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Uganda’s heavy debt burden is an abuse of power in governance:

 

Written by Cissy Kagaba

 

The Finance minister of Uganda Mr Matia Kasaija

 

Uganda’s debt appetite has no end in sight. In December 2019, Uganda’s debt burden stood at about Shs 49 trillion.

In December 2020, debt stood at Shs 65.8 trillion. That is a Shs 16.8 trillion increment. It is safe to say Uganda now collectively owes Shs 1.5m per citizen in debt. But how much of that money has directly gone to the citizens owed?

It is fair to state that the Covid-19 pandemic pushed many economies to the brink and thus the need to borrow money to cushion the populace. However, there are countries, even in the region, that did not borrow as much as we did to cushion the population from the effects of Covid-19. And their Covid-19 figures, in terms of percentages of the population, are not far from our percentages.

The problem here is not that we are borrowing excessively; it is that we are borrowing for the wrong reasons! Even when we borrow for the wrong reasons, the custodians of this country exaggerate the amounts of money borrowed to cater to their selfish ends. Also, we are tethering on the brink.

We are now borrowing at rates higher than the market value because our debt burden is close to unsustainable, considering that the debt-to-GDP ratio stands at 46 per cent as of 2020. This has gradually increased from 33.8 per cent in 2017, 35.1 per cent in 2018 and 38.2 per cent in 2019 and is projected to be close to 50 per cent by June 2021.

The technocrats often say we borrow to fund infrastructure projects. But which of those projects are user-centric and which ones of them directly benefit those for whom the project is being established?

The auditor general’s reports to parliament over the years have shown that accounting officers have excelled at nugatory expenditure. These are expenditures that could have been avoided.

For a while, the country was paying interest and other sums of money for a loan that was borrowed for the Mpigi expressway, which was not being utilized. This road is just one of the many underutilized projects for which Uganda pays about $2.2 million annually.

The minister of state for finance, David Bahati, just the other day, tabled an amended budget with an additional Shs 3 trillion to, among other things, accommodate the money for the purchase of vehicles for the Eleventh Parliament.

I am not against providing vehicles to the legislators, but what end does the purchase of new cars for MPs serve their voters?

Within the region, we have august Houses that have provided state-owned vehicles for their legislators. However, these vehicles are not the property of the legislator, but of the state. They are not as exorbitantly-priced and when the legislator leaves parliament, the vehicle goes back to the state, to be refurbished and passed on to another department of the state. That is progressive expenditure.

About Shs 105 billion is meant for the purchase of vehicles for the legislators. We could build new health units and meet the remuneration of health workers for the next five years.

We could upgrade a number of regional referral hospitals to national hospital status, build and maintain kilometers of roads and enhance the much-needed capitation grants to schools providing UPE and USE. These are things that benefit many Ugandans who have to unfortunately share a debt burden for which they were not consulted.

We also need to bite back at the custodians of those engaged in wasteful expenditure. This should go beyond reprimand to the recovery of the misused funds from their private property.

The issue of collective responsibility should be set aside so that whoever is charged with public office starts to look at their offices not as an opportunity to amass personal wealth, but an opportunity to better the citizens of Uganda and jealously guard public resources.

We also need to share plans of how these monies we are borrowing will be recovered from the infrastructure projects they are being borrowed for.

Lastly, borrowing money for consumptive purposes should be stopped. Instances in which we borrow to consume or for mere luxury, such as purchase of vehicles for MPs, for instance, should no longer be tabled in parliament. Let the MPs buy the cars, through loans, like the rest of us. Otherwise, calling for suspension from loan repayments does not save the country.

The author is the executive director of Anti-Corruption Coalition Uganda.

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Indeed it is abuse of power especially on the side of those who pick up their hard earned money and lend it over to the poor who have convinced them that they are in a better position to repay those expensive loans with high interest rate!

 

 

 

 

Uganda Draws More Cash From Oil Fund Before Producing Any Real Oil

The countryside oil rig pumps

 

Uganda is spending more than a third of its Petroleum Fund before the East African nation produces any oil as it struggles to narrow its budget gap while increasing infrastructure investments.

