Local election Observers have warned that the high handedness of Uganda Police and other security agencies against opposition politicians and the public could spark off election violence.

Yesterday police arrested more than 10 Forum for Democratic Change (FDC) officials including the presidential candidate Kizza Besigye, party chairman Wasswa Birigwa, party president Gen Mugisha Muntu, Acting chairperson Joyce Ssebugwawo, FDC women league leader Ingrid Turinawe among others together with other party flag bearers in different electoral positions.

Following the arrest of the FDC politicians, demonstrations erupted in different places around the city center including; Kiseka Market, Najanankumbi, Nateete, Wandegeya and Kawempe. Police and Military Police responded to the demonstrations by firing teargas and live ammunition to disperse the protestors. Media footage showed police brutality arrest people, directly spraying some with teargas.

Crispy Kaheru, the Executive Director Citizens' Coalition for Electoral Democracy Uganda (CCEDU) says during this critical time when the electoral emotions are high, police ought to restrain from being brutal and abusing the human rights of Ugandans as it may fuel electoral violence.

"I think they raise a lot more anxiety and potentially this is the time we should be seeing security agencies, police specifically taking more restrained measures in handling such situations not arrests. At this time you want to tamper the anxieties of people not to flare them. And for me the temptation is, such arrests could end up flaring up, could end up inciting the public which could act in irrational ways. We don’t want to see that", Kaheru said.






The African Police showing off its true colours on the African continent.



Police has been criticized locally and internationally for brutality and abuse of human rights in past by reports from Amnesty International, Uganda Human Rights Commission and other critical bodies.

Dr Martin Mwondha, the National Coordinator Citizens Election Observers Network-Uganda (CEON-U) says, the police despite its past record was expected to help achieve a free, fair and peaceful election which they have failed.

"Police intervention in blocking the movements of any citizen or any candidate is perceived as a big infringement on the rights of people. And that is what not we expect in an electoral process that is free and fair", Mwondha said.

However the deputy police spokesperson Polly Namaye says, they have practiced restraint from arresting people despite being pushed to the limits. Police has maintained that they have not arrested any politician during this election period but rather 'inconvenienced' the illegal activities of the politicians. Media reports and footage, however say otherwise.

"Those who are trying to announce themselves winners of the election at Najjanankumbi were inconvenienced and many of them were taken to their home aboard to ensure that they don’t continue with the press briefing that they were planning to do where they would announce themselves. But we also hope that they have learnt that you can not announce yourself an election winner when people are still voting.

And anyway there is only one instituion that is mandated to announce results - that is the Electoral Commission. When we see the assemblance of people burning tyres definitely we [would] arrest them but at  the moment, No, we have not arrested anybody who was involved in burning tyres and also those who are attempting to burn the [police] vehicle but we hope they don’t do it", Namaye said.


  The EC in Uganda is promising to declare a military coup in Uganda as the National General Elections get near:

Dr Badru Kiggundu

the EC.

 

By PAUL TAJUBA


Posted  Thursday, December 17   2015 


The Electoral Commission (EC) Chairman, Dr Badru Kiggundu has said he will, on request by the government, authorise the deployment of the military to counter presidential candidate Dr Kizza Besigye’s defiance campaign.

“If the military is called to come in, I will approve. Yes, the military is part of Uganda; they are your brothers…” Dr Kiggundu said on Thursday.

Shortly after nomination for his fourth presidential bid, Dr Besigye declared “a campaign of defiance and not compliance” that will enable citizens “take back their power” from a dictatorship.

On Monday, FDC Wasswa Birigwa at the party headquarters in Najjanakubi, a Kampala suburb said: “Our campaign is standing on four legs; defiance, liberation, restructuring of state institutions and social-economic transformation... In particular what we mean by defiance is we shall not accept to adhere to any directive that is unlawful or any law that deviates from the universal human rights,”

But Dr Kiggundu said yesterday at the Uganda Human Rights Commission public dialogue held in Kampala aimed at facilitating a peaceful and violence-free electoral process, that such messages are inciting violence and only preparing the masses for violence if Dr Besigye loses.

Dr Kiggundu further attacked Dr Besigye describing “him as bad example to his youthful followers” and urged his supporters to first ask him [Besigye] why they should be on the frontline yet his family is “enjoying burgers” in foreign countries.

“If I were a young person, I would ask [Dr Besigye] where your son is in this campaign. In most times, they are in New York, London and elsewhere enjoying cheese burgers…” Dr Kiggundu said.

Dr Besigye could not be reached for a comment as his known telephone was unavailable but Forum for Democratic Change spokesperson, Ibrahim Ssemujju Nganda, said in reaction to the comments: “Should [Dr] Kiggundu participate in rigging or allow the NRM to rig or announce a loser [as winner] our response is there with or without the military,” Mr Nganda, told the Daily Monitor by telephone yesterday.

Adding, “Did Museveni go with his family to the bush? For him to think that a revolution must happen when Anselm Besigye [Besigye’s son] is here… I do not understand why he [Dr Kiggundu] went to school,”

In an interview at the sidelines of the dialogue, Chief Political Commissar of the Uganda People's Defence Forces (UPDF) Col Felix Kulaigye, said the military will “support the Uganda Police Force when it is required” during the electoral process.

“Failure to protect and sustain peace in this country will be our [UPDF] failure and if people are announcing defiance, can we seat in our comfort barracks and watch?” Col Kulayigye asked.

Human rights lawyer, Nicolas Opiyo said by the EC boss calling in the intervention of the military, it is an indication that either the elections will not be free and fair or there will be violence thereafter.

“Mr Kiggundu seems to have no confidence in police and expects violence. He should instead make the election free and fair to avoid violence,” Mr Opiyo said, adding that attacks on candidates’ families are despicable.

Deputy attorney general, Mwesigwa Rukutana at the same event warned the media from inciting the public and urged all stakeholders to make the elections free, fair and peaceful.

ptajuba@

ug.nationmedia.

com


Ekibiina kyobufuzi ekya Kabaka Yekka, UPC y’ Obote Ekiwera:

Obote yekyusiza abaamutuusa!

 

 

Mu mwaka 1965, Omubaka we kibiina kya KY Daudi Ocheng, yayisa ekiteeso kunsonga yokukusa zaabu we Congo namasanga g’enjovu, okubitunda munsi zebweru.


Dr Obote, nga Prime Minister, ne Minister Nekyon muganda wa Obote ne Onama Minister wa Defence bebatekebwa ko olunnwe nga bwebenyigira mulukwe luno.

Era Ocheng yaleeta ekiteeso ekirala, Colonel Amin okugira ng’awummuzibwako weeks bbiri nga Gavumenti bw’ebuuliriza.


Gwo omukago gwebyobufuzi wakati we kibiina kyo bufuzi ekya KY ne kibiina kyo bufuzi ekya UPC gwafiira ddala mu September 1964. Era 1965 gugenda okutuuka nga bangi ababaka ba UPC mu National Assembly (Parliament) bateesa kulaba nga bawera ekibiina kya Kabaka Yekka. Baakiyita kya bakyewaggula abatagoberera mateeka era abaagala okutabulatabula eddembe mu Uganda.

Abantu bangi baali bakwatiddwa era nga bali mu nkomyo na ddala e Luzira.

Obote yatekawo akakiiko kabulirize ku bya zaabu n’amasanga era abantu bangi ko baawa obujulirwa mu kakiiko ako, ebyama bingi ku kufuna n’okutunda zaabu n’amasanga ne bibikkulwa.

Naye report y’akakiiko bwe yaggwa Obote teyagifulumya! Parliement ye, Cabinet ye nabawagizi bangi aba UPC nebamuggyamu obwesige.


Yali asigazza kwesiga b’amagye bokka. Okuyimiriza Col. Amin yakigaana nakuza Amin mukifo kya Brigadier Opoloto. Mukuteesa kwa Cabinet okwaddako Obote yagenda kukwatta ba Minister be batano nabasibira e Luzira Criminal Prison.


FRIDAY, 16 JANUARY 2015

Attorney General Peter Nyombi has scoffed at the Uganda Law Society, after the body threatened to boycott today's ceremonies to open the law year.


In a letter on Wednesday, ULS President Ruth Sebatindira urged lawyers to boycott the function in protest at President Museveni's failure to appoint a chief justice and deputy chief justice. But a defiant Nyombi told us on Wednesday that the function would go ahead with or without lawyers.


"Those who want to come will come; those who want to stay away, let them stay away but we shall go ahead with the function," Nyombi said.


Justice Steven Kavuma, who is acting both as chief justice and deputy chief justice, will preside at the ceremony at the High court in Kampala. The new law year is an annual meeting at which the judiciary states what it achieved the previous year and its targets in the new year. In the letter, Sebatindira decried the lack of substantive leadership in the judiciary.


"[It is my belief that we have to adopt a different approach as to how we support the judiciary on this matter."


At meeting in April 2014, Museveni told ULS that the positions would be filled once the constitutional petition challenging the reappointment of Benjamin Odoki as chief justice upon retirement was determined. Four months after that petition was disposed of, the president is yet to act.


Asked about the lack of a substantive chief justice, Nyombi said: "There is already an acting chief justice [Kavuma] who can perform all the functions."


However, Sebatindira says that the judiciary is being run ìunder scandalousî circumstances.


"We can no longer walk with our heads high to assure the citizenry that all is well in the judiciary because, all is not well," she said.


Nicholas Opiyo, a former ULS secretary general, told The Observer that like last year, he would not attend the function to be presided over by Kavuma.


"I respect Justice Kavuma as a judge but I cannot call him the deputy chief justice or the chief justice because it is illegal as the Constitutional court ruled," he said.


Kavuma told The Observer he was too busy to comment on Sebatindira's letter.


dkiyonga@

gmail.com


 The British Judge Allen


P J Allen and his judiciary at the time demonstrate the high quality of the judiciary at the time.
Judge Allen and Judge Manyindo presided over  the trials of most of the Amin era criminals. A majority of these criminals hired the best lawyers available in Uganda at the time, which invariably was Ayigihugu. Some like Abdallah Nasur were convicted but a good number were acquitted because of lack of direct evidence. Others like Edward Mulindwa even managed to lie low for a while before escaping to foreign lands.



 I hope your mate WBK does not judge those of us who participated in prosecuting these Amin era criminals as failures, in the same manner that he has judged the ICC prosecutors. Prosecutors are supposed to present the facts before the courts that can convince a court that an accused is quilty. In this, it has to work very closely with the Investigatory authorities, namely the police and law enforcement. In the case of the Amin criminals, the police did not give us enough information from their investigations that would allow a conviction to be  upheld.
It was particulalrly disappointing in the case of Bob Astles in whose case, the judge found he was always around the major killings we charged him with, especially the murders of Archbishop Luwum and Minister's Erinayo Oryema and Oboth-Ofumbi, but we could not connect him directly to the killings. With advance in DNA science these days and coupled with Edward Mulindwa's recent confessions about complicity in the murders, I think a good prosecutor would today nail Edward Mulindwa without doubt. What WBK does not understand, from your debates which I have followed,  is that the ICC prosecutors can only be good as the investigations put before it. The Satatute of the ICC puts a duty on Satte Authorities to cooperate with the ICC in investigating cases referred to it. if a state refuses, objects or even thwarts the invesigations, the direct result is that the Presecutors will not have serficient evidence to obtain a conviction. So Mensouda and her team have so far failed in their prosecution of Jomo Kenyatta, but this is because of the failure of GoK to cooperate in investigations. It is not because Mensouda and her team are bad lawyers as WBK keeps asserting. In fact the evidnce that they had gathered against Jomo Kenyatta was so compelling that any prosecutor would make a decision to prosecute. But faced with alkmost all key or material witnesses withdrawing or disappeared or intimidated, Mensouda had no choice but to withdraw the case.


The first important hurdle, that is the establishment of the International Criminal Court, has now been successfully overcome. States party to the Rome Treaty now have to decide ways and means by which they can strengthen the ICC's Investigatory capacity and authority, especially in cases where a suspect or accused  holds or is close to power. The UN Security Council has to give the Prosecutor extra-ordinary powers to investigatewith or without the cooperation of the State concerned. Th UN must also strengthen its Witness protection programme. Lastly, the Security Council must reserve to itself power to punish leaders, like Jomo Kenyatta and Omar Bashir who refuse to cooperate with the ICC investigations. This may mean imposing travel bans, arrest warrants and other other economic sanctions against them so that they the continue to swagger around like Jomo Kenyatta whn in fact they should be locked up in prison as dangerous criminals. 
Written by 
George Okello
 
Reviews by experts and politicians of the country’s eight-year experiment with multiparty politics have found cracks. Loud voices advocating a return to the no-party Movement system, are beginning to emerge.

Some political players claim the wrangling within the ruling NRM in the aftermath of the sacking of former Prime Minister Amama Mbabazi is not good for the growth of multiparty democracy.

“NRM belongs to people who are faceless; until you step on their toes,  that’s when you will get to know who are the real owners of that party,” opposition Chief Whip Cecilia Ogwal (Dokolo Woman) said in a recent interview.

NRM has been accused of using its Parliamentary caucus to gag its members and subsequently killing free debate and parliamentary independence.

Kyankwazi retreat

During its 2013 retreat at Kyankwanzi, NRM MPs adopted a set of rules of procedure, criticized by political commentators as intended to gag the NRM MPs. The development followed a sharp disagreement between Parliament and Museveni over the mysterious death of former Butaleja MP Cerinah Nebanda in 2012.

“There have been initiatives by the opposition to keep the government in check but they could not go far because the NRM caucus sees them [initiatives] as adversarial manoeuvres,” said Hippo Twebaze, a political and policy analyst.

“If you take the Nebanda case and the oil debate in the first one and half years of the [current] Parliament, you would see some sort of legislative independence, but it has since gone down,” Twebaze adds.

In its rules of procedure, the NRM caucus adopted a three-line whipping system, which gives a strict instruction to members to attend parliament and vote in a particular way. Any MP who acts in breach of the rules is liable to punitive action, including expulsion from the party.

Four MPs; Theodore Ssekikubo (Lwemiyaga), Wilfred Niwagaba (Ndorwa East), Muhammad Nsereko (Kampala Central) and Barnabas Tinkasiimire (Buyaga West) were the first offenders.

“Some political party leaders want to control the thinking and the speaking of their members; this is worse with the ruling party,” said Niwagaba in an interview.

Although the quartet still hold their parliamentary seats, their expulsion scared many of their outspoken colleagues on the government side into shutting up.

“It is wrong for one to imagine that under a multi-party system, one shouldn’t hold their independent views,” Ssekikubo said.

“I don’t think that multipartyism is synonymous with gagging; under whatever political system in place, as long as I am an MP and not a member of the executive, I should be at liberty to voice the concerns of my people,” Ssekikubo added.

Parliament Speaker Rebecca Kadaga used the 25th Commonwealth Parliamentary Association seminar in Dar es Salaam, Tanzania, in May 2014, to vent her frustration at the ruling NRM government’s mode of operation. During the meeting, Kadaga claimed that debate in Parliament had been stifled because NRM MPs cannot freely speak without receiving instructions from the caucus.

Kadaga is NRM’s second national vice chairperson, and also a member of the ruling central executive committee, CEC, the second topmost decision- making organ of NRM. The caucus’ vice chairman David Bahati (Ndorwa West) said in an interview that despite the challenge of balancing NRM interests and individual interests of its members, the caucus encourages free speech.

“There is a lot of freedom for MPs to speak as long as what they say is in the interest of the country and in line with the party they represent,” Bahati said.

“They [MPs] can speak their mind constructively during the caucus meetings and rally their colleagues to support their positions which can eventually become the position of the party,” he added.

No-party

In a dissertation, Parliamentary Independence in Uganda and Kenya, 1962 – 2008, written for the State University of New York for his PhD in Political Science, John K. Johnson, notes that the absence of political parties in Uganda facilitated parliamentary independence during the sixth Parliament (1996 – 2001).

The independence was attributed to the absence of a government and opposition side in Parliament, which made it easier for MPs to support a position favourable to Parliament against the executive. According to Twebaze, the high degree of independence exhibited in the sixth Parliament was an eye-opener for President Museveni to start interfering with Parliament’s autonomy.

“The president’s interference shaped the performance of the next parliaments, some MPs were de-campaigned [in the 2001 elections] and in effect, the seventh Parliament did not confront the [executive],” said Twebaze.

“In its first year, the seventh Parliament tried but then conceded to the president on major issues like the removal of term limits from the Constitution,” Twebaze added.

With the restoration of multiparty politics in 2006 that saw the NRM winning more than a two-thirds majority both in the eighth and ninth Parliaments, Museveni’s influence over Parliament grew, resulting in a decline of its independence.

“The current government is president-driven, Parliament cannot act normally because Museveni is using the NRM caucus to entrench his interests, he has a lot of control over every activity of Parliament,” said Cecilia Ogwal.

Movement hangover

Joseph Balikuddembe Mutebi (Busiro South) relishes the days of the Movement system era when all MPs would freely contribute to debate in the House.

“Virtually, Parliament has lost its independence because caucusing has become the norm unlike the core function of Parliament elaborated in Article 79 of the Constitution,” Mutebi argued.

In their book, The Rise and Ebb of Uganda’s Parliament, Twebaze and Nelson Kasfir note that the absence of parties was an important factor in the success of Parliament. But the pace of legislative development “ebbed” once the country formally legalized multiparty politics and the boundaries between government and opposition were more firmly drawn.

An NRM MP who has been a lawmaker from the sixth Parliament, blames the loss of parliamentary independence on the MPs’ choice of patronage over their roles.

“It is forestalling the cardinal principle of Parliament, acting as a check and balance especially on the executive arm of government,” Niwagaba said.

“There is a tendency of those in leadership to fuse the executive with parliament and in a way whittle down the cardinal roles of MPs,” Niwagaba added.

But Stephen Tashobya, the chairperson of the Legal and Parliamentary Affairs committee, said much as the country embraced multiparty democracy, some MPs are still nursing a Movement hangover.

“Some want to talk on their individual merit, what you think is what you say, things have changed and this was a choice of Ugandans [that we adopt multi-party democracy], you can’t eat your cake and have it,” Tashobya said.

One-party system

Tashobya relates the workings of the NRM to Britain’s Conservative party that he says whips its members in more or less the same way as NRM does.

“You can’t run away from the party, because we are elected on the basis of party positions and platform; so, when we come to Parliament, we are supposed to actualize, to implement what the government promised the people,” Tashobya argued.


To enforce discipline among their members, other political parties also have an option of expulsion. UPC took the lead at the opening of the political space in 2005 when it expelled seven MPs: Ogwal, Omara Atubo (Otuke), Dr Okullo Epak (Oyam South), Dr Alex Okot (Moroto), Charles Angiro Gutomoi (Erute North), Tom Odur Anang (Kwania) and B’Leo Ojok (Kioga) who were opposed to the leadership of new president, Miria Kalule Obote.

FDC in 2010 expelled two of its MPs; Beti Kamya (Lubaga North) and Alex Onzima (Maracha). Kamya was punished for forming a rival political party (Uganda Federal Alliance) while Onzima’s charge was hobnobbing with NRM. Ogwal, now an FDC MP, argues that despite the expulsions, her party MPs are free to speak their mind.

Article 8(d) of the DP constitution also lists expulsion as a punitive measure against its members but like other opposition parties, DP is not keen on doggedly controlling what its members speak. DP Legal Advisor Fred Mukasa Mbidde said DP is keener on shielding its members from the long arm of NRM influence.

“[NRM] has silenced all the other [parties]…,” Mbidde said.

“Multiparty democracy has not been given a chance to operate in Uganda, what exists is a single party; a dictablanda or democradura [dictatorship] but not a democracy,” Mbidde argued.

Beside party controls, Twebaze argued, Parliament’s performance is also undermined by the financial status of the MPs as well as the quality of people elected to Parliament.

“The quality and experience of the MPs needs to be considered. Look at where they jumped from to join Parliament, it makes it hard for them to build coalitions to oppose, modify or give an alternative to government proposals,” Twebaze says.


sadabkk@

observer.ug

This article was produced with support from the African Centre for Media Excellence (ACME)


 
UPC founder Milton Obote

The term movement legacy was first coined by professor emeritus, Goran Hyden in 2011, and by it I mean a pattern of political behavior that characterized anti-colonial nationalist movements in their struggles for independence.

Half a century since most countries gained independence, this form of behavior continues to shape ruling- and opposition party politics in Africa and Uganda, while frustrating the prospects for deepening democracy.


CAUSE-EFFECT

Nationalist movements in Uganda were spearheaded by three main sections: World War II veterans, a small not so well-educated elite class of clerical workers, and leaders of a nascent civil society.  These groups were united by a single but multi-faceted cause, namely to vanquish the colonial masters and take charge of the state apparatus.

Other than this mission, these groups remained committed to their particular identities. The issues were varied and subordinate to the cause. The anti-colonial movements adopted a simple but important strategy of popular mobilization for the cause. It was rare and in most cases illegal to campaign.

Most notably the movement against the British took place at the level of society because there were no representative bodies such as parliaments or legislative councils until much later in the struggle.  Membership to these movements was rather diffuse and fluid, but because there was a single movement, this was not detrimental to its dynamic and operation.

Typically anti-colonial movements reified the person of the leader, and were not built on competition. The latter was not necessary because of the consensus that was built around the anti-colonial struggle and the proclivity to lean toward personalities rather than structure and organization.  Finally, social movements seldom value or subject themselves to formal (legal) limits to resource claims.

Political parties (DP, UPC, etc) that emerged out of these movements and are yet to shed their movement skins or disavow movement political behavior.  First, a cursory look at post-independence Ugandan politics demonstrates how parties are driven by “a cause” rather than a systematic articulation of specific issues.

Among Uganda’s opposition parties today the cause is ‘remove Museveni’ or ‘reform the Electoral Commission’ or ‘de-couple the state from the NRM-O’. Rarely does a discourse on issues take precedence over the cause de jour.

This is partly a consequence of the absence of ideological orientation among the parties; and without ideology, it’s hard to project a coherent, well-reasoned set of issues that would drive a campaign and thus enable ascendancy into government.  But lack of ideology also raises another key issue inherited from the pre-colonial movements, namely the lack of specific party identity.

Affiliation to the parties is diffuse just as was the case with pre-colonial social movements. In Uganda’s early history, this characteristic was the underpinning to the frequent crossing of the floor of parliament by MPs.

Today, the phenomenon of so-called Independents in parliament is the closest to crossing the floor, given that the process of abandoning one’s party in midway through the terms is outside the law. Not unlike the opposition parties, the ruling NRM party seldom articulates issues in a systematic manner except in the run-up to elections, when roads or business parks are commissioned, banks rebranded, job centers set up, etc.

The cause for the movement party in this case has changed over time but lately it has become an entrenchment project; and the intensity of party loyalty and identity with the NRM is also subject to debate.


NO COMPETITION

Second, parties, both incumbent and in the opposition, typically mobilize, rather than campaign. It’s, indeed, hard to campaign effectively if issues are not the main elements undergirding the methods of political operation.

Related to this point is that mobilization, by definition, circumscribes competition, which explains why it is a dying breed in Uganda.  In their mobilization schemes, Africa’s political organizations, most notably incumbent parties aim at co-opting and/or marginalizing political contestants while eschewing competition.

President Museveni often disparages opposition parties and chides voters who don’t elect NRM flag bearers as having made mistakes. For him, the weaker the opposition the better; or better still he wishes they didn’t exist at all. Clearly the president places very little value in opposition parties as building blocks of a healthy, vibrant and deepening democracy.

