Zimbabwe: Moto Republik Demolition Press Release (10.03.2017)

Reserve Bank Gov. Mangudya says the economy of Zimbabwe is an ‘albatross’!

The Governor Dr. J.P. Mangudya Zimbabwean Reserve Bank writes a special piece on the Zimbabwean economy, not as bleak as the one Finance Minister P.A. Chinamasa wrote in mid-year report of 2016. The Monetary Policy Statement (MPS), of January of 2017, as still evident of the issues in the Zimbabwean economy. With the knowledge of the debt-burden that has arisen together with the suspended international loans, the state funds has funds dwindled. Also, the monetary and fiscal prudence has been weakening as told by the governor of the Reserve Bank. The Governor even called the Zimbabwean Economy an “albatross”, the rest of it says it all.

Zimbabwean economy needs to catch up:

“The positive spin-offs from the recent removal of Zimbabwe from the International Monetary Fund (IMF) remedial measures, following successful clearance of its arrears to the Fund in October 2016, are also expected to go a long way in reducing Zimbabwe’s country risk, thus attracting the much needed foreign investment. Completion of the clearance of external debt arrears to the rest of the international financial institutions – African Development Bank (AfDB), World Bank and European Investment Bank (EIB) – is expected to further reduce the country’s debt burden that continues to be an albatross on Zimbabwe’s access to foreign finance for the past 16 years now at a time when other emerging markets have been making tremendous strides in their economic transformation. As a consequence, Zimbabwe has lagged behind and needs to catch up with its peers” (Mangudya, P: 6-7, 2017).

Reactions to drought:

“In 2016, food imports (maize and wheat), however, surged owing to the El Nino induced drought that destroyed crops in the Southern African region, including Zimbabwe. Continued reliance on imports of finished goods is unsustainable as it undermines current efforts to resuscitate domestic industrial production, leading to significant trade and current account deficits” (Mangudya, P: 15, 2017).

Other key development:

“Driven by merchandise trade developments, the current account deficit is estimated to have narrowed down by about 15.5%, from a deficit of US$1,519.4 million in 2015, to a deficit of US$1,283.9 million in 2016, partly on account of the projected decline in the import bill. Remittances, which are also a major source of import financing declined by 17.9% in 2016, from US$1,917.7 million received in 2015 to US$1,574.0 million in 2016. Of the total amount received in 2016, US$779.0 million reflects remittances from the Diaspora while remittances from International Organizations (NGOs) amounted to US$795.0 million” (Mangudya, P: 16, 2017).

Problematic government loans:

“Reflecting developments on both the current and capital account, the overall balance of payments position is estimated to have deteriorated from a deficit of US$25.8 million in 2015 to a deficit of US$186.4 million in 2016. This phenomenon reflects an unsustainable economic situation of funding capital projects using loans as opposed to equity. The danger with this scenario is that debt would become unsustainable as exports are mortgaged towards debt repayments” (Mangudya, P: 19-20, 2017).

Unbalanced economy:

“The fact that the 14.4% of the country’s foreign receipts handled by RBZ for redistribution into the market seems to have more impact in the economy is a sign of market failure. The Bank shall quickly move to redress this market failure through measures that compel banks to adhere to the import priority list and to mitigate against institutional indiscipline such as the use of more foreign exchange for personal card and DSTV transactions ahead of raw materials to produce cooking oil, for example. Financial institutions should do some soul searching and rethink on how they add value to the economy under the New Normal” (Mangudya, P: 67, 2017).

Bond- Notes introduction:

“The Bank is encouraged by the manner in which the nation embraced bond notes. The Bank has to date issued $94 million of bond notes into the market against an aggregate value of the export incentive of $107 million. Whilst the circulation of the bond notes represented by levels of deposits and withdrawals is also encouraging, the Bank is putting in place a redistributable measure that mitigates against skewed concentration of bond notes within the banking sector by limiting the maximum amount of bond notes that each bank should hold at any given point in time in relation to its level and type of transactions. This measure is necessary to ensure that bonds notes are distributed proportionately according to the customer base or customer profile of each banking institution” (…) “The Bank is directing financial institutions to strictly observe the policy to deposit bond notes into the US$ accounts without requesting the banking public to differentiate between bond notes and US$ cash. This measure is essential to ensure that bond notes continue to trade at parity with the US$ and to reflect the fact that bond notes are supported by the US$200 million offshore facility to support the demand for foreign exchange attributable to bond notes” (Mangudya, P: 67-68, 2017).

