AU Monitor

Gaddafi Visits Uganda

Daniel Kalinaki (The EastAfrican)—Libya’s President Col Muammar Gaddafi was expected to arrive in Kampala over the weekend to close an Afro-Arab Festival and preside over the opening of a mosque in the Ugandan capital whose construction he has funded.

Ugandan officials said last Friday that Presidents Mwai Kibaki of Kenya, Paul Kagame of Rwanda, Abdoulaye Wade of Senegal, Pierre Nkurunziza of Burundi, Omar el Bashir of Sudan, Mamadou Tandja of Niger and Idriss Deby of Chad, were also expected to attend.

Despite the philanthropic nature of the visit, Col Gaddafi’s first visit to Uganda in seven years underscores Libya’s growing portfolio of investments in the region and the political and economic weight it wields and is increasingly willing to use to acquire and defend its interests in the region and across the continent.

Gaddafi’s relationship with Uganda goes back several decades; he was Idi Amin’s strongest political and military ally, and helped fund the five-year rebellion that brought President Yoweri Museveni to power in January 1986. During his last visit to Uganda — on May 12, 2001, to attend Museveni’s swearing-in ceremony — Gaddafi, who has been in power since 1967, described Museveni as a “revolutionary” who should rule without having to undergo elections.

The Libyan leader visited again in July the same year to attend festivities for King Oyo, the child-king of Tooro kingdom in western Uganda, and a beneficiary of Gaddafi’s largesse.

Gaddafi also promoted Museveni’s son, Muhoozi Kainerugaba, then a second lieutenant, to major, a rank State House later clarified was honorary but which Muhoozi now holds legitimately, after undergoing several courses.

Gaddafi’s visit comes amid a relative cooling of political ties between Tripoli and Kampala following President Museveni’s refusal to support Gaddafi’s call for an immediate Pan-African government during last July’s African Union Summit in Accra, Ghana, in preference for a unity model based around regional economic blocs. Gaddafi and Wade are expected to use the Kampala visit to rally support for their unification model — and Libya has the economic clout to influence political positions.

Libyan investment in the region has soared over the past decade, funded by record oil prices, through the Libya Africa Portfolio for Investments (LAP), the $5 billion sovereign wealth fund set up in 2006 whose subsidiaries include the Oil Libya Holding Company (formerly Tamoil Africa), the Libyan Arab Company for African Investments, Afriqiyah Airlines, the LAP Green Holding Company and various other projects and shareholdings.

Tamoil won a bitterly disputed tender to construct the $100 million Eldoret-Kampala oil pipeline extension, whose construction is expected to start later in the year. LAP has also expanded into telecoms, acquiring 69 per cent of Ugandan Telecom Ltd (the Ugandan government owns the rest of the shares), and has paid $100 million to acquire 80 per cent of the formerly state-owned Rwandatel. The company has pledged to invest $317 million over the next five years to modernise the network and roll out a mobile telephony network.

The Libyan sovereign wealth fund owns 100 per cent of the Lake Victoria Hotel in Entebbe, and 60 per cent of the 4-star Hotel Novotel Umubano in Kigali, in which the Rwandan government owns 40 per cent. It also owns 60 per cent of Tristar, a fledging company set up to export garments from Uganda to the United States under the Africa Growth and Opportunity Act, as well as 49 per cent of Uganda’s largest real-estate developer, the National Housing and Construction Corporation NHCC.

Notably, some of the Libyan investments in Uganda — in particular UTL, National Housing and Tristar — were concluded under the table, without open bidding and often involved controversial debt-for-equity swaps.

The EastAfrican reported last year that a committee of the Ugandan parliament was investigating claims that the country could have lost as much as $30 million in a debt-for-equity swap involving NHCC due to undervaluation of the latter. The deal involved swapping 49 per cent of the company’s equity, valued at $20.3 million, as part-settlement of an $88 million loan that Uganda took from Libya in 1989. The company was valued at Ush122 billion ($72 million) in 2004 and Ush119 billion ($70 million) in 2003, but the government used the accounts of the year 2002, when the company’s net worth was Ush70.6 billion ($41.5 million) only — some $30 million less — to negotiate the deal with the Libyans.

The chairman of the Public Accounts Committee, Nandala Mafabi, told The EastAfrican at the time that National Housing “was sold overnight because no due diligence was done and no adverts were seen in the press to this effect, so the agreement is illegal.” Finance ministry officials defended the deal and said the government would have had to pay more in interest and penalties had the deal not been concluded then. Chris Kassami, Permanent Secretary in the Ministry of Finance, said: “If we did not sign that agreement, it meant that we had to pay $188 million there and then.”

Away from the philanthropy, Libya is increasingly seeking to use its economic muscle to further its political and strategic interests on the continent. In January, Reuters news agency, quoting Libya’s official news agency Jana, said Gaddafi had threatened to divert the focus of the $5 billion sovereign wealth fund to the Mediterranean region if Africa “sacrificed its future” and failed to form a common government.

“If Africa practised racism or wanted to sacrifice its future, Libya would then be able to scrap its current investment in Africa and move it to the Mediterranean region,” Gaddafi was quoted as saying before the AU summit in Addis Ababa in February.

In his speech, made to an audience of “African citizens and African leaders,” Gaddafi made it clear that Libya’s investments on the continent are not purely philanthropic. “This money is invested by Libya in Africa not to be given to Africans for free, but for a return to Libyans,” he said.

Gaddafi has not hidden his desire to give the continent’s Arabic speakers more clout, preferably through a single unified government, and his visit to Kampala for the Afro-Arab Youth festival and mosque-opening is telling.

His vision of African unity is countered by the South African-led view of the phased approach, a gradual process that Gaddafi warned in his January speech could lead to a continental chasm along racial lines.

He said: “And it would be possible that the Sahara would be the dividing line of the continent into white and black Africa, with North Africa, headed by Libya, linking its future to Europe.”

Libya’s investment on the continent, therefore, is as much a search for economic returns as it is for political reward. It is not happening in a vacuum — South African investment on the continent has soared over the past decade, with firms like Stanbic, MTN, Vodacom and Shoprite becoming continental brand names.

Nigeria, flush with oil cash, has also set up a sovereign wealth fund and Nigerian firms have started investing in the banking and insurance sectors in West and East Africa.

East Africa has become the beachhead for the new contest between South Africa and Nigeria on the one hand, and Libya on the other. The new dazzling mosque in Old Kampala is as much, therefore, a symbol of Libya’s friendship as it is of its determination to win the battle of minds, hearts and the future of Africa.

Posted by on 03/17 at 04:46 AM

Next entry: India-Africa Summit

Previous entry: AU Reviews Elections

<< Back to main