OAG Report states that 356 Town Council lacks funding

In the February 2021 Office of the Auditor General Report it states a very simple fact. The state has created more local government entities than it can manage to pay for. They have in this instance created to many Town Councils and therefore, they cannot afford to operate them. It is a total of 356 Town Councils, which they cannot afford to pay for.

The Auditor General Report says this:

Government has over the last years created a Local Governments particularly Town Councils which should be financially independent from the Districts from which they were created in line with Section 79 of the Local Governments Act. Records reviewed indicated that Government had created a total of 584 town councils by June 2019/2020 out of which only 228 have been approved by MoFPED for direct access of resources from the national budget. As explained last year, it requires on average UGX.1.8bn to run a Town Council. This implies that the balance of 356 town councils would require approximately UGX.640.8bn for both development and operational costs. Failure to fund Town Councils significantly affects the ability of these Town Councils to Operate and deliver services. It appears that Government is increasingly finding challenges to provide the required funding for the newly created Town Councils” (Office of Auditor General (OAG) Report – February 2021).

It is telling that there is existing 584 Town Councils in the Republic, but there is lacking funds for 356 Town Councils, which is about 60% of all of them. That says how mismanaged the Local Government organization is. They are just creating more constituencies for the elections, but not thinking of how to cover the costs of actually having them. That is why this is so prevalent.

This little passage of the OAG is only about Town Councils, but is a part of a bigger problem of the gerrymandering. Where the state is creating local government bodies without any considerations of the costs. This is why 60% of them lacks funding and cannot afford to be operational. This says it all.

This is how the National Resistance Movement (NRM) is “securing your future” or delivering “steady progress”. Peace.

Kenya: Joint NGOs Press Release – Demands by Members of County Assemblies are not a priority amidst the harsh economic realities in Kenya (20.02.2021)

Uganda: Deficit financing is creating an evil circle financially [72% of revenue spent on debt repayment!]

By implication, if sh15.7 trillion for debt service-related expenditures is subtracted from the sh21.9 trillion the Government will have generated in revenue collection, it means that 72% of the country’s revenue collection would be spent on debt repayment. The committee raised concern that the high rate at which government is borrowing is not commensurate with the low level of increasing government revenue collection and, therefore, violates the country’s charter of fiscal responsibility. The report indicates that as of June 2020, Uganda’s public debt had reached $15.27b, which is equivalent to sh56.9 trillion. Out of this sh38.9 trillion is external debt and sh17.9 trillion domestic debt” (Moses Mulondo – ‘Govt earmarks sh15.7 trillion for debt repayment ‘ 03.02.2021, New Vision)

The news on how the state got to repay old loans is coming out. As the Ministry of Finance, Planning and Economic Development (MoFPED) have put forward the budget for the Financial Year of 2021/22. This is initially telling stories on the revenue or tax base, which will be preoccupied or used for paying debt repayment.

Just to put things in perspective. This is the definition of ‘Deficit Financing’:

Deficit financing, however, may also result from government inefficiency, reflecting widespread tax evasion or wasteful spending rather than the operation of a planned countercyclical policy. Where capital markets are undeveloped, deficit financing may place the government in debt to foreign creditors. In addition, in many less-developed countries, budget surpluses may be desirable in themselves as a way of encouraging private saving” (Encyclopaedia Britannica – ‘Deficit financing’ (25.08.2015).

This here is telling the story, which the state media and others isn’t telling. Because, they are borrowing funds to cover up for the deficit. The deficit is created as a result of the rising cronyism and misuse of funds. These funds have to cover the bloated government and its staff. That is why deficit is created to fix the shortfall between the needed revenue and the expenditures of the state. They are using loans to cover and fix the lacking revenue of the state. If the state had enough funds through its tax-base, the state wouldn’t need these loans in the fist place.

However, the state have prolonged with this game over years. The state has used loans to cover its baseline and usage of funds. They have went out for foreign creditors to get enough funding. That shows that the state haven’t been fiscal responsible. They have misused the authority of the state and taken up loans, which now accumulate to over 70% of yearly revenue. While this is happening. The state and the Parliament is still issuing new loans and creating a bigger debt burden. That is what they are doing… and that cycle must stop.

Soon, all revenue will go directly to debt repayment. We know the state wants to have debt relief, but this is self-created by the regime, as they are borrowing for basic commodities and necessities. They are always loaning funds to build development projects and infrastructure, which will be costly. As funds are lost and misused in the building of these. That is why the price of road is so expensive and also projects in general. Therefore, the state is crewed over more than it can swallow.

