but clear preventative strategies is necessary to combat a lifestyle-related epidemic. One of the major setbacks with regard to fighting HIV/AIDS in many countries has been to shroud it in secrecy, fearing its impact on tourism.

Uganda's achievement was based on the adoption of a policy and practice of openness. The reduction in transmission has been achieved through a combination of methods, including Abstinence, Being faithful to one partner and Condom use (popularly known as the ABC Strategy). In addition, it is Uganda's policy to make Anti-Retroviral (ARV) drugs readily available to all who need them in order to prolong life. To this end, Uganda has now established a factory to produce the ARV drugs.

Your Excellencies, in addition to the above achievements identified by the Panel, there are other noteworthy achievements, which I would like to highlight here, namely:

-Transparency and accountability.

-Promotion of gender equality and balance

-Liberalisation of the mass media

-Building our capacity in petroleum. research and development, leading to the discovery of our oil by ourselves

Transparency and accountability

Your Excellencies, please note that the whole mechanism for transparency and accountability in Uganda was instituted by the NRM Government. One of the early priorities of our Government was to inculcate a culture of transparency and accountability in public life.

In order to achieve this, the NRM Government created the institution of the Inspector General of Government, introduced a Leadership Code of Conduct and established the Directorate of Ethics and Integrity. The public accounts committee in Parliament oversees central ministries and local government accounts. While the NRM has majority in Parliament, these committees are chaired by Members of Parliament from the opposition parties. Therefore, the misconception that there is lack of political will to fight corruption is not justified.

Promotion of gender equity and balance

Right from the beginning, the NRM has vigorously promoted gender equity and balance. Uganda implemented the Beijing Programme of Action and also other conventions on gender. In order to increase the number of female leaders in professions and politics, Uganda adopted a policy of affirmative action, by which extra entry points are awarded to female candidates to increase their enrolment in institutions of higher learning, including universities.

The impact of this has been the increase in the number of highly educated women professionals at all levels. In terms of political representation, women are allocated a third of membership in all councils at all levels.

Subsequently, now 67.1% councillors at sub-county level and 46.8% at district level are women.

Liberalization of the mass media

The mass media are recognised as the fourth pillar of Governance. It plays the key role of disseminating information and promoting awareness as well as forming opinion on issues of democracy and governance. Since the NRM Government came to power and liberalised the mass media, electronic and print media houses have mushroomed and flourished in the country. The number of radio stations has grown from one to over 100 stations, while the number of television stations has increased from one to over five.

In addition, there are alternative and competitive channels of communication in the telecommunication sector, which play a key role in disseminating information throughout the country, including the rural areas. However, it is a challenge of governance that the freedom given to the media is used in a responsible and constructive manner.

Some of the radios have abused their freedom by telling incredible lies and promoting sectarianism. This is an issue that will have to be addressed.

Major challenges to governance in Uganda

Your Excellencies, the following are the challenges identified by the APR Panel of Eminent Persons which I will comment on one by one:

-Lack of structural transformation in the economy.

-Poverty

-High population growth rate.

-Negative political developments

-Corruption

-Dependence on aid and debt, as well as

-Uneasy peace with the neighbours

The challenge of nation-building

Before I elaborate further on my comments on the identified challenges, I wish to point out the greater challenge of nation-building. It is true that the formation of Uganda as a Nation-State dates back to 1894. However, it is important to acknowledge that there was a lot more in common both economically and politically between the peoples in the Region. As a point of fact, not only the people who live in Uganda but even those in north-western Tanzania, West of Kenya, eastern Congo, Rwanda, Burundi and Southern Sudan are either quite close
linguistically, culturally or are linked historically. Between 900 AD and 1500 AD, many of these groups were governed together by the Bachwezi Dynasty.

That is why you find common names in Uganda, Tanzania and Congo such as Ndahura, Mulindwa, Mugyenyi, Isimbwa, Kagoro, Wamala, Mukasa/Mugasha and others.

The successor kingdoms that followed the collapse of the Bachwezi Dynasty were, sometimes fighting, but mostly cooperating: Bunyoro-Karagwe (Tanzania), Buganda-Karagwe, Nkore-Karagwe, etc. That is how traders would go from Zanzibar to Buganda, Bunyoro or Nkore (1200 miles).

Excavations done at Ntutsi and Bigo Bya Mugyenyi, the ancient capital of Uganda, carbon dated to 900-1500 AD, showed a lot of cattle bones, pottery and also glass beads (enkwanzi) and cowrie shells (ensimbi). We were not making glass beads and cowrie shells. They were coming from the ocean. How did they get to Bigo Bya Mugyenyi, 1200 miles from the sea, if there was no cooperation by these kingdoms?