A sum of 200 billion shillings ($54 million) was removed from the fund to help finance spending plans for the year through June, leaving 288.7 billion shillings in the account, the Finance Ministry said in a report on its website. A 125.3 billion-shilling withdrawal was made the previous year.

 

The government of East Africa’s third-biggest economy is implementing a 32.7 trillion-shilling budget for 2018-19, partly to fund development of power plants and roads. That contributed to a fiscal deficit of 6.6 percent of gross domestic product this year, leaving the government with the need to raise funds from elsewhere to plug the gap.

 

The government aims to narrow the deficit to 5.6 percent in 2019-20, according to budget documents.

 

Given the deficit, financing from the fund is welcome provided it’s used for infrastructure projects, said Augustus Nuwagaba, director of Kampala-based Reeve Consults Ltd. It would be a problem “if the money was spent on consumption,” Nuwagaba said.

What Bloomberg’s Economist Says

“It generally reflects a realization that the start of commercial oil production is still distant and that it makes little sense to have a negative carry on the money in the Petroleum Fund in the meantime. The drawdown could be seen as a precursor of exploring other financial options, such as non-concessional foreign borrowing.”

–Mark Bohlund, economist

The government started the Fund in 2015 to receive revenue-deposits from oil-related activities including what’s generated from the output as well as pre-production transactions. It’s managed by the nation’s finance ministry.

France’s Total SA, Cnooc Ltd. of China and London-based Tullow Oil Plc are developing Uganda’s crude finds estimated at 6 billion barrels of oil resources, with production estimated to start in 2022.

 

 

 

 

 

The Ganda Royals have made an appeal to the Parliament of Uganda to be paid for their land where the Government of Uganda is planning to build an expensive  specialised hospital:

March 13, 2019

Written by Siraje Lubwama

The artistic impression of the specialised hospital

The artistic impression of the specialised hospital

 

Five members of the Buganda Kingdom royal family have petitioned Speaker of Parliament Rebecca Alitwala Kadaga, seeking her help in getting payment for land on which the government plans to build a large, specialised hospital at Lubowa, Wakiso district.

Their petition comes on the heels of last week’s letter from President Museveni to Kadaga, asking her to speed up approval of a Shs 380 billion supplementary budget to go towards guaranteeing the foreign investor in the hospital project.

The royals led by Prince Fredrick Jjunju wrote to the speaker on March 7 declaring their claim to being the rightful owners of the eight square mile swathe of land known as Bunamwaya estate.

The land includes Lubowa estate where government wants 30 acres for the hospital.

“We inherited this entire land from our grandparent, the late Yusuufu Ssuuna Kiweewa, who originally owned this land on Block 265 and 269. We have all valid legal documents which prove we are the rightful owners of the estate. Much as we also need development on the land needed for the hospital, we can’t donate it free of charge; so, Right Honourable Speaker, we request that as this matter is deliberated on, paying us first should be paramount,” said the six-page petition. The petition letter was copied to various officials, including the president.

The four other signatories are: Steven Saava Kikonyogo, Abduratif Nakalaali, Siriman Sebirumbi and Moham Nawango. If the project proceeds, this would be the first international, specialised hospital with 264 beds in Uganda.

It is hoped patients with complicated diseases who would otherwise travel out of the country for medical care would now be treated here. The hospital is, therefore, expected to address the issue of expensive medical tourism since it will offer a wide range of services, including transplants, neurosurgical and heart operations, among others.

In parliament recently both the minister for health, Dr Jane Ruth Aceng, and the junior minister for economic planning David Bahati denied that the land at Lubowa has multiple owners, and that there is a case before court regarding the matter.

The Observer has, however, learnt that initially three different groups of members of the Buganda royal family laid claim to the land. One group had Princes Joseph Kiggala (who lives in USA) and Nakibiinge Kimbugwe. The Kiggala claim was, however, dealt a blow on February 28 when the High court dismissed a suit they had brought against Prince Jjunju Fredrick, Victorial Luwedde (RIP), Steven Kikonyogo Saava and Mariam Zawedde.

After the court dismissed the suit, Jjunju, Kikonyogo, Luwedde, Abdulatif Nakalaali and Siriman Sebirumbi are thought to have regained rights over the property in respect to letters of administration.

However, the long-standing ownership dispute over this estate reportedly remains unresolved.

