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Spillover of Uganda 'Fuel Protests' Expected Around East Africa

Discussion in 'Jukwaa la Siasa' started by nngu007, Apr 20, 2011.

  1. nngu007

    nngu007 JF-Expert Member

    Apr 20, 2011
    Joined: Aug 2, 2010
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    Mwaura Kimani

    Nairobi - East African presidents watching Ugandan protesters clash with security forces last week over the skyrocketing prices of fuel must have been wary of a spillover into their countries as the region battles surging inflation.
    In Uganda, where the ruling party recently won a general election by basically bribing voters using hundreds of million dollars through the National Resistance Movement electoral machine, ordinary people are starting to feel the pinch of rising prices. And they said this loud and clear last week.

    The country's opposition leader, Dr Kizza Besigye, President Yoweri Museveni's closest rival in the February elections, led thousands of Ugandans on a "Walk to Work" campaign to protest against rising food and fuel prices; more such protests are expected this week.

    There is a growing likelihood that Uganda's protest will quickly spread to other EAC countries.

    In Kenya, the Consumer Federation of Kenya (CoFeK) has warned that it intends, in collaboration with the Central Organisation of Trade Unions (Cotu), to mobilise workers and consumers to protest against runaway inflation arising from increasing fuel and food prices from Tuesday this week.

    On Thursday, the government through the Energy Regulatory Commission (ERC) raised fuel prices by Ksh9 (11 US cents) a litre, sparking protests from consumers and manufacturers.

    Commission director-general Kaburu Mwirichia attributed the rise in pump prices to surging global crude prices due to unrest in the middle East and North Africa and increased demand from strong economic growth in countries such as China and India. Diesel, on which Kenya's economy is deeply dependent on for transportation, power generation and agriculture, rose 14 per cent, while the price of kerosene, the mostly widely used domestic fuel by a majority of the country's 38 million people, rose 8 per cent.

    Analysts argue that the protests in Uganda are a signal the ordinary sacrifices that consumers have been forced to make since late 2010 will start translating into political discontent as it dawns on households that they could soon barely afford a meal a day.

    "This is not Uganda. It's about East Africans and their lives, which are at stake in the face of dwindling political will to address their problems," said CFK secretary-general Stephen Mutoro. "It's a matter of days before we see the East African region engulfed in protests because households are really suffering," added Mr Mutoro, saying that his organisation was seeking police approval to proceed with the protests.

    Uganda and Kenya have been particularly hard hit by inflation since the onset of the global financial crisis, a situation that has been made worse by the weakening of local currencies against the dollar and other hard currencies.

    A slew of problems face EAC households, exacerbated by unending political feuds, but none is as pressing as high food and fuel prices, which have hit millions of poor people, and angered opposition leaders, company executives and trade unionists.
    "Knowing that the state has no interest or political will to act on the side of the ordinary citizen to avert or lessen the social and economic impact of this crisis, the suffering masses have no choice but to take recourse to self-help, to act in their self-interest to change their conditions by themselves," said Odit John, secretary-general of the Uganda People's Congress in a statement on Friday.

    Governments globally have been taking measures to address soaring food and fuel prices as well as unemployment -- which have stoked social unrest especially in African countries such as Libya, Tunisia Algeria, Egypt and Morocco and now Uganda -- by changing taxation regimes, introducing price controls and taking in more imports to boost supplies.

    Kenya, for example, introduced price caps on fuel prices in December 2010 after complains that retailers were exploiting them.

    But the formula being used by ERC to determine maximum pump prices is already facing opposition, with consumers threatening to go to court to have it adjusted in their favour.

    Analysts said surging inflation could be the greatest risk to the EAC economies in 2011 and could trigger more monetary tightening in coming months.

    "The protests should be a wake-up call to African governments, who must cushion households from the rise in the cost of basic goods," said Joseph Kieyah, head of the private sector development division at the quasi-government think-tank, Kenya Institute of Public Policy Research and Analysis.

    "The way out is reviewing taxation regimes in regard to basic commodities like food and fuel to make them more affordable as well as to introduce subsidies," said Dr Kieyah.

    Inflation in Kenya and Uganda rebounded with a vengeance in March, edging near the double-digit mark on the back of high food and fuel prices.

    The Kenya National Bureau of Statistics said inflation climbed to 9.19 per cent in March -- the highest since the new method of calculating price changes was introduced in November 2009, and 2.65 percentage points higher than February's rate of 6.64 per cent.

    Meanwhile, Uganda's year-on-year inflation rate jumped to double digits in March, driven by rising food costs.

    Food prices -- which carry a 27.2 per cent weighting in the consumer price index (CPI) -- jumped 11.9 per cent month-on-month to push the headline rate up for a fifth month to 11.1 per cent from a revised 6.4 per cent in February.
    This trend is likely to be replicated in Tanzania, Burundi and Rwanda as figures on the cost of living come in.

    In Tanzania, rising food and fuel prices, coupled with a chronic energy shortage, are expected to push Tanzania's inflation rate back into double digits this year.
    The country's year-on-year inflation rate was up for the third successive month to 6.4 per cent in January, up from 5.6 per cent in December.

    So far, Rwanda and Burundi seem to have had stable inflation rates, although it looks unlikely this will hold with the fresh rise in global crude prices.

    Across the region, food shortages due to drought and the persistent currency depreciation pressures have been the main drivers of inflation.

    Currency depreciation pressures in the past couple of months have also had adverse effects on the domestic price level.
    Political crises in North Africa and the Middle East have caused fuel prices to shoot up, as oil is a major export of these countries.

    Though the seasonal rains throughout the region seemed to have started on time late last month, in time for the growing season for maize in Tanzania and planting time in Kenya, the rainfall is expected to be less than average.
    This could mean a below average harvest that could lead to food shortages and rising prices.

    From afar, the problem of rising prices in the region has been confined to the policymaking community, but the real effect on the man on the street is starting to bite.