The result is the emergence of a dominant (even hegemonic) movement party system in Uganda, South Africa, Zimbabwe, Tanzania, Eritrea, Rwanda, etc.

Thirdly, Ugandan parties are extremely personalistic. Their organizations and structures are weak not unlike their social movement forebears. As a result, when Col Kizza Besigye stepped aside, the FDC suffered a heart attack with the left ventricle (or Mafabi wing) disconnecting from the right ventricle (or Mugisha Muntu/Alaso faction).

The Uganda People’s Congress (UPC) has not recovered from the demise of its founders especially Dr Milton Obote. It too is fragmented along several quite visible fault lines.  Can anyone think about/imagine the NRM without Yoweri Museveni? Or ZANU-PF without Mugabe or the Rwandan Patriotic Front without Kagame? What is particularly intriguing in making this observation is that leaders deliberately encourage these personality cult-like tendencies.

Fourthly, in their bid to fulfill the cause, social movements are not restrained by law especially as they lay claim to resources. This piece of the movement legacy is also undoubtedly clear in Uganda. Rule of law is not appreciated in principle but, rather, in instrumentalist terms, i.e. it’s respected only when it is convenient and expedient.

The implication of this is that rules and norms governing parties may be altered without reference to their significance; and constitutional engineering becomes common practice. Some laws may be passed without quorum while constitutions may be altered to, for example, remove presidential term limits. On the opposition side, we have recently seen DP president Mao appealing to the likes of Erias Lukwago and other factions to respect party structures and rules as they vie for leadership positions.

Finally, movements operate at the level of society as pointed out above. This characteristic is even more pronounced in Uganda and in Africa as a whole because culturally we operate at a very informal (rather than formal) level.

Unlike typical parties whose arena of operation is primarily parliament, movement focus and influence is mostly limited to the (civil) societal level. It is this variable that best explains the use of patronage as a mobilization tool.

Agents in society quickly take on the role of clients while those in power and with access to state resources become patrons. The resulting patron-clientelist networks inevitably breed corruption and erode the mechanisms of accountability and transparency.


CONCLUSION

To the extent that the ‘movement legacy’ is a historically determined, genetic flaw in the make-up of African parties, it stands to reason that for now it matters not which party takes power. Clearly there is a need for a mutation of sorts if party behavior is to change.

And change must begin with efforts towards institutionalization of political parties and of politics in general. In its present form, democracy on the continent precariously revolves around the holding of regular elections and clearly this is not enough. Competition must be encouraged, political spaces expanded and rule of law strengthened.

The emergence of issue-based politics, political transparency and accountability represent other milestones on the road toward a deeper democratic dispensation.


The author is a professor of Political Science at Roanoke College, Virginia, USA.


The new Chief Judge of the NRM Judiciary Mr Katureebe has asked for a list of corrupt judges that grace the Resistance Movement judiciary institution:

Chief Justice Bart Katureebe.

Chief Justice Bart Katureebe.

PHOTO BY Michael Kakumirizi

By  ANTHONY WESAKA


Posted  Saturday, May 2  2015
KAMPALA, UGANDA
 
Following prevalent outcry over rampant corruption among judges and magistrates, the Chief Justice Bart Katureebe has launched an anti-corruption crackdown to restore public confidence in Judiciary.

Justice Katureebe has also written to retired Supreme Court judge George Kanyeihamba and senior lawyer Peter Mulira to forward to him names of corrupt judges and other judicial officers they have been referring to during public functions.

The campaign to crack down on corruption in the Judiciary was launched on Thursday, according to a press statement from the Judiciary public relations office. The statement quotes Justice Katureebe warning that no judicial official or support staff will be spared of investigations once they are implicated.

The Chief Justice wrote to Justice Kanyeihamba, Mr Peter Mulira and Presidential Press Secretary Tamale Mirundi, asking them to name the corrupt judicial officers they have been talking about.

“We need to move and tackle issues of alleged corruption in the Judiciary…furnish me with the evidence in your possession so that the necessary course of action is taken in accordance with the law and the constitution,” Justice Katureebe wrote to the three individuals.

“All responsible citizens of our country should not only speak out about the perceived malpractice in the Judiciary, but should come out and help in finding a solution to the problem. Let us work together to improve and strengthen the administration of justice in our country,” Justice Katureebe added.

The press statement signed by senior communications officer Solomon Muyita said the Judiciary has prepared a series of public engagements with civic leaders and the public to partly keep open lines of communication and to explain the functions of the Judiciary and the courts at the different levels.

The statement said a number of reforms will be made to clean up the Judiciary. The reforms include assigning a Supreme Court judge to head the Inspectorate of Courts, a section of Judiciary that inspects courts and deals with corruption issues, which is currently headed by a deputy registrar of the High Court.

The statement further said the Judiciary has started a process of setting up a customer care telephone numbers and feedback hotlines for the public to make general inquiries and also report errant court staff who demand bribes from the litigants.

Justice Katureebe said once a prima facie (credible) case has been established against a judicial officer, his/her name will be forwarded to the Judicial Service Commission (JSC) for disciplinary action and the evidence and decisions will be shared with the public.

He, however, cautioned the public not to equate wrong court decisions, which can be appealed, to corruption.

During a public function last week, the Principal Judge Yorokamu Bamwine, urged the Chief Justice to approach Justice Kanyeihamba and Mr Mulira to give him names of the judicial officers they had claiming are corrupt so that they can be dealt with accordingly.

Justice Bamwine explained that by naming the corrupt judicial officers, it will save the judicial staff from the collective sin of the “Adam and Eve” style.

“I hope I speak for a number of my colleagues on this point, Lord Chief Justice when I propose that you get better particulars from lawyers like Mulira and Prof Kanyeihamba and take appropriate action through the JSC and the President so that the sheep are separated from the goats in order to protect the integrity of those doing an excellent job. All judicial staff should not suffer collective sin like the descendants of Adam and Eve,” Justice Bamwine told the Chief Justice.

Addressing lawyers in Entebbe two weeks ago, Justice Kanyeihamba said he knew at least half a dozen of Ugandan judges who receive ‘enkoko’ (a reference for bribes) and castigated the Uganda Law Society for not taking action about them. However, he did not name the corrupt judges.

On Thursday, Prof Kanyeihamba said he was “very ready” to name the corrupt judges he had been referring to if the Chief Justice contacted him.

The Judiciary has been ranked one of the most corrupt government institutions in various corruption surveillance surveys.

awesaka@ug.

nationmedia.

com


EC warns against personal attacks

Electoral Commission chairman Badru Kiggundu (L) speaks at the National Consultative Forum in Arua District.

PHOTO

BY FELIX WAROM OKELLO

 
By
FELIX WAROM OKELLO


Posted  Monday, May 25  2015 

Arua. The chairperson of the Electoral Commission (EC) has warned all those seeking office in the 2016 general elections to desist from the politics of character assassination.

Mr Badru Kiggundu asked the politicians to pursue issue-based campaigns that promote democracy.

“I have always said we are still young in democracy because there is still character assassination versus issue- based campaigns. Talk about issues. What has character got to do with campaigns? God created people in different ways. Let us chase issues not personalities,” Mr Kiggundu said.

He was speaking at the National Consultative Forum meeting held in Arua Town on Thursday. Mr Kiggundu said the concept of multiparty politics is not yet well understood and appreciated by citizens as well as leaders. He, however, painted a rosy picture for the future.

“There is no country that has had perfect elections but we aim to get there someday. As human beings, we make some mistakes. Even countries such as the United States of America that have practiced democracy for long still make mistakes during elections,” he said.

West Nile sub-region has in the past elections seen candidates contesting for political office at various levels use strategies such as nick-naming, mudslinging and composing songs with messages that cast their opponents in bad taste.

However, Mr Kiggundu appealed to politicians to be tolerant of one another irrespective of tribe, religion and political affiliation during campaigns.

The former presidential candidate, Dr Abed Bwanika, said there was a need for national dialogue involving all political parties as a way of championing the growth of democracy.

Mr Titia Kamure, the UPC national vice chairperson, said there is a need for electoral reforms ahead of the next general election in 2016.

Background

Since independence, Uganda has had few elections. These include; the Legislative Council of 1958, the referendum of 1961, and general elections in 1980, 1996, 2006 and 2011.

editorial@ug.

nationmedia.

com

Nb


This gentleman

(Politician) running Political Movement Democratic Elections in the young country of Uganda is indeed God sent! 

The government of Uganda has been found wasteful of tax payer' s money:

 

Reveals. The director of political affairs, Lt

The director of political affairs, Lt Col Joseph Aliganyira, addresses a press conference at ISO headquarters in Nakasero, Kampala, on December 6, 2017. PHOTO BY ABUBAKER LUBOWA

 

By Misairi Thembo Kahungu

Kampala. The Internal Security Organisation (ISO) has submitted to President Museveni a report on government’s wasteful expenditure and recommended a merger or abolition of some state agencies.
The intelligence agency compiled the report between July and November in response to President Museveni’s earlier letter demanding information on how much money ministries and agencies were costing the government.
Addressing journalists at ISO headquarters in Nakasero yesterday, the Director of Political Affairs, Lt Col Joseph Aliganyira, said the report was submitted to the President on November 25.

The report scrutinised expenditures of ministries and government agencies in the 2016/2017 budget and highlighted astronomical wasteful spending on non-essential issues.
The report pointed out that most wasteful expenditures were on consultancy, travel, welfare and entertainment, fuel and workshops.

Duplication
It was also discovered that a lot of money is spent on duplicated or overlapping functions between the main ministries and the agencies.
For instance, the ISO report a copy of whose summary Daily Monitor has seen, says government agencies and ministries in 2016/17 financial year spent Shs190 billion on welfare and entertainment, Shs353b on travel and Shs393b on consultancy.

 

 



President Museveni

 

The President of Uganda holding the Constitution of Uganda that allows him to spend money as if there is no tomorrow.

 

 

The report further reveals that Shs151b was spent on fuel, Shs46b on advertising and a whopping Shs104b on workshops and seminars.
According to the report, Uganda Revenue Authority, was the top spending agency on welfare of staff at a cost of Shs6.3b. On staff welfare, URA is followed by Kyambogo University with Shs3b; Electoral Commission Shs1.9b, and Kampala Capital City Authority Shs1.6b. The three are the top spenders by agency.

The top spenders on welfare among ministries include Ministry of Finance at Shs1.7b, Ministry of Public Service at Shs 1.1b; Ministry of Water and Environment at Shs900m. The Ministry of Agriculture spent Shs 900m, Gender and Prime Minister’s office spent Shs700m each on staff welfare.
The Ministry of Lands, Housing and Urban Development was the biggest spender on consultancy and used Shs66.6b followed by Ministry of Water and Environment at Shs 52.8b.

Expenditures
The Ministry of Finance spent Shs51.4b, Agriculture Shs28.2b and Ministry of Energy and Mineral Development Shs26.9b.This translates into a total of Shs226b compared to Shs36.6b the agencies spend on consultancy.
The Uganda Cancer Institute is the biggest spending agency on consultancy. In the 2016/17 it spent Shs 9.8b on consultancy followed by the National Information Technology Agency (NITA) at Shs7.8b. Others are, KCCA with 6.8m, Uganda Management Institute with Shs 4.8b, Uganda National Roads Authority (UNRA) at Shs 3.9b, and, Uganda National Metrological Authority with Shs 3.5b.
The report indicates that ministries spend more money than agencies on travel, with State House staff topping the spending list on trips at Shs56b.

State House is followed by Parliament in wasteful expenditure on travel with Shs21.4b; Ministry of Health (Shs 19.6b); Ministry of Education (Shs16b) and Ministry of Defence (Shs15.7b).
The ISO report queries why there is duplication of functions by different agencies which should have been done by the relevant or line ministries.
For example, ISO cites a total of Shs482.9b which was spent on distribution of agricultural inputs to farmers by 17 different teams, departments and agencies yet these items could have been distributed by Ministry of Agriculture, Animal Industry and Fisheries.

For example, the National Agricultural Advisory Services (Naads), National Agricultural Research Organisation and Uganda Coffee Development Authority supplied farm inputs yet Ministry of Agriculture was also supplying the farmers at the same time.
Besides, other government agencies such as National Forestry Authority, Uganda Prisons, KCCA, Kyambogo University, State House, Ministry of Education, and Uganda Police and Office of Prime Minister were also carrying out duplicate functions supplying agricultural inputs or materials.

“At the end of the year, you find that these agencies carry out duplicated roles that would have been done by the Ministry of Agriculture which is directly mandated to supply such inputs. But you find KCCA, UCDA, Operation Wealth Creation among others also supplied inputs. This is unnecessary expenditure,” Lt Col Aliganyira told the press yesterday.
The report also cited the fragmentation of skills development. It observed that each ministry was carrying out its own skills development instead of one ministry doing the job for all the deserving ministries.
Skills development consumed a staggering Shs461b of the 2016/17 budgets of ministries of Education, Gender and Local Governments.

 



State House, Entebbe

State House, Entebbe

 

 

According to Col Aliganyira, the intelligence agency questioned why government workers are paid separately for projects and consultancy services under their respective ministries yet they are supposed to do such work by virtue of their employment.
The intelligence agency said this is a scheme calculated to enrich the same civil servants, in different ministries, for the same work they were employed to do.
The ISO report pointed that 209 projects in government ministries consumed Shs4.9 trillion in 2016/2017 financial year.

The intelligence agency describes this as wasteful expenditure on skills which are already paid for under the civil service employment.
“We found out that some of these projects would have been handled by the ministries in their day-to-day activities to end wasteful expenditure. The civil servants are hired to execute them to enrich themselves when other workers elsewhere are suffering on low pay. The same is on consultancies where civil servants are using these channels to top up because they do consultancies among themselves,” Col Aliganyira said.
He was speaking on behalf of the ISO director general, Col Frank Kaka Bagyenda.


Recommendations
The ISO advised the President that government should carry out reforms by abolishing and or merging agencies with duplicating functions in order to reduce on the wasteful expenditure and use the money to enhance salaries of civil servants.
Currently, the government is facing pressure rising out of industrial actions by various professionals such as medical doctors, prosecutors and judicial officers, all demanding a salary increase and improved welfare and working conditions.

Government, through Ministry of Public Service, has embarked on harmonisation of salaries for civil servants as a way of ending wage disparities and persistent strikes by public servants.

mkthembo@ug.nationmedia.com

 

 

 

 

The Bank of Uganda is paying money any how to law firms without proper accounts to show to the National Parliament of Uganda:

22 November, 2017

Written by Sadab Kitatta Kaaya

A House committee has asked Bank of Uganda to explain how it paid billions of shillings to three firms a week after the central bank retained another law firm, Sebalu, Lule and Company Advocates, to represent it in the ongoing mediation talks over Crane Bank Ltd.

The payment comes one year after the central bank took-over Crane Bank on October 20, 2016. Crane Bank was subsequently sold to dfcu Bank in January 2017 for Shs 200 billion.

That sale followed technical advice offered by MMAKS Advocates, alongside audit/accounting firms KPMG and PricewaterhouseCoopers (PwC).

According to correspondences seen by The Observer, the three firms were engaged in November 2016 for an initial fee of $710,190 (Shs 2.6 billion). Six months later, an additional Shs 2.8 billion was paid specifically to MMAKS for a separate contract, bringing the full amount to an estimated Shs 5.4 billion.

The Asian Crane Bank owner , Mr Sudhir Ruparelia (R) leaving the Commercial court in Kampala, Uganda.

Parliament’s committee on Commissions Statutory Authorities and State enterprises on Tuesday raised questions about the money when BoU officials appeared before them.

“There are inconsistencies in the figures they gave us vis-a-vis the figures in their management accounts – which shows the amounts budgeted for and the actual expenditures,” Anita Among, the committee’s vice chairperson said.

Central bank officials had said the lawyers were paid Shs 335 million but on further scrutiny of the bank’s books of account, MPs discovered that more than Shs 1.7 billion had been paid.

“The variance in the figures is so big and you never know, they [BOU] could have paid much more than that, and, without contracts,” Among said.

Deputy Governor Louis Kasekende, who was flanked by Justine Bagyenda, BOU’s executive director in charge of supervision, failed to get a deferment on the matter on grounds that it is a subject of ongoing litigation.

After they asked for time to come back with relevant documents, MPs gave them up to Thursday next week.

A break-down of the initial Shs 2.6 billion BoU paid shows that MMAKS Advocates was contracted as a transactional advisor at $251,045 (Shs 903.7m).

PwC was paid $286,740 (Shs 1.03bn) to cover an investigative and forensic review, in addition to another Shs 338.2 million to compile an inventory of assets, liabilities and equity of Crane Bank.

At the lower end, KPMG received $172,405 (Shs 620.6 million) for information technology security testing and disaster recovery gap assessment as well as provision of technical support in information technology.

This breakdown is contained in a November 30, 2016 letter from Bagyenda to central bank governor Emmanuel Tumusiime Mutebile. In the letter, Bagyenda requested Mutebile’s approval of letters of engagement for the three firms and for their payment.

Available documents show that MMAKS advised BOU based on the Financial Institutions Act 2004.

The law firm also handled applications from institutions which ex- pressed interest in buying Crane Bank, and was also used as a repository and central point for all buyer information and correspondence.

According to the payment schedule, dfcu bank just last month paid Shs 20 billion to BOU on October 1, 2017 and will make another deposit of the same amount on January 1, 2018. Thereafter, dfcu will be making quarter-year de-posits of the same amount to BOU, with the last payment scheduled for January 1, 2020.

Two months after selling Crane Bank, BoU again contracted MMAKS Advocates to coordinate with dfcu in settling Crane Bank debtors.

This was after Crane Bank had paid $6.2 million to settle letters of credit on behalf of Foneplus Limited, Minutan (U) Limited and Shumuk investments Limited.

In this contract, MMAKS was to work with dfcu to engage the debtors to recover funds, according to a March 30 letter written by BoU’s director for commercial banking Benedict Ssekabira to dfcu’s top management.

The law firm received an additional $804,098 (Shs 2.8 billion) on May 11, 2017 for this assignment. Apollo Makubuya, a co-partner in MMAKS Advocates, defended their bill yesterday.

“We invoiced BoU based on the professional service that we offered [and] it is our client to determine whether it was a fair price or not,” Makubuya told The Observer.

Sudhir Ruparelia, the proprietor of Crane Bank, has protested the involvement of MMAKS on grounds that they have a conflict of interest. The law firm used to be lawyers of his now- defunct Crane Bank.

MMAKS is representing BoU in a case before the civil division of the High court where the central bank sued Ruparelia for causing financial loss to his bank.

“This is a matter before court but we have always represented Crane Bank not Sudhir, [and] even in court today we are representing Crane Bank [under receivership],” Makubuya said.

sadabkk@observer.ug

 

Nb

Indeed some Ganda people are making lots of money from the mess in the National Bank. Who should not for heavens' sake in these hard times.

 

 

 

 

Trying to improve the supplementary expenditure for the long serving government of Uganda seems to be failing it:

 

National Budget. Finance Minister Matia Kasaija

National Budget. Finance Minister Matia Kasaija during the 2017/2018 Budget reading in Kampala in June. PHOTO BY ALEX ESAGALA 

By Ibrahim A Manzil

Pending Parliamentary approval – retrospectively though – is the Supplementary Appropriation Bill 2017 to cater for expenditure amounting to Shs888 billion spent in Financial Year 2015/2016.
In the memorandum of the Bill dated June 23, 2017, Finance Minister Matia Kasaija asked Parliament to okay the supplementary already spent.
“The object of this Bill is to provide for supplementary appropriation out of the Consolidated Fund under Article 156(3) of the Constitution and Section 25 of the Public Finance Management Act, 2015, a sum of eight hundred eighty eight billion… shillings to meet additional expenditure for the Financial Year 2015/2016,” wrote Mr Kasaija.

The same would come back to haunt the Ministry in Financial Year 2016/2017, this time increasing to Shs969 billion.
There are specific agencies that request supplementary budgets with extraordinary frequency. The Uganda National Roads Authority claimed last Financial Year’s crown, with the Ministry of Works and Transport – their mother ministry – coming second, followed by the Ministry of Defence and Veteran Affairs.

Love-hate affair
Minister Kasaija told this newspaper in a telephone interview that he doesn’t support the practice of a supplementary expenditure but it cannot be avoided.
“I don’t like the supplementaries but we have to raise them if people are dying of hunger, there is a disaster somewhere, what do I do?” said Mr Kasaija.

This was demonstrated in the enactment of the Public Finance Management Act 2015, which, unlike the now repealed Budget Act of 2002, provided for expenditure to be first approved by Parliament.
But government could not fully comply with the provision of Section 25 of the Public Finance Management Act. An amendment was quickly brought to reinstate the position of the repealed Budget Act of spending and seeking retrospective parliamentary approval.

Had the original Section 25 stood the test of time, it would have averted a situation where the supplementary expenditure of a previous Financial Year drags up to 2017.
The chairperson of Parliament’s Budget Committee Amos Lugoloobi (NRM, Ntenjeru North) blamed this on the failure to provide for the Contingency Fund as required by the Public Finance Management Act and “indiscipline” from the spending agencies abetted by the Finance Ministry.

Section 26 of the Public Finance Management Act establishes the Contingency Fund and requires Parliament to appropriate for it every Financial Year. Section 26(1) states that “There is established a Contingencies Fund which shall, every financial year, be replenished with an amount equivalent to three and a half per cent of the appropriated annual budget of Government of the previous financial year.”
This is the fund which would be used by government agencies for any unforeseen expenditure.

“Supplementary expenditure is a matter of discipline. Sticking to the approved budget would be the way to go. We need to provide resources for the contingency fund to stop the practice of encroaching on the budgets approved for agencies and departments of government,” said Mr Lugoloobi.

He adds that “there is gross [financial] indiscipline on part of the agencies and the people who release this money to the agencies, [by] allowing the release of supplementary expenditure that does not meet the requirements.”
On the issue of failure to provide for the contingency fund, Mr Kasaija passes the buck to Parliament, which he says thwarted his first attempt to establish the fund.

“We proposed in the Public Finance Management Act that we create what we call a contingency fund and the first time that law was passed, I put money, about 70 billion, but Parliament did not appropriate it,” said Mr Kasaija.
He now says “because of pressures I have got, new roads, oil roads, hunger, I can’t find money to put in that fund.”

This view is opposed by Mr Julius Mukunda, the coordinator of Civil Society Budget Advocacy Group, who says MPs cannot be trusted with the contingency fund without sufficient system checks to curb abuse.
“[Given] the current state within which our budget is governed, you don’t want a contingency because you need to keep meat away from hyenas. They will allocate that money amongst themselves,” he says.
Mr Kasaija, however, maintains that all supplementaries meet legal requirements established under the Public Finance Management Act.

“All supplementary expenditure I put my signature to can’t wait. I issued, for example, a supplementary amount of money to pay court. If I didn’t pay, now the fellows go back to court and the bill is multiplied because of interest,” said Mr Kasaija.
He disagrees with claims that his ministry is indisciplined, saying it is the spending agencies and not the Finance Ministry that spend the appropriations.

“I don’t agree when [Lugoloobi] says we are the people who are undisciplined. How? We are not the ones who ask for these supplementaries… I disagree when he says it is indiscipline on the part of the Ministry of Finance,” he said.
Economist Ramathan Ggoobi, a lecturer at Makerere University, says the supplementaries would not be a bad idea. The problem, he says, is that they are subject to abuse “in countries like ours with governance challenges.”