One of the British adventurers mentioned in the report, H.M. Stanley, in his book, In Darkest Africa, page 386, wrote as follows:

"By a gradual rise from Amrada southward, we escape after a few miles out of the unlovely plains to older land producing a better quality of timber. Before we were 100 feet above the lake a visible improvement had taken place, the Acacia had disappeared, and the myombo, a tree whose bark is useful for native cloth and for boxes, and which might be adapted for canoes, flourished everywhere. At Bwanga, the next village, the language of the Wahuma, which we had heard continually since leaving the Albert Nyanza, ceases, and the Unyamwezi interpreters had now to be employed, which fact the skeptical Zanzibaris hailed as evidence that we were approaching Pwani (the coast)."

What he called Wahuma (Bahima) language were the Interlacustrine Bantu dialects (Runyoro, Luganda, Runyankore, Runyambo, Lusoga, Lugwere, Lunyole, Ruhaya, Rujinja, Lukerewe (Lukerebe), Lumasaba and even Kinyarwanda - Kirundi - Kiha-Kihangeza). They were so close that they are mutually intelligible in varying degrees. So much for these British-French and German political engineers who created "artificial" edifices out of groups that were strange to each other!! In fact, they disrupted a constellation of fraternal and linked political units that were, at least, trading together. It is, therefore, not very accurate to say that the British created a country of such diverse groups that they were almost incompatible; or to give the impression that this is the first time these groups had interacted.

Even the adventurer, Stanley, could not help noticing the obvious fact that from Ituri in Congo to near Mwanza in Tanzania, the People were speaking one language, which he called the Wahuma (Bahima) language. He was referring, as already pointed out, to the very close Interlacustrine Bantu dialects.

It is in this context of the challenge of Nation-building and economic integration that what the report refers to as "North-South divide" needs to be understood. The document captures the chaos and blood-letting that has characterised Uganda since independence.

The report also talks of the violence and wars provoked by the British and their European rivals in the form of Catholic vs Protestants and Christians vs Muslims following the entry of the British into Uganda in the 1880s and 1890s. Who were the belligerents in these conflicts? Did these conflicts represent a North-South divide? Not at all.

The conflicts in Uganda after independence were for most of the time North on North conflicts: Idi Amin (North) vs. Milton Obote (North). Tito Okello (North) vs Milton Obote (North). Uganda has been independent now for 46 years and for 23 years of that time she was led by northern factions.

At the dawn of Colonialism, much of the conflict was not North vs South. It was in fact, internal conflicts in Buganda (Catholics vs Protestants, Muslims vs Catholics) or British Colonialism against a belated alliance of Ugandan chiefs of Bunyoro (Kabarega), Buganda (Mwanga) and the North (Akaki of Lango). The Front for National Salvation (FRONASA)-Amin conflict (1971-1979) or the NRM-Obote's Uganda Peoples Congress (UPC) conflict (1981-1986), was not North-South conflicts. Why? In the 1971-1979 anti-Amin struggle, the NRM (FRONASA) was on the same side (although we failed to form one organization) with Obote's UPC against Amin. Amin had been massacring everybody but, especially, the Acholis and Langis (from the North).

In the 1981-1986, the NRM was allied with the whole of West Nile (Moses Ali, Emilio Mondo, Hajati Anuna Omar, and Dr. Adriko) against UPC which was not really a political party from the North; the Report has already described UPC as more of a Protestant party than a northern party.

In fact, some of the strong anti-UPC elements were from the North (Alexander Latim, Serapio Obonyo, Gaspare Oda - murdered in 1980, Adimola). Karamoja (North-East) has always been pro-NRM - in the anti-UPC struggle and even today.

The report talked of the Kony terrorism. Where does Kony come from? North. Whom has he been targeting and killing? Mainly, people from the North (especially Acholis).

Where, then, is the North-South divide? These factions have always been myopic groups of, actually, individuals who, then, try to gang-press certain groups into their corner in the unprincipled fights. These factions, most of the time, do not represent the interests of even any one area.

What grass-root development did these Northern factions bring to even the North? If NRM came to destroy northern prosperity, where are the ruins of that prosperity? The Roman Empire was destroyed in the 5th Century AD (410). However, the ruins of that Empire are still there (the coliseum and roads.

To the contrary, the NRM Government has put some developments in the North; for example, of the 22,100 primary school classrooms built in permanent materials (cement, bricks and corrugated iron sheets) to be found in the North-Eastern region, the NRM has built a total of 16,897 classrooms of them as illustrated in the table alongside.

The 16,897 classrooms built by NRM Government in the North in the last 20 years, constitute 54.7% of the entire number of 40,067 classrooms, in the whole country. Gulu University and a number of Teacher Training Colleges (TTCs) have also been built by the NRM in spite of fighting Sudan-sponsored terrorism at the same time.

