The method in the madness: Uganda’s budget 2018 is divorced from reality

19 June by Mary Serumaga


Uganda’s Minister of Finance

The report of the Auditor General (AG) for 2016–2017 is another catalogue of systemic theft, embezzlement and wastage of public goods. In this, it is similar to audit reports going back at least two decades. It appears that incompetence as much as theft are responsible for the seeming inadequacy of national resources to meet development needs. In 2017 government failed to provide UGX 43 billion [US$ 11.5 million] as its agreed contribution to donor funded projects.

Yet the President’s State of the Nation Address of 2018 (SONA2018), like that of 2017, outlined plans and promised development targets based on a degree of competence in service delivery, a level of institutional capacity and availability of resources which no longer exist.

In His Excellency’s view, a successful development programme has been delivered; feeder roads built, improved seeds distributed and modern agricultural practices disseminated, agro– credit, an ICT backbone, healthcare and education made available. What is required now, he said, is to commercialize farming, industrialization and to lower the cost of doing business.

A closer look at the enabling environment so described shows that development and prosperity are much further away than the Address would have citizens believe. National development targets are feasible, the strategies to achieve them, reasonable as far as they go, but their implementation is as unlikely in the political environment of 2018 as in the 1990s because it is the same environment that permitted the looting of the Global Fund to fight AIDS, Tuberculosis and Malaria, the National Social Security Fund, the National Agricultural Advisory Service, government pensions and payroll and most recently, the Land Fund.

Beginning at the top, administrative failure is evident even at the planning level. In 2017 the AG found that fifty–one entities responsible for UGX 4.483 trillion [US$ 1,182,871,005.133] have not prepared strategic plans as required by law. [1] Furthermore, sanctions for non–compliance are not enforced. Government performance against such plans as there are, is monitored by the National Planning Authority (NPA) and the Office of the Prime Minister (OPM) which together compile the annual Government Annual Performance Report. The report is a key input for cabinet and parliament in correcting past anomalies and for future planning but the AG found that the contents of the GAPR inaccurately reported some performance targets as having been achieved.

Owing to ambiguities in the National Planning Act, the NPA and OPM have overlapping responsibilities in monitoring performance. The AG asserts they in fact duplicate the same oversight function. In doing so over the past three years they have each spent over US$ 3 million. [2]

There is evidence of deliberate negligence in the delicate area of public private partnerships (PPP). PPPs are touted as an alternative to borrowing as the private sector is meant to inject capital in public enterprises in return for a reasonable profit Profit The positive gain yielded from a company’s activity. Net profit is profit after tax. Distributable profit is the part of the net profit which can be distributed to the shareholders. . One such agreement was with Umeme Ltd to distribute electricity. The financial disaster that followed is one of the country’s most catastrophic [3] to–date and resulted in service delivery levels the general public agreed to be far below an acceptable standard. As far as doing business, the cost of energy is cited as a primary disincentive to investment in Uganda. Yet, not learning from the past, the PPP Unit remains without a substantive director and the key positions of; project finance expert, legal expert, technical expert, and technical specialist remain vacant.

The fund required by law to finance the work of the PPP Unit has never been established. Neither has a monitoring and evaluation framework for PPP. The AG’s conclusion is unambiguous, “Thus the PPU unit cannot provide the technical, financial and legal expertise to the PPP Committee and the contracting authorities as required under the Act.”

This leaves important decisions regarding public assets in the hands of leaders and their extended families, would–be oligarchs, who have essentially become hawkers of national resources to the global market. It is increasingly clear that poor service delivery is a result of public funds and other assets being transferred to the possession and control of this predatory class of leaders, public officials and their accomplices, both foreign and indigenous.

In development work the missing component is the money to carry it out. In this essay, the amounts required are included for contrast with funds lost. In order to plot a way forward, it is useful to examine the methods by which the predatory class has created a regime of incompetence and by so doing facilitates theft and undermines service delivery. First, some background.