“The world over, countries have supplementary provisions in their budgets because you can’t be perfect in budgeting for the future because right now they are finalising the budget process for 2018/2019. Imagine planning now for things to happen in 2019,” said Mr Ggoobi.
He, however, adds that “the problem is that in countries with governance challenges like ours, such arrangements can easily be abused.”
Mr Ggoobi says the way to go is to define what exactly supplementary expenditure should be used for.

“You cannot say that you are going to spend on recurrent non-wage supplementary. The only thing maybe you can ask for supplementary is development expenditure,” Mr Ggoobi proposed.
Matters like wages, he said, which can be foreseen, should as a matter of principle never call for supplementary expenditure.
Mr Ggoobi says Uganda’s current situation predisposes it to unscrupulous, corrupt cartels that may work to dubiously procure supplementaries for plunder.

To cure this, he prescribed entrenchment of provisions of law relating to supplementaries.
“In some societies where they know that people who are holding the offices and those who are going to approve the supplementaries can easily be captured [to become] a cartel, the way forward is to remove those arrangements and you lock in those kind of expenditures within the law to deal with the governance challenges,” said Ggoobi.
Whereas entities ask government for supplementary funding, ultimately some monies are returned to the consolidated fund at the end of the Financial Year.

Unspent funds in the Financial Year 2016/2017, for instance is up to Shs81billion, about the exact amount that Mr Kasaija had in the first place proposed for the botched contingency fund.
Curiously, the health sector, with perennial under-funding complaints, took the lead in unspent monies with Mulago National Referral Hospital as the flag-bearer at Shs3.4 billion.
But what exactly should supplementaries be used for? Ms Cecilia Ogwal (FDC, Dokolo) says it should strictly be applied to enhance productivity in the economy.

“Generally, a good budget with its supplementary should focus on production expenditure. We spend a lot on expenditure which does not increase our economic productivity,” said Ms Ogwal.
She Ogwal adds that the idea of supplementaries offend the budget and expenditure plan of departments and agencies that suffer the cuts to fund the supplementaries.

Mr Lugoloobi agrees, saying: “We should not be seen to be cutting budgets except when resources are not being used, and then they can be given to other agencies with need.”
Mr Kasaija says the view that supplementaries affect the funding to other agencies is unschooled because that is not what happens.
“When we are approving a supplementary, we are not encroaching on any budget item,” he said.

Mr Mukunda says that ministries, government agencies and departments use supplementaries to avoid budgeting for their sectors beforehand, choosing to upstage Parliament with a request so central to their priorities it cannot be turned down.
This, argues Mr Mukunda, sets the approved funds for abuse.
“There is too much indiscipline in the budget process. You find that sector priorities are not prioritised in the budget making process because you know that in the middle of the process you can come back and ask for a supplementary budget when it is the major focus of the sector and nobody will raise an issue.”

Mr Matia Kasaija’s solution to the supplementaries is to have the contingency fund in place anyway.
“The answer would have been to have the contingency fund, but unfortunately I have not been able to put in money over the last three years,” he said.
In the next Financial Year, whereas the process is going to take the usual cycle of an entire year, as night follows day, there will be a supplementary expenditure.

The argument now shifts to the use government should, by law, prescribe for the use of supplementaries.
To avoid situations where money is spent by way of supplementary expenditure on peripheral issues, there should be strict legislation on sectors that may place a request for a supplementary expenditure, and the activities clearly defined.

In Uganda, Members of Parliament have been given Shs 13bn for age limit consultations

October 23, 2017

Written by Sadab Kitatta Kaaya

Members of Parliament will each receive Shs 29 million each to be used as facilitation for consultations on the ‘age limit’ amendment bill.

In total, Shs 13 billion will be diverted from the MPs’ emoluments (allowances) to facilitate the age limit consultations according to Parliament’s director of Communications and Public Affairs, Chris Obore. 

Obore says ministry of finance asked Parliament to find the monies from within the already released funds, promising to reimburse.

Some MPs already started consultations

The reallocation was reportedly allowed by Finance minister Matia Kasaija after NRM MPs told President Museveni that they did not have money to facilitate their consultations on the Raphael Magyezi bill. The bill is currently before the Legal and Parliamentary Affairs committee.  

MPs get a monthly net salary of Shs 6.1 million plus allowances ranging between Shs 30 million to Shs 40 million, depending on the distance between parliament and their constituencies.

This money is usually posted to their accounts in the first week of a new month but this time round, Parliament has only disbursed the Shs 6.1 million salary.

Obore says if Finance doesn’t reimburse the money by December, the MPs may have to go another month without their allowances. 

“The clerk to parliament has provided Shs 13 billion from the members’ emoluments. Emoluments are allowances they pay, fuel, transport - all those things. So we have picked Shs 13 billion to pay them to go out, because this thing has a time frame. Each MP is going to receive Shs 29 million to go to their constituency to consult”, he said. 

"The implication to us is that if ministry of Finance delays to give us the money, the payment of emoluments of MPs by December will be affected because we have already brought their emoluments forward in order to be able to facilitate an activity", he added.   

Last week Finance said it had so far released over 50 per cent of Parliament’s 2017/18 approved budget.

 

Nb

As Parliament looks after the taxpayers money well, better it is that one sees value for money in this parliamentary project. Indeed this is a lot of the tax payers' money when the national economy is not at best.

 

Kangole bridge is giving motorists in Karamoja Province, panic attacks as they regularly have got to use it:

October 15, 2017

Written by URN

A truck stuck on Kangole bridge

A 63-year-old bridge over one of the longest and fast-running rivers in Karamoja region is on the verge of total collapse.

Without immediate repairs, motorists have expressed fears that Kangole main bridge on Omaniman river along the Moroto-Soroti road will soon give way. Three accidents have so far happened at the bridge, according to the LCV chairman Napak, Joseph Lomonyang. 
 
The first vehicle to veer off the bridge was a food truck belonging to the UN World Food Program (WFP) around May this year, followed by two Chinese trucks. One of the Chinese trucks almost fell into the river this week after part of the bridge broke away. The bridge was constructed in 1954.
The continuous wearing away of the bridge has forced some vehicles especially heavy trucks to abandon the road altogether.  

Immaculate Angella, one of the passengers who travelled on Friday afternoon from Soroti says the state of the bridge is very worrying.  
 
"I felt like jumping out of the Noah [vehicle] when we passed there. The bridge is just in pieces and yet some heavy vehicles risk and pass on it.  Government should restrain drivers from passing on this road when they are loaded" said Angella.

An administrator with the Gateway bus company who declined to mention her name says passengers are always asked to come out of the bus and cross the bridge on foot.  She adds that the process consumes a lot of time for passengers.

Lomonyang has appealed to Uganda National Roads Authority (Unra) and the Chinese company, China Road and Bridge Cooperation (CRBC) currently upgrading the road to prioritize on the construction of the bridge.

"Passing there is now very risky. We need that bridge repaired to allow continuous flow of traffic. This is a major road connecting Karamoja to other parts of the country" Lomonyang said on phone.

He blames the engineers who worked on the bridge for making it very narrow. Mark Ssali, the communications and corporate affairs head at Unra couldn't comment when contacted.
 
However, an official within Unra who preferred anonymity because they are not allowed to speak to the media said they are considering diverting heavy vehicles through Lorengedwat in Nakapiripirit to Lotome, an additional distance measuring more than 20 kilometres. 

While the Chinese contractors upgrading the Moroto-Soroti road prioritise on bridges, the first attempt to work on Kangole bridge failed when water carried away the diversionary route created by the engineers.
 
The bridge was washed away after a heavy downpour.
 
Nb
Unfortunately for the current NRM government, this is the province that has received lots of government attention for development for the last 31 years.

Nakumatt the modern African urban supermarket is presently feeling the financial problems in the country of Uganda:

By Faridhah Kulabako

 

Added 3rd July 2017

 

Kenya media report that as of April this year, the retail store had accumulated a huge debt, estimated at sh609.1b (Ksh18b), up from sh159b (Ksh4.7b) in 2012.

 

Naku 703x422

One of several modern Nakumatt stores on the streets of Kampala, Uganda.

 

Although it had hoped for a financial bailout to inject fresh blood in its businesses across the East African region, the deep financial distress has forced cash-strapped Nakumatt to again offload some of its prime-located stores, which it opened hoping to tap into the wallets of the affluent Ugandans to improve profitability.

A statement issued by property managers Knight Frank Uganda, indicates that three Nakumatt stores including Acacia Mall, Kololo, Village Mall, Bugolobi and Victoria Mall, Entebbe have been closed to pave way to redevelop the said malls.

Nakumatt Uganda, together with its parent company Nakumatt Holdings Kenya have been facing financial challenges since last year, forcing them to close several branches both in Uganda and Kenya.

In April, it closed the Katwe branch because it owed sh297m in rent arrears.

Kenya media report that as of April this year, the retail store had accumulated a huge debt, estimated at sh609.1b (Ksh18b), up from sh159b (Ksh4.7b) in 2012.

In October last year, Ugandan suppliers halted giving the retail store merchandise because of failure to meet its financial obligation. This saw a number of Nakumatt’s stores including Garden City, Bukoto, Naalya and Bugolobi run out of stock on some items.

In February this year, Nakumatt announced that it was getting a sh266.1b ($75m) capital injection that would enable it clear supplier debts and revamp outlets.

The money was in form of an equity acquisition of 25% from an undisclosed buyer. However, the funds are yet to come, further pilling pressure on the distressed company that is unable to meet some of its financial obligations.

At the peak of its challenges last year, the retail chain also announced that it had embarked on a re-organisational strategy, including renegotiating contractual agreements with suppliers, to enable it to safely wade through the turmoil.

They were reported to have engaged suppliers to review their supply terms, in addition to undertaking a management enhancement programme that involved recruiting and retaining management personnel to handle specialised units

The company is also said to have integrated an advanced warehouse management system to allow the business hold optimum stocks based on daily demands of individual branches to cut on losses. These are yet to have an impact.

Suppliers take it to court

Last week, Nakumatt management was summoned by the Commercial Division of the High Court to respond to two different law suits in which Britania Allied Industries (L) and Charms Uganda Limited, accuse it of failing to pay over sh400m for supplies.

Britania indicated that during the period from January 2016 to June 2017, Nakumatt ordered for consignments of goods at a reasonable agreed upon price but is yet to pay.

The Minister for Animal Industry Bright Rwamirama, Mpororo Group Ltd, and Ms Florence Rwamirama dragged Nakumatt to court over rental arrears from 2013 totaling sh2b.

The Mbarara outlet was forced to close.

The South African ratings agency, Global Credit Ratings, also downgraded the retail chain’s credit risk profile to ‘watch list’, indicating a weakened ability to meet outstanding financial obligations.

Started its operation in Uganda 2009, Nakumatt had nine branches in Uganda mainly in the central region; two in Bugolobi, Oasis Mall, and Acacia Mall in Kololo and Naalya. Others were in Bukoto, Katwe and Mbarara.

In Uganda the National Bank Of Uganda has produced evidence on why it has got to take the owner of a Private bank to court:

September 1, 2017

Written by Derrick Kiyonga

 

 

On Tuesday evening, Bank of Uganda (BOU) filed a rejoinder to its lawsuit accusing businessman Sudhir Ruparelia of stealing Shs 400 billion from the collapsed Crane bank.

On the same day, the central bank also filed its response to a counter claim filed by Sudhir, in which the former Crane bank owner demands that BOU pays him $8 million for breach of the Confidential Settlement and Release Agreement (CSRA) signed earlier this year.

DERRICK KIYONGA carefully scrutinized the BOU 36-page defense and found that the central bank squarely heaps the blame on Sudhir for breaching the said agreement. 

In his defense against the Bank of Uganda (BOU) lawsuit, Sudhir contends that MMAKs Advocates and AF Mpanga advocates, the central bank’s lawyers, cannot institute proceedings against him because in so doing, they are in breach of the advocate-client relationship.

Sudhir specifically took issue with MMAKs Advocates. He said the law firm earlier represented Crane bank and got vital information, which it is using in the BOU case against him.

BOU, however, denies that its instructions to MMAKS Advocates and AF Mpanga Advocates in this suit are a violation of any advocate-client relationship with Sudhir or Meera Investments, who are the defendants.  

BOU contends that MMAKS Advocates has acted for Crane bank [in receivership] in various matters since 2005 and continues to do so in this suit and other matters.

According to BOU, Crane bank is a separate and distinct legal entity from Sudhir, who is its majority (sole beneficial) shareholder. The central bank further argues that Sudhir as an individual is not a present or former client of MMAKS Advocates and did not become so by virtue of the fact that the law firm represented Crane bank.

“In any event, the claims of fraudulent extraction of monies by the defendants [Sudhir and Meera Investments] from the plaintiff [Crane bank], which are subject of this suit, only came to light subsequent to and by reason of a forensic audit carried out by Pricewater houseCoopers (PWC) after October 20, 2016 and were not known by anyone other than the defendant and his associates/co-conspirators prior to the issuance of PWC’s forensic audit,” the BOU rejoinder says.

AGREEMENT

In his defence, Sudhir argued that the BOU case should be summarily thrown out because he signed an agreement with the bank known as a Confidential Settlement and Release Agreement (CSRA), which he says stops the central bank from instituting any legal proceedings, be it civil or criminal, against him.  

He cited clause 6 of the agreement, which says; “This confidential settlement and release agreement is in full, complete and final settlement of all claims that either party (or related parties or shareholders) may have against the other, and each of Bank of Uganda and Crane Bank Limited hereby fully and finally releases and forever discharges and shall refrain from instituting, directing, procuring, instigating or maintaining all or any actions, claims, sanctions (whether administrative, civil or criminal in nature). ”

But the bank says by executing the CSRA, BOU did not concede that the claims against Sudhir, which form the basis of the claims set out in the plaint, were not well founded.

‘The undertaking by the plaintiff to release and discharge the first defendant [Sudhir] from liability and to refrain from instituting, directing, procuring, instigating or maintaining any legal actions or claims against the first defendant, set out in Clause 6 of the CSRA and the agreement not to sue set out in Clause 7 of the CSRA did not arise and become binding on the plaintiff simply by virtue of the execution of the CSRA,” BOU says.

Sudhir’s primary obligation, according to BOU, under the terms of the CSRA, was to pay the settlement consideration, being an aggregate amount of $60m part in cash and part in property, as well as handing over the freehold/mailo certificates of title for the 47 branches, in accordance with and in the manner set out in the provisions of Clauses 3.1, 3.2 and 3.3 of the CSRA.

In particular, BOU says Sudhir’s initial obligation under Clause 3.2.5 of the CSRA was: “to identify and supply a list of properties (free of all encumbrances, claims whether legal or equitable and whether registered or unregistered) whose collective fair market value shall meet the required value [of US $42,000,000.00, United States Dollars Forty Two Million) under this agreement and [to/ submit the list to BOU at the date of execution.”

In breach of the express provisions of Clause 3.2.5 of the CSRA, the details and particulars of which breach are more fully set out in the defence to counterclaim, BOU says Sudhir did not submit a list of unencumbered properties whose collected fair market value amounted to $ 42m to BOU on the date of execution of the CSRA.

That when BOU insisted on receiving the property lists, Sudhir wrote a letter on May 18, 2017 purporting to suspend implementation of the CSRA but in effect repudiating the same.

BOU says that on April 5, 2017, Sudhir provided two lists of properties in purported compliance with its obligations under Clause 3.2.5 of the CSRA.

The first list, according BoU, comprised of 14 properties, which in court documents have been termed as “Meera list” owned by Meera Investments.

The second list, which in the court documents has been referred to as “the Bharwani list” comprised of ten properties, three of which were owned by Mahmud Bharwani and the rest (one each) owned by Phionah Najemba, Florence Nakimuli, Eddy Matovu, Dembe Apartments, Alice Nambozo, Way Forward Developers and Prestigious Apartments.

On April 6, 2017, BOU says, its lawyer David Mpanga raised concerns about the property lists, pointing out, inter alia, the facts that: Plots 35, 37, 39, 41 and 45-65 Mpanga Close (Items 1- 5 on the Bharwani List) were encumbered by reason of being located in a Nakivubo swamp; plots 22-23 and 24-25 Mukabya Close (Items 6 and 7 on the Bharwani List) were encumbered by reason of being located in a Kinawataka swamp.

Mpanga also pointed out that Plot 34A, which Sudhir surrendered to BOU as part of the CSRA, is a playing field of Nakasero primary school and is fenced off with a clear sign indicating that it is not for sale.

On the April 10, 2017, BOU says that Mpanga presented Sudhir’s lawyers with further evidence of the encumbrances on the Nakasero primary school playing fields and on the properties located in the Nakivubo and Kinawataka wetland.  

In the same meeting, Mpanga queried Bharwani’s credibility and on behalf of BOU, requested that the Bharwani list be replaced with a list of unencumbered properties so as to augment the Meera List and make up the required value as per the requirements of Clause 3.2.5 of the CSRA.

In purported compliance with clause 3.2.5 of the CSRA, BOU says that on April 12, 2017, Sudhir presented a further list of three additional properties, one of which was owned by Meera Investments, another by Sudhir jointly with his wife and the third owned by Sudhir, bringing the total number of plots submitted on the “Meera Investments List” to seventeen.

Sudhir, according to BOU, on the 24th of April 24, 2017 presented a further list of four properties in the names of Adventure Real Estates Limited, a company associated with Bharwani, bringing the number of properties on the “Bharwani List” to 14.

All of the properties on the Bharwani, according BOU, were inspected by Semaganda & Associates, the valuers appointed to the Joint Valuation team by BoU and found to be encumbered in so far as they were: controversial titles located in gazetted wetlands; carved out of contested land belonging to city primary schools; or traversed by high-voltage power lines and encumbered by wayleaves (which allows government to work on private land).

“The fact that the majority of the properties on the Bharwani List were encumbered and largely worthless for being controversial was well within the counterclaimant’s knowledge [Sudhir] by reason of his association with Mahmud Bharwani and his involvement in the fraudulent extraction of monies using the Infinity Investments Limited facilities,” BOU says.

Though Sudhir says the agreement was repudiated the moment  BOU filed a case against him in the Commercial court; the central bank  in its defence insists that it was Sudhir’s intransigent stance, and refusal to remedy the breach of the agreement  that compelled the central bank to initiate legal action against the businessman.

It seems, however, BOU lawyers don’t seem to have a ready answer to Sudhir’s main claim, to the effect that since the CSRA collapsed, the central bank should return the $8m he paid in partial fulfillment of the agreement.   
  
dkiyonga@observer.ug

In Uganda the Auditor General wants clear explanations from the Uganda Revenue Authority over Shs 11bn oil money:

August 24, 2017

Written by Edward Ssekika

Uganda Revenue Authority (URA) has not remitted Shs 11bn in “oil revenues” to the Petroleum Fund, the latest audit report into the fund by the Office of the Auditor General reveals.

According to the auditor general’s report on the financial statements of the Petroleum Fund for the period 30th June to 31st December, 2016, the tax body, ought to have remitted Shs 11.3 billion collected as Pay as You Earn (PAYE), Value Added Tax (VAT) and Withholding Tax from petroleum activities.  

The report, released in June this year, is the first audit report into the finances of the petroleum fund that has been made public.

“It was, however, noted that monies collected by Uganda Revenue Authority (URA) under the Income Tax Act from income derived from petroleum operations such as Pay as You Earn (PAYE), Value Added Tax (VAT) and Withholding Tax is not being remitted to the Uganda petroleum fund. This contravenes the Public Finance and Management Act 2015,” the auditor general’s financial report reads.

 

One of the oil wells right in the middle of the continent of Africa.

 

The Public Finance Management Act, 2015 describes “petroleum revenue” as tax paid under the Income Tax Act on income derived from petroleum operations, government share of oil production, signature bonus, surface rentals, royalties, proceeds from the sale of government share of production, any dividends due to government, proceeds from the sale of government’s commercial interests and any other duties or fees payable to the government of Uganda from contract revenues under a petroleum agreement.

In the report, the auditor general, according to his assessment, argues that the description of “petroleum revenues” is restrictive since it leaves out income derived from petroleum operations like Pay as You Earn (PAYE), import duties and VAT payments from petroleum activities.

However, in URA’s opinion, PAYE is not taxed on revenues derived from petroleum operations, but it is categorized as employment income paid by the employees and as such it is excluded from petroleum revenues.

“Arising out of the above, it was established that Shs 11.3bn collected through the commercial banks and remitted to the consolidated fund should have instead been transferred to the Petroleum Fund,” the report pointed out.

The auditor general notes that the management of URA promised to remit the money to the Petroleum Fund. In the report, the auditor general advises URA to seek advice from the solicitor general to clarify on whether or not PAYE from employees of oil companies and their sub-contractors, as well as VAT, are part of the petroleum revenues.

SHS 271BN FUND

The auditor general’s report reveals that by the end of December 2016, the fund had a total of Shs 271.5bn. This includes the Shs 922.3 million the fund received from Tullow Oil and Total E&P in rental fees.

“For the six months ending December 31, 2016, the fund received non-tax revenue worth Shs 922.3 million ($270,900 dollars) as surface rental fees from Tullow Uganda Operations Pty and Total E&P Uganda,” the report reads.

Of this, $113,400 dollars was paid by Total E&P Uganda for the development areas of Ngiri, Jobi-Rii and Gunya and $157,500 was paid by Tullow Uganda Operations Pty Ltd for the areas of Ngege, Kasemene, Wahrindi, Nzizi- Mputa, Waraga and Kigogole-Ngara.

“The Petroleum Fund does not own any property, plant, equipment in its books of account. There are no expenses on the fund, except bank charges,” the Auditor General says in the report.

The petroleum fund is maintained in two separate accounts in Bank of Uganda. One of the proceeds is denominated in the local currency and the other in United States dollars.   

The signatories to the Petroleum Fund are: Keith Muhakanizi, Patrick Ocailap (deputy secretary to the treasury) and Lawrence Ssemakula, the accountant general.

The Public Finance Management Act, 2015, places an obligation on the auditor general, to audit the financial statements of the fund. The auditor general noted: “From the fund’s cashbooks and bank statements, I ascertained that there were no expenses made from the fund, except bank charges.”

Under section 56 of the Public Finance Management Act, 2015 the minister of Finance is responsible for the overall management of the petroleum fund. Under Section 60 of the PFMA, the accountant general is responsible for maintenance of proper books of account and proper records of the petroleum fund; and preparation and submission of semi-annual and annual financial statements for the petroleum fund that are free from material misstatement whether due to error or fraud.

Under the Public Finance Manangement Act, withdrawals from the fund can only be authorized by parliament through an Appropriation Act and warrant from the auditor general to the Consolidated Fund to support the annual budget and or to the Petroleum Revenue Investment Reserve Account.

OIL FIRMS LOSE SHS 136BN

In a separate audit report – the annual report of the auditor general on the Financial Statements of Government of Uganda for the Financial Year Ended 30th, June, 2016 - the auditor general approved Shs 3.1 trillion as recoverable costs.

Recoverable costs are those project investments that the oil companies are allowed to recover before sharing the profit from the sale of the oil.

According to the report, international oil companies stand to lose at least $39 million (approximately Shs 136.8bn) in recoverable costs for failure to comply with the provisions of production sharing agreements.