When you see this numbers alone, there would be more meat in the report that says lots of the downfalls of the economy. The Governor said the fiscal issues and debt, together with the lacking of imports and exports, the short and less infused funds. With that in mind, instead of pounding on the troubled economy, we should rather enjoy a moment of explanation of why albatross is so dire:

“something or someone you want to be free from because that thing or person is causing you problems” (Cambridge Dictionary) and this one too: “a continuing problem that makes it difficult or impossible to do or achieve something” (Merriam Webster Dictionary). So the Albatross for the Zanu-PF is the economy, even as they eat of it and deplete it. However, the turbulence and insecurity isn’t over as the trust in the Bond-Notes or the other factors as the New Normal isn’t giving. Peace.

Reference:

Dr. J.P. Mangudya – ‘“Stimulating Economic Growth and Bolstering Confidence”’ – Monetary Policy Statement, Reserve Bank of Zimbabwe (RBZ)

CSBAG Statement: The Budget We Want 2017/18 (20.01.2017)

Footage: On 5 October 2016, AfDB President Akinwumi Ayodeji Adesina receives his African Passport, symbol of continental integration

The Auditor General Muwanga really told stories on mismanagement and maladministration of the NRM government (Quotes from the End of the Year AG Report 30th June 2015)

As of yesterday there we’re the reported 111 cars that vanished and weren’t procured by a Ministry in Uganda. Because of that I had to look more through the report of the Auditor General John Muwanga. There are many stories; some of the ones in this Report have already been discussed on my page.

There so many stories to pick, but here is some of my favourites that shows all from a goats, expressways to other where money have disappeared, over-compensated or not allocated needed funds for the planned procurement and projects that the Government we’re supposed to do. Take a look!

Indebted to International Organizations:

“I noted that a number of Government entities are indebted to International Organizations such as PTA Bank, ADB, EADB, WTO, UNIDO, COMESA and Shelter Afrique. A sample of five entities revealed indebtedness of UGX.77,724,089,603 and US$.4,968,950” (OAG, P: 36, 2015).

Overpay on construction of Kampala-Entebbe Expressway:

“An analysis was done and adjustments for the different features of the two expressways were made. It was observed that the unit cost for the Kampala-Entebbe expressway was US$ 2.315 million per lane kilometre while the similar expressway was US$ 1.204 million per lane kilometer” (OAG, P: 38, 2015).

NAO Project going nowhere:

“The protocol agreement between Government of Uganda (GoU) and Democratic People’s Republic of China (DPRC) was signed on the 27th June 2008. It involved establishment of a demonstration centre under the National Agricultural Organisation. However, it was observed that after hand-over of the site by Ministry of Agriculture, Animal Industry and Fisheries to the DPRC, there was no proper follow up by Government on the project as such it was difficult to establish whether the anticipated funding of RMB YUAN 50,000,000 equivalent to UGX.26 bn was received and how it was applied to the project” (OAG, P: 42, 2015).

NCIP disbursed funds:

“Government signed fourteen (14) protocols under the Northern Corridor Integration Projects where substantial amounts of funds have been invested and implementation is on-going. For example amounts totalling to UGX4.2bn was disbursed to fund the power interconnection and the Hoima-Lokichar-Lamu oil pipeline. However, the protocols do not provide for regional coordination and monitoring as well as the audit framework to provide an independent assurance on the utilization of joint funds. This renders it difficult to track the progress of the projects and follow up the accountability for the funds disbursed” (OAG, P: 43, 2015).

Advances Unaccounted for:

“Uganda National Roads Authority: 47,738,040,619 UGX” (…) “Ministry of Local Government:  3,827,011,454 UGX” (OAG, P:87, 2015).

Bidco has avoided VAT:

“It was noted that as of November, 2014, the outstanding VAT obligations for BIDCO stood at UGX.744,420,170, included in this figure was late payment interest charge of UGX.168,747,557. Accordingly, a sum of UGX.700,000,000 was paid to URA towards settlement of the tax arrears” (OAG, P: 93, 2015). “After the eleven (11) years, BIDCO would start paying VAT directly on its own and from the 12th year start refunding to Government the VAT plus 5% interest for the first eleven (11) years in (8) equal installments over a period of (8) years. This condition was subject to fulfillment of article 4(3) of the agreement which requires Government to have handed fully to BIDCO all the agreed 26,500 hectares of land” (OAG, P: 94, 2015).