The Challenge of Increasing Agricultural Output

There is little need to recycle the fact that Uganda is an agricultural country, that life in Uganda is sustained by the 80% of the population deriving its income from agriculture. Nutrition aside, the agricultural sector contributes 23% of GDP GDP
Gross Domestic Product
Gross Domestic Product is an aggregate measure of total production within a given territory equal to the sum of the gross values added. The measure is notoriously incomplete; for example it does not take into account any activity that does not enter into a commercial exchange. The GDP takes into account both the production of goods and the production of services. Economic growth is defined as the variation of the GDP from one period to another.
. [4] Two budgets ago government promised the country would transition from low to lower middle–income status by 2020 (a feature of which is two meals a day for 100% of the population) as a result of the commercialization of agriculture as well as the acceleration of industrialization and increasing production and productivity in all sectors of the economy. At some point access to grain mills and vegetable oil processors was slated to be made available at county level.

However, economic challenges remain the same as they have been for the last thirty years; the price of the major foreign currency earner – coffee – is volatile and at this point has been in the doldrums for years, that therefore we need to diversify our exports, that key components of the enabling environment are still missing; access to agricultural credit for planting material and farm inputs, equipment, irrigation facilities and access to knowledge of all of the above. Protection from potentially devastating plant pests and organisms that may be imported with planting material is lacking. Those feeder roads and bridges across the many rivers and wetlands fall in to disrepair and are often insufficient or so poorly maintained as to increase the cost of transportation of produce.

It is known that global warming has transformed farming for the worse – there were only three serious droughts between 1910 and 1970 but there have been eight between 1970 and 2010. [5] Therefore, in addition to facilitating access to knowledge, agro-credit and road transport, government has the responsibility of providing the infrastructure for farmers to migrate from rain–fed FED
Federal Reserve
Officially, Federal Reserve System, is the United States’ central bank created in 1913 by the ’Federal Reserve Act’, also called the ’Owen-Glass Act’, after a series of banking crises, particularly the ’Bank Panic’ of 1907.

FED – decentralized central bank : http://www.federalreserve.gov/
cultivation to irrigation farming. In the event of drought, the State would be expected to be on stand–by with a Disaster Preparedness Plan and the law requires that it maintains a contingency fund for the purpose. [6]

These considerations are captured in the National Development Plan, the Plan to Modernize Agriculture (PMA) and the current Operation Wealth Creation seed distribution bonanza. Clearly, the country is not short of visions for the future.

In the SONA, the president listed the challenges to this critical sector as, “the high costs of inputs, the underdevelopment of water for agriculture, the low use of fertilizers and poor management skills by the farmers themselves.”

Feeder roads, irrigation schemes including valley dams, revival of tea and rice growing, diversification of exports, free seeds, an agricultural advisory service and agricultural credit have all ostensibly been provided for in a series of budgets.

Outside the budget presidential pledges are made and given to women, youth, the tribe of the month…. A recent example would be the UGX 5 billion [US$ 1,324,503.31] gifted to the youth in the lead–up to the Rukungiri by–election. While the million dollars was said to be from the President’s own pocket, there is also provision in the budget for random presidential pledges.


Administrative failures in the agriculture sector

Previous major interventions in the sector have faced the same problems as those in the current audit report. Agro–credit would have been available under the Microfinance Support Centre (MSC) of 2011 but it became a slush fund for political patronage. Interest Interest An amount paid in remuneration of an investment or received by a lender. Interest is calculated on the amount of the capital invested or borrowed, the duration of the operation and the rate that has been set. –free loans were given to the politically connected. [7]

The agricultural sector is as vulnerable as it was in the previous year because administrative anomalies pointed out in 2016 were not addressed in 2017. Additional, serious failures have come to light leaving the agricultural sector in jeopardy.

As in 2016, the government did not create a disaster preparedness fund. When disaster struck in 2017 in the form of an army worm invasion that decimated maize plantations, there was inadequate funding to save the crops. Per the AG;

  • “The Ministry required UGX 4.11 billion [US$ 1,086,092.72] to handle the emergency, however only UGX 2.1 billion was provided representing 51% of the required funds. Further, the appointment of this task force was never formalized; and thus operating without a legal framework despite the enormous task being critical to the sector. Inadequate funding for the emergency activity resulted into losses to farmers and food insecurity to the nation.”

The underlying problem was not addressed in the SONA. Rather the president reduced the challenge of pest invasions to a matter of applying more zeal.