Structural transformation in the economy

It is not true that there is no structural transformation in the economy as the contribution of agriculture to GDP has come down while that of industry is rising.

In order to achieve structural transformation in the economy, Uganda is embarking on industrialisation, agricultural modernisation and the expansion of the services sector.

The claim that "little has changed in the relative importance of the agricultural, industrial and other sectors of Uganda's economy" is not true. In 1986, agriculture was 53.9% of GDP, industry was 16.1% of GDP and services were 30% of GDP. The figures are now 21.4%, 24.4%and 49%, respectively. How could anybody say "little" has changed?

It is true that we are still exporting a significant portion of our products in the form of raw materials whereby we lose money and jobs to the outside World. We are very much aware of this and we have been deliberately solving it where possible - mainly relying on attracting private companies instead of starting parastatals.

This process has worked for the fish sector (17 factories since 1986 bring in $124.7m), tea sector (20 factories bring in $ 47.6 m), cotton sector (brings in $ 19.6m), sugar factories and steel-mills.

The issue, however, is that there is a lot of latent capacity that is not yet exploited when it comes to value-addition in the areas of coffee, fruits, beef, cereals, natural fibres, minerals, tourism, wood-products, light and heavy engineering and ICT. What is needed is deepening the value-addition process but not the direction to take. The journey of transformation has already been embarked upon.

Even the relative importance of coffee as a lead export earner has also changed. It is no longer true to say that "over a half of Uganda's export earnings are derived from coffee exports".

This year, our exports of goods and services were of the magnitude of $2,293m ($2.3b) and coffee only brought in $265.9m. This figure does not include the figure of our workers' remittances from abroad which is $1.3b. In addition, the Government has a deliberate policy to transform the country from a predominantly subsistence economy to a modern industrialised economy. In this regard, the following specific interventions are being undertaken:

-The construction of industrial parks which will increase access to serviced land by investors.

-Provision of tax incentives and export processing zones to facilitate manufacturing industries.

-Increased access to long-term finance by SMEs for value- addition particularly in Agro-processing.

-The Government is supporting Loan Guarantee Scheme for commercial banks. This will support value-addition by agro-processors outside the industrial parks.

-Construction of Hydro-power dams in Bujagali, Karuma and Isimba.

Significantly increasing funding for road construction and maintenance and revamping the railway network.

-The Uganda Investment Authority is a one-stop centre to facilitate investment.

-To facilitate the service sector, Government has made heavy investments in human capital, ICT, infrastructure and tourism.

Poverty eradication

Since 1997, Uganda has had a successful Poverty Eradication Action Plan (PEAP) which has enabled the population living under poverty to reduce from 56% in 1992/93 to 31% in 2005/06, as mentioned earlier. Recently, we embarked on Prosperity-for-All, which is our strategy for wealth-creation ensuring that every household is able to earn, at least, sh20m($12,000) per annum. The main objective of Prosperity-for-All is to transform the peasant households from subsistence, unplanned production methods and poor unhealthy living conditions, to commercial, industrialized production and healthy living conditions.

The Government is aware that there is regional disparity in poverty levels due to historical factors and a protracted war for nearly 20 years in northern Uganda, as already alluded to, that forced over 1.5 million people to live in camps for the last 10 years.

However, the Government over the same period has continued to invest significant resources in northern Uganda. Government, therefore, introduced deliberate programmes to address these disparities, for example the Northern Uganda Reconstruction Programme (NURP) I and II, Northern Uganda Social Action Fund (NUSAF) of $100m and more recently the Peace, Recovery and Development Plan worth $ 650m. This is over and above the budgetary allocation given to each district on per capita basis and further supported by equalization grants.

High Population Growth Rate

The Cabinet has recently adopted the revised National Population Policy to address population issues; and the high population will be used as a dividend through increased production and productivity of the population to realise economic transformation.

I do not share the alarmism over the high rate of population growth. The problem of Africa, over the millennia, was under-population. With the GDP rate of growth of above 10%, after we deal with the issue of energy, we shall cope with our high rate of population growth. As our society becomes more middle class, the family sizes will shrink. That is the natural, positive way of dealing with population instead of wanting to keep Africa under-populated. That was part of the problem in the past.

Underdevelopment is the problem but not population. The UK is the same land area as Uganda and they have a population of 60 million which is living in affluence. Even Japan which is slightly bigger than Uganda has a very affluent population of 127 million people. Uganda has got much more natural resources than either the UK or Japan. How can we fail to cope with a population of 30 million or the subsequent increases? I am not persuaded by these arguments.

