Gay Rights Squabbles: Uganda Brushes off World Bank’s Promise to Cut Funding, All Political Chapels Back Anti-Homosexuality Act

The shilling seems to have stabilized against the United States of America dollar (USD), after initial shock from the World Bank’s announcement that it would no longer provide new financing to Uganda, led to loss of value.

Following the World Bank’s announcement, the Uganda shilling, which, had been one of the better performing currencies in East Africa lost ground. Kenya’s shilling has been struggling for months against the dollar, as the country’s foreign debt payment obligations negatively affected currency reserves.

Tanzania last year looked like it had adequate foreign exchange reserves, but in what analysts say is a self-inflicted wound, the country started struggling following President Samia Suhulu’s directive to limit agricultural exports contributed to the shortage of the USD.

And following the World Bank’s announcement to stop funding over the anti-gay, it looked Uganda would join East African neighbours in the struggle to find dollars, as the shilling lost ground from Ush3500 per USD over 3700, within a space of two days.

For now, the loss of value seems to Uganda shilling’s strength seems to have stabilized.

Michael Atingi Ego, the Deputy Governor of the Bank of Uganda says the fact that the World Bank will not be cutting already approved loans could explain the shilling regaining value but adds that it is hard to give a proper response before the Ministry of Finance provides the list of the loans and grants that are to be affected.     

He says the shilling lost strength in the wake of the World Bank’s announcement, but things have since changed for the better.

“You know we have a market-based exchange rate and factor like sentiment determines movement, but as you are aware that the currency picked some strength on Friday and yesterday (Monday),” he says.  

The World Bank announced in a statement last week that Uganda’s decision to pass the harsh anti-gay law would cost the country new funding.  

“We believe our vision to eradicate poverty on a livable planet can only succeed if it includes everyone irrespective of race, gender, or sexuality. This law undermines those efforts. Inclusion and non-discrimination sit at the heart of our work around the world,” says the statement.

The World Bank has been a major funder for Uganda.  Information from the Civil Society Advocacy Group (CSBAG) shows that the World Bank is currently running 30 active projects and another 13 are being processed. Together the 43 projects are worth $13.9 billion, which is a big chunk of the money, considering this is Uganda, where the Gross Domestic Product (GDP) stands $49.2 billion.  

Despite the World Bank’s importance to the economy, President Yoweri Museveni’s reaction was that of nonchalance, saying Uganda would develop with or without loans.

Although he added that his government would seek to explain to the World Bank the importance of the homosexuality act, which its supporters claim will protect children from being abused.

“It is unfortunate that the World Bank and other actors dare to want to coerce us into abandoning our faith, culture, principles and sovereignty, using money,” says the President.

Following the President’s statement, members of the ruling National Resistance Movement (NRM) have reechoed the same statement, saying Uganda would find other ways in surviving.

As the Parliament was almost unanimous in their support of the anti-homosexuality act, the reaction by both government officials and members of the opposition has been that Uganda can do without the World Bank’s money.

In his communication to Parliament on August 15, Deputy Speaker retaliates this message of Uganda’s determination to implement the anti-homosexuality act.

“When we were making that decision, we knew it would have repercussions,” he says, adding that the Parliament is prepared whatever the consequences the West may want to throw at Uganda.

He also says that as Parliament, they cannot afford to show any signs of weakness or panic, as this would mean lack of understanding of what was bound to happen.

The opposition in Uganda does not agree with the government on many things, but passing and keeping the anti-homosexuality act on the country’s law books seems to be one of the few areas, where the two side’s views are similar.

Asuman Basalirwa, the opposition Member of Parliament, who sponsored the act, has for example suggested that Uganda look to Qatar, Saudi Arabia and the United Arab Emirates for money, even if he says the World Bank’s decision is unfair.

Even President Museveni’s closest challenger in the last general election, Robert Kyagulanyi commonly known by his stage name Bobi Wine, did not condemn the government for passing the anti-homosexuality law.

He instead criticized the World Bank for singling out homosexuality as the one human right that results in the sanctioning of President Museveni’s government.

Kyagulanyi says; “It is disturbing how institutions like these (World Bank) give priority to only gay rights and ignore all other gross human rights violations, including mass murder, torture, detention without charge, and undermining democracy by rigging elections.”  

Kyagulanyi’s thoughts seemed to be the overriding sentiment among many Ugandans. However, there are those who think President Museveni, who since he came to power in 1986, has bent over backwards to please the Bretton Woods system should not then squander the sacrifice of Ugandans to pass a populist law that is hard to enforce.  

When President Yoweri Museveni first came to power in 1986, he found a rundown economy that did not produce many essential commodities, which had reduced majority of the population to doing without even the most basic goods such as salt.

The country did not have the foreign exchange to import these essential goods either, so he proposed barter trade with countries such as Libya and Cuba.

The President’s idea was for Uganda to provide commodities such as coffee, while Cuba and Libya would provide sugar and oil respectively.

However, within a year of his presidency, he realized the idea of strongly allying with countries like Cuba or Libya would turn him into a pariah, so he switched gears and negotiated with the West and institutions such as the World Bank.

The World Bank and the International Monetary Fund spearheaded the structural adjustment program in Uganda resulting in one of Africa’s most comprehensive liberalizations and privatization.

Implementing these reforms was costly, as Uganda spends billions every year since 2007 to facilitate the construction of some factories, hotels and providing credit to mostly peasants, as public owned banks were either closed or privatized.

Some analysts even blame the invasive corruption in Uganda’s current civil service and private sector on the structural adjustment reforms, as the children of a big section of the middle class that thought their livelihoods had been secured for life through employment with government; now obsess over primitive accumulation of wealth.

Now with the World Bank promising to no longer finance Uganda, President Museveni says the country will turn to resources currently squandered through corruption. In effect, he says the World Bank has provided an impetus to solving the long-standing problem of corruption.

Whether fighting corruption is possible under President Museveni remains to be seen. There is also the question of whether savings from corruption can be enough, to protect Uganda from future foreign exchange shortages and the loss of value for the shilling.

Because according to Dr. Fred Muhumuza, if Uganda does not resolve the current disagreements with the World Bank, a shilling will at some point shed value, as a shortage of foreign exchange is inevitable.