Irrigation

The government claimed to be rolling out irrigation. In the past valley dams for irrigation that cost a combined US$ 4.3 million in 1999 and 2002 turned about to be either non–existent or not fit for purpose. More recent initiatives in irrigation have, like most of the valley dams, been limited to rehabilitating colonial structures. A new one was built in 1976. Five remain dilapidated.

SchemeDistrictAcresStatus
Doho Butaleja 2,471.05 Functional
Mubuku I Kasese 1,275.06 Functional
Agoro Kitgum 1,532.05 Functional
sub-total 5,278.16
Olweny Lira 1,482.63 Under rehabilitation
Rwengaaju Kabarole 286.64 New
Mubuku II Kasese 1,186.10 New
Doho II Butaleja 2,910.90 New
Tochi Oyam 1,235.53 New
Ngenge Kween 2,174.52 New
sub-total 9,276.32

Source: GOU BMAU BRIEFING PAPER (6/18) MAY 2018, Modernization of Agriculture in Uganda. How much has government done through irrigation?

Ongom 741 Dilapidated
Atera 1,999 Dilapidated
Labori 702 Dilapidated
Odina 902 Dilapidated
Kiige 912 Dilapidated
5,256

Source: Wanyama, Ssegane, Kisekka et al, Irrigation Development in Uganda: Constraints, Lessons Learned, and Future Perspectives, Table 1., asce, 2017.

The rehabilitation of Olweny and Agoro irrigation schemes was delayed from 1999 to 2012 by a lack of funds. Agoro was reconstructed in 2012. The farmers of Lamwo county added wheat and barley to the rice and vegetables they grew. In 2016 they were forced to appeal for further reconstruction of Agoro as the shoddy reconstruction of 2012 no longer supplied sufficient water.

Solar–powered irrigation pumps developed at Makerere University and built with locally recycled material have been awaiting field trials for two-years in a row. Farmers spoken to are reluctant to share Share A unit of ownership interest in a corporation or financial asset, representing one part of the total capital stock. Its owner (a shareholder) is entitled to receive an equal distribution of any profits distributed (a dividend) and to attend shareholder meetings. the cost because they believe free irrigation units to go with the free seeds are on the horizon.

Farming on a model farm such as the State House Kisozi Farm with abundant inputs and cultivating a smallholding are two different things. Imported farm inputs have been discovered to contain 1/3 less nitrogen than it says on the tin. The same study shows that ‘improved ’ hybrid maize seeds yield Yield The income return on an investment. This refers to the interest or dividends received from a security and is usually expressed annually as a percentage based on the investment’s cost, its current market value or its face value. about one tonne less than the same amount of genuine seed. [8] Tests showed that both the fake seed and fake fertilizer caused economic loss to farmers.

It is victims of poor governance like these that the president referred to in the SONA when he said,

  • “68% of Ugandans ‘are subsistence’ (sic), they contribute nothing to the economy, they are mere by–standers.”


Lack of bio-safety in the agriculture sector

  • “The statutory [9] national seed testing laboratory under the National Seed Certification Service is unable to carry out pesticide and residue analysis so that pesticides brought into the country are of the right quality and the ingredients conform to the industrial standards. The army worm is believed to have been imported with produce from its native USA.
  • Crop inspection and certification: Namalere pest control laboratory is underutilized because certain components had not been supplied since 2010.
  • The laboratory lacks equipment and reagents necessary for the analysis.
  • Facilities at the post–entry quarantine station (PEQS) are inadequate to prevent the importation of plant disease
  • […] Inadequate refrigeration capacity (temperature ranges), non-functional ice maker, inadequate capacity of autoclave machine, recycled consumables (which reduce accuracy of tests, substandard microscopes).”

The AG concludes, “Lack of adequate laboratories for the department exposes the whole agricultural sector to risks of inferior crop varieties being imported into the country including failure to control the new invading pests.”


Transportation of agricultural produce

Contrary to SONA2018, all is not well in the roads sector. A loan of US$ 10.6 million and co-funding of US$ 1.185 to build fourteen bridges in Northern Uganda became effective in 2009 but completion was pushed back to 2017. Even then, three of the bridges – Ajeleck, Opot and Ojanal, were not built and the UGX 6 billion for them was returned to the International Development Bank for non-performance.