In the report, the auditor general, John Muwanga, reviewed costs recovery statements submitted by the oil companies for the period 2004 – 2011. Uganda discovered commercially viable oil reserves in 2006 after years of exploration.

“I reviewed cost recovery statements relating to the period 2004-2011 in the sum of $983,063,050 (an estimated Shs 3.4 trillion) and made the following observations; a sum of $39,094,724 (approximately Shs 136.8 billion) was determined unrecoverable because of non-compliance with the provisions of the PSAs,” the report reads in part.

The production sharing agreements [oil agreements] signed between government and the oil companies spell out the type of costs which are recoverable and those which are not. For instance, recoverable costs include all exploration, development, production and operating expenditures.

However, in the report, the auditor general does not specify which companies are affected by non-compliance. The production sharing agreements signed between the government of Uganda and oil exploration and production companies provide that the government auditor will review the cost recovery statements submitted by the companies to ascertain whether there was compliance with the provisions of the agreement.

According to the report, a sum of $902,382,526 (approximately Shs 3.1 trillion) was considered compliant with the provisions of the production sharing agreements and is, therefore, recoverable from future oil earnings. This means, once oil production starts, oil companies will recover Shs 3.1 trillion as costs they have incurred in oil exploration so far.

“A sum of $41,585, 800 (approximately Shs 145.5bn) was determined unclaimable in accordance with the production sharing agreement (PSA) provisions as commercial oil and gas reserves were not discovered in the licensed exploration areas.

Under the production sharing agreement model, oil firms recover their investment after making discoveries, and production starts. However, where oil companies do not make any discoveries, no recoverable costs accrue to the oil companies.

For instance, Cnooc Uganda Limited hit a dry well in Kanywataba prospect in Ntoroko district while Neptune also hit dry wells. Therefore, the money they injected could not be recovered from government.

The auditor general is required to scrutinize the expenditures made by oil companies and give final approval of recoverable expenditures. As an example, at the end of 2008, the auditor general had approved $492.5 million as recoverable costs out of $510 million spent by oil companies in the five areas licensed for exploration.

The auditor general has now embarked on the audit of recoverable costs for the period 2012-2015.

ssekika@gmail.com

Ono yomu kubawabuzi ba Republic ya President Museveni, Mr Tamale Mirundi.

Olukalala lw’emisaala gy’abawabuzi ba Pulezidenti wa Uganda lwewunyisiza Ababaka ba Parliament. Bonna bawabuzi kyokka ensasula ya njawulo!

By Musasi wa Bukedde

 

Added 11th May 2017

 

OLUKALALA lw’emisaala gy’abawabuzi ba Pulezidenti lutabudde ababaka ba Palamenti olw’enjawulo mu nsasula ng’ate bonna bakola omulimu gwe gumu; ogw’okuwa Pulezidenti Museveni amagezi!

 

Minisita avunaanyizibwa ku nsonga z’obwapulezidenti, Esther Mbayo ye yayanjulidde ababaka ab’akakiiko akakola ku nsonga z’obwapulezidenti olukalala lw’abawabuzi 128.

Okusinziira ku lukalala olwo, abawabuzi ba Pulezidenti abasing obungi basasulwa 2,380,000/- kyokka mulimu abasasulwa eziri mu bukadde 15 n’okusingawo. Omu ku bawabuzi ba Pulezidenti, enzaalwa ya Girimaani Klaus E Holderbaum yaliko omubaka wa Girimaani kuno.

Ono buli mwezi asasulwa 7,000,000/-. Abaaliko ku bwakatikkiro wa Uganda kati nga bawabuzi ba Pulezidenti ye Kintu Musoke, Polof. Robin Apolo Nsibambi ne Henry Muganwa Kajura eyali omumyuka owookubiri owa Katikkiro.

Wabula ensasula yaabwe eyawukana kinene. Kajura y’abasinga okusasulwa. Afuna obukadde 15, Kintu Musoke obukadde 11 ate Polof. Nsibambi afuna 2,380,000/-.

Eyali Omumyuka wa Pulezidenti Dr. Specioza Wandira Kazibwe naye ku lukalala kwali ng’asasulwa 2,600,000/- omwezi.

Abaaliko baminisita abali ku lukalala lw’abawabuzi ba Pulezidenti ye; Gerladine Namirembe Bitamazire, Gerald Sendaula, Maria Kiwanuka, Ham Mukasa Mulira, Dr. Beatrice Wabudeya, Gen. Salim Saleh, Dr. Ezra Suruma, Dr. James Makumbi ne Polof. Edward Rumayo.

Dr. Wabudeya, eyaliko Minisita ow’Ensonga za Pulezidenti y’asinga ab’ekiti kino okusasulwa ng’afuna 11,180,000/- omwezi. Abasigadde bonna bali mu bukadde bubiri.

Avunaanyizibwa ku by’amawulire mu maka g’Obwapulezidenti Don Wannyama yannyonnyodde nti Minisitule ey’abakozi ba Gavumenti y’esengeka emisaala gy’abakozi so si Ofi isi oba amaka ga Pulezidenti.

Yagambye nti ye ky’amanyi, nti abawabuzi ba Pulezidenti balina Kontulakiti ez’enjawulo.

Omu ku bawabuzi ba Pulezidenti, Brig. Kasirye Ggwanga bwe yatuukiriddwa yagambye nti ye tafaayo oba banne bwe bawa Pulezidenti amagezi bafuna ssente nnyingi okumusinga.

“Nze ndi mumativu ne ssente ze nsasulwa kuibanga ndi musajja mulimi era omukozi.” Wansi lwe lukalala lw’egimu ku misaala gy’abawabuzi ba Pulezidenti.

 

 

The Ministry of Finance in Uganda is to sack 30 Permanent Secretaries over lack of proper financial accountability:

April 7, 2017

Written by Alon Mwesigwa

 

 

The Embattled Permanent Secretary of Finance, Mr Keith Muhakanizi

 

 

The finance ministry has warned at least 30 accounting officers for ministries and departments to provide responses to accountability queries raised by the auditor general or face the possibility of being sacked.

In a letter to Parliament dated March 28, 2017, the secretary to the Treasury, Keith Muhakanizi, ordered the accounting officers to account for missing funds by the end of June.

“Accounting officers who fail to do so shall have committed an offence in accordance with Section 79 of the PFM (Public Finance Management) Act 2015, and I may recommend surcharges against them as provided for in Section 80 of the same Act, in addition to other administrative sanctions,” wrote the finance ministry’s permanent secretary.

Muhakanizi’s missive was a follow-up to a voluminous document authored by the Office of the Auditor General, which catalogues “the status of implementation of audit recommendations” by each government unit that received a share of the national budget for the 2016/17 financial year.

Among the ministries that the auditor general identified as having failed to provide satisfactory accountability for public funds are health and education. He also named the Electoral Commission, Judiciary, Uganda Police, and Kampala Capital City Authority (KCCA).

Ministry of Finance PS Keith Muhakanizi

In his March 2017 report, the auditor general says the blacklisted entities had outstanding issues with accountability and some accounting officers were transferred before resolving the queries. He remarked that those with outstanding audit queries should not be eligible for re-appointment.

Jim Mugunga, the ministry of finance spokesperson, confirmed to The Observer that Finance had received the list of accounting officers with outstanding queries.

Mugunga told us yesterday: “I can confirm that the secretary to the Treasury has sent out the same queries to the accounting officers to address them satisfactorily before they are disappointed and not appear on the list of accounting officers in the financial year [2017/18].”

In his letter, Muhakanizi states, “The appointment or designation of accounting officers for the FY 2017/18 is based on the status of implementation of audit recommendations in the report of the auditor general for the year ended 30th June 2016 and the internal auditor general’s report for the year ended 30th June 2016.”

SOME AUDIT QUERIES

At the ministry of education, the auditor general found that during the tenure of Dr Rose Nassali Lukwago as permanent secretary, at least Shs 90m was paid to staff who had exited the ministry and those who were supposed to retire without any proper justification.

Yet Uganda’s public service standing orders of 2010 state that payment of a salary to a public officer must be stopped immediately the officer ceases to render services to government under whatever circumstances, including death.

The audit also found that the ministry made double payments of Shs 396m to several pensioners. Asked how the duplicate cases came about, the ministry told the AG that the Integrated Personnel and Payroll System (IPPS), a system government uses to pay civil servants, does not automatically deactivate an employee’s assignment on attainment of mandatory retirement age.

Dr Nassali has since been transferred to the Judicial Service Commission. For the Uganda Police, the auditor general says 24 pension files worth Shs 296.2m were processed without verifying the pensioners’ life certificates to confirm that indeed they are alive and eligible for the payments – noting this could have led to loss of funds.

The under-secretary, Rogers Muhirwa, is named as the accounting officer responsible. At the ministry of health, the auditor general says a private company was paid Shs 888.7m, excluding withholding tax, basing on photocopies of supporting documents.

“Payments against photocopies may result into multiple expenditures,” said the auditor general.

At the Electoral Commission, whose accounting officer is the secretary, Sam Rwakoojo, the auditor general found that between 2006 and 2011, the commission failed to remit to URA taxes in form of withholding taxes on goods and services and PAYE on allowances and motor vehicle benefits to its employees.

As a result, URA computed a total of Shs 1.9bn as a principal sum and imposed an interest charge of Shs 2.7bn in March 2016. The EC told the auditor general that they had “requested for a waiver of the interest from the ministry of finance and a response is awaited.”

The audit notes that the EC management explained “that the principal sum was paid using balances on the various account codes after all the budget activities had been finalised…”

For KCCA, the audit questioned their legal fees. The auditor general said while the authority budgeted Shs 6bn in legal fees in 2015/16, it paid out Shs 11.8bn, exceeding the budgeted expenditure by 93 per cent.

“It was also noted that taxes and interest costs on a number of these cases were yet to be determined by court. There is a possibility for further increases in the legal costs payable,” the AG says.

The AG also revealed that the authority had a case in court that could cost it up Shs 100bn in legal fees. The responsible accounting officer at KCCA is Jennifer Musisi, the executive director, whose contract was this week renewed by President Museveni.

Mugunga told us that those accounting officers that were transferred but had not resolved their queries will be required to resolve them or work with their former institutions to ensure that they settle all outstanding financial issues.

 

 

Accounting officers facing accountability queries are as follows:

 

 

Government Institution

Accounting Officer Named

1.

Office of the Prime Minister

Christine Gawatudde Kintu

2.

Kampala Capital City Authority

Jennifer Semakula Musisi

3.

Judiciary

Dorcus W. Okalany (now at

ministry of lands)

4.

Undersecretary ministry of health

Segawa Ronald Gyagenda

5.

Ministry of water and environment

David O. Obong

6.

Secretary Electoral Commission

Sam Rwakoojo

7.

Uganda Industrial Research Institute

Professor Charles Kwesigwa

8.

Uganda Tourism Board

Stephen Asiimwe

9.

Rural Electrification Agency

Eng Godfrey R. Turyahikayo

10.

National Animal Resource Centre & Data Bank

Dr Wilberforce W. Kifudde

11.

Ministry of Health

Dr Asuman Lukwago (now at Education Service Commission)

12.

Kyambogo University

Patrick Madaya

13.

Uganda Police

Rogers Muhirwa

14.

Ministry of Education and Sports

Dr Nassali Lukwago (now at Judicial Service Commission)

15.

Cotton Development Authority

Jolly K Sabune

16.

Uganda Land Commission

Albert Jethro Mugumya

17.

National Forestry Authority

Michael Mugisa

18.

National Medical Stores

Moses Kamabare

19.

Uganda High Commission, New Delhi

Bob Richard Opio

20.

Uganda High Commission, Pretoria

Charity Natukunda

21.

Uganda Embassy, Washington

Stilson Muhwezi

22.

Uganda Embassy Addis Ababa

Michael Karugaba

23.

Ugandan Embassy, Tripoli

Kalikola Dennis Lugemye

24.

Ugandan Embassy, Khartoum

Robert Tugume

25.

Ugandan Embassy, Paris

Dora Kutesa

 

amwesigwa@observer.ug

 

Nb

Who are going to be paying for all these civil servants shopping spree if it happens that the funds mismanaged is that of the International Monetary Funds. Will it be our poor Black African grand children to pay back in 30 or 50 years time from now, one wants to ask the Audit General? 

 

 The committee of Parliament investigating the misuse of tax payers money has been advised by the national civic society:

By Mary Karugaba and Nicholas Wassajja

Added 14th March 2017 

 

 

"Publish What You pay out." Robert Tumwesigye and his associates puts his point across before members of COSASE) at Parliament. Looking on is ACFODE’s Brenda Asiimwe). Photo by Miriam Namutebi

 

There was drama in Parliament today when members of the Civil Society Coalition on Oil and Gas clashed with MPs probing the oil bonus and blamed them of approving the expenditure and later wasting time probing the circumstances.

Trouble started when one of the members, Magara Siraje, criticized the MPs on Commissions State Authorities and State Enterprises (COSASE) committee of approving the money before investigating the matter.

“I think Parliament didn't do its work. Why do you appropriate money that you will not monitor and then sit here to probe? This was a weakness on your side" Magara said.

His comment however angered the members who bombarded them with questions and accused them of being ignorant about the budget cycle and issues of oil.

In a rebuttal to brush off the accusations, the acting committee chairperson Fred Turyamuhweza said, "While you are here to enrich our understanding, it seems you only understand the expenditure and not the appropriation process. Don't just pick things and come to complain. I beg the civil society to give people correct information and not peddle lies”.

“If you have been following the probe, where did you get information that we appropriated the money? Where did you get the information that the money was removed from the Oil Revenue Fund?” Turyamuhweza asked.

According to documentary evidence submitted by Bank of Uganda, Uganda Revenue Authority and the Ministry of Finance, the money was requested through a supplementary budget which Parliament is yet to approve.

MP Abraham Byandala cautioned the CSOs against “talking about things they are not well versed with”.

“Whatever decisions government makes follows the development plan. Don’t say government is not doing its work and doesn’t care about its citizens. Secondly, why do you focus on oil expenditure yet there are other things like tourism?” he asked. 

CSCO chairperson Irene Ssekyana however proposed that for the purposes of transparency, authorities charged with the oil money should publish quarterly reports to avoid mismanagement.

"You should reign in the Ministry of Finance and Ministry of Energy to publish quarterly reports on oil revenues. It is important to always disclose information regarding the sector and proactively educate the citizens about the policies, legislation and associated implications," Ssekyana said.

She pointed at a range of loopholes currently bogging the oil sector, saying that despite a number of petroleum revenue management policies, a review of the current fiscal legal regime guiding the collection and use of the revenues revealed that, "there is lack of petroleum revenue utilization plan and conflicting powers between the minister of finance and Bank of Uganda".

Last week, COSASE chaired by Abdu Katuntu directed an audit into the oil revenues that have been collected since 2011.

This followed failure by the Ministry of Finance to account for over Sh1.3 trillion that was deposited on the oil revenue account before the creation of the petroleum fund account with Bank of Uganda.

COSASE members then argued that prior to the creation of the petroleum fund account; the money was supposed to be ring-fenced and transferred to the fund as opening balance.

However some ministry officials said there was no money but on further questioning, the Permanent Secretary in the ministry revealed that the money was spent on construction of Isimba and Karuma dams.

The committee asked him to provide a breakdown of the expenditure.

According to Bank of Uganda, the petroleum fund account holds only Shs10b on the local currency account and $72m on the dollar account.

 

The country of Uganda borrows money but fails to use it as it continues to pay high interest on it:

 


The austere Auditor General of Uganda, Mr John Muwanga

 

The major advise given to these economic technocrats is to read the small print before they commit the country to borrowing so much money:

Keith Muhakanizi, the secretary to the treasury, appears to have mastered the art of passing the buck to his team of accounting officers whenever the question of the government failure to use borrowed money comes up.

In the latest melee, Muhakanizi finds himself on the spot again following revelations by Auditor General John Muwanga that government has failed to use Shs. 18 trillion it borrowed.

“You ask individual accounting officers why they are not absorbing this money,” he told The Independent in a phone interview, “I also don’t know but government is trying to address this problem. It is poor performance, and yes, it is very bad.”

But former Finance Minister, Ezra Suruma, says this is not a new problem. “When I was minister,” Suruma told The Independent, “they (accounting officers and ministers) used to come with loans looking for signatures, I would ask them whether they had read and understood the conditionalities only to find that most of them hadn’t. I would ask them to go back and read and understand and they would say Suruma is slow.”

Paper Money laundering in Uganda that seems never to come to an end

 

 

Suruma says a large number of loans is signed without prior and thorough understanding and negotiations by the borrowers. “As a result,” Suruma says, “officials cannot meet the conditionalities after signing and the lenders cannot disburse.”

Some of these loans require passing of new laws and as a result infringe on our sovereignty but most of the times the borrowers have not read and do not understand these conditionalities.

Suruma adds that what we need are committed people who can read and understand these documents (some of them as big as 500 pages) and sign them when they understand the conditionalities and can implement these projects.

“The problem is not that we don’t need the money,” Suruma told The Independent, “we need the money to implement all these development projects but we must get it after understanding the conditionalities behind it.”

This poor absorption has far reaching implications on Uganda. Muwanga has warned that that it undermines the attainment of planned development targets because the country end up paying more to the lenders in terms commitment charges.

The report on public debt (domestic and external loans), guarantees and other financial liabilities and grants for financial year 2015/16 submitted by Finance Minister, Matia Kasaija, to parliament in March last year, revealed that commitment fees paid on undisbursed funds have grown by 191% from $1.75m in 2007/2008 to $4.6m paid in 2013/2014 due to delayed implementation of projects.

Ever rising public debt has already raised concerns with many saying it’s soon hitting unsustainable levels. Debt has jumped from $1.9b in the 2008/2009 financial year to over $ 10 bn as of last year, according to Uganda Debt Network. Kasaija and his technocrats insist that at 34 percent of GDP, Uganda’s debt remains sustainable.

Apart from commitment fees, as public debt has risen, so has interest payments on it. In his budget speech last year, Kasaija noted that Shs. 2,022.9 billion was for interest payments on debt.

Muhakanizi promises

Muhakanizi has been promising to address this problem in vain. In the new report, the AG warns that some issues raised in the previous reports were not addressed by the accounting officers and insists that this time around, the new findings need to be addressed urgently.

Just last year, Parliament’s Public Accounts Committee (PAC) summoned Muhakanizi and his team over the same problem. At the time, the AG had just revealed that out of the 73 loans assessed by 2015, 15 were at zero absorption, while 58 were performing below 20%.

One of these is a $10million loan borrowed in 2009 from the Islamic Bank for the construction of urban markets in Busega in Kampala and Nyendo in Masaka district. By 2015 no money had been released despite the loan accumulating interest.

The other was funding for the Mutundwe-Entebbe transmission line, which was acquired by 2013 but in 2015, no money had been released.

Muhakanizi said that this project stalled because the conditionality was counterpart funding, which was not readily available.

Apparently, Shs500 billion had been allocated as counterpart funding but only Shs200 billion shillings was released.

Muhakanizi added that in other cases, things like a land title were a requirement, which takes a long time to get. In response, legislators wondered why government would borrow money before acquiring a title. Muhakanizi did not have a ready answer but he told legislators that despite these challenges, the political system keeps pushing too many projects to technocrats for implementation. PAC legislators were not convinced.

When PAC Vice Chairman, Gerald Karuhanga asked him whether he was proud of a legacy of being one of the worst performing governments with respect to loan absorption, he appeared apologetic.

“Kindly, honourable, did you hear in my voice where you felt that I am proud?” Muhakanizi asked rhetorically, “No no, I agree with you things are bad, we need to take action.”

At the time, President Museveni had also just talked tough over the matter in a cabinet retreat.

“Low absorption capacity?” Museveni asked rhetorically, “This not acceptable.”

But things continue to get worse. While the AG has always raised queries over the matter, it is the first time the funds in question are as high as the entire country’s budget. This year’s total budget is Shs.26 trillion but of this, funds available for spending are Shs 18 trillion.

The revelations show that the amount of unabsorbed funds has been rising over the years to Shs.18.1 trillion this year.

These revelations also contradict President Yoweri Museveni’s excuse that lack of funding is the major detriment to service delivery.

It appears now that despite having a high borrowing appetite, his civil service is failing to absorb these funds.

 

 

The Local African commercial retailers and wholesalers have asked govt to remove Foreign Investors from their National Trading Sector.

WEDNESDAY DECEMBER 14 2016

 

Ms Jane Nalunga, the country director, Seatini Uganda, addresses the media in Kampala on Monday. PHOTO BY ALEX ESAGALA 

UGANDA, Kampala.

Tempers were high at the Monday validation meeting for the draft report on Uganda-Netherlands bilateral investment treaty in Kampala as local manufacturers tasked Uganda Investment Authority (UIA) to explain what foreign investors have contributed to the country’s economy.

In response, Mr Charles Omusana, the UIA investment facilitation and aftercare officer, who in his overview of Uganda’s investment climate, said foreign investors still offer opportunities in ICT, tourism and agro-processing.

“There is a big opportunity for investment sectors like tourism, ICT and agro-processing. We, therefore, still need many foreign investors. We currently have more than 6000 foreign investors,” Mr Omusana said.

Mr Owomusa’s call for more foreign investors did not go down well with Mr Godfrey Ssali, a development policy analyst and lobbyist at Uganda Manufacturers Association (UMA).

“I am very disappointed that you can stand here and start lecturing to us on investment opportunities for foreigners instead of explaining what they have added on the country’s economy. The economy is struggling, unemployment is very high, and what do foreign investors do?” Mr Ssali said.

A study by the Education ministry shows more than 400,000 graduates are channelled out every year. In August Finance minister, Mr Matia Kasaija, said of these, government employees only 300,000 graduates.
Mr Ssali’s disappointment was shared by Ms Jane Nalunga, the country director Southern and Eastern Africa Trade Information and Negotiations Institute (Seatini).

Ms Nalunga wondered why government has allowed foreign investors to venture into business that can be managed by nationals.
“I know of a German national who is growing coffee. I wonder why such a person could be allowed to grow coffee which can be produced by local farmers,” she wondered.

In response, Mr Omusana said some foreign investors grow their own crops because local farmers have failed to produce what industries need. He also asked the members not to throw blame on UIA yet the authority is just an implementer of decisions made by the Trade and Finance ministries.

Citing an example of Ethiopia that has reserved some sectors such as banking, telecommunication and retail businesses for its nationals, Mr Kenneth Lubogo, the Bulamogi constituency Member of Parliament, also chairman parliamentary trade and industries committee, said it was time some sectors be preserved for only Ugandans.

“Almost every sector of the economy has been taken over by foreign investors whose impact is not seen. The capacity of the locals does not match those of foreigners,” he said, adding: “All local banks like Greenland and cooperative band were closed because they could not match foreign banks,” Mr Lubogo said.

He said he would convince other MPs to have investment policies revised purposely to protect some commercial opportunities for locals. The participants also castigated UIA, Finance and Trade ministries over allowing foreign investors to be guided by employees of State House.

“Some foreign investors are received by State House. State House now becomes a transaction centre. We wonder what roles UIA, Trade and Finance ministries play,” Mr Lubogo said.

jkato@ug.nationmedia.com

 

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These African traders want monopoly in the basics of commerce in this country in a liberal economic system that has made them very rich.

 

By wanting to provide quickly the country of Uganda with basic electricity, government officials and Chinese companies built a substandard dam at Karuma and Isimba:

TUESDAY NOVEMBER 15 2016

 

 The Karuma Dam building site.  