About the title

A copy of one land title seen by The Observer indicates that the proposed project land (measuring 37.968 hectares on blocks 269 and 260 of Lubowa estate) was bought by Joint Clinical Research Centre (JCRC) about 25 years ago from Uganda Company (Holdings) Limited as a freehold.    

The Uganda Company was incorporated on October 31, 1903 in England as a 100 percent subsidiary of Mitchell Cotts Limited, a UK company.

In 2015, Kiggala dragged six companies to court for allegedly encroaching on Lubowa estate. These included; Uganda Company Limited, Uganda Company (Holdings) Limited, Mitchell Cotts Uganda Limited, JCRC, National Housing and Construction Corporation, National Social Security Fund and Roofings Ltd.

lubwamasiraje@gmail.com

 

 

 

 

 

TODAY Uganda's debt has hit 41 Trillion Shillings:

Deputy secretary to the treasury Patrick Ocailap appearing before the public accounts committee at Parliament on 26 Wednesday, 2018 to explain the problem, photo by Miriam Namutebi

By Moses Mulondo

Added 2nd October 2018

 

Uganda’s public debt has been sporadically rising from only $1.9b in the 2008/09 financial year to over $11b currently.

 

Members of Parliament on the Public Accounts Committee have expressed fears that the high rate at which the government is borrowing is not sustainable and risking the country’s national assets in the event that government fails to pay back the money.

 

The MPs last week had a discussion with finance ministry technocrats on the management of Uganda’s public debt during which they also expressed concern that government has secured many loans which are idle as the country pays interest on them.

 

In the 2017 Auditor General’s report, it was revealed that over sh18 trillion which government had borrowed was lying idle due to delayed implementation of the projects for which the money had been borrowed.

“As a committee, we have come across so many loans which are redundant and we continue paying interest on them,” said Angelina Osege, the chairperson of the committee.

According to the documents presented by the director for debt management, Stella Wanyera, Uganda’s public has increased from $10.5b (sh38.8trillion) as of December 2016 to $11.1b (sh41trillion) as of December 2017, which is 38.4% of the country’s GDP.

Wanyera explained that upon the implementation of the Standard Gauge Railway, the country’s debt to GDP ratio will reach 47%, which is close to the red mark of 50% which is the maximum recommended for borrowing, beyond which further borrowing becomes unsustainable.

Kachumbala County MP Patrick Isiagi Opolot cited countries like Zambia and Ghana which have failed to pay back money borrowed from China and now the Asian country threatening to take over their national assets to recover their money.

 

Opolot also castigated government over what he called over borrowing domestically, which he said denies adequate credit to the private sector companies and therefore not only hurts the economy, but also worsens the country’s public debt burden because loans from commercial banks are very expensive.

“We do not want Uganda to get into such problems arising from government over borrowing. The ministry of finance should not fail the country in this,” Opolot argued.

Kwania County MP Tony Ayoo said: “I was shocked to learn that government is planning to get a commercial loan of over $100m from Standard Chartered Bank to buy CCTV camerasThere is no economic sense in that. There are reports that China is likely to take over Kenya’s Standard Gauge Railway over inability to pay the loan.”

  

Deputy secretary to the treasury Patrick Ocailap appearing before the public accounts committee at Parliament on Wednesday. Photo by Miriam Namutebi

 

Allaying the fears of the MPs, the deputy secretary to the Treasury, Patrick Ocailap, who had led the delegation from the finance ministry said: “We will ensure we live within what we can afford in the course of borrowing. Zambia made a mistake when they went for expensive loans for their recurrent expenditures. Most of our loans are for infrastructure projects which will create a strong base for our economy.”

Explaining concerns on government borrowing expensive loans from commercial banks, Ocailap explained that they only go for such loans as a last resort after failing to secure money from the other available options of getting cheaper loans.

With sh10trillion (32.7%) of the sh32.7trillion for the 2018/19 national budget allocated towards debt repayment, this now takes the biggest portion of the national budget.

Uganda’s public debt has been sporadically rising from only $1.9b in the 2008/09 financial year to over $11b currently.

According to the order paper, the minister for finance is today (Tuesday) expected to present a statement during Parliament’s plenary sitting on the state of Uganda’s public debt.

 

 

 

 

 

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