Feeder roads are the responsibility of local government. UGX 800 billion is required per year for feeder road maintenance. A fixed amount of UGX 417 billion of the was provided for in each of the last three years. Decentralisation was introduced in 1997 with under 30 district authorities, a number which has risen to over one hundred and twenty. One hundred and eleven new local government entities have been created since 2015/16 largely as forms of patronage. This means an increase in basic administrative overheads without a corresponding increase in the resource envelope, so there is less available for actual road maintenance.

The solution to impassable roads announced in the SONA is importation of Japanese earth–moving equipment negotiated by His Excellency himself. It is extremely worrying that the president seems to have been directly involved in the negotiations. Procurement regulations may have been by–passed leading to inflated costs for the machinery.


Absence of advisory support for farmers

The National Agricultural Advisory Service (NAADS) was to promote knowledge and practices of modern farming techniques. The IMF IMF
International Monetary Fund
Along with the World Bank, the IMF was founded on the day the Bretton Woods Agreements were signed. Its first mission was to support the new system of standard exchange rates.

When the Bretton Wood fixed rates system came to an end in 1971, the main function of the IMF became that of being both policeman and fireman for global capital: it acts as policeman when it enforces its Structural Adjustment Policies and as fireman when it steps in to help out governments in risk of defaulting on debt repayments.

As for the World Bank, a weighted voting system operates: depending on the amount paid as contribution by each member state. 85% of the votes is required to modify the IMF Charter (which means that the USA with 17,68% % of the votes has a de facto veto on any change).

The institution is dominated by five countries: the United States (16,74%), Japan (6,23%), Germany (5,81%), France (4,29%) and the UK (4,29%).
The other 183 member countries are divided into groups led by one country. The most important one (6,57% of the votes) is led by Belgium. The least important group of countries (1,55% of the votes) is led by Gabon and brings together African countries.

http://imf.org
had earlier required the retrenchment of thousands of agriculture extension workers. In its later stages it also became a channel for free farm inputs.

Still recovering from the historic embezzlement of US$ 40 million and without having apprehended the culprits and recovered the money, the government has replenished this slush fund.

Realising that hoped for private actors were not attracted to fill the gap left by the retrenched government extension workers, the government resolved to reform NAADS and employ another 5,000 to replace those retrenched. However, only half the number was employed leaving many farmers without advisory support. To advertise a plan to recruit 5,000 specialist staff within a fixed post-retrenchment wage envelope is unrealistic if not an outright bluff.

In 2016 the AG attributed much of US$9 MN lost through financial mismanagement attributable to the lack of skilled staff. Currently each extension worker serves 1,800 farmers rather than the 1:500 optimum ratio. As a result, to quote the AG,

  • “Local Governments were unable to attract some professionals like in Veterinary, Entomology, and Agriculture Engineering. Failure to provide agricultural extension services to farmers, more especially at the Sub County level hinders the Ministry from increasing agricultural production and productivity (emphasis added). Farmers are denied access to inputs procured, new technologies generated, training on utilization of inputs and services rendered by sector projects that require the extension system [….]”


Impact of inadequate extension support on tea growing

In an effort to revitalize and extend tea growing, tea seedlings were distributed to farmers beginning 2013. A special audit was carried out of the project in 2017. The audit focused on the preparation and distribution of tea seedlings and farm management practices of farmers in the five districts of Kisoro, Kanungu, Kabale, Buhweju and Kabarole district. Without an adequate extension service, introducing crops to first–time planters has resulted in a waste of seedlings. The AG explains,

  • “The slope of the land for tea growing is critical. […] Any slope that is below 10% risks heavy water logging while any slope above 20% risks severe loss of soil by erosion which is detrimental to the proper growth of tea seedlings. […]
  • Out of a sample of 94 farms, 53 farms (representing 56%) were planted on land steeper than the acceptable gradient while 19 farms (representing 20%) were located in low lying areas that were prone to waterlogging (below 10% gradient).
  • [Only] 22 farms (representing 24%) were planted at the appropriate gradient.
  • […] topography was not considered at all in selecting sites for tea growing as indeed some farms were lost due to water logging.
  • […] There appears not to have taken technical consideration in the growing of tea in the region.
  • […] This is likely to affect the success of the programme which could lead to a substantial loss of investment in excess of UGX.100 billion so far invested into the programme since 2013/14 to–date [….]
    “According to the project design, the Lead Agencies were required to provide advisory services to the farmers, including among others farm siting, land preparation, planting of tea seedlings, weeding and pruning and water control, harvesting and transporting the tea leaves.
  • […] NAADS paid UGX. 1.4 billion [US$ 370,860.93] to two Lead Agencies in the Districts of Kisoro and Kanungu to provide extension services to farmers.
  • […] all the farmers interviewed indicated that no extension services were provided during the planning period.
  • Because of inadequate extension services, I noted that the quality of planting materials greatly deteriorated at the time of planting due to poor handling and long distances of transportation of tea seedlings in Buwheju, Kanungu and Kabale Districts.
  • In most cases the nurseries were very far from the farms where the materials were to be planted leading to delays in delivery of seeds. There is need for the programme to review its approach to providing extension services [….]”