That is why the state is deficit financing and its become a burden, which it cannot carry. The debt is not sustainable. When 72% revenue is spent on debt repayments. That shouldn’t be a thing, but that is fiscal policy of this regime and apologist cannot hide the fact. They have run down the state and taken up loans they cannot carry. Peace.

Opinion: Kenyatta there is no free lunch

We thank the officers of the United Nations and all development partners who have been close collaborators but at this juncture I must make it clear that while we appreciate your support and look forward to your collaboration you must remember that Kenya has its owners, and its owners are 50 million Kenyans, I ask you to refrain from trying to direct us in which way we should go. We are clear on where we want to go. We ask you to join us, to support us in that endeavor. But do not interfere because we shall not allow for you to dictate to us which direction that should be” – President Uhuru Kenyatta on the 4th December 2020

The idea that President Kenyatta comes with, I understand the sentiment and the ideal of acting as a sovereign and act as an independent state. As the Head of State … Kenyatta knows this too. The state his running is dependent on donations and aid. That is well known, as well as most of development expenditure is using foreign funds.

That’s why when you receive other people’s money and from foreign organizations. There will be strings attached to that money. The state who receives that money has to comply to a set of rules, regulations and deliver reports on the spending. This is happening because the state took the money and after that they have to prove the value for money.

Someone like Kenyatta should know this. The United Nations, Multi-Nationals and Foreign Donors are not doling the money out without any strings. This means that if the Kenyan state takes the money. They have to comply with the stipulations of the funds or the direction which they were intended to be spent.

If Kenyatta wants the state to be fully independent and sovereign he shouldn’t accept the money. The man shouldn’t even take the grants, donations or the development funds if they are putting strings on his actions.

President Kenyatta shouldn’t be dependent on it then. If you take other people’s money … there will expectations and directions coming with it. Yes, the Kenyan state is sovereign and can self rule. However, when you take funds to cover deficits and create development projects. These funds will steer the conversation, as these monies aren’t given out for F-R-E-E.

So, if Kenyatta doesn’t want to be told how to spend. Then he should add his own state revenue and tax-base so that he doesn’t have act out like this.

President Kenyatta there is no free lunch. You expect that money grow on trees and just get dropped in your hands. That’s not happening… Kenyatta, better buckle up and smell the coffee. Since, the reality is that the state can grow on its own. However, then you should stop the dependency of foreign donors. If you want to steer the ship without anyone telling you the direction. Peace.

Kenya: CS Ukur Yatani – National Treasury & Planning – Media Report on G20 Debt Service Suspension Initiative (20.11.2020)

The NRM lacks Fiscal Responsibility!

There been so many times the National Resistance Movement (NRM) apologists and defenders have claimed the opposition lacks Monetary Polices. However, contrary to public belief or perception it seems like the NRM is failing on this themselves. It is very simple reason for all of this.

The NRM and the Government of Uganda, which is the legal entity and de facto legitimate state at the moment. Have the power to borrow, loan and get funding for their operations. They can budget and make monetary policies. The government can make it possible to inject and add stimuli to the economy as a whole. That is what is happening all the time, but it is also very important. That if they fail to do it properly. It can have dire consequences.

One key aspect the NRM and its government have failed over time is to show fiscal responsibility or balance its budgets. The NRM regime have been borrowing and been deficit financing. They are in a cycle of loans financing old loans. They are adding debt burdens to build roads, pay salaries and do basics of the state. While nothing having funds to cover the shortfall and the interests. This is why fiscal responsibility is so important.

On EconomicsHelp.org it states that Fiscal responsibility is defined as this:

Fiscal responsibility implies a government pursues the appropriate level of government spending and tax to:

– Maintain sustainable public finances.

– Ensure fiscal policy aids the optimal rate of economic growth.

– Maintain appropriate levels of public investment” (Tejvan Pettinger – ‘Definition of fiscal responsibility’ 13.10.2020).

It is very simple concept. To be fiscal responsible isn’t an revolutionary act. It is initially only spending the money you have and not spend other people’s money. Know what sort of revenue you do have and not expect a sudden miracle of funds appearing out of nowhere to cover a possible shortfall or lack of funds. This is how the NRM has practically operated.

They have needed loans for any sort of project. The NRM have tried to add their tax-base, but at the same time drained the economy. While spoiling itself and adding more and expenses. When they are not generating more natural income. The plus and minuses isn’t adding up. The state is also anticipating more loans, paying more interests and not paying civil servants.