Parliament’s Public Accounts Committee has faulted ministry of Energy officials for risking over shs 7 trillion of tax payers’ money in shoddy Isimba and Karuma power plants.

The committee on Tuesday confirmed that the two contractors; China International Water & Electric Corporations and M/s Sinohydro Corporation Limited were contracted without an open bidding process.
“Our initial bidding process was interfered by administrative reviews by cabinet which overruled the procedure with an aim of providing quick electricity to the country,” said Ms Prisca Bonabantu, the undersecretary at the Ministry of Energy and Mineral Development.

Ms Bonabantu, said that prior to the interference by cabinet an open bid process had been undertaken although she fell short of naming the companies that took part.

The Committee Chair, Ms Angeline Osegge (Soroti Woman Representative-FDC), accused the undersecretary for negligence and surrendering to political interference.
“In your technical capacity, what convinced you that the cabinet prevails over the law?” Osegge asked.

In 2013, Sinohydro Corporation Limited was awarded the tender for the construction and production of 600MW at Karuma on one hand while China International Water and Electric Corporation on another hand was awarded the Isimba Power project to produce 183 MW.
Both tenders were valued at shs 7.1 trillion with 85 percent funding from the EXIM Bank of China, distributed as Shs 5.7 trillion and Shs 1.4 trillion for Karuma and Isimba respectively.

However, according to the 2014-2015 Auditor General’s Report, there was no tendering undertaken for both firms, implying that the bidding process was flouted as the ministry directly allocated the contract to the two firms.

“The bidding process would be used by Government to evaluate the technical abilities of various bidders to identify the most capable firms to undertake the works,” reads part of the report, noting that “there is no evidence that this firm had the technical capacity to construct the dam.”

Since there was no bidding, the Auditor General contends that the contract price of shs.5.7 trillion had no basis since there was no evidence on how amount was arrived at.

The Auditor general also noted that there was a heavy risk since “the project costs for Isimba Hydropower project could be exaggerated.”

The deal in which Uganda paid shs 39.9 billion as 15 percent commitment fee and up-front was meant for complete establishment of transmission lines and substations.

The source of the money also remains unclear as officials gave conflicting accounts of before the committee but agreeing that the money was not provided for in the ministerial policy statement for the year of audit.

Whereas the accounting officer, Ms Bonabantu, said the money was recovered from the Energy Fund, Mr Ibrahim Mukwaya, the Senior Accountant in the ministry said the money was got directly from ministry of finance.

“The appropriation came from ministry of finance reserves and that caused a mismatch in the records,” Mr Mukwaya said.
The committee raised concerns on how a company whose history had not been verified would be trusted with carrying on with a vital project involving hefty sums of money.

It was also discovered that China International Water & Electric Corporation had been blacklisted by the World Bank because of its “dirty dealings” in Africa.

Both the Inspectorate of Government and the High Courts of Uganda had established that the firm had misrepresented facts in their bid for the Karuma Hydropower project.

 
The Director of the Uganda Revenue Authority M/s Doris Akol.

Facing pressures to manage a huge public administration system, and reluctance among donors to give Uganda money, President Museveni has asked the Uganda Revenue Authority to increase tax collection at a time when the economy is struggling to stay on its feet, writes ALI TWAHA.

President Museveni has challenged the Uganda Revenue Authority (URA) to increase the ratio of tax to Gross Domestic Product (GDP) to 20 per cent even as the economy remains frail.

“This figure [13 per cent] is still low and the lowest in the region,” Museveni said of the tax-to-GDP ratio. “[We must] increase it to at least 20 per cent by 2020.”

The remarks were in Museveni’s speech that Prime Minister Ruhakana Rugunda delivered recently. during URA’s 25-year celebrations at the tax body’s headquarters in Nakawa. Part of the reason as to why Uganda still has a low tax-to-GDP ratio is because of the low compliance levels, especially in the large informal sector.

TOO AMBITIOUS?

Richard Marshall, the associate director at PriceWaterhouseCoppers, described the move as “too ambitious” since URA is still struggling with structural weaknesses, including a narrow tax base, low compliance levels, widespread exemptions and low coverage.

“The 20 per cent is ambitious, especially in comparison to the government’s policy target to increase the ratio by 0.5 per cent per annum over the next five years...,” said Marshall.

Marshall cautioned against increasing tax rates or even introducing new taxes without increasing the number of taxpayers. He said the few taxpayers would be overburdened if new tax rates were introduced, impacting on their ability to save and invest in productive sectors.

“This may be detrimental to business growth and attracting foreign investment,” Marshall says.

Marshall argues that tax increases could most likely cause a big drop in citizens’ spending power. Fred Muhumuza, an economist and consultant, says low tax-to-GDP ratio has been affected by the structural nature within the economy where only a few people pay taxes.

“I know we could hit [at least] 15 per cent [tax-to-GDP ratio] if government withdrew some exemptions [from investors],” Muhumuza said.

URA PROPOSAL

URA, through guidance from the ministry of finance, is already mooting a couple of moves to slap new taxes on mobile data usage. Henry Saka, the commissioner, domestic taxes, at URA, said: “Tax on voice calls would be doing okay, but there is a new trend of telecom companies giving you data subscription and then you use it for calls.”

It is possible to make phone calls via social media platforms such as WhatsApp, Viber, Facebook Messenger, among others. URA argues that revenue from voice calls has dropped largely due to the evolving technology that allows cheaper phonecalls.

FAILING BUSINESSES

There are other signs that the low business growth in Uganda could limit the expansion of the tax base. For instance, early this year, at least 65 prominent businesses are said to have sought bailouts from government, amounting to Shs 1.3tn to settle their outstanding loan obligations with several commercial banks.

Other factors such as the high volatility of the shilling against other currencies have also hurt sectors like manufacturing. A depreciated shilling makes imports, which are crucial in the process of production, more expensive.

DONOR FUNDS

Recently, the World Bank withheld new lending to Uganda as it reviews the country’s ability to absorb the money and human rights issues. The withdrawal of donor funds places more pressure on government to increase its tax revenue to fill the funding gap.

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It is a Uganda Government that has made NRM political leadership a commercial enterprise in this country. Well one has to reckon on the market product from this enterprise and the ensuing profit margins there in. 

The World Bank has stopped its development loan efforts in the country of Uganda

Written by Alon Mwesigwa

Yet again, the private sector could be crowded out of the credit market as government turns to domestic borrowing to cover gap left by the World Bank, a move likely to slow down growth, writes ALON MWESIGWA.

Ugandans will find it hard to borrow if government chooses to get money from the domestic market to fill the gap left by the World Bank’s recent cash freeze, a Bank of Uganda official has warned.

Appearing on Capital Gang radio show last Saturday, Thomas Bwire, a senior principal banking officer at BOU, said:  “Their [World Bank’s] getting out implies [government] will put more pressure on the domestic borrowing.”

Ironically, the development lender’s concern is that Uganda has failed to absorb most of the money the former has advanced to it. The bank announced last week that it had decided to stop new lending to Uganda, as it reviews ongoing projects.

“The World Bank group took a decision to withhold new lending to Uganda effective August 22, 2016 while reviewing the country’s portfolio in consultation with the government of Uganda,” it said in a statement last week.  It asked “Ugandan authorities to address the outstanding performance issues in the portfolio, including delays in project effectiveness, weaknesses in safeguards monitoring and enforcement, and low disbursement.”

As of April 2016, the World Bank’s Uganda portfolio included 17 national active operations with a $2.1bn commitment, according to a statement on WB’s website. The suspension will not affect ongoing projects. The government announced in the 2016/17 budget that it would only borrow Shs 600bn domestically this year.

This was deliberate to allow the private sector borrow more and shower up growth. When government borrows a lot domestically, most banks rush to lend to it instead of giving money to private businesses and individuals because it offers no risk.

But it also means interest rates, currently averaging 23 per cent, are likely to remain high for the risky borrowers. Previously, government domestic borrowing has always hovered around Shs 1.4tn.

According to BOU, credit growth in the first half of 2016 averaged 3.9 per cent, compared to 9.6 per cent in the same period of 2015.

GROWTH CUT

And when private businesses aren’t borrowing, it slows down the economy’s growth. In a speech to ministers and ambassadors at a government retreat in Munyonyo recently, Matia Kasaija, the finance minister, said Uganda will grow at 4.8 per cent this financial year, lower than the earlier projected five per cent. It grew at 4.6 per cent last financial year.

Kasaija told The Observer that issues ranged from expensive credit to unfavourable weather conditions, which hamper this financial year’s growth. The World Bank’s 2016 Uganda economic update, released in July, said the country was not getting value for money on investments on most public projects over the past decade. It added that this will not transform the country into a middle-income status soon.

The WB said Uganda’s projects were characterized by “endemic delays in implementation, cost overruns, and corruption means that sometimes projects come twice the original cost.”

Some of the projects are given as political gifts and no thorough assessment is done.

Christina Malmberg Calvo, the World Bank Uganda country manager, said: “Over the past decade, for every shilling invested in the development of Uganda’s infrastructure, less than a shilling [about 70 per cent of a shilling] of economic activity has been generated. That’s not good and will not translate into a transformed middle-income country anytime soon.”

MORE PROJECTS

While Uganda continues to borrow, billions of shilling from other lenders remain unconsumed, yet taxpayers continue to pay interest. In the 2014/15 auditor general’s report, out of 73 loans assessed, 15 were at zero absorption, while 58 were performing below 20 per cent.

When he appeared before the parliament’s Public Accounts Committee (PAC) Secretary to the Treasury Keith Muhakanizi blamed procurement gaps and inefficiency in ministries for the low absorption rate.

He said “Uganda was the worst in Africa” when it came to loans absorption.

President Museveni said at the Munyonyo retreat that ministries fail to use the money because “officials wand enjawulo [kickbacks]”.

Government officials deliberately delay to implement some projects as they buy time in a bid to profiteer from them.

amwesigwa@observer.ug

Museveni's economic development paper has been adopted as Africa's plan in Nairobi, Kenya.

 

African leaders meeting in Nairobi, Kenya have agreed to use Uganda President Museveni's paper to solve development bottlenecks facing the world’s most underdeveloped continent.

The decision followed President Museveni's presentation at the African Peer Review Mechanism (APRM) meeting at the Intercontinental Hotel, Nairobi on Friday where he explained bottlenecks to Africa's growth and development. The meeting was chaired by Kenyan President Uhuru Kenyatta.

Museveni, who has ruled for 30 years one of Africa's poorest countries told the meeting that he had arrived at the 10 bottlenecks after watching the development scene in Africa for the last 50 years.

"I have picked some ideas which are responsible for our lagging behind. The problem seems not to be addressing all issues in a comprehensive way," he said.

They include ideological disorientation, weak state exemplified in a weak army, human resource underdevelopment, poor infrastructure, failure to industrialize, fragmented markets, under-development of the services sector and undermining the private sector, among others.

 

Speaking on the weak armies, president Museveni stated thus;


"When you want to build an army and you look for people from your tribe, you should ask, can a sectarian army command respect of a whole country? In such circumstances, when you get a small rebellion the army collapses. You then bring in the UN who are armed tourists."

The President commended the international community for speaking about human resource underdevelopment but added that the issue had been raised in isolation of the other bottlenecks.

He said that many development partners were disinterested in building Africa's infrastructure especially electricity leading to another bottleneck; underdevelopment of infrastructure.

"They do not care about dams, roads and the railway. As a consequence, only South Africa and Libya under Gaddafi had high electricity consumption. Importantly, poor infrastructure causes very high costs of doing business. You can't attract investments, how then do you eradicate poverty if people are not employed," he asked.

He added that because of poor infrastructure, the next bottleneck is failure to industrialize; a development which had forced Africa into exporting raw materials and ultimately donating a lot of revenue to the West.

Citing the Ugandan example where a kilogram of unprocessed exported coffee, which goes for $1 while the processed coffee in the West fetches $14 US dollars, Museveni asserted that Africans were the real donors - and unfortunately were donating their jobs too.

Museveni also cited fragmented markets as a major bottleneck to Africa's development.

The President of Uganda lecturing applied economics in Nairobi

On the under-development of the services sector, President Museveni said this was partly because Africa has suffered bad publicity through wars, poor infrastructure, among others, compelling professionals to shun the continent. This, he said, had affected tourism, education, health, banking sector among others.

The laissez-faire attitude that is crippling the agriculture sector in Africa, creating another bottleneck, must be fought, the President told the meeting. He said in the tropics, many farmers were getting on with the minimum basic of producing for consumption (subsistence) and not commercial purposes. Coupled with this is the increasing fragmentation of land, making the land share diminish with successive generations.

"Agriculture must be modernised. We must talk of income security not just food security. We should also agree with Egypt on the question of irrigation for other countries sharing the Nile."

The other obstacle, according to the Museveni, is undermining the private sector, adding that it has been persecuted through policy like former Uganda President Idi Amin did with expulsion of Asians or through corruption. He noted that most ‘Asian Tigers’ like Singapore, Malaysia and South Korea had developed through a private sector-led approach.

The last obstacle, President Museveni noted, was democracy but added that most of Africa had addressed this and it was prevailing across the continent.

The motion to adopt the paper and task the APRM secretariat to expand it into a blue-print for the continent was moved by South African President Jacob Zuma. The proposal was unanimously supported. Earlier, both Presidents Macky Sall of Senegal and Ellen Johnson Sirleaf of Liberia had also spoken in support of the presentation.

The APRM was held ahead of the 6th Tokyo International Conference on African Development (TICAD) that runs today (Saturday) and tomorrow at the Kenyatta International Conference Centre.

 

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How long will this blue print guide last for heavens sake after 50 years of African independence? Another 50 years or 100 years or 150 years, if all related factors remain constant (do not change in any way)?

In Uganda’s economy, what it really means by bailout of rich companies:

 

On March 31 2016, the total value of all loans in Uganda’s commercial banking industry was Shs21.7 trillion of which Shs528 billion were non-performing loans (or “bad loans”) i.e. 2.64% of the total. Under the effective oversight of Bank of Uganda, especially its director for supervision; Justine Bagyenda (known in the industry as Uganda’s Iron Lady), non-performing loans have averaged 1.7% over the last 10 years. Although there was deterioration, it was a far cry from the 17% non-performing loans in 1996.

However, in just three months, nonperforming loans jumped three-fold to Shs1.8 trillion by June 30, 2016 representing 8.4% of total loans, an unheard of thing in nearly 20 years. What has caused this sudden deterioration?

It certainly cannot be bad borrowers and reckless lenders but something troubling about our economy generally. It is thus justified to fear the situation could worsen with bad loans reaching Shs7.0 trillion (30% of total loans) by December. This fear can be contested but for policy makers it is always safe to plan for the worst even when hoping for the best.

Most commentators have denounced the proposed bailout as a scheme to line the pockets of incompetent businesspersons, reckless banks, and “regime cronies”. But let us look at the facts for some perspective.

How to help distressed companies without removing the risk from lenders and borrowers

Of the Shs528 billion in non-performing loans, Shs126 billion (24%) is a result of government not paying domestic arrears to its suppliers. Diversion of funds to speculative businesses is only Shs2.6 billion (0.49%). See Table 1. Almost 30% of these loans went to building and construction (Shs155 billion), 29% to agriculture (Shs151 billion), 24% to trade and commerce (Shs127 billion) while only 1.4% (Shs7.4 billion) went to personal household stuff. See table 3.

So Uganda is caught in a Catch-22 situation. If it intervenes to help distressed companies or over-leveraged banks, it will create the problem of moral hazard. For example, out of Shs21.7 trillion in loans, only Shs1.8 trillion is non-performing. If the problem is system-wide, how come Shs19.9 trillion of loans are still performing?

But the threefold growth in bad loans since April means that it is highly likely many good loans could go bad. Yet helping distressed companies means rewarding failure and penalising those servicing their loans. And in helping the 8.4% who are distressed, you could be encouraging many in the 91.6% who are doing well to become lax and default in anticipation of a similar bailout.

Moral hazard is a core belief among free market ideologues and a real risk in such government interventions. Moralists seeking social equity would also reject any bailout. But ideological dogmatism and moral outrage are rarely a basis for sound public policy.

I was re-watching a documentary on the 2008 financial crash in America. Secretary to the Treasury, Hank Paulsen, made the same ideological mistake in regard to Leman Brothers, a US investment bank, and refused to bail it out with only about $50 billion and let it go bankrupt. But this caused shock on the stock market leading to the near collapse of the rest of the banking sector.

Eventually, the US government had to fork out $700billion to bailout banks infected by Leman’s collapse and $800 billion as a stimulus package to recover from the ensuing recession.

 

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You rich hard working companies in Uganda, why keep supplying the government your good services when it is not paying you now 30 years in administration? So where were you getting your working capital if the customer was not giving you the payment?..... From Mrs Bagyenda?

After an Expensive rigged election in Uganda, the Government is requesting shs 1 trillion from the national treasury to bail out 100 companies in financial trouble:

July 18, 2016 

The President of Uganda using an electronic computer to work
 
Inside the Shs1 trillion rescue plan for loan stressed companies

On July 9, President Yoweri Museveni summoned top officials from the Ministry of Finance, the Central Bank and Uganda Revenue Authority (URA) for a meeting at State House, Entebbe.

Amongst those who attended what has been described as a high stakes meeting was Deputy Central Bank Governor, Louis Kasekende, URA Commissioner General, DorisAkol. Others included officials from the Finance Ministry, and the head of Operation Wealth Creation, who is also President Museveni’s brother, Gen. Caleb Akandwanaho aka Salim Saleh.

Up for discussion was what to do for over 100 Ugandan companies that are reeling under heavy commercial bank loans.

The meeting followed several others in which technocrats from the central bank and the Finance Ministry have sharply disagreed and opposed plans by some top politicians to have government fork about Shs1trillion from the public purse to pay off the loans owed to commercial banks and save private businesses, whose assets some banks have already started putting under receivership.

Details of this meeting remain scanty but The Independent understands that even before the President, the technocrats stood their ground, and opposed the proposed bailout package.

Meanwhile, even as the meeting raged, bailiffs, auctioneers, and debt collectors continued to do brisk business attaching assets of companies neck deep in debt. With the economy failing to pick up pace for the fifth year in a row, the trend appears likely to continue unless checked.

Financial analysts are saying the loan distressed businesses are the latest hint to the gravity of the situation the Ugandan economy is in.

“What we see manifesting is a bigger economic problem, the entire business community has been exposed to the strong economic headwinds,” Stephen Kaboyo, the former executive director operations at the central bank, who now runs the sovereign asset management fund Alpha Capital.

He added: “There is a terrible crisis of confidence, investors, financial institutions are all afraid that many firms are going to fail.”
Kaboyo told The Independent that the general lack of long term money in the economy is at the heart of the current crisis.

“Business firms borrow short term to finance medium term and long term projects,” Kaboyo said, “This mismatch makes it unsustainable and puts a lot of pressure on borrowers.”
This is even more critical because Uganda’s economy is mainly private sector driven, Kaboyo said.

“The private sector is the engine of growth and creator of wealth and employs more people than the public sector,” he said.
When big businesses, such as a large steel maker collapses,Kaboyo told The Independent, it leads to loss of jobs in direct layoffs and more indirectly through the supply and distribution value chains.

Kaboyo also said that the current conditions make a strong case for government intervention. He says that a one- off bailout for the private sector, if properly structured, would be a pragmatic approach to stabilise the economy.

“This may not necessarily be cash, it may be credit guarantees, may be administrative through working with financial institutions to restructure loan obligations,” Kaboyo said, “If it has to be a financial offering this could in form of debt or equity or a line of credit, or subsidies which has to be accompanied by greater oversight and monitoring to mitigate risks of moral hazard.”

Government’s plan

The government has been mulling over the situation described by Kaboyo. Several interventions have been suggested but the latest plan, which could see the government fork out close to Shs1 trillion (Approx.US$300 million) to save distressed big business, is attracting both praise and sharp criticism.

The Independent understands that the cash bailout is expected to come through an Asset Recovery Vehicle (ARC)like the Non Performance Assets Recovery Trust (NPART) that was established in 2006 to recoverclose to 100 billion shillings that had been borrowed from the former Uganda Commercial Bank (UCB) and Uganda Development Bank (UDB).

Initially, government had wanted to directly bail out the companies but under another proposed arrangement, government will place into the ARC monetary obligations of selected ailing private entities deemed “too big to fail”  and resolve them with their lenders; mainly commercial banks. The managers of the ARC will then undertake to collect the debt from the private firms.

The other plan is for the loans to be sold-on to a recapitalised Uganda Development Bank in an arrangement that could see them shift from short-term liabilities payable in under 10 years to long-term liabilities which the ailing firms could pay over 20 years. Under this arrangement, the interest rates would also be renegotiated downwards.

The deal, if it goes through, will be the biggest deployment of taxpayers’ money to prop up ailing private companies in the history of Uganda. It will be bigger than even the Public Enterprises Reform and Divestiture of the 1990s and the earlier distribution of the properties of expelled Asian in the 1970s. It will also be unique in that it will most likely be executed in secret, without either a defined structure or an Act of parliament.

Several sources have told The Independent that former Uganda Investment Authority (UIA) chairman, Patrick Bitature and current Private Sector Foundation Uganda (PSFU) Chairman, Gideon Badagawa are among officials that have been working on the bailout list with Prime Minister RuhakanaRugunda.

When contacted, Badagawa who is very familiar with the issues having previously been executive director of the Uganda Manufacturers Association confirmed that “almost all the firms in Uganda are distressed because of trouble with the current business environment”.

“Ever increasing interest rates and the depreciating shilling are some of the many problems,” Badagawa said, “You have companies that borrowed at an interest rate of 18 percent and now have to pay back at a rate of 25 percent.

“Other firms borrowed in dollars when the interest rate was Shs.2700, it increased to Shs3800 and has just dropped to Shs3300. This makes it hard for companies to pay back.”

To make matters worse, Uganda’s major export market, South Sudan, has become inaccessible ever since fighting broke out there between forces loyal to President SalvaKiir and his Deputy Riek Machar.

Estimates indicate that Ugandan businesses made about a million dollars a day in South Sudan during peacetime.  But the latest fighting which broke this July is likely to make a bad situation worse.

“Remember,” Badagawa said, “there are Ugandan business people who have never been paid the over US$54 million (some put the figure at $100 million) owed by their counterparts in South Sudan.
“This has constrained their cash flow and affected Uganda businesses ability to do business and pay their loans.

“Apart from this, there are companies, which also demand government a lot of money because government has delayed to pay and this has affected their cash flow too.”

As a result, Badagawa confirmed that negotiations have been on-going to assist distressed firms pay their loans. He said, however, this will be done by improving the business environment and denied reports that government would fork out cash to pay the loans of private companies.

“Government doesn’t have that kind of money,” Badagawa said, “Even if it did, it is not sustainable for government to pick money from the public coffers and pay for private companies.”

Instead, Badagawa said PSFU and government are working on a set of measures intended to fix the economy by boosting production, reduce cost of doing business, reduce the import bill and also reduce commercial bank interest rates.

Who is on list?

But basing on some of the potential beneficiaries, proponents are hailing the bail out as a pragmatic move to save the economy. Critics meanwhile see it as a form of money laundering – with government cronies helping themselves to public resources.

Proponents appear to be mainly the Who-is-Who in Uganda’s business community and politicians, while opponents appear to be technocrats in Ministry of Finance, policy makers, and regulators.