Value for Money: Persistent Systemic Theft and Incompetence

Seedlings were supplied to farmers in Kigezi sub region, Buhweju and Kabarole on the basis of the acreage to be planted. Predictably, the value for money audit revealed that the acreage was inflated, 463.936 acres could not be traced (approximately 200 – 300 thousand smallholdings). Also, twice the recommended number of seedlings was supplied.

  • “supply of tea seedlings vis–a–vis the acreage planted. The total estimated acreage of the 64 farms sampled was 937.517 acres in the 5 Districts. However, the measured acreage of these farms was 473.581 acres resulting into additional acreage of 463.936 acres that could not be traced.
  • It was noted that 4,440,507 seedlings were supplied instead of the recommended 2,369,333 seedlings resulting into excess supply of 2,071,174 seedlings valued at UGX 932 million [US$ 246,894.91] at a market rate of UGX 450 per seedling.
  • 27,000 seedlings supplied to the Zatwoshaho Joy to Bukinda seminary and Bukinda Parish, could not be traced to particular tea farmers in Kabale District.
  • there was no proper mechanism to verify the acreage prior to supply of seedlings.
  • There is a risk that seedlings were supplied to non–existent farms [...]”


Value for Money: Promotion of Rice Development (PRiDe) Scheme

A five–year scheme to increase rice production by 20,000 metric tonnes was launched in 2011. NAADS was the implementing agency. The development partner involved was the Japan International Cooperation Agency (JICA). JICA highlights the fact that rice production tripled on one farm.

The rest of the story is supplied by the AG’s value for money audit in which the rice yields of PRiDe beneficiaries were compared to those of non–beneficiaries between 2012 and 2017.

  • It was found the average rice yield of rice scheme beneficiaries dropped from 485kgs in 2012 to 136kgs in 2017 (a 72% reduction) while that of non-beneficiaries dropped from 539kgs to 366kgs (a 32% reduction).

This outcome is very similar to the old NAADS outcomes in which non–NAADS beneficiaries adopted the techniques promoted to a greater degree than beneficiaries of the scheme. Also, under NAADS phase I, there was no difference in yields between the two groups. Yet it is so powerful a slush fund that it receives UGX 203 billion per annum and spends only UGX 57 billion on planting and breeding materials and the rest on administration, ‘salaries and seminars’ in the president’s words, At the same time, 67 entities were left short of 15% of the funds they expected under the approved budget.

While both tea and rice disasters are said to be partly related to the inadequacy of the extension service to help bed down new crops and varieties among beginner rice farmers, the most likely interpretation of the phenomenon is that a significant number of recipients of agricultural grants are not farmers but traders in government hand–outs.