Civil servants, the local government officials, the teachers, nurses and such needs their salaries to sustain a living. That salary pays the overhead, the food on the plate and other expenses. Some of this money will be returned back in taxes and VAT. Therefore, the state will return some of the funds.

This is why the state has really outplayed itself. When its living on borrowed money and donor grants. The state isn’t sufficiently run, when the funds dries up like this. When the state have to issue suspension of paying out salaries and expenses. Except for a handful of cronies, the army and law enforcement. That isn’t a sign of strength, but of weakness. This is basic governing.

The government who governs should be able to plan, secure and add enough revenue to able to pay salaries to its civil servants. If they are not paid? Why should they go to the office? They should be farming instead or work for a public company instead with their experience and skills. It is a waste to be a civil servant, if it doesn’t pays. The mortagage, the plate for supper and the UMEME doesn’t stop asking for money. The bills will continue to come. The landlord can knock on your door and give you an eviction notice.

That is why this is failing the basics. To not balance the budget and be fiscal responsible. It isn’t a magic masterpiece or an unbearable task. To explain what the NRM has done for years. Instead of spending within their means. They have instead been spending like an alcoholic, being buzzed drinking at the bar with no coins in your pocket, but hoping someone else is paying your tab. Peace.

RDC: Compte Rendu de la 50eme Reunion du Coseil des Ministres (25.09.2020)

Zambia: Ministry of Finance – This Annoncement does not Constitute a Solicitation of an Offer to Sell or Recommendation to Purchase the Notes Referred to in this Announcement or any other Securities. The Consent Soliticiation is not being made, and this Announcement shall not be distributed, in any jurisdiction in which such Soilicitation of Consent is not in Comlianece with the Laws or Regulations of such Jurisdiction (22.09.2020)

Kenya: Council of Governors (CoG) – Re: Impending Shutdown Occasioned by Lack of Resources (16.09.2020)

A Trillion Shilling to cover three days [A Treasure Chest for 2021 Elections?]

A fiscal year in Uganda runs from 1st July 2020 to the 30th June. What is really rare is that the Parliament and the Government gave itself a Supplementary Budget on the 26th June 2020 to cover arrears of supposed 1 trillion shillings. These funds are to paid out in the budget year and cover expenditure not hold. It is really sketchy do that so late in the budget year. As this is the end of the Fiscal Year of 2019/20 and days ahead of the 2020/21.

So in a budget of about 34 trillion shillings, the state needed another 1 trillion in the end. Meaning the budget wasn’t prepared correctly since they needed to amend it to this extend. To add yet another trillion shillings like it was nothing.

What is striking is how easy it is to adjust the cash balance, the fiscal year and the supplement budgets. These are easily voted through and the money doled on whatever. This time it wasn’t paying the water-bills of the State House. However, other random projects of the state. Which suddenly lacking funds. It just appearing right that and just right now. It was needed to be done now. In mind that it wouldn’t look to bad or be able to keep this accountable for later.

That you need a trillion shillings this late in the fiscal financial year is sketchy at best. Especially considering the implication of a new financial years just days ahead. These sort of arrears should be considered into the next financial year. If these numbers are real and have a basis. It could just be taken out of thin-air and cover whatever else the state needs ahead of campaigns and elections. These years are always more expensive and a trillion shillings for the campaigns wouldn’t be far fetched. To cover added expenses, cars for VIPs and such. Which comes with every single election.

The President, the Office of the President, State House and Office of the Prime Minister would suddenly eat more food and expand their organization. As it has to pay off cronies, new allies and ensure the electorate get a pinch of the future middle-income country. They get some soap, food and small tokens to carry them for the next four years. This is what they always do. Some even come with a few thousand or a thousand shillings as a part of the NRM Village Project Outreach, which it also does during elections.

None of the added expenses is cheap. It cost to be king. The king needs to give the public, food and circus. That is what he does and it continues the way it has always done.

The NRM, the President and the whole team passes this along. Knowing there will be no overlook or accountability over the sudden 1 trillion shilling added in the end of this fiscal year. Not like these billions here and there couldn’t end elsewhere. As long as they are voted for and can be used by the state to campaign.

The General Election is coming up and the incumbent needs a treasury chest. If there ever was one. The one trillion shillings would be helpful to run an campaign. I wouldn’t be shocked if it went missing and was used for campaigns. That would be just another day in the Republic. Peace.