Those for the bailout, argue that the problems afflicting the companies are not as a result of their internal management problems but as a result of external problems. Amongst these, they cite interest rate escalation, for which they say they say the central bank is partly to blame.

Since 2012, the central bank has been buying Treasury Bills at an interest rate as high as 18 percent, at some point 23 percent. The central bank also increased the CBR to as high as 20 percent in a bid to control inflation.

As a result, interest rates for commercial banks increased to 32 percent and have since kept above 25 percent. Apart from this, there has been a problem of exchange rate depreciation of about 30 percent.

Also political uncertainty over elections and anger over the now repealed Anti-homosexuality Act is said to have contributed to poor revenue from tourists and reduced Foreign Direct Investment (FDI).

But opponents of this proposal, argue that public money should not be used to compensate commercial banks, which failed to do due diligence on their borrowers. They also argue that such a measure might erode payment discipline and create a culture, where private business borrow hoping to use political influence to side step their obligations. The technocrats say the banks and companies must pay for their wrong decisions.

The question proponents pose is; what happens if the businesses are not saved. The answer, they claim, is that local companies will collapse, lay off over 100,000 workers and also lead to the collapse of local banks, and ultimately the economy.

Banks are tight-lipped about those who owe them money but when The Independent approached some bankers with a list, some bankers confirmed that indeed some of them were highly indebted.

Some of the most affected are giant transport and logistics companies, giant steel manufacturers, construction companies and hoteliers, among others.

A source at one of the commercial banks who declined to be named because of the sensitivity of the matter intimated to The Independent that one of their biggest debtors owed them over Shs150 billion.
“This investor cannot pay and has even failed to sell his properties because no one can or wants to pay what they want,” the banker intimated.

And as The Independent went to press, Standard Chartered put giant steel maker, Steel Rollings Mills under receivership over a debt of Shs. 50 billion. The same bank was expected to also put another of its debtors, a logistics company, under receivership.

While some officials have denied reports that government will be releasing hard cash to meet some of these loan obligations, others say close to a trillion shillings is being considered.

Multiple sources interviewed by The Independent, some in private banks and others in government estimate that over a hundred private firms need over Shs.1 trillion to dig themselves out of indebtedness. This is over 5 percent of the 18 trillion available for government expenditure in this financial year.

President Yoweri Museveni forking out Shs1 trillion of public money to private businesses might sound unbelievable but a banking executive with one of the top banks says it is very close to the total sum of non-performing loans on commercial bank loans. Non-performing Assets (NPAs) were the biggest contributor to the poor performance of banks in 2015.

By December, they stood at 2.6 percent of total banks’ assets. By June this year, the figure had jumped to 8.2 percent or about Shs. 1.8 trillion the total assets, which is about Shs.21.7 trillion.

Two major banks are most affected.Standard Chartered and Uganda’s fourth largest bank by assets, Crane Bank, whose profits slumped from a Shs50 billion profit the previous year to a loss of Shs3 billion in 2015.

Many will remember that in the past, President Museveni has bailed out cronies and politicians. At the height of the contest with his then Prime Minister, Amama Mbabazi, with in the ruling party in 2014, Museveni, for instance, offered to clear the loans of members of parliament after he learnt that Mbabazi was considering the same.

President Museveni first hinted on saving local firms as he gave his state of the nation address. He said the solution to cheap credit, which was critical for boasting agriculture and manufacturing, was in recapitalising Uganda Development Bank (UDB).

He said the delay to recapitalise UDB was because he “wanted to see whether the involvement of the private sector in Banks, would lower the interest rates because of “competition” and the “efficiency” of private actors”.

“Well, the facts show that it has not,” he said.
He said that even when the inflation rate is 5%, commercial banks lend at 23.5% as of now.  He said UDB will come to the rescue but there are, however, short-term issues that must also be addressed in addition to recapitalising UDB.

Amongst these, he said, was the problem of government not paying arrears of private companies that supplied to the government. He said that he had already directed government to resolve this issue. Highly placed sources told The Independent that government had not paid up to Shs1 trillion to local service providers. This delayed payment had affected companies like construction giant, Spencon, which demands billions of shillings from government.

The Independent understands that it is only on July 11 that Uganda National Roads Authority received about Shs400 billion to pay some of the arrears.
Secretary to the Treasury, Keith Muhakanizi, who is understood to be against the bail out, has come out to say government will pay the arrears.

Museveni also pointed out companies in the oil sector that borrowed money in order to buy drilling rigs using borrowed money that was attracting huge interest and yet they are not yet working because of delays caused by the government.

“These companies will get support from the Government to negotiate with the banks for reasonable treatment,” he said.Businesses like Three Ways shipping and Bemuga Forwarders could be considered here.

Other investors like Roofings Limited borrowed from the World Bank’s International Finance Corporation (IFC) and expanded their capacity but can only produce at 30 percent capacity because of low demand. Specifically, Sinohydro, which is working on Isimba and Karuma dams, has refused to take Roofings Ltd products over quality concerns but Japanese and South Koreans contractors working on bridges in Uganda say the steel produced by Roofings is of high quality.

The Chinese companies, The Independent has been told, cannot source steel locally because they produce a lot of steel back at home that they must find market for.

Museveni also warned commercial banks and money lenders not to grab people’s properties using unethical methods as long as there is evidence that those companies are owed money by the government.

He said companies that supplied to the embattled government of South Sudan and had not been paid on account of the crisis would also be helped.They reportedly demand over $ 100 million most of which was borrowed money from the banks that has been accumulating interest.

For Museveni, as always, there are political considerations. Most of the pleas for a bailout are from the business community that supported him immensely during the recently concluded elections.

The current deal, whose implementation is expected to kick off this August, started taking shape as early as last year when one by one top private business people started meeting President and requesting for support to save their businesses.

At the time, Museveni was facing a high-stakes election and possibly pledged to look into the matter after the election. In any case, the same companies are said to have to bankroll his campaign.

Many business people determined to catch the President’s eye contributed funds, sometimes in small amounts, and were also directly involved in campaigning for Museveni.

Names of contributors read like the Who-is-Who of Uganda’s business elite. SudhirRuparelia of Crane Bank, Joseph Yiga of Steel and Tube, Bitature of Simba Group and LalaniSikander of Roofings top the list of over 50 businesses and people that contributed towards Museveni’s campaigns.

Some of them have interests in the hotel, energy, real estate and finance sectors that are facing distress.Some of these, not all, are amongst those being considered for a bail out The Independent has learnt.

In a major revelation, the Crane Bank’s proprietor, SudhirRuparelia told The Independent recently that “half of Kampala is on sell” and there is no one to buy.

The poor performance of these companies also partly explains why the Uganda Revenue Authority registered a shortfall of Shs242.6 billion between January and March. The shortfall mainly arose from a fall in domestic taxes like Pay as You Earn (PAYE), Value Added Tax (VAT) and local excise duty.

Catching Museveni’s eye

Indeed, other knowledgeable sources claim that this financial distress was the reason some of these business people went out of their way and directly campaigned for Museveni. They did not have a lot of assurances that a new president would be sympathetic to them.

Under pressure from private banks, the business people were looking to lobby for support immediately after the election.

With the election out of the way, real lobbying for a bail out started around April. Meetings have been held between these business people, officials at the Finance Ministry, the Office of the Prime Minister, officials at Bank of Uganda, and President Museveni.

Other officials at the centre of the deal remain cagey about its details but The Independent has learnt that President Yoweri Museveni is keen to see it through.

By press time, officials were still working out the nitty-gritties of bailout package. Apart from cash handouts, the government through the Office of the Prime Minister (OPM) has worked out an extensive plan with the PSFU, which is intended to improve the business environment in Uganda.

Prime Minister Ruhakana Rugunda on June 13 wrote a brief detailing the same to President Museveni. Apparently, all government Ministries, Departments and Agencies (MDAs) are working to implement these following an inter-ministerial meeting Rugunda chaired on June.1 Four days later; the measures were communicated to the business community.

On the commercial banks’ high interest rates on borrowing, the government has directed Bank of Uganda to issue guidelines that would introduce the mandatory signing of `consumer protection’ at the time of contracting loans.

The Independent also understands that the decision to reduce domestic borrowing as announced by Finance Minister, MatiaKasaijja in his budget speech was part of the measures to reduce interest rates.
Earlier this year, government also borrowed some $ 200 million from PTA Bank of Kenya to stablise the shilling.

The other move government is considering is contained in the local content policy. Apparently, government is proposing the review of the PPDA law to require that 40 percent of all public procurement deals are always subcontracted to local suppliers.

As The Independent recently reported, Ugandan businesses are concerned that in the on-going construction of big infrastructure projects like Karuma and Isimba, the Chinese contractors are subcontracting fellow Chinese companies to supply cement, crashed and coarse stones, which can be supplied directly by Ugandans. The same has for long haunted local suppliers in the oil industry.

Rugunda also said the government had agreed to settle outstanding arrears by the end of August. When The Independent attempted to reach him for a comment, Rugunda, in a text message asked us to text back saying he could not talk. When we contacted his spokesperson, Julius Mucunguzi, he said that is a matter the Prime Minister would comment on himself. We texted the Prime Minister what the issue was and by press time, he had not responded.

Badagawa said that the figure being talked about regarding payment of outstanding arrears is just Shs100 billion. But The Independent has learnt from other sources that local suppliers demand government over a trillion shillings.

 

 

Mr Mosses Khisa a journalist of the Observer newspaper, Uganda.

 

The use of service delivery to justify a bloated cabinet is hollow and without substance.

Now the first major business the 10th parliament has undertaken is to okay the increase in the size of what is undoubtedly one of the biggest cabinets in the world. On the one hand, you have to be sympathetic to President Museveni who is accosted with all manner of demands for inclusion in the cabinet on grounds of ethnicity, region, religion, gender, etc.

For example, the rather capricious Buyaga West MP Barnabas Tinkasiimire believes Museveni should have rewarded Bunyoro sub-region for its unwavering political support. He should not have taken away the position of third deputy premier and minister of public service, previously held by an eminent retiree in Henry Muganwa Kajura.

NRM MPs from Karamoja also believe they need more ministerial positions, so do those from Lango sub-region. Parliament speaker Rebecca Kadaga wants more women ministers; she especially wants a woman deputy prime minister.

There are litanies of similar demands by disparate groups claiming to be speaking for specific constituencies. To attempt to respond to all and appease every constituency is simply untenable unless we want every Ugandan village, clan or even family to get a ministerial appointment. The folly in playing balancing and appeasement should be quite obvious, just as the claim of service delivery is fatuous.

So, why can’t General Museveni stand his ground and reject pressures for increasing the size of cabinet?

Contrary to the public posturing as a “strongman” fully in charge of affairs, General Museveni has increasingly become a weakened ruler, beholden to streams of actors on whom he depends for his political survival. He has become so sensitive to maintaining the broadest possible loyalty and support lest he fails to secure an election, or he may well fall prey to civic insurrection, something that has become far more appealing to many opposed to his regime.

All this goes back to a ruler staying in power past their sell-by date. They become susceptible to blackmail because their long stay makes them acutely insecure. Museveni is the legal commander-in-chief of the armed forces and has control over the national purse, but he is not sure that subordinates at different levels of government and the armed forces bear true allegiance to him as demanded by the laws of the land.

The only recourse then is to buy and rent support and loyalty through appointments to public offices, primarily cabinet but also a host of others ranging from presidential advisors (he once said he doesn’t need any advice) to ambassadors, including to places where we don’t have a mission (like it was the case with the United Arab Emirates recently).

Some years back, when it appeared that huge sums of money were going to districts, local elites and national handlers sensed that they could press for creation of new districts so they can gain access to national resources. The narrative of service delivery offered an appealing slate. But it was all an empty slogan! Now the surge has turned on growing the size of parliament and cabinet; these, too, are tied to the same empty slogan.

The size of Uganda’s cabinet today beats those of most rich and powerful nations around the world. In fact, if we take cabinet per capita, Uganda may be right up there. At nearly 460 MPs in a country of 37 million people, our parliament rivals that of Ethiopia whose population is nearly 90 million.

But the whole thing will crumble. It’s a matter of time. American political scientist Robert Bates has shown, in a study of state failure in contemporary Africa, that the ballooning of public sectors to meet sociopolitical demands created fiscal crises that greatly undercut political order, leading to state collapse.

Uganda’s economy is comparatively small and there is not much to suggest that it will greatly expand in the coming years. With limited wealth creation – never mind the vaunted Operation Wealth Creation being commanded, literally, by General Salim Saleh – public revenue collections will not match the runaway public expenditure occasioned by an ever-rising political public sector.

We need a sober introspection to question the rhetoric behind the growth of parliament and cabinet. It is not just our tax money being put to waste; it is also that this politics of Museveni hanging onto power through buying and renting support is a recipe for disaster. We will wake up to realize that however much we are taxed, we can’t sustain the fiscal needs of our rulers. They will then become full-blown bloodsuckers and we may have no escape as citizens especially since they have guns.

They will easily become warlords.

moses.khisa@gmail.com

The author teaches  political science at Northwestern University/Evanstan, Chicago-USA.

 

The Auditor General in Uganda has failed to convince the Parliament of Uganda over his annual reports about corruption in government:

            Auditor General John Muwanga (Right)

 
BY PATIENCE AHIMBISIBWE

Posted  Sunday, April 17  2016
 

THE ECONOMIC SUMMARY

Accountability. Anti-corruption body says no action has been taken by the National Legislation to address faults identified by the Auditor General’s Annual Reports.

 

UGANDA, KAMPALA:

A new study on accountability has put Parliament on spot for failing to discuss the Auditor General’s reports submitted annually in the last 12 years which makes it difficult to ascertain the value-for-money in the government’s audited expenditures.

The Anti-Corruption Coalition Uganda (ACCU) report on compliance of ministry departments and agencies with the Auditor General’s (AG) reports highlights that while audit reports are annually submitted to Parliament, many of such reports have never been debated.

“There was no treasury memorandum produced since financial year 2004/2005. This was due to non-submission of relevant reports by Parliament of Uganda to the Ministry of Finance.

“If the AG is spending money to conduct audits year after year and there is no official response to the actions taken to address the faults identified, how can we account for the value for money,” Mr David Wakaliga, ACCU’s consultant questioned yesterday as he presented his findings.

The study looked at AG’s reports from 2010 to 2014. Some of the issues raised in the reports were payments for tax commitments of the previous year, mischarge of expenditure, advances to personal accounts, unaccounted for advances, consolidated allowances and wasteful expenditures. This study considered five government entities - health, education, agriculture, public sector management and Works and Transport.

Mr Wakaliga said while the AG noted that ministry of Agriculture and Ministry of Works and Transport had posted cash advances to personal accounts of Shs11.4b and Shs10.3b respectively in 2011/12, Parliament had not acted on the reports.

The health sector had cases of violation of procurement regulations under the various departments, abandoned or grounded motor vehicles and unaccounted for funds.

For instance, during 2011/2012 there were advances to personal accounts of Shs2.3b, which has since reduced to Shs15m in 2013/14 while unaccounted for advances increased from Shs3.6b in 2010/2011 to Shs13 billion in 2012/13.

Mulago Hospital has Shs1.9b unremitted taxes, Shs7.7b outstanding commitments and about Shs6b on non-compliance with treasury accounting instructions while Shs58m was given out in advances to personal accounts.

At Makerere University, the report indicates that Shs288m was unaccounted for in 2012/2013 which increased to Shs308m in 2013/2014. In the same year, there was unauthorised expenditure of Shs8.6b which reduced to Shs4b in the subsequent year.

Kyambogo University had Shs5.3b in outstanding commitments as of 2010/11, which went down the following year to Shs3.4b.
However Ms Alice Alaso, Parliament Accounts Committee chairperson, explained that she had communicated to the Speaker of Parliament that her committee would first concentrate on reports that were submitted during her term before they could consider others.

“We cut off reports of 2007, 2008 and 2009. We wrote to the Speaker that if we are to consider them, it must be after. Some of the officials have since died, the accounting officers transferred. The report is good but for academicians.

Accountability in Uganda is dead. AG on his own can’t do much. There is a racket in Public Service, Finance everywhere to the courts of law. When you talk of compliance, by who?” she asked.

Ms Alaso added: “You come to PAC and your committee members are missing, so there is no quorum to proceed. You want reports written and the Clerk has disappeared with the draft report. You must understand that we are dealing with very vicious people.

They brought bribes to me in my committee and I refused. They paid back during campaigns because all these people’s vehicles drove to Serere District so that I don’t come back to Parliament. These are citizens you say should demand accountability when they can’t ask where we MPs who bribe them with Shs1,000 get the money from?”

Mr Maxwell Poul Ogentho from the Auditor General’s office, welcomed the Anti-Corruption Coalition Uganda report but said citizen participation in demanding public officials to account is still low in Uganda.

“It is a good report that brings clear the challenges in the utilisation of audit reports and provides recommendations for improvement. However, the citizens have a challenge of understanding the report to enable them demand their leaders to account,” Mr Ogentho said.

Ms Cissy Kagaba, the ACCU executive director, said they would follow up with the respective ministries to ensure each fulfills their responsibilities.

Mr Nicholas Opio, a city lawyer blamed it on lack of political will from the executive.
“The fight against corruption requires political commitment from the top leadership and there must be a collective outrage from the people affected who wake up to the bad roads, dilapidated hospitals and poor schools,” Mr Opio said.

The report recommends that Parliament institutes special sitting sessions to deal with the backlog.

pahimbisibwe@ug.nationmedia.com

 

A very unlucky UGANDA Businesswoman fights KENYA corruption Revenue officials over ERRATIC AUCTIONED GOODS OF OTHER COUNTRIES:

 

Written by Alon Mwesigwa

              Deborah Kigongo, whose goods
               were auctioned in Kenya

Deborah Kigongo’s woes kept getting worse. By the time she could not take it anymore, she ran to court.

For Kigongo, a businesswoman based in Kampala dealing in the importation of spare parts of trucks and road construction equipment, the last three years can best be described as “hell.”

THE CASE

Kigongo’s troubles started in 2010 when the Uganda National Roads Authority (Unra) contracted her, through her company Kaaya Investments Ltd, to supply them with ground-engaging road construction equipment, which included cutting edges and other accessories.

“We then contacted a supplier from Singapore called Allied Companies for enquiries and specifications so that they can make the exact goods that we wanted,” Kigongo says. The total contract was $120,000 (about Shs 400m). In November 2011, Kigongo received confirmation from the manufacturer that the equipment had been manufactured and were ready for shipping.

When the goods arrived at Mombasa in May 2012, Kigongo rushed to Evergreen shipping line in Kololo, the firm she contracted to transport the goods from the country of origin to the final destination, to direct her where to go in Mombasa. She also wanted to know how to go about the demur- rage charges.

THREE CONTAINERS

Evergreen directed her to Gulf Badr, a clearing and forwarding firm based in Mombasa. The goods had come in three containers of 20ft. Two of the containers were on the same bill of lading while the other was in- dependent. Each container was worth $40,000.

When she approached Gulf Badr, Kigongo was handed the bombshell: one of the containers had been auctioned.

“How could that be?” she wondered. Since 2012, Kigongo has made endless journeys between Kampala and Mombasa port to re- cover her goods, which Kenyan authorities auctioned in what she describes as “plain robbery.”

The case, which is being heard at the Kenya High court commercial division in Mombasa, has drawn in traders from Uganda, the Ugandan embassy in Kenya, the ministry of trade and politicians.

It has led some traders to question the role of the East African Community integration when traders cannot be protected in the bloc. Since then, a series of letters have been exchanged between Kaaya Investments Ltd, the owners of the goods; Kenya Ports Authority, Kenya Revenue Authority (KRA), ministers of trade in both countries and the EAC secretariat.

Documents filed in the Kenyan court show that KRA announced in the Kenya gazette of May 11, 2012 that it would auction the goods by June 26, 2012. Kigongo was not informed. And yet, it is normal practice that the owner of the goods is told before the goods are auctioned.

KRA valued the goods at Kshs 500,000 ($4,964 at the current exchange rate). However, according to court documents, Unicorm Ltd, the buyer, paid 378,500 Kenya shillings (about $4,000) to take them. Kigongo says the container was worth $40,000.

In July 18, 2012, Kigongo wrote to KPA asking why her goods had been auctioned. In a reply on the same day, Muhammad Jezan, the Uganda resident representative at KPA, said: “KPA does not auction containers; this is done by KRA who issues a notice in the gazette.”

The letter also noted that going by their records, “the containers captioned were still within the port yard...” but advised her to engage KRA to stop the process of auctioning the other consignments.”

Kigongo then asked KRA which criteria they used to auction one of her containers and yet they were two on the same bill of lading.

“Instead of asking so many questions, just clear these ones which are pending,” one KRA official reportedly told her.

“We started a process of clear- ing the remaining goods. Because I was not convinced with the auctioning of these goods, I had to call the buyer because the receipt had the phone number,” Kigongo says.

She says she pleaded with them to sell her back the goods but they refused. They said they could only accept if she brought $50,000 for the goods they had bought at only $4,000.

Meanwhile, getting the rest of the containers became another hurdle. At Mombasa, she hovered from one office to another trying to get them cleared. One container, which was on an independent bill of lading, was finally cleared. This was around August 2012.

Clearing the other container, whose twin was auctioned off, became problematic.

“I was told to pay a bond of $4,000 to take the goods out of Mombasa, and after offloading the goods, I take back the container and claim the $4,000,” she said.

“I accepted but on reaching back, I was given [a receipt] which had a serial number showing I had taken the container that had been auctioned,” Kigongo narrates.

“I said ‘come on, you are the one who gave me the receipt showing the container had been auctioned now you are giving me another one showing I had taken the goods’.”

From 2013 to date, it has been a court battle in Mombasa. Last year in May, a judge cancelled all the proceedings and ordered for a fresh trial of the case after one of the defendants used an unqualified lawyer. This, Kigongo says, was the biggest setback. For the case, she says she has spent more than Shs 100m – on transport, hotel, lawyers and other expenses.

The biggest pain, though, is that without the parts that were in the auctioned container, the rest can not be used.

“They are made to work together,” she said. This means she stands to lose all the $120,000 (Shs 400m).

MANY YEARS

The case represents a complaint that Uganda has made to Kenya for some years now. In a letter dated December 2014, Uganda’s ministry of trade wrote to Kenya’s government about “complaints from [Ugandan] business community of their goods being auctioned by KRA without notifying them and their agents”.

“This practice apparently has been going on,” read a letter signed by trade minister Amelia Kyambadde addressed to KRA and copied to other officials in Kenya and EAC secretariat. The letter added that she had raised the issue at the council of ministers meeting in Nairobi in November 2014.

Uganda demanded that the auctioned equipment be replaced, but it has not been the case. Gulf Badr and KRA did not respond to our calls for a comment. The ruling is expected today – and whether it is in Kigongo’s favour or not, the inconvenience has been unfathomable.

amwesigwa@observer.ug

 

Interesting comment by  miki a reader in the observer paper:

This trader was screwed in Kenya. But she could as well have been screwed the same or even worse by the tax authorities in Uganda.

For Ugandan importers, there is no where to hide. You get screwed whether in Kenya, or in Uganda. It is like the authorities in both Kenya and Uganda are intent on punishing anybody who is stupid enough to engage in business.

Both Kenyan and Ugandan tax authorizes treat importers like criminals until they prove themselves innocent.

