Privatisation of the Uganda and Kenya railways corporations

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Uganda Railway Workers’ Union

The political situation in Uganda

Uganda is a landlocked country situated in East Africa, with an area of 93,000 sq miles and a population of about 29 million. The current government has improved the political, economic and social aspects of the majority of citizens. Economic activities, schools and banks, which were in the past confined within urban areas, have now penetrated rural areas.

Uganda has ratified a number of ILO conventions, notably Conventions No. 11, 29, 87, 98, 100, 105, 111, 122, 138, 144, 154, 158 and 182, all of which have been incorporated into the national constitution. Following tripartite consultations, Parliament enacted several labour laws, such as: the labour unions act 2006, the employment act 2006, the labour disputes (arbitration and settlement) act 2006, the occupational safety and health act 2006.

Ratification of important ILO conventions, new labour laws, and workers’ right to have five representatives in parliament have marked a significant step forward from the old provisions, which had prevented workers from organising and joining trade unions.

Uganda and Kenya railways privatisation process

Poised to allow foreign investments and greater participation of the private sector in the economy, the Ugandan government embarked on a reform program by enacting privatisation guidelines under the public enterprise reform and divesture (PERD) statute No 9 of 1993.

Parliament approved in 2001 the strategy to concession Uganda Railway Corporation (URC).

Following the 2003 agreement of the presidents of Uganda and Kenya to concession the two national railway corporations together, the two governments set up a joint steering committee to overview the implementation of the whole process.

Having realised that privatisation could lead to unemployment, the Uganda Railway Workers’ Union (URWU) and Kenya Railway Workers’ Union (KRWU) tried to resist the concession, but the governments’ decisions eventually prevailed.

Both unions demanded their participation in negotiations, particularly they demanded:

Consolidated salaries prior to calculating workers’ terminal and pension benefits (URWU).
Paid fair terminal and pension benefits (URWU/KRWU).
All workers to receive terminal and pension benefits regardless of their employment status with the concessionaire or the residual companies (URWU/KRWU).
All permanent and pensionable workers having at least ten years of service to be paid pensions, regardless of whether they have reached the qualifying age of 55 years (URWU).
The concessionaire should unconditionally recognise both unions (URWU/KRWU).
When recruiting, the concessionaire should give priority to actual employees before taking applications from outside the national railways (URWU/KRWU).

However, despite having consulted one another, the unions negotiated separately with their governments and corporations.

Railway workers in Uganda went on strike twice, the second strike lasting for two weeks (31 March – 13 April 2005). URWU reported the case to the ministry of gender, labour and social development, and following a tripartite meeting involving URWU, the government and the URC, a memorandum of understanding was signed on 13 April 2005 to call off the strike and start negotiations with the government.

Results of negotiations

Negotiations started on 14 April 2005 and ended on 18 April 2006 when the court ruled in workers’ favour. URWU recorded significant achievements:

Salaries were consolidated before being taken into account for calculating terminal and pension benefits.
Pension computation actuary factor of 1/500 (one five hundredth) was agreed as opposed to 1/600 (one six hundredth) that had been used for many years by the management.
All permanent and pensionable workers with at least ten years of service should qualify for pension benefits, regardless of their age; otherwise, the normal qualifying age for pension benefits is at least 55 years.
All workers will receive their terminal dues regardless of whether they kept their jobs within the concessionaire or a residual company.
A recognition clause was embedded in the concession agreement requiring the concessionaire to recognise the union and to accept all terms and conditions previously negotiated between the union and Uganda Railway Corporation, until both parties mutually agree to change or re-acknowledge them.
An employment clause required the concessionaire to give priority to railway employees when recruiting personnel.

Conclusion of the concession process

The Rift Valley Railways Consortium (RVRC)is led by South African company Sheltam Trade Close (61 percent), whilst Comazar (10 percent) and the CDIO Institute for Africa Development Trust (four percent) both of South Africa, Kenya’s Prime Fuels (15 percent), Mirambo Holdings of Tanzania (10 percent) are minor partners.

In October 2005, the Rift Valley Railway Consortium won the bid to operate both Uganda and Kenya Railways Corporations for 25 years. URWU filed a suit in the High Court of Kampala and won a court injunction against URC, therefore restraining it from signing the concession agreement. This action compelled the government in Uganda and URC management to resolve all outstanding contentious issues with the union first.