Cash Management

Leakages through poor cash management continue. The AG reports,

  • Significant wasted (nugatory) expenditure was apparent in 2017 as it is every year. Avoidable penalties for late payments to contractors amounted to UGX 2.74 billion [US$ 725,827.81]
  • Government failed in its commitment to supply the counterpart funds to complement donor funds amounting to UGX 43,708,375,637 [US$ 11,578,377.65]
  • Over expenditure from the previous year was smuggled in and paid resulting in unforeseen expenditure of UGX 87,537,492,907 [US$ 23,188,739.84]
  • Local Government owes UGX 1.4 billion in arrears of payment to local suppliers for which there was no budget provision (i.e. there was no authorization to incur the debt). In addition UGX 45 billion was spent on debt clearance, affecting service delivery for the current year.
  • Irregular expenditure: payments totaling UGX 1,117,692,936,922 [US$ 294,877,498.] by various entities could not be traced in the approved budgets.
  • There are hidden multi-year contracts worth UGX 81,258,326,983 [US$ 21,434,603.142] not backed by Parliamentary approvals and not included in the Medium Term Expenditure Framework.
  • Local government neglected to collect UGX 14.4 billion [US$ 3,708,609] in dues and was unable to absorb (spend) UGX 125.6 billion transferred from the treasury. Mbarara, Hoima, Fort Portal and Jinja were unable to use funds brought forward from the previous year.
  • Loan commitment fees: As in previous years, fees are paid for loans which the government then fails to utilise. The amount increased by 281% in 2017. The amount went from US$ 1,501,335,611 in 2013/14 to US$ 4,854,050,780.97. The AG states, “This has increased government expenditure on debt repayment in form of payment of high commitment fees, and denied government of the funds that could have been put to financing other budgetary needs.”
  • Local government and agencies are beginning to form limited companies to pursue development projects. Not being government entities, they are outside government control mechanisms and place government at financial risk.


Avoidance of IFMIS Internal Controls over Expenditure

That officials can spend above budgetary limits points to by–passing the IFMIS (Integrated Financial Management Information System). It was reliance on this system that prompted donors to begin to put grant funds at the disposal of the treasury, in the supposedly secure knowledge that it could be tracked. However, the AG found that large transfers of cash are transferred out of the central bank Central Bank The establishment which in a given State is in charge of issuing bank notes and controlling the volume of currency and credit. In France, it is the Banque de France which assumes this role under the auspices of the European Central Bank (see ECB) while in the UK it is the Bank of England.

ECB : http://www.bankofengland.co.uk/Pages/home.aspx
to commercial banks from where they are disbursed independently of the budget and IFMIS. “…it was observed that 6 entities sent a total of UGX 274,531,965,784 [US$ 73 million] to commercial banks outside the IFMS arrangement. Under the circumstances, the effectiveness derived from the use of the IFMS as a government wide system with embedded internal controls is not met.”


Human Resource Development: Health Services

No economy can grow without attending to the health and wellness of its workforce. However health service delivery continues to defy reform initiatives and remains inadequate. Drug stock–outs persist even for the first–line anti–malarial, Coartem, and for Maama Kits (for expectant women). Both were out–of–stock for close to a year (320 and 285 days respectively).

Other alarming findings include; expired drugs were again found to be retained by a significant number of health units. The cap on recruitment and fixed wage envelope mean that 83% of health units are under–staffed, some with only 10% of requirements and others lacking 10%. Some district and municipal councils are short of critical staff for positions such as medicine management.

76% of local governments were unable to account for UGX 4.5 billion [US$ 1,192,052.98].

  • “This shortcoming could be attributed to mismanagement or poor record keeping. Unaccounted for medicines and health supplies may lead to rampant medicine stock–outs which hamper service delivery and occasion widespread public outcry.”


More gifts made to foreign and local investors

Uganda continues to lose dues payable Payable A sum of money that one person (debtor) or group of people owes to another (creditor). by foreign corporations managing, operating and collecting revenues from privatized state entities. In 2016 it was Kilembe Copper Mines and oil concessionaires. In 2017, foreign oil companies still did not pay all their dues and neither did operators of hydro–electric dams, gold miners, and tourist site operators. The fifteen minerals mentioned in the SONA including natural gas, oil and uranium will have little impact on the welfare of the citizenry if their exploitation is managed as gold and other assets have been managed so far.

A key example is the organic fertilizer, vermiculite. Ugandan vermiculite is in demand internationally because unlike deposits elsewhere, it does not contain poisonous asbestos. In mentioning that there are 54.9 million tonnes of it for mining, His Excellency omitted to say that mining rights are owned by the Australian Black Mountain Resources. The owners will pay a 1% royalty. Given that government fails to collect dues from foreign investors, it is unlikely that even that tiny amount will reach the treasury.

Vermiculite is a valuable farm input that fertilizes and aerates the soil and facilitates drainage. Vermiculite is also fire–resistant and essential in making much needed energy–saving stoves. It is not widely available in Uganda being mined mainly for export. Instead Ugandan farmers buy costly, imported chemical fertilizers.

