Shs18 trillion unused irks Suruma

Lawrence Bategeka, is the Vice Chairman of Parliament’s National Economy, which approves government loans. Critics say his committee has turned into a clearing house for government loans, which are mostly never planned for and end up performing poorly. But Bategeka says the poor performance of these loans is down to fundamental internal structural problems with in government.

He explains that while individuals borrow and money is wired directly in their accounts, when government borrows, disbursements from lenders is dependent on the progress in implementation of activities.

“Unfortunately,” he said, “because of complications in procedural process like procurement delays and lenders interests, implementation becomes difficult.” Bategeka also noted that the inefficiency of public servants and their personal interests also affects implementation.

“Where people’s personal interests are involved,” he said, “you see projects dragging on and where they are not, projects move.”

Overall, however, Bategeka says that the problem is with some laws like the procurement laws and land laws.

“You have a problem where a contract is cancelled multiple times because of complaints from competitors and you also have problems with land acquisition,” Bategeka says, “That is why these laws need to be reviewed such that government projects are not sabotaged.”

But Karuhanga, who is the Vice Chair of PAC, which scrutinises government performance, has a different view.

He says that the officials in charge are just lousy and incompetent and take the citizenry for granted.

“If you know you are going to construct a market,” he asks, “why do you borrow money and let it sit in an account while attracting interest before securing a title for the land?”

He said that the interest Ugandans pay on these idle loans annually is enough to build a Mulago every year.

“This is utter disregard of the citizenry and it is absurd but what do you do when it keeps happening and voters do not act against it?” Karuhanga said.

He adds: “For us (PAC), we will keep doing our job that is inquiring and providing information to the public but at the end of the day, it is the public to wake up and realise that this is a shameless government and the people running it don’t care.”

As has become routine, he said that the Finance officials will face a rough time again when they appear before the committee this year over the same matter.

Poor loan management became too costly last year when the World Bank suspended lending to Uganda of $ 1.5 billion (Shs. 5 trillion) bringing to a grinding halt implementation of key development projects including in the critical education sector.

“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,” a statement from the lender released on Sept.13 last year reads, “We continue to actively work with the 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.”

At the time Muhakanizi, who embarked on a task to negotiate with the lender to lift the suspension, admitted that Uganda’s absorption capacity of World Bank loans is currently at 10 per cent.

This, he further admitted, was generally low compared to other African countries whose absorption capacity is at 25 per cent the level at which the World Bank sees as being fair in regarding the absorption of its loans.

But he said government had put in place new measures to reach the 25 per cent level in two years from now.

World Bank financing is critical to Uganda. For instance, in the financial year 2014/15, 57% of Uganda’s external debt was from the World Bank.

The World Bank’s loans in Uganda are usually from the International Development Association (IDA), which provides loans on concessional terms. Uganda’s current IDA loans are interest-free and attract only an administrative service charge of 0.75 per cent on the disbursed amount. Other lenders charge higher interest rates of between 3.5 to 4 percent (commercial rate).

 Other issues raised in AG’s report.

• More than Shs168b spent irregularly
• 31b advanced to personal accounts of public servants
• Domestic arrears and other commitments have increased from Shs1.3 trillion to Shs2.2 trillion over the past three years.
• Discrepancy in domestic arrears—financial statements put the arrears at Shs2.254 trillion, an audit put the arrears at Shs2.700 trillion, showing a deficit of Shs446b.
• More than Shs11b in salaries was paid irregularly.
• At least 33 local governments procured items worth Shs27.548b without following public procurement regulations.
• Only 10 of the 22 State Enterprises audited were profitable while only one (1) declared dividends.
• More than 150 patients were referred for treatment abroad for treatment by the medical board at an estimated cost of more than Shs10 billion
• Youth Livelihood Programme (YLP), overall recoverability stood at Shs5.501 billion of the Shs14.2 billion that was due for repayment by the beneficiaries.
• The outstanding amount in court awards and compensations has been accumulating over the last five years from Shs54 billion to Shs 684 billion.

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editor@independent.co.ug