The Uganda government eventually signed a concession agreement with Rift Valley Railways Ltd in April 2006 and a takeover agreement in October 2006.

Information available from Kenya indicates that Kenya Railway Workers’ Union was apparently not fully involved in the negotiation and concession process. A recent report from the union’s general secretary showed that:

Workers did not get their terminal and pension benefits regardless of whether they kept their jobs.
Workers sued the government of Kenya and Kenya Railways Corporation privately, and did not accept the union’s involvement.
The union sued Rift Valley Railways Ltd in court for refusing to recognise them.

The Rift Valley Railways Ltd retained only 605 workers as permanent staff and 300 as casual staff (with negotiations underway to confirm them as permanent) from Uganda, and 3,200 permanent workers and very few casuals from Kenya.

The negative impact of the concession

The concession of Uganda and Kenya Railways Corporations affected a number of trade unions and workers’ rights and created several problems for the two unions:

Massive job losses.
Terminal and pension benefits paid with delays, and scanty payments prevented retrenched workers from investing properly.
Resistance from the concessionaire to recognise the unions.
Job security is not guaranteed.
Rift Valley Railways Ltd finally recognised the unions, but requested their members to re-confirm their membership before deducting union subscriptions. Consequently, the union membership has dropped drastically. Uganda Railway Workers’ Union recorded only 300 members among permanent staff and 200 members from casual staff.
Unions have also lost revenue accordingly and became financially weak, hence vulnerable in their relationship with the government and employers.
The re-recruitment exercise requested by the Rift Valley Railways Ltd is financially and logistically expensive for unions.
Workers and the union are left exposed, as no formal agreement was signed because the company did not finalise the human resources manual.
Both unions have lost trained and experienced officials at branch and national levels.
Employment of large numbers of casual workers, regardless of their qualification, is exploitative and robs unions of stable membership.
URWU is heavily indebted - Ugsh 262,000,000 (US$152,326) - after using the services of a professional lawyer.

The positive impact of the concession

Rift Valley Railways Ltd initiated a number of positive actions:

Workers’ salaries were doubled.
Medical facilities have been established.
A medical insurance scheme has been put in place.
A provident fund scheme was established.
A computer-training programme has been established.
There is an exchange of training programmes between workers based in Uganda and Kenya.
Management is relatively cooperative with the URWU.

Strategies to consolidate the unions

Uganda Railway Workers' Union and Kenya Railway Workers' Union should consolidate and work together in order to exert considerable pressure on Rift Valley Railway Ltd.
As a long-term solution, unions are considering forming
a sole financially powerful union.
Unions should use their existing structures and all available means to attract more workers. Both unions are planning to use the ITF and their national centres to talk to workers.
URWU is training its branch officials and shop stewards with the national centre's support. This will equip union officials with the necessary skills to effectively serve the workers' interests.
Both unions are planning to expand their membership
by recruiting casual workers from the railway system
and by organising workers in the transport industry.
Unions should approach the ITF to provide assistance
for training and recruitment purposes.

Conclusion

Governments worldwide are embracing the privatisation of public enterprises only with a view to reducing subsidies for public services and transport services in particular. In the case of the railways, unions should advocate for economic, political and social policies as well as for collective bargaining aimed at creating new jobs and reducing the unemployment rate.

Unionists should understand that privatisation can be successful and beneficial to workers, who are the backbone of the growing economies, only if there is a level playing field and all stakeholders move in the same direction. Unfortunately, this condition has been rarely experienced and fulfilled in the history of privatisation as employers and governments have not always considered workers as vital partners.

It is now the right time for unions to rise and prove their ability to defend their rights, which have been abused in the name of privatisation.

This is the edited version of the report “Privatisation of Uganda and Kenya Corporations” by Samuel Alfred Wuma, National General Secretary, Uganda Railway Workers’ Union, Uganda which was presented at the ITF Railway Workers’ Section Steering Committee meeting, London, 9-10 May 2007

Related documents:
ITF Rail Union Report Number 2: March 2008 (55kb PDF)

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