This usually comes after incurring tremendous costs in arbitrary official taxes, bribes to the corrupt tax officials, and hefty storage charges to the bonded custom yards where the imported goods are just strewn around in the storege bond houses.

This is one of the reasons why many Ugandan business people have long given up on import business to instead engage in speculative land transactions.

CIF Mombasa for Ugandan bound goods is always tricky and expensive if something goes wrong.

One would have to travel back and forth from Uganda to Kenya to sort out any outstanding issues. Inside Uganda itself, it is not a bed of roses.

URA assigns verification officers who don't have even the slightest clue of what they are clearing. The import duty and other taxes one is asked to pay are determined arbitrarily.

And to make matters worse, almost all the revenue officials seem to be from one tribe or region of Uganda. It is like one tribe is intent on driving other Ugandans from other tribes out of business.
 
Nb

Miki you can make a good African business man indeed these days in this dodgy so called political East African community.

Customers queue up inside KCB bank

 

When President Museveni decided to vent his fury over high loan costs in his state-of-the-nation address, he looked no further than the banking sector.

He wondered why Ugandans were borrowing at 22 per cent yet when he travels to South Korea and USA, he finds the locals there borrowing at three per cent or less.

"When we privatized UCB, I was told it would be well managed and interest rates would come down," he said. "The rates have not come down; it is clear [now] privatization of UCB has not achieved what we intended to achieve," he fumed.

LIBERALISATION

First, Uganda is a liberalized country and banks are free to set what to charge on loans for its customers.

Interest rates depend on the cost of mobilizing the money. Most banks here, being foreign, get their money from their mother firms. Some borrow from each other. Others use customer deposits.

Banks also consider the level of inflation ñ they will always charge a rate above the inflation ñ and then operation costs, profit margin and individual credit worthiness of the borrower. The riskier the borrower, the higher they are likely to be charged.

Yet, Bank of Uganda sets a signal rate which influences interest rates in the market. It is called the Central bank rate (CBR).

The higher the CBR, mostly meant to arrest inflation, the higher the interest rates are likely to be. At the same time, government always borrows from the market at a rate higher than the CBR and because it is considered an almost riskfree borrower, banks will always rush to lend to government ñ putting pressure on interest rates for individual borrowers.

GOVT BORROWING

Christine Alupo, the Bank of Uganda director of Communication, agrees "there is an uptick in [interest rates] in the most recent period."

She said higher loan charges could be attributed to a rise in treasury bill rates, which are related to the CBR.

"Treasury bill rates may have risen due to anticipated increase in public spending on infrastructure development as well as funding for the general elections," she told The Observer on June 8.

Treasury bills and bonds are instruments through which government borrows from the domestic market. Commercial banks are usually the biggest lenders to government. Herman Kasekende, Standard Chartered bank CEO, said interest rates mirror dynamics in the economy.

"The returns on government securities have got a lot to do with where those rates are," Kasekende said at budget breakfast on Friday.

Recently, yields on treasury bills and bonds have peaked to 14 and 17 per cent respectively. Banks can't lend to an individual at a rate below that. Ezra Munyambonera, a research fellow at the Makerere-based Economic Policy Research centre (EPRC), said as long as government continues to go to the market to borrow, pressure on interest rates will stay.

"The banks know there is an attractive deal in the securities market, which is less risky. They are not under pressure to reduce interest rates," he said in a June 10 interview.

In the 2013/14 financial year, government borrowed Shs 1.7tn; while in the 2014/15, the government is to borrow Shs 1.4tn domestically, almost the same amount it seeks to borrow next financial year. Analysts say this overshadows private sector lending and reduces the money extended to private people.

However, although there has been a spike in interest rates, loans to private people continue to grow. They grew by 16.1 per cent in the year to February 2015, said BOU's monetary policy report for April.

And many more Ugandans are borrowing. The World Bank's financial inclusion in Uganda report, released last week, shows that as many as 79 per cent of adult Ugandans reported having borrowed in the past year although majority said they borrowed from friends and family.

USA, SOUTH KOREA VS UGANDA

President Museveni compares rates in Uganda to US and South Korea, but according economic indicators, these are two worlds apart.  According to the World Bank's doing business report 2015, the Korea Republic and USA are ranked 5th and 7th respectively while Uganda is ranked 150th in the easiness with which one can do business.

This means it is much riskier to lend to a business operating in Uganda than one in the US. The cost of electricity, infrastructure, and savings culture are very poor in Uganda, making it had for a business to thrive.

Commercial banks factor in those operational costs while giving loans.

Luz Salamina, the finance and private sector development specialist at the World Bank, said "less developed financial sectors tend to have higher interest rates."

Stephen Kaboyo, the managing director of Alpha Capital partners, said that while this could partly explain Uganda's scenario, the high profits consistently posted by banks do not appear to fully justify the fact that the operation costs are higher.

For instance last year, the top four banks - Stanbic, Standard Chartered, Crane, and Centenary posted net profits of Shs 372bn combined. They amassed assets above Shs 1.5tn each. With this performance, how can they argue that they can hardly reduce on interest rates?

One official at BOU said such profits were necessary to keep confidence in the economy so as to attract more investors.

WHAT CAN BOU DO?

To many Ugandans, the central bank is expected to rein in the banks and force them to reduce their lending rates. At the peak of inflation in 2011, BOU was expected to do just that. It did not. Traders in Kampala closed shops while civil society called on BOU to tame the banks.

In a statement at the time, the deputy Governor Louis Kasekende said: "BOU does not directly control the interest rates which commercial banks charge their borrowers or offer to depositors."

But still the central bank cannot sit and watch. BOU intervenes indirectly on different fronts to determine the direction of interest rates.

Then, it also supervises the banks such that in pursuit of profit, they don't engage in reckless lending to credit bust, which sometimes can lead to a collapse of some banks.

"BOU incubated the Credit Reference Bureau, which aims at ensuring transparent assessment of the credit worthiness of borrowers. [It] enhances provision of financial information of borrowers," Alupo said.

SOLUTION

President Museveni offered a solution to higher rates - recapitalize Uganda Development bank with Shs 500bn and higher loan costs will be history.

Analysts disagree, although they think recapitalizing UDB is a bold step. Fred Muhumuza, a senior manager at KPMG, said there was more to the success of the UDB than just recapitalization.

ìIf you are a manager of a bank where you receive chits from a minister or politician telling you to appoint someone's daughter or relative, what can you do?î he wondered, suggesting that even for loans, the managers of the bank might be directed on who to lend if it makes political sense.

BOU's Alupo thinks a little more competition within the sector could see the rates come down.

"[There is need for] reforms to the legal framework to allow competitively lower cost modes of banking like agency banking to lower operational costs of the banks for lending rates to come down," Alupo said.

amwesigwa@observer.ug

 

 

The Auditor General of Uganda unearths Shs 300 billion losses:

 

 

TUESDAY, 01 APRIL 2014

WRITTEN BY BENON HERBERT OLUKA & DEO WALUSIMBI.

 

Auditor General: John Muwanga

 

 

Uganda has lost nearly Shs 300 billion and risks losing another Shs 355 billion through theft of public funds, mismanagement and botched deals, the auditor general has revealed.

 

John Muwanga handed over the auditor general’s annual report for the year ended June 30, 2013 to Speaker Rebecca Kadaga at the Parliament boardroom on Monday afternoon.

 

 

     Mr Muwanga the Auditor General of Uganda.

 

 

Shs 300bn

Some of the losses are due to irregular payments to contractors, refunds to donors for stolen money, as well as court awards and compensations. The auditor general established that the government paid Shs 65.6 billion to various contractors for work that had either not been executed or costs that should have been avoided “if proper contract management procedures had been followed.”

 

In the judiciary, the money lost in court awards and compensations rose by 100 per cent from Shs 82 billion in the 2011/12 financial year to Shs 164 billion in the subsequent year.

 

“This raises the question of the extent to which government is making efforts to minimise court awards and compensation,” notes the auditor general.

 

“Discussions with the accounting officer attributed this to laxity on the part of the concerned entities to provide the necessary information for the cases.”

 

The government coffers were also depleted by the payment of Shs 50 billion to various donor countries as a refund for funds that were stolen in the Office of the Prime Minister. In his counsel to government, the auditor general says although government obtained a supplementary budget allocation to refund donors, “there is need to ensure that the appropriate organs of government follow up the matter in order to eventually recover the funds from the responsible officials.”

 

The auditor general further accuses officials in various entities of charging Shs 97.9 billion on items which do not reflect the nature of the expenditure.

 

“Such a practice impacts on the credibility of the financial statements, since the figures reported therein do not reflect the amounts expended on the affected expenditure items,” says the report.

 

Low levels of loan disbursements by the government have also resulted in a 40 per cent rise in commitment fees to Shs 12.7 billion.

 

Government also paid Shs 642.9 million for semi/finished textiles by two companies instead of the raw materials that were supposed to be imported in support of the agriculture sector value chain.

 

No accountability

The auditor general says different government departments are yet to account for a total of Shs 355 billion, which could lead to further losses. For instance, Shs 65.8 billion that government officials received as advance payment to carry out activities in various entities remains unaccounted for.

 

The practice of giving advance payment for such activities contravenes the public finance and accounting regulations, says the auditor general.

 

“Delays in accounting for funds may encourage falsification of documents,” says the report.

 

In addition, the auditor general complains that a number of government entities advanced Shs 16.3 billion to staff through their personal accounts. The practice, which the AG, however, says is on the decline compared to the previous year, contravenes regulations and exposes government funds to loss since accounting officers have no control over individuals’ bank accounts.

 

The auditor general particularly admonished government entities for the age-old practice of paying irregular stipends to staff, such as consolidated allowances, weekend allowances and monthly allowances to serve as extra income.

 

“During the year under review, several MDAs [ministries, departments and agencies] continued with this practice and paid periodic consolidated allowances to staff with no proper justification as these were not activity-based, rendering such a practice irregular,” says the report.

 

“The ministry of Public Service indicated that it was currently discussing options to motivate public officers given that government had failed to implement the pay policy of 2006 due to financial constraints.”

 

The report also reveals that various government organs spent up to Shs 231.4 billion on repairs and maintenance of motor vehicles without technical pre- and post-inspections to determine the extent of the defects and thus the repairs required.

 

Tax evasion

The report, which scrutinises financial activities within the central and local governments, as well as government departments such as statutory commissions and state enterprises, also revealed tax irregularities.

 

Several ministries, departments and agencies, it points out, did not remit Shs 28.3 billion in taxes, contrary to the requirements of the Income Tax Act.

 

“The failure to deduct and remit taxes directly impacts on collections by URA,” says the report.

 

Accordingly, URA is demanding Shs 50bn in tax arrears from the ministry of Finance, Planning and Economic Development.

 

“The funds arise from tax incentives to various entities; however, the ministry lacks documented criteria in selecting and approving tax incentive beneficiaries,” says the report.

 

Domestic arrears

According to the auditor general, there is need to streamline this process by providing clear guidance to avoid haphazard selection of beneficiaries. Uganda is also weighed down by an escalating domestic arrears figure that is spiralling out of control, according to the auditor general.

 

“Despite adopting the commitment control system, the total value of domestic arrears payable has continued to increase over the years. The current status shows a steady increase in the arrears figures, clearly indicating that the current approaches to address the problem are not working. The debt figure may become unmanageable,” cautions the auditor general.

 

In the 2010/11 financial year, according to the auditor general, the domestic arrears stood at Shs 473.6 billion. It rose to Shs 763.1 billion in 2011/2012 and then jumped sharply to Shs 1.12 trillion in 2012/2013.

 

“The current status shows a steady increase in the domestic arrears figures, clearly indicating that the current approaches to address the problem are not working,” says the report.

 

Speaker Kadaga will now send the auditor general’s report to Parliament’s Public Accounts Committee, which will scrutinise it and interrogate the accounting officers in an attempt to recover the money and/or cause the errant officials to be prosecuted.

 

hobenon@observer.ug

walusimbideo@gmail.com

 

Nb

£320,000 has of recent been paid by Parliament to clear Kadaga's 1 year
bill in Brussels and Amsterdam.
 ===========================================
   In 2015 alone the Speaker used £320,000 tax payers money in
 accommodation expenses in 2 European cities.
 According to available receipts she only books presidential
suites with a full conference center whenever she's in
Europe.
The money was to be picked from her office's annual
2.4bn but strangely footed from other vote. ...

Parliament accountability committees chocking on report backlog:

By MERCY NALUGO

 

Posted  Saturday, August 30  2014

 

The blame. The committee chairpersons complain of little time and workload left behind by those they succeeded.

 

The National Parliament of Uganda and its problems:

Parliament’s accountability committees may be the most celebrated, but they are also dreaded because of the workload. Today, at least three of them are chocking on backlog with the new Public Accounts Committee (PAC) stuck with more than 300 undebated reports left behind by the previous group.

Some undebated Auditor General’s reports, value-for-money audits and inquiries handled by PAC; the committee on Commissions, Statutory Authorities and State Enterprises (COSASE) and Local Government Accounts, date way back to 2000. Others are muddled up with scanty minutes on public hearings that were conducted.

Influence

A leaked document compiled by PAC’s technical staff that Saturday Monitor has seen, shows that PAC, the most influential committee conducted 220 hearings during the last session but there is neither report nor proper minutes for those hearings. The document was a discussion paper during a recent technical staff-only meeting

Under the current multiparty dispensation, the political Opposition leads the accountability committees. With the exception of the one on Government Assurances, they are charged with monitoring and overseeing State activity.

The committees, among other duties, should examine reports and audited accounts of Statutory Authorities, State Corporations and Public Enterprises and take action on the Auditor General’s annual reports. Value-for-money audits and other petitions are also considered. The committees are supposed to write recommendations to Parliament for immediate action to be undertaken by the government.

What the law says

Article 163(4) and (5) of the Constitution says that the Auditor General shall submit to Parliament annually a report of the accounts audited by him or her for the financial year immediately preceding Parliament then debates and considers the report and takes appropriate action.

Under the Parliamentary Rules of Procedure, these committees are expected to report to Parliament at least twice a year. A treasury memorandum is then supposed to be prepared by the Permanent Secretary ministry of finance and Secretary to the Treasury (in this case, Keith Muhakanizi). The Treasury memoranda to Parliament indicate government’s actions taken on Parliament’s recommendations arising from the report of the Auditor General. But Saturday Monitor has established that the last time PAC and COSASE got a Treasury memorandum was in the financial year 2004/2005.

This revelation would suggest that the government has never acted on the previous committees’ recommendations rendering their work redundant.

The case of PAC

Commenting on the magnitude of the workload before the committee, Ms Alice Alaso (Serere Woman), the new chairperson of PAC, told Saturday Monitor that they are stuck with old reports where some witnesses have either died or left the country and are devising means of disposing them of.

She said reports left behind by her predecessors that are said to be in draft form are “actually not in concrete draft”.

“They need more work to be done on them for them to be really draft reports. We will begin dealing with them at some point in time. We are looking at them with my vice and the committee technical team,” she said.

Ms Alaso’s committee has taken over 32 of the 300 reports and these are yet to be officially tabled before Parliament for debate. The same committee is still cleaning up 94 reports which are in draft form, leaving behind a baggage of 126 untouched.

She blames the backlog on what she calls the previous committee’s poor method of work, advising that her committee will focus more on yielding results than “seeking public attention”.

“The previous PAC did what they could but capitalised on handling special reports. The committee conducted public hearings of 2009/2010 and no reports were written hence the backlog. The task is enormous yet on a daily basis, the Auditor General churns out reports. My committee shall begin with the fresh reports of 2012/2013 beginning August 12,” Ms Alaso said.

She notes that the last time government acted on a PAC report was in 2005 during the late Dr Okullo Epak’s time, while that of COSASE was in 2005.

“The previous leadership held public hearings but with no recommendations. In 2009/10, they listened to everybody and wrote no report. In 2011 to 2012, they listened to everybody and made no report. With the draft reports, I am laying 32 of them before Parliament and we compiled all this work in just two months. We have been re-drafting minutes, going back to read and redrafting everything,” she said.

The backlog raises questions over the nearly Shs400 million they received in allowances to facilitate their work even during recess and over the weekends.

Former PAC chairperson Kassiano Wadri (Terego County), who assumed office in July 2011 admits that they did not write recommendations for some reports given the bulk that was before them which they wanted to finish off.

He handed over the committee leadership to Alaso in February this year having handled only six Auditor General’s reports which were debated by Parliament and the rest remained in draft form.

Those that were debated include reports on the controversial government compensations paid to Haba Group of Companies, Rhino International, Dura Cement Limited, Basil Read Bouygues for the rehabilitation of the Jinja Bugiri road, Beachside Development Services and special audit investigations into allegations of financial impropriety in the Office of the Prime Minister.

In his defence, Mr Wadri said; “We have got electronic recordings of all the proceedings and my successor is improving on the draft reports which are mainly on financial accountability. The challenge however is that the committee is not only tied to financial accountability. Some reports come as forensic audits and special audits like the case of the Prime Minister’s office alone that took us six months to complete yet we worked from Monday to Monday.”

Too much work

One of the terms of reference for the OPM probe into the suspected theft of more than Shs50 billion meant for post-conflict reconstruction of Karamoja and Northern Uganda was that they conduct the investigations within two weeks.

“It was hard to churn work in two weeks. The committee interfaced with more than 100 witnesses which made it practically impossible to finish on time yet some witnesses had to appear three to four times,” Mr Wadri recalls.

 

PAC under Mr Wadri came under suspicion of conducting selective inquiries targeting some people and institutions. Bribery allegations were also raised which Mr Wadri denied. “I can say this from the bottom of my heart that at no one time did we succumb to compromise. I went through lots of threats but I stood by the recommendations of the reports we produced... Everything was done through consensus and we wrote the reports jointly,” said Mr Wadri

PAC vice chairperson Paul Mwiru, who also held the same position in the last session under Wadri, however, said writing of minutes is the role of [officials under] the Clerk to Parliament.

“The problem we have is staffing. One person (clerk assistant) sits in from Monday to Monday and they really do not have time enough time to do all the reports,” he said.

Mr Nandala Mafabi, who chaired PAC in the 8th Parliament between 2006 and 2011, however, rejected assertions that his team did not deliver.

“I handed over a clean plate. I came in 2006 and I got the backlog from 2000 to 2005 but I cleared it. I did the ones of my period from 2005 to 2009. The one of 2010 was submitted in April 2011 so that is when the current Parliament begun. We cleared every backlog we found including our own reports and submitted reports to Parliament. If the current chair of PAC can show that my committee left a backlog, let her do it,” he told this newspaper.

He added: “We are yet to see the results after me. These days we just gloss over things and accounting officers are no longer tasked to explain queries. But our time, we insisted on results, you either refund the money or answer the queries. The current chair should just show her current work and what she inherited instead of making blanket statements. That would be abusing the competence of others.”

About COSASE

The situation is not any better with the COSASE committee where the Auditor General started providing audits around 2003. This committee has registered just about 3 per cent performance, creating a huge backlog of 97 per cent of the reports to be handled by current chair, Mr Ibrahim Ssemuju Nganda (Kyaddondo East).

“We are bogged down and we are going to change our method of work. There are years where Parliament did not debate any reports at all from this committee and we cannot apply the same work method,” said Mr Ssemuju.

Although he concedes that his committee has not kept true to the expectations, Mr Nganda says they have so far finished some reports including one on health councils, Uganda midwives, Coffee Development Authority, Bank of Uganda and National Medical Stores.

“Instead of handling them per entity, we will be handling them in lump sum so that we have one report to Parliament,” he said. “World Bank is also funding expert services to help the committee clear the backlog.”

Asked who is responsible for the backlog, Mr Nganda, like Ms Alaso too blames the previous committee’s poor method of work. The previous committee was chaired by Mr Patrick Oboi Amuriat (Kumi County)

“The Opposition has been in charge of the committee. I had thought that Amuriat did no work but the work method of the committee was poor because it did not guide itself properly.”

He also blames Parliament for lack of enough space and poor coordination.

“For instance, I had to handle issues of 2013 but Parliament does not have a proper timetable within which to handle these reports. I had lined up the accounting officers to appear before the committee so we deal with new reports of 2013 first before the old backlog but we were told to first handle the Budget. Parliament also lacks enough committee rooms within which to operate.”

Ms Oboi says he took over from a leadership that was inefficient.

“As a result, we had to deal with reports dating from 10 to 12 years. COSASE has more than 100 entities it has to deal with and that is a daunting task amidst other commitments. Standing Committees are also expected to be in abeyance during Budget time. We are given two and a half years but we work for only nine months,” Mr Oboi observes.

He says they submitted to Parliament three reports on Uganda Investment Authority, Uganda Development Bank and a petition by the former workers of Uganda Railways Cooperation but the government has not yet responded to them. He also dismissed allegations that the committees are sometimes bribed.

Local governments

The Local Government Accounts committee has the seasoned Jack Sabiiti (Rukiga) as its chair but even he concurs that handling accountability committees is not a “bed of roses”.

His team exercises oversight on audit reports covering all of the country’s districts, 12 municipalities and town councils on top of other audit queries and petitions.

“It is practically impossible to handle all districts given the limited time available to members who must attend Parliament as well as consider their reports. This means that there will always be backlog. In addition, we were assigned other audit queries outside other districts like Naads. They left behind three financial year audit queries to be handled.”

The way forward

Mr Kaasiano Wadri, when still PAC chair, once proposed that the committee be divided into two to handle various reports at the same time but structural and administrative problems were raised by Parliament with concerns that the committee needed two clerks, and two permanent committee rooms which could not be availed.

He told Saturday Monitor that Article 163 of the Constitution should be amended to allow Parliament more time to dispose of AG’s audited account, saying six months are impractical.

Some of the proposals suggested by Ms Alice Alaso’s committee are that before any PAC meeting with any witness or accounting officer, a pre-hearing meeting should be conducted with at least five Members of Parliament, staff from the office of the Auditor General, a lead counsel and the chair.

The pre-hearing meetings would provide a matrix of a summary of queries and possible questions that committee members should focus on.

“We agreed with the Accountant General and Permanent Secretary/Secretary to the Treasury that the moment Parliament adopts reports, they will issue a treasury memoranda of the action the government has so far taken. Also modern management dictates that you must have a report. What is the reference account? Also, we shall need more time to do the work before we can ask for allowances. One report a week is okay compared to three years of nothing,” she said.

She said her committee will focus more on the current work.

New approach

“I do not intend to bury my committee in report writing because they were not responsible for the delayed report writing. We are going to adopt a new approach where we will do public hearings for a sector and write the report immediately before embarking on another sector. We do not intend to have any pending reports,” she said.

There is a proposal being mooted to have MPs belong to just one committee since most of them run in between committees. Mr Oboi says they had suggested that a new committee be created to handle value-for-money audits and petitions on COSASE, PAC and Local Governments to help produce reports easily.

Government assurance committee

Reports. This committee rarely sits. A report compiled during the term of its former chair, Mr Odonga Otto (Aruu) exposed President Museveni’s 817 unfulfilled pledges made since coming to power in 1986 with an estimated cost of more than Shs12.9 trillion covering roads, hospitals, schools, airport, bridges, electricity and machinery Scrutiny.

 

Government Assurances was set up to scrutinise the assurances, promises and undertakings given by ministers and other agents of government in Parliament and to report on the extent to which those assurances, promises and undertakings have been implemented.