The suspicion that foreign investors bribe government ministers for business favours that leave the country naked, including exemptions from statutory requirements was confirmed in 2017 making future recovery of the funds from the responsible public officials and their clients a possibility.

In the energy sector, Umeme, the private electricity distribution company has never been invoiced for, nor has it paid for the lease of state electricity distribution equipment. It owes US$ 2,953,642.38 due since 2004. Umeme has also neglected to install the agreed number of new meters and does not meet the target waiting time for new connections to the grid.

Still in the energy sector, the Uganda Electric Generation Company operating Nalubale and Kiira Hydro Power Complex has not complied with its duty to repair turbines and masonry. It has also failed to execute thirteen projects since 2013. The AG warns,

  • “throughout the period under review, UEGCL did not enforce compliance by the firm. There is risk that the Nalubale and Kiira Hydro Power Complex may not be in proper working condition by the time of handing back to UEGCL, at the end of the CAA.”

Finally, the contractors responsible for oversight of Karuma and Isimba Hydro Power Projects have shown signs that they are not up to the task. Poor building work and shady procurement have been the result and are likely to lead to high maintenance costs in the future. Although their contract was not renewed for Isimba, the firm has been allowed to continue at Karuma. For Karuma the AG lists “failures in the quality assurance/quality control procedures, quality control results likely being false in some occurrences and therefore being unreliable, poor quality of concrete lining causing cracks in some sections of the dam. Isimba progress reports revealed inadequate supervision of the Engineering Procurement and Construction (EPC) contractor, which resulted in poor concrete quality on site, cracking, cold joints, honeycombing and failed concrete repairs.


Lost Gold Revenues

Revenue from gold mining is comprised of mineral rents due to the government, [10] and landowners and export taxes. Export licences are meant to be issued by the Directorate of Geological Surveys and Mines (DGSM). In a repeat of 2016, the directorate issued licences to export gold (sixteen thousand kilos) but the revenue authority only has records for the export of half that amount (eight thousand kilos) which earned over three hundred million dollars. Collusion to defraud government is evident in that one exporter had a ‘permit’ purportedly issued by the Ministry of Tourism and Trade instead of the DGSM and he claimed he had waiver of export tax from the Ministry of Finance.

  • “the country lost revenue ranging from USD 3.39m to USD 16.95m [11] in royalties from the undeclared gold exports and imports depending on the applicable rates of 1% and 5% for the imported or locally mined gold respectively. Although Management admitted that the exporter does not make any declaration of gold exports to the Commissioner claiming they were offered a tax waiver by MoFPED, there was no evidence to this effect.”
  • Uncollected mineral rents payable to government stood at UGX 2.71 billion US 717,880.79].
  • Unpaid mineral royalties payable to government by one company amount to UGX 679.6 million [US$ 180,026.49 ].
    “This was caused by the failure by the directorate of geological surveys and mines to enforce payment. Management stated that it had written letters to the mineral rent defaulters and intends to publish their names. It has also communicated to both URA and the Solicitor General’s office to follow up and prosecute the persistent defaulters. I wait results of Management action in this regard.”
  • various land owners were not paid the prescribed 3% of the of the royalties government did receive amounting to UGX 354.3million [US$ 93,854.30 ]


Tourism Revenues and Development Opportunities Lost

After agriculture, tourism is the sector on which the nation relies to generate hard currency. This is one area in which the State agency responsible admits to error. The UWA admitted to the AG that owing to inadequate due diligence in awarding concessions, some were awarded to firms that did not have the financial capacity to operate the facilities.

As a result, some concessionaires contracted to manage and protect an area, an animal or plant species or to provide services and infrastructure in return for charging tourist fees and paying dues to the UWA [12] have been unable to perform. They are required to submit plans of operation three months after signing agreements. However six did not submit plans even though they had received concessions for 2 – 11 years. Another was operating two years after his licence had expired. Others owed a combined total of US$ 209,546 to the UWA.


Corporate and Artisanal Environmental Degradation

Environmental destruction continues apace. The AG lists encroachment on natural resources in; Zirimiti Central Forest Reserve, in Mukono District, Kitibulu, Nonve and Bukasa forest reserves in Wakiso District, Kabojja and Lubigi swamps in Wakiso District, encroachment in Chala Swamp in Moyo District and Lake Birinzi in Masaka District. Beyond stern warnings from public officials, humiliating grillings by the parliamentary public accounts committee and much head–shaking in front of TV screens across the nation, Ugandans have been largely stoic in the face of the looting and destruction of the environment.