Negative political developments

The report talks of the danger of the return of "neo-patrimonial politics." This does not make sense, especially after you have elaborately laid out our vast democratic structures right from the 51,000 Local Council (LC1s) at the village (ekyaaro) levels, through LC2s at parish (emiruka) levels, LC3s at sub-county (Gombolola) levels, LC4s at county (saza) levels, LC5s at district (eitwaare) levels up to the national Parliament. How is "patrimonial" politics (old or neo) possible in such a structure?

The report also talks of the amendment to the presidential term limit under Article 105 (2) of the 1995 Constitution. At the time we carried out this amendment, we took into account the state of the political and socio-economic development of Uganda.

In the Bible, in the book of Isaiah 53:6 says: "They left undone what they ought to have done and they did what they ought not to have done and there is no truth in them."

Given our history, it was clear that there were no strong institutions that could carry out the necessary programmes that we had initiated. While we saw the need for continuity, we also looked at other constitutions and practices around the world. It is clear that some countries have term limits and others do not.

In our judgment, given the aforesaid, we opted to follow those countries that do not have term limits. As you know, examples abound in such great democracies as the United Kingdom and Germany. In India, the biggest democracy in the World, there is no term limit. In Israel and all the Western democracies there are no term limits. I was recently in Israel with Shimon Perez who was already active in the Israel politics of resistance when I was born, in 1944. He is still making a contribution. He is always voted in and voted out. We amended this provision because that is what Ugandans demanded. There was a majority of MPs accepting this amendment in Parliament, with a minority of only 52 Members of Parliament out of 303 opposing it.

There were 38 amendments made to the 1995 Constitution including the introduction of the multi-party political system and the creation of the official role of the leader of opposition at Cabinet rank. What is fundamental is what is captured in Articles 1 and 59 of the Uganda Constitution that "gives every citizen of Uganda of 18 years of age or above, a right to vote." As long as the people are exercising their right of choice and separation of power mechanisms are in place, leaders will be thrown out if they do not perform. This is in harmony with the "NEPAD Declaration on Democracy, Political, Economic and Corporate Governance" where Uganda commits itself to enforcing the inalienable right of the individual to participate, by means of free, credible and democratic political processes, in periodically electing their leaders for a fixed term of office.

Very many African leaders were rejected democratically although they had been in power for a long time, among them Mzee Arap Moi, Mzee Kenneth Kaunda and Mzee Abdou Diof. You can see the recent elections in Zimbabwe. What is exactly the point with this term limit? It is another "golden calf" erected by those who meddle in our affairs to divert us from worshipping the real 'God' of development: private sector-led growth, value-addition, market-access and integration, human resource development, political integration by creating political federations where possible in order to guarantee our future, the power of the people to elect or remove leaders at periodic intervals.

It is these factors that made other countries succeed; and not term limits. This is the view of the people of Uganda. Indeed, there was a Referendum on the issue. After we removed the presidential term limit on September 26, 2005, we held presidential, parliamentary and local government elections on February 23, 2006. We won all the three with big majorities. That is what the people of Uganda want.

With regard to limits of the major pillars of the State and issues of the oversight role of Parliament being undermined, it is important to note that through its oversight committees, Parliament checks and holds the Executive accountable and all oversight committees of Parliament are chaired by the opposition.

Furthermore, all appointments by the President are vetted and approved by Parliament. On a number of occasions, Parliament has declined to approve nominations by the President. Through the public accounts committee and the local government accounts committee, Parliament scrutinizes and examines all expenditure of Government and rearranges priorities.

The Judiciary is not only independent in the performance of its duties, but is also a self- accounting institution. To further strengthen the Judiciary, this financial year, we have addressed the issue of human resource by appointing 16 new judges. The Constitutional Court has, on a number of occasions, taken judicial decisions which are not in favour of the Government. The Government respects all Court decisions and where it is not satisfied, appeals are lodged by the Attorney General in the Supreme Court.

The Uganda Constitution, in Article 176, devolves and transfers some functions, powers and responsibilities of Central Government to local governments except defence, the Police and foreign relations. Through the system of decentralisation, decision making and allocation of resources is being shared between the Central Government and local authorities.

We acknowledge the recommendation relating to reviewing the Constitution and appointment of the Electoral Commission. We also acknowledge that there are three elements in strengthening the electoral system which have been missing: computerising the voters register to stop those who try to engage in multiple registrations; disciplining the political actors to stop using bad language and stopping the politicians that corrupt voters through bribery.

We have created a special wing of the Police to deal with political hygiene by arresting those who offer bribes and those who receive them. Otherwise, the electoral process in Uganda is among the best in the world.

Corruption

The report notes that the Government has put the legal framework in place and has established appropriate institutions but that they lack resources to carry out their effective oversight and accountability role. The Government h