Otto’s report was refuted by the government. Previously, attempts by the previous chair, Issa Kikungwe (Kyaddondo South), to table before Parliament a private members Bill over similar concerns in March 2008 were also frustrated after President Museveni and the NRM parliamentary caucus claimed it sought to depict the incumbent leadership as non-performing.

Frustration. Opposition lawmakers generally observe that they are frustrated by politicians of the ruling NRM party who disregard their recommendations and exonerate corrupt officials through their caucus.

mnalugo@ug.nationmedia.com

Additional reporting by Isaac Imaka.

 

 

 

To its credit, the ministry of Finance tables a report on public debt every year, in fulfillment of the provisions of the Budget Act. And in June, Finance Minister Maria Kiwanuka tabled the latest figures in Parliament.

These figures show that over the last nine years, our external debt has increased from less than $2 billion to $6.56 billion. Our annual budget as a country is about $5bn. The domestic debt, including money government competes with the population to borrow from commercial banks, has also increased to $2.89bn. External and domestic debt put together means the public debt is now at $9.45bn!

To understand the level of exposure, one needs to look at our GDP, which, according to the World Bank, is at $21.4bn.  Kenya’s stands at $44.1bn (or $53.4bn after rebasing recently), Tanzania’s is $33.2bn and Rwanda is at $7.4bn. Nigeria’s GDP of $521bn is the biggest in Africa, I think, followed by South Africa, with $350.6bn.

For those like me, with very basic knowledge of economics, GPD means the country’s total wealth, including utensils in your kitchen. Therefore, Uganda’s total wealth is $21.4bn and our debt obligation is now $9.45bn. And here I am talking about the principal but, there is huge interest,  especially on bilateral loans.

Last year, for instance, we repaid debts $63 million and 41 per cent was interest. I am no mathematician, but what this means is that on a loan, for example, of $10m, there will be $4m on top to pay as interest. Economists from Finance used to tell us, when I was still a member of the parliamentary committee on National Economy, that a country’s debt becomes unsustainable when it reaches half its GDP. For emphasis, our GDP is $21.4bn and total debt is $9.45bn.

Before I leave this matter, readers of this column, especially those with no access to ministry of Finance reports, must know that some of the money we borrow remains on accounts for years. Finance says there is low absorption capacity and sometimes our own processes, such as procurement, are also blamed.

Most annoying here is that we pay interest on this money borrowed but which remains unutilised for years. Finance reports that interest on this unutilized money is now $4.1m. President Museveni has a tendency to excite during post-budget speech, saying that the total budget has increased from this to that – Shs 15 trillion, this financial year. He will not disclose that Shs 908bn, almost a trillion shillings, is meant to pay interest on loans.

I have quoted these figures from the ministry of Finance’s reports extensively to show you what the many loans we are getting from China mean to our survival and independence as a territory. The huge $8bn loan from China’s Exim bank to finance the hugely-inflated construction of 251km standard gauge railway from Malaba to Kampala will bring our total debt to $17bn.

I have already told you that our total wealth is $21.4bn.  Mind you, there are also other loans from China to construct Karuma and Isimba power dams, plus the old one of Entebbe Express Highway. In Kenya, the construction of the 482km rail line from Mombasa to Nairobi, initially at $3.8bn and now revised, is shaping up to what the media there is describing as the country’s biggest financial scandal. In fact, court has halted it.

Kenyans are shocked that Ethiopia, which is also borrowing from the same source, China, to construct a 756km, twice the length of Kenya’s and with a better technology, will be spending only $3.6bn. And if Kenyans are scandalised by spending more or less the same amount like Ethiopia to construct their 482km railway line, what about Uganda’s 251km?

I have heard that this cost includes construction of a port at my village in Bukasa, near Namboole, but this is satanic. And like Col Kizza Besigye noted in his article last week, all of us know this deal, like many others, was concluded in the sitting room of State House.

The deal was given to a Chinese company that didn’t carry out feasibility studies, yet there is one that had done so, at a cost of Shs 9bn. And like I have noted in earlier articles, this whole railway thing is a scandal of our generation.

First, we signed a concession with South Africans who were calling themselves Rift Valley. What these ones did was to get a guarantee from government and borrowed about $100 million. They then sold their interest and, without adding any value in our company, left the country. Another generation of investors came in, did the same, and left.

You will not say I didn’t warn you.

 

semugs@yahoo.com

The author is Kyadondo East MP.

 

 

With Kampala’s terribly-clogged roads, one endures the pain of spending heavily on fuel to survive long hours in the city’s choking traffic.

Fuel prices in Uganda remain unreasonably high even as prices elsewhere have dropped. Consider this: what you pay for a litre of petrol in Kampala could easily get you a gallon (3.7 litres) in some American cities.

There is something bizarre about the fuel market in Uganda: prices instantly go up at the slightest smell of a crisis yet they never come down after the trigger-crisis goes.

The price of oil on the global market has fallen precipitously since last June, with a barrel dropping from $110 to less than $50 this week. Yet in Uganda, pump prices either remain unchanged or have gone up.

Uganda’s fuel companies can say they are still selling stock bought before global prices started plummeting. But this would be a most disingenuous explanation. Fuel dealers have shown in the past that in the absence of new supplies, their stocks can’t last even a week.

If they have previously failed to meet demand for only a week, whenever supply has been interrupted, how can fuel companies be selling the same stock months down the road?

There is the bit of the weak Ugandan currency, which depreciated significantly in the final quarter of 2014. But the huge fall in the global market price of oil should have pushed down local fuel prices in Uganda, regardless of the shillings’ performance against the dollar.

The NRM captured power in 1986 as a Marxist-Leninist-Maoist guerrilla group. Back then, it had pretensions to socialist thinking, leaning towards a sort of planned economy but couched its economic policy approach in the more appealing language of a ‘mixed, integrated and self-sustaining economy.’ That was the rhetoric.

The practice turned out the opposite – a crude embrace of the laissez faire (leave us alone or let them do) economic ideology. In the late 1980s/early ‘90s, we were too desperate to appease our financiers in Washington and London. We urgently needed their money. They too were only pleased to dictate our economic policies and showcase Uganda as a model of successful free market reform in Africa.

So, they pressed on and we danced faster: total deregulation, complete liberalization, and full privatization – a perfect private and ‘free’ market economy. The national airline went and a member of the ruling cabal took the lucrative ground-handling. We donated the national bank to foreign capital.

We were thorough and became a real model, but a model for something that doesn’t exist anywhere in the world, not even in the heart of world capitalism United States of America.

It is one thing to have free enterprise and allow innovative business practices to thrive; it is another to think there can be a free market for exchange of goods and services. The latter is an illusion. The reality is that markets are controlled, manipulated and constructed. The question is, should private individuals and profit-driven players freely manipulate the market?

Renowned economist Friedrich von Hayek reasoned that governments cannot know what is good for millions of individuals, and so are incapable of properly regulating market activities.

Instead, it is rational individuals who know better what works and doesn’t work for them.This thinking was taken to extremes by right-wing, conservative economists at the University of Chicago, the foremost figure being Milton Friedman.

But even Friedman and von Hayek would be mesmerized by Uganda’s brand of a ‘free’ market economy. In it, anyone can do whatever they want, in a ‘free and liberalized’ environment.

A foreigner can bring in large sums of hot dollars, speculatively ‘invest’ in real estate, make a big return, and go away. No hassle. One can get a panicky government official with billions of stolen public money, exorbitantly sell him/her land, then go about freely buying dollars and hoard them. It’s a ‘free’ market.

Advocates of the fictitious ‘free’ market, the chief of the guild being the journalistcum-businessman Andrew Mwenda, want government to protect the rich and their property but are decidedly hostile to any intervention against exploiting the poor.

This guild attributes Uganda’s supposedly impressive economic performance to ‘leave us alone.’ But if Uganda has had an economic miracle, let’s look at a few basics.

First, how much industrial transformation has happened over the last couple of decades? The guild will say: well, most of our growth has been in the services sector – half of our GDP is from services. But services are a feature of postindustrial societies. Does it mean we jumped from pre- to postindustrial?

Second, most Ugandans live in rural areas. They depend on tilling the land. How much does agriculture contribute to our GDP? That’s not important, the guild will say: what’s important is that the economy is growing!

Last, how much of the economy is in the hands of Ugandans who naturally have a permanent stake in the country? Who cares, we are in a global village…

 

moses.khisa@gmail.com

The author is a PhD candidate in Political Science at Northwestern University, Evanston/Chicago-USA.

 

A supplementary request of Shs 614m by the ministry of Foreign Affairs to pay Scribe Strategies and Advisors, a US public relations company that sanitized Uganda’s international image tainted by the passage of the Anti-Homosexuality Act in 2014 has been sharply criticized by MPs.

Some MPs on the House budget committee refused to approve the Shs 614m, a part of the supplementary budget requested by the ministry of foreign affairs to pay the PR company. The MPs boldly told off the ministry of Finance delegation led by Aston Kajara, the minister of state for privatization.

The finance officials were in Parliament on Friday to defend government’s Shs 847.2bn supplementary request for the fiscal year 2014/15. In his brief to the committee, Kajara told the MPs that government through the ministry of foreign affairs spent “Shs 614m to prop up Uganda’s image in the US Congressional Caucus, which was tarnished by the Anti-Homosexuality Act.”

His defence of the Shs 2.7bn additional funding needed by the ministry of foreign affairs didn’t convince some MPs. The lawmakers said they couldn’t approve a public relations budget for a law they want re-introduced in Parliament.

“We cannot spend Shs 614m on clearing Uganda’s name and if you took a vote amongst the MPs in this House, no one would find it proper to spend taxpayers’ money on this anti-homosexuality act,” said Agago’s John Okot, supported by colleagues Cecilia Ogwal, Florence Nebanda and Fred Ebil, among others.

Nebanda said: “It’s quite unbelievable that the ministry of foreign affairs could use this money to clear Uganda’s image, yet us as Ugandans we are against this issue of homosexuality.”

In defending the expenditure, Kajara said: “I remember that the president was moving to the US and there were [negative] campaigns against the government of Uganda to the extent that even the hotel they had booked for him had to change and we engaged consultants to intervene and stem the hostility against the president on behalf of Uganda.”

Pressed further on the same issue, the minister said: “The president slept in somebody’s farm and even the PR company said that they booked and they were threatened that if this man [Museveni] sleeps here, we shall abandon this hotel.”

In September, last year, US media reported that President Museveni was denied accommodation in two hotels during his visit there.

 

Other controversial issues included the Shs 300m request by the ministry of trade, industry and cooperatives to “cater for the funding shortfall that resulted from outstanding obligations under AGOA secretariat.”

But the MPs led by Martin Drito objected to this, saying: “We can’t approve AGOA supplementary budget unless they have shown us that Ugandans benefit from their existence…”

MPs also want the ministry of finance to explain the Shs 403.1bn spent to “cover the funding shortfall on domestic debt obligations.” 

Although the ministry officials said it was occasioned by the increase in interest rates, the unconvinced MPs demanded a written explanation.

 

walusimbideo@gmail.com.

 

 

 

 

Police in Uganda want Shs200b to supervise 2016 polls:

 

 

By Yasiin Mugerwa

Posted  Friday, April 24  2015 
 

PARLIAMENT IN THE COUNTRY OF UGANDA

 

The Uganda Police Force yesterday asked for more than Shs200 billion to cover operations during next year’s general elections.

The request described by some MPs on the committee of Defence and Internal Affairs as “outrageous” was presented by Internal Affairs minister Aronda Nyakairima, who said the item is one of the unfunded priorities in the next Budget.

Gen Nyakairima said the money would cover training of personnel; ensure mobility of the Force, pay allowances and other expenses. 
“To police the 2016 general elections, the Force is asking for Shs204 billion as if they are going to field candidates,” Mr Ibrahim Ssemujju (Kyadondo East) said.

“They are competing with Electoral Commission with Shs376 billion. This is outrageous and unacceptable. This is a poor country, we cannot afford to spend money on consumptive areas yet we need money for schools and hospitals,” he added.

Mr Eddie Kwizera (Bufumbira) suggested the money be passed to the Electoral Commission to give police allowances for securing the elections. 
The request is expected to be discussed by the House Budget Committee. If police get this money, their budget for 2015/16 will surge from Shs412 billion to Shs616 billion.

The minister did not provide a similar break-down for the Shs204 billion request. He, however, revealed that the Force plans to recruit 7,000 officers ahead of the 2016 elections. He said the additional personnel will improve police to population ratio from 1:819 to 1:757.

The background
Police in the 2011 general elections asked for Shs130 billion. Of these funds, police also wanted another Shs24 billion to buy riot gear.

A total of Shs43 billion was for maintaining its vehicles and hiring a helicopter; Shs1.5 billion to pay Special Police Constables; Shs1.6 billion for uniforms, training Shs3 billion, feeding Shs19 billion and Shs19 billon for communication.

 

ymugerwa@ug.nationmedia.com

 

Is Uganda’s national debt sustainable?

 

 

 

Ugandan Genetic Modified tomatoes sold on the market stalls.

PHOTO BY Rachel Mabala

By Didas Kisembo

Posted  Wednesday, June 3  2015 

 

KAMPALA. Uganda’s bulging national debt, if not checked, is likely to worsen the cost of living in addition to burdening the consumer with more taxes, experts have warned. 
Government debt is one owed by the central government and governments often borrow in order to finance its operations and other schemes of economic development since taxation alone cannot provide enough revenue for the economy.
Less creditworthy countries sometimes borrow directly from supranational organisations such as the World Bank and other international financial institutions. 
Over the years, Uganda’s debt has been rising steadily at 2 per cent of its Gross Domestic Product (GDP)—an annual measure for determining the country’s economic performance.

The increase
In 2014, Uganda recorded a national debt of 33.26 per cent GDP. 
This figure is set to rise to 35 per cent in 2015 as the government embarks on a series of new projects. 
World Bank’s latest statistics of 2013 show that Uganda’s External Debt was at Shs13.7 trillion. 
Some statistics, however, indicate that Uganda’s external and domestic debt is growing at 2 percentage points of the GDP every year.
In 2014, a report from the Parliamentary Committee on National Economy revealed that Uganda’s debt had risen to Sh14.5 trillion, sparking outrage from opposition politicians.
The projection, however, puts Uganda among the highly indebted countries with a worrying external debt raising concerns on the country’s capacity to pay back.
Projections are that Uganda’s external debt will likely grow by Shs4.5 trillion next financial year now that proposals from the Finance ministry have been factored in. This is in addition to another Shs1.5 trillion which the government intends to borrow domestically. 
While Kenya and Tanzania have the biggest external debts in the region, their large economies are an indication that they have the capacity to pay back.

The pinch
At more than Shs14 trillion, Uganda’s debt might seem abstract, just another statistics in the country’s economics. However, analysts now contend that if left unchecked, that rapidly swelling figure has the potential to affect our daily lives significantly.
“Eventually, the government may find it harder to finance its debt, which may subsequently mean higher interest rates or a lower value of the Shilling,” says Peter Tugume, an economist at Makerere University.
“The potential for future growth could be less, and you could see a slower growth in the standard of living or even a decline fuelled by rising costs of goods and services,” Mr Tugume says. 
In March 2015, core inflation, which measures the changes in prices of goods and services, rose to 3.7 per cent for the year ending March 2015 compared to 3.3 per cent registered. 
Since the year, the Shilling has been struggling against the dollar, hitting a high of Shs3, 067 and averaging at 2,990.
Subsequently, prices for food items such as tomatoes, rice and non-food items such as, clothes, rent, education, charges, furniture and cement, an indication that the general public’s expenditure on these items is higher than they were a year ago.
Emmanuel Tumusiime-Mutebile, the governor of Bank of Uganda, at the beginning of this year, warned that a weak Shilling remained the biggest risk to medium-term inflation outlook.
In April, the Central Bank of Uganda raised its benchmark lending rate for the first time since June 2014 to 12 per cent from 11 per cent to forestall a rise in core inflation caused by a weakening local currency and faster economic growth.
“It is interesting how the increased Bank of Uganda interest rates will affect lending rates for consumer loan products, including mortgages, car loans, credit cards, and student loans. As interest rates inch up to attract Treasury bond investors, so will rates for consumers,” adds Mr Tugume.

The tax burden on Ugandans
Inadvertently, there is also the debt’s impact on taxes. Tugume argues that in the medium and long term, governments maybe forced to increase taxes so as to service the debt.
In April, Finance minister Matia Kasaija proposed new taxes on beer, cigarettes and commuter taxis to finance the Shs24 trillion Budget for the 2015/16 financial year to meet URA’s target for this financial year at more than Shs11 trillion.
“We should expect more taxes in the next financial years. Unfortunately, it is the common man who will bear the brunt of it,” Tugume warns.
Despite these writings on the wall, the government argues that the country’s growing public debt is sustainable.
In 2013, a Debt Sustainability Analysis (DSA) by the Finance ministry to assess the ability of the country to meet its current and future debt obligations, based on the current level of debt and prospective future borrowing in the context of medium-term macroeconomic scenarios, found Uganda’s public debt to be highly sustainable. Their findings denoted that it will remain sustainable in the medium-to-long term, with the debt sustainability indicators staying below their thresholds over the projection period.
“This is the case for both total public debt (external and domestic) and for public and publicly guaranteed external debt,” read the report in part. 
Bank of Uganda has also come out to reinforce the notion, with the director research, Dr Adam Mugume, reassuring in an interview with local media last year that Uganda’s debt is still sustainable, meaning that the country is free of debt distress.

The looming threat
However, Martin Bakunda, a financial analyst and lecturer at Makerere University Business School, argues that rising debt creates a deficiency in funding for the sectors that need the money. 
Bakunda warns that unless fiscal discipline is observed, the economy may witness a reckoning that was last seen in 2007 when Uganda’s debt rose beyond 70 per cent of its GDP.
“Looking at the 2015/2016 budget, I noticed that a huge sum is being set aside to pay debt. If most of that was allocated to sectors such as health. It would do much,” he says.

Financial discipline
“The government really has to ensure financial discipline. If it continues to borrow more and the money is not used for what it is meant, then we will struggle in the long run,” he adds in reference to the millions of money ministries turn over, unused form the previous financial year and corruption.
Over the past seven years since 2008, Ugandans have enjoyed relatively stable conditions, Tugume says, and at some point, something has to give: “Generally, the economic effects are less destructive if the government deals with the deficit by cutting back on spending especially on non-productive activities.”

Uganda’s debt burden

Shs14.5 trillion
The amount of Uganda’s External Debt according to a 2014 Parliamentary Committee on National Economy.

Shs4.5 trillion
Expected increase in Uganda’s external debt in the next financial year

Shs24 trillion
The proposed Budget for 2015/2016 Financial Year

 

Finance minister Matia Kasaija

 

Analysts have insisted Uganda could struggle to pay back the amount of debt it is accumulating. This is despite assurances from government that the country’s debt levels were sustainable.

Dr Fred Muhumuza, a former adviser to the minister of finance, said last week that Uganda should not look at the debt-to-GDP ratio alone, but also at the ability to mobilise revenues and pay back.

“If 60 per cent of your revenue can go to service the debt, that’s not sustainable,” he told a budget review meeting by Economic Policy Research centre and Bank of Uganda.

Uganda’s debt-to-GDP ratio is at 34 per cent, with government saying it was still affordable because it is below the 50 per cent threshold for East African countries.

Dr Adam Mugume, the director for research at BOU, said the debt dynamics were misleading.

“Comparing public debt-to-GDP ratio is misleading,” he argued. “If the ability to tax and pay the debt is low, then there is a problem. In the long run, you must be able to tax and pay back. If the revenues are low, then the ability to service a debt will be poor.”

Uganda Revenue Authority is expected to collect Shs 11.3tn while Shs 6.4tn will be paid for debts next financial year. Uganda’s debt stands at $7.6bn with 60 per cent of this external. The country is set to borrow about Shs 5.9tn in 2015/16 from both the domestic and external sources.

Anna Lucia Coronel, the IMF country representative in Uganda, said at a recent PricewaterhouseCoopers budget breakfast meeting that while she thought the debt burden was still sustainable, the country must borrow smart.

“Uganda has a large infrastructure gap and development needs; you have to spend,” she said. She, however, cautioned: “Do this while increasing revenues as well and borrow in a healthy way. Do more concessional loans.”

Meanwhile, some economists have said the budget was out of touch with reality, with issues such as unemployment. For instance, John Mutenyo, a senior lecture at the school of economics at Makerere University, said the budget was not clear on how to tackle unemployment.

“Unemployment is a major source of insecurity. So many youths are now vulnerable to manipulation and can easily be confused,” he said.

While Finance Minister Matia Kasaija said government was aware of the problem of unemployment, he didn’t say anything about how to solve it. 
amwesigwa@observer.ug

 

 

The Uganda Government financial sector was privatised when M7 forcefully wound up  Uganda Commercial Bank and took the building using a famous businessman  Mr Karim Hirji.

By Frank Mujabi

 

Posted 1st June 2016

 

This privatisation ended any regulatory responsibility which BOU had over private banks. 

The banking market was left open for Barclays,DFCU, Standard Chartered and some Kenyan banks. These banks came on to the market based on the fake population statistics, fake GDP and faje middle class figures.

UG banks have no obligation to announce their interest rates (even inside the bank), or the types of loans they give and how interest rates are calculated. 
They are also free to change the terms of your loan including length of loan or interest rates in the middle of the loan.

There is no law in UG to make sure that the bank keeps its side of the loan agreement. I am a qualified finance specialist and it took mr once 3 weeks to work out the terms of a loan which I gently declined.

The only collateral a bank takes is a land title and a secured salary of the mostly bank employee's salary.

The savy Baganda traders with land titles have advantage here and could borrow money and import stuff. That is why M7 is complaining about banks increasing imports.

The majority of bank loans are however for real estate. Because building a house required no skills on the part of the owner, most prople in UG borrow to build.

The problem however is that 'the new money ' have aqcuired fake titles issued by Uganda Land Commission , or by Mailo land con artists.

Because the borrower knows that he has a fake title, he is at the mercy of the corrupt bank officer who demands his cut when issuing this loan. A borrower borrows 600million, and receives only 400000million having given the bank official 200million.

The borrower is really ignorant of the loan details and in no time defaults on the loan, having spent most of the money on consumption.

The bank has repossessed a lot of these properties which are worthless because they were built in ghettos or wetland with a worthless fake title.
It is these new middle class who are crying to daddy M7.

About 50% of new buildings in Kampala are on sale right now.

The Northern by pass has many empty blocks of flats (with no balconies) built in wetlands. This is all over Kampala.

The Kenyan banks are about to quit the UG market and King Barclays as well.

The UG economy is run by idiots and even the foreign banks cannot make any money. It is only the banks doing international money laundering who are making some headway.
bobbyalcantara94@gmail.com:

Nb

Your man Kayibanda is now blaming the banks for his ruinous policies that have allowed banks to bankrupt most aspiring middle class Ugandans and grab their land and other property across the length and breadth of the country. Who said an un-educated bushman and former cattle herder would ever understand anything about economic policy? And he is blaming others for his folly. An economy does not run just like grass grows  in the savannah after the rainy season. It has to be planned, and carefully managed, and this means having educated and skilled people at the helm. Having a flatulent and obese idiot like Tumisimme Mutebile at the helm of Uganda's economic policy, a man a vodka-soaked alcoholic who is lucid for barely 1 hour in a day,  has led to this ruin, where commercial banks now own a sizeable proportion of Uganda's real property and wealth.