ADB Susbscription:

“In August, 2010, the Governing Council of the African Development Bank (AfDB) under the sixth general capital increase of the bank allocated Uganda shares worth USD.19,759,798 payable over a 12 years period in annual instalments of USD.1,646,649. It was noted that the payment of Uganda’s 4th instalment of UDS.1,293,299 which became due on 16th March, 2015 had not been made. As a result, the callable shares related to the missed instalment had been suspended in line with the Board of Governors resolution on the sixth general capital increase of the bank meeting” (OAG, P:95, 2016).

Banana Project:

“The banana project owns land in Bushenyi together with other movable properties. However, it was noted that the land title is still in the names of the project without the legal mandate to continue owning this land of behalf on government unless the expired legal status is resolved following the legal opinion of the Attorney General to transfer the project under Agriculture sector” (…) “During the financial year 2014/2015, the PIBID project had a budget provision of UGX.9bn out of which only UGX.2.7bn was released as vote on account and as a result, activities worth UGX.6,682,145,000 were not under taken. The affected activities include: purchase and installation of machinery and equipment (UGX.2.5bn), Construction materials (UGX.1.457bn.), marketing of the tooke products (UGX.777,665,000) and procurement of transport equipment (UGX.780,000000)” (OAG, P: 102-103, 2015).

Delayed Construction of Katuna OSBP and swamp reclamation works:

“The construction of Katuna OSBP is undertaken at a contract sum of UGX.8,951,277,750 and Swamp reclamation for access road works estimated at UGX.12,000,000,000. The commencement date for the construction was 13th June 2014 and the estimated completion date was set for 13th June 2015. This was later revised to 30th December 2015. Inspection of construction works showed the following” (…) “The EU Confirmed funding on the 12th May 2014 and all the conditions set by World Bank were met including NEMA’s clearance that was received on the 30th April 2014. I noted that GOU was required to finance the building works for Katuna OSBP since IDA credit funding had been exhausted. The contract for construction of OSBP was finally awarded at a sum of UGX.8,951,277,750 on the 5th June 2014. The EU delayed to operationalize her support and the contractor could not commence on the major building works due to delayed reclamation of the wetland where the buildings were to be constructed” (…) “Management explained that heavy rains, poor terrain and lack of material sources in Katuna such as sand are the biggest challenges. The would be material sources such as hard core are not readily accessible due to the hilly terrain of the area and the contractor can only make a few trips only on a sunny day. For materials like sand, the source is Mbarara (about 150km) and the contractor can only make a few trips given that the road (Mbarara-Ntungamo and Kabale-Katuna) is under construction” (OAG, P: 137-139, 2015).

Uganda Police Force:

“A review of the statement of financial position revealed outstanding payables of UGX.16,454,307,782. Payables worth UGX.10,500,682,162 were incurred during the year which implies that management continued to incur arrears without establishing sufficient mechanisms to monitor and control them” (OAG, P: 183, 2015).

Ministry of Local Government:

“A review of the Ministry of Local Government’s expenditure revealed that the entity charged wrong expenditure codes to a tune of UGX.12,086,792,676. This constituted 40% of total actual expenditure for the Ministry of Local Government. Whereas the funds were spent on items for which they were not originally budgeted for, the accounts have been presented in a way that reflects that the amounts were spent on the earlier budgeted items” (OAG, 2015).

M/S Faw Limited:

“A local company was contracted by the Ministry to provide storage space for the various roads, sanitary and fire-fighting equipment procured under a Chinese loan in 2011/2012 financial year from their parent company. The providers were paid UGX.1,416,000,000 during the year 2014/15 for 20 months storage of the equipment delivered. A review of the procurement file revealed the following” (…) “It was noted that only the Contracts Committee decision on a submission (PP Form 209) approving the evaluation report and contract award at a monthly fee of UGX.70,800,000 were available on file. However, the Solicitor General’s approval and contract agreement were on the procurement file. No initiation of procurement, invitation of potential bidders, record of receipt of bidders, evaluation report and PDU submission of Evaluation Committee report to Contracts Committee were on file to support the award” (…) “A review of the availed documentation revealed that two conflicting pro-forma invoices were submitted by the firm with one quoting a monthly fee of US$.14,160 VAT inclusive for ten months, that is; from 1st June 2012 to 31st March 2013 totaling US$.141,600 and dated 17/5/2012 and another one dated 2/1/2012 quoting a monthly fee of UGX.70,800,000 VAT inclusive for twenty months without clarifying the particular months” (…) “The final batch which arrived in August 2013, was commissioned by the president in October 2013 and handed over to police on 19th December 2013 implying storage of at most five (5) months. This makes fourteen (14) total months of storage as opposed to the 20 months billed resulting into a loss of UGX.424,800,000” (OAG, P: 237-239).

Ministry of Defence:

“During the year the Ministry’s total expenditure on land acquired amounted to UGX.1,119,388,145. However, it was noted that the government policy of capitalising the acquired land from the financial year 2011/2012 did not give guidance on what to include as cost of land acquired. As such, this amount could not be verified due to lack of guidelines on treatment of land costs in the financial statements” (…) “It was observed that a sum of UGX.1,000,000,000 was paid to an individual as part payment on a claim of UGX.2,958,668,733 for the compensation of 683 cattle and 119 goats which were handed over to 4th Division for safe custody during the insurgency period in 1986” (…) “It was not possible to confirm whether this claim had not been paid before since it is now 28 years since the purported supply of the animals” (…) “It also appears that these animals were for various people but instead the compensation was made to one individual” (OAG, P: 285-288, 2015).

State House Entebbe – Okello House:

“State House has been occupying Okello House for many years with a tenancy agreement that expired in 2013. However, it was observed that State House has not renewed the tenancy agreement and no rent payments have been made to the landlord despite continued occupancy. At the close of the financial year, a sum of UGX.1.272,363,507 was outstanding in rental arrears” (…) “National Housing and Construction Corporation owns properties on Plot 1 Kyagwe Road–Nakasero which is currently occupied by State House. Documents indicate that National Housing has been demanding arrears of UGX.201,100,000 from State House. These arrears have not been reflected in the financial statements”  (OAG, P: 294-295, 2015).

If you don’t find this interesting that the Government of Uganda is misspending funds in this way and that this is just a figment of imagination as this is pieces of a giant report. The most interesting is that one man got the whole piece of the pie of what happen in 1986 and secondly that the State House doesn’t even have an agreement with the tenant who owns Okello House where the President has gallant dignitaries. That shows the state of affairs, brothers, time for a change and also better procedures and practices! Peace.

Reference:

OAG – ANNUAL REPORT OF THE AUDITOR GENERAL FOR THE YEAR ENDED 30TH JUNE 2015

Press Release: Social accountability vital for building trust in post-election Uganda (01.03.2016)

Development projects that pay greater attention to social accountability can improve citizen-state relations and trust in Uganda and other fragile countries, according to new research by International Alert.

The report, titled Making social accountability work: Promoting peaceful development in Uganda, evaluates  two large-scale development projects undertaken in Uganda and has been published following the recent elections in the country that have been undermined by widespread unrest and allegations of corruption.

The report states that development projects which build in transparency and accountability components can nurture more constructive government-community relations – vital for closing historical divides between citizens and state that fuelled the civil war in Uganda, and helping people feel they can influence change.

Richard Businge, Country Manager for International Alert in Uganda, said:

“Uganda is not alone in the region in experiencing tensions around presidential elections. It is vital that we avoid post-election violence of the kind seen in Burundi at present and in Kenya in 2008, which points to the urgent need to help more people participate in decision-making and ensure the government and development agencies respond to their concerns.”

An informant of one of the report’s case studies commented that people in northern Uganda had previously felt neglected and humiliated by the government, but relationships improved “quite tremendously” after the project integrated a social accountability component. Teaching communities conflict-management skills also empowered them to resolve more local disputes among themselves.

It was also found that accountability initiatives can help make communities more cohesive. For example, forming local groups to interact with the district government and give voice to local concerns is an effective way of improving citizen-state relations, laying stronger foundations for building mutual trust and understanding.

As well as being a critical component of development projects, the report reveals that technology can also amplify citizen voices and enable better information sharing, therefore strengthening social accountability.

Jo Robinson, Programme Officer on International Institutions at International Alert, author of Making social accountability worklead author of Making social accountability work, said:

“Online spaces can sometimes represent more open forums for discussion on state behaviour than those offline, allowing people to engage frankly in democratic debate not just during election time, but whenever decisions are being made which may affect their lives”.

The report findings will be presented at the World Bank Group Fragility, Conflict and Violence Forum in Washington DC on 1-3 March 2016 (website).

The research was based on two projects: Lakes Edward and Albert Fisheries Pilot Project (LEAF I), funded by the African Development Bank; and the Northern Uganda Social Action Fund Project (NUSAF II), funded by the World Bank.

• Report link: http://international-alert.org/sites/default/files/Institutions_UgandaSocialAccountability_EN_2016.pdf
• Acknowledgements: This report was researched and written by Jo Robinson, with substantive contributions from Bernardo Monzani and Elizabeth Drew. © International Alert 2016
• Press contact: communications@international-alert.org

Press Release: AfDB Group approves US $91-million investment in water supply and sanitation for Uganda (04.02.2016)

In the African Development Bank Group’s bid to work for a continent free of poverty and water-borne diseases, the Board of Directors approved on Wednesday, February 3 in Abidjan a US $91-million loan to Uganda, for the provision of clean water and improved sanitation in the country.

The Water Supply and Sanitation Program II (WSSP II) targets 1.43 million people and will contribute to the country’s 2040 vision of having “a transformed society from a peasant to a modern and prosperous country within 30 years.” Direct impacts of the project include reduction in the average walking distance to the nearest water point and reduction in time spent fetching water at congested water points.

Presenting the WSSP II to the Board, AfDB Water and Sanitation Department Director, Mohamed El-Azizi, outlined that the Bank’s intervention is in line with its High 5s with particular emphasis on improving the quality of life for African people. “Implementation of this project will help improve health and productivity of Ugandan populations and have positive social and gender payoffs, as well as more conducive work environment in the towns and rural growth centres,” El-Azizi said, explaining that the country’s national objective was to reach water and sanitation coverage for all.

Board members underscored the relevance of the project, which they said is good news for every Ugandan as the government prioritizes water security and good sanitation as a driver of change.

The Bank Group’s experience in Uganda’s water sector dates back to 1968. AfDB is a partner of choice in the water sector in the country, with steady investments and implementation in the sector throughout all this period.

The AfDB is eager to remain the country’s partner of choice in the water sector and will work towards investing more in the country when it implements its sector strategies, according to the Bank’s Water Department team.

Interesting findings from the AG report on “Central Government and Statutory Corporations” – Part One!

Here I will Travers through the report of Auditor General of Uganda’s Annual Report for the year ended 30th June 2015. This is on: “CENTRAL GOVERNMENT AND STATUTORY CORPORATIONS”. I will take the quotes and stories that seem to show parts of how the Government of Uganda works and what the Auditor General have cared about addressing in this specific report. Take a look! This here is Part one!

What it contains:
“This is Volume two of my Annual Report to Parliament and it covers financial audits carried
out on Central Government Ministries, Departments, Agencies, Universities and Uganda
Missions abroad” (…)”Section 2 presents my findings and audit opinion on Government of Uganda Consolidated Financial Statements including major observations” (P: 25).

Nugatory expenditure:
“Government paid UGX.26.1bn during the period under review as delayed settlements of obligations arising from contracts for construction services, Court awards, and contributions to international organizations etc” (P: 34). Comment: The government has no issues wasting giant sums of settlements it seems, shouldn’t’ there be away to not use the money on these settlements?

Unsustainable pension liability:
“The Ministry of Public Service recorded an outstanding pension and gratuity liability of UGX.199,255,907,539 as at 30/6/2015 (up from UGX.108,681,159,047 as at 30/6/2014). It was noted that the gratuity and pension arrears continue to accumulate, a fact which the Accounting Officer has attributed to inadequate budgetary provisions over the years” (P: 35). Comment: There been press release from the Ministry of Finance, Planning and Economic Development during 2015 doesn’t seem like they want to fix it, instead blame the pensioners. Well, they have learned from their master right?

Understocking of the Government petroleum strategic reserves:
“In 2012, the Government of Uganda and a private petroleum company entered into a concessional agreement to refurbish, restock, maintain and manage the petroleum strategic reserve facility at Jinja. Despite the concession requiring the operator to ensure that 40% (12million litres) of the storage capacity of the products is available at all times, I noted during inspection in September 2015, there was only 274,000 litres of petrol and 331,000 litres of diesel in stock compared to the required stock levels of 20,000,000 and 10,000,000 litres respectively” (P: 38). Comment: Doesn’t seem like they follow the guidelines from 2012 and proves that the Governmental agencies doesn’t follow the plans they have or have the procurement to buy what their supposed to. This here is just barely enough considering the use of oil and diesel!

Construction of Kampala-Entebbe expressway:
“It was observed that the unit cost for the Kampala-Entebbe expressway was US$ 2.315 million per lane kilometre while the similar expressway was US$ 1.204 million per lane kilometer” (…)”This is less than half of the cost of Kampala-Entebbe Expressway which is US$.9.261 million per Km” (…)”However, a review of the services provided by the consultant’s revealed duplication of activities as the originally recruited private firm serves the same purpose as the international firm” (P: 38-39). Comment: This here has been discussed and been put out there, but still proves the misuse of funds, especially when one of the reasons is that you have two companies that have the same role on the site, instead of only one, and that adds the price per kilometer of roads.

Mismanagement of funds under the Ministry of Local Government (MoLG):
“the diverted funds revealed that UGX.3,827,011,454 remained unaccounted for and UGX.635,621,910 was questioned due to inappropriate accountabilities” (P: 39). Comment: Unaccountable use of funds is a beauty and proves that funds have been used without waivers or accounted for; where it has been used is something that we can ask, but they could by Kit-Kat bars in Masindi or extra bottle of cokes in Lira for all we know.

Fixed budget allocation for essential medicines and health supplies:
“The annual budget allocation of UGX.218bn for essential medicines and health supplies to all health facilities across the country has remained constant since 2011/2012 despite the remarkable increase in the number of patients” (P: 42). Comment: That the money are stagnate while the amount of patience goes up shows quickly; why the hospitals doesn’t have the necessary medicine? That is the simple reason why they don’t have enough.

Regional coordination and monitoring framework for Northern Corridor Integration
Projects:
“For example amounts totalling to UGX4.2bn was disbursed to fund the power interconnection and the Hoima-Lokichar-Lamu oil pipeline. However, the protocols do not provide for regional coordination and monitoring as well as the audit framework to provide an independent assurance on the utilization of joint funds” (P: 43). Comment: Money to a project that don’t have a framework for the regional coordination and can’t utilization of the funds, that means they are just sitting in the fund, without any use or monitoring it.

Compensations of Project Affected Persons (PAPS):
“Review of the compensations for the Project Affected Persons (PAPs) on the two projects of Mukono-Kyetume-Katosi road and LPC Busega revealed inconsistencies in the names of the PAPs appearing in the Chief Government Valuers report and those compensated” (…)”A sum of UGX.1.3 bn paid without resolving the inconsistencies was questionable” (P: 44-45). Comment: That already over-expensive road project that has gone over margin and had issues with the contractors of the road-building. So that the government haven’t compensated the once that lost land where the road where built. Therefore the project is even more expensive, since this will be add-ons to the ones that already registered and billed for.

Budget performance-Budget shortfall:
“21 entities budgeted to receive UGX. 2,272,017,747,273, out of which UGX. 1,481,698,945,173 was received translating into a 65% out-turn for the financial year. This left a funding gap of UGX. 790,318,802,100 (35%)” (P: 55). Comment: This here proves how the budget is underfunding and not procuring from the Ministry of Finance, Planning Economic Development (MoFPED) to deliver the cash in-due time to the projects and other state entities that supposed to get funding to do their work. The ministry with biggest shortfall was the Ministry of Energy and Mineral!

MoFPED – Payment of avoidable interest on VAT:
“It was noted that as of November, 2014, the outstanding VAT obligations for BIDCO stood at UGX.744,420,170, included in this figure was late payment interest charge of UGX.168,747,557. Accordingly, a sum of UGX.700,000,000 was paid to URA towards settlement of the tax arrears” (P: 93). Comment: Bidco got to pay less to cash to URA then expected in a settlement, instead of paying everything they needed as they hadn’t cleared in their VAT. So the government was not getting what they we’re entitled so