As public administrative systems collapse, the population has maintained a composure rivalling the band that played on as the Titanic went down. Since the public protest that saved Mabira Forest from ‘investors’ there has yet to be a protest en masse against corruption like Kenya’s on 31st May 2018. Even though the police are known to read – they regularly arrest journalists – the Extracts of the AG’s reports elicit no response from them.

For his part, the president stated that encroachment on forests has declined judging from what he was able to observe from some minutes in his helicopter. He posited that wetlands could be used more profitably as fishponds. However no mention was made of the fact that in contravention of the National Environmental Act, what is left of Uganda’s environment, has recently been put up for sale. Chinese businessmen have begun to harvest the beaches, the beds of the Great Lakes and the wetlands. General Saleh, his brother announced that the choice was between reducing unemployment and preserving the sand.

Nor was it mentioned that the first twenty of fifty-three crater lakes were sold to a private investor. [13] Foreigners like Jerry Zhou the business supervisor of Goodwill (Uganda) Ceramic Company Limited now have the confidence to publicly complain about how environmental protection is interfering with their businesses.

Furthermore, the Bio-safety Act permitting the dissemination of genetically engineered material has been passed by parliament after much lobbying and grant-making by the Alliance for Science, a Cornell University–based group founded and bankrolled by Bill Gates who was a major shareholder in Monsanto, purveyor of said patented genetically modified material.

Public administration has failed after decades of grand theft of national resources and the state is at the mercy of its creditors to an extent that threatens its sovereignty. This is not rhetoric. It was unpayable debt that led to the colonization of Egypt and Tunisia. The Ottoman Empire was finally dismantled after the Ottoman Public Debt Administration, [14] an organization with powers similar to the IMF, was set up to restructure it and extract debt repayments. [15]

During SONA2018, the president acknowledged corruption as a problem. He singled out the Inspector General of Government to reflect on why the public has no trust in the inspectorate and announced the formation of a triumvirate in his office to investigate complaints.

It is hoped that now the IGG will do three things i. read the AG’s reports and investigate the cases listed ii. issue the necessary arrest warrants and iii. cause the perpetrators to reveal the senior public officials, local and foreign investors responsible for the losses. While she is at it, she might probe the source of the million dollars the president used for electioneering in Rukungiri and the legality of the exercise.



Footnotes

[1Section 8 (1) – (5) of the National Planning Authority Act 2012.

[2NPA has spent UGX 12.5 and the OPM, UGX 14.8 billion.

[3Paul Harper, Public-private partnerships in Uganda cost the country dearly 28 September 2015

[4Source: National Household Survey of 2016.

[5Byaruhanga, Joseph Kadoma, Smallholder Irrigation Schemes for Sustainable Agricultural Production, pub.d in Vol. 9, Lake and Catchment Research Symposium Proceedings, 2011, Ed: Gerd Förch, page 30.

[6Section 26(15) of the Public Finance Management Act, 2015;

[7Source: Annual Audit, 2011.

[9Section 11 of the Agricultural Seed and Plant Act, 1994.

[10Section 106(1) and (2) of the Mining Act, 2003 requires exploration and mining companies to pay mineral rent fees annually

[11In 2016 the losses were UGX6.981 billion or UGX34.9 billion or US$ 1,849,006.62 and 9,245,033.11.

[12Per the Section 14 (1) of the Uganda Wildlife Act.

[13Serumaga, Bio-piracy: The Sale of Uganda’s Lakes to Investors, 6 April 2018, Pambazuka News.

[14Angelos A. Chotzidis. The Impact of the Ottoman Public Debt Administration on the Economies of Epirus, Macedonia and Thrace (1881-1912): A PreliminaryApproach, Department of History and Archaeology,Aristotle University of Thessaloniki

Mary Serumaga

a Ugandan essayist, graduated in Law from King’s College, London, and attained an MSc in Intelligent Management Systems from the Southbank. Her work in civil service reform in East Africa lead to an interest in the nature of public service in Africa and the political influences under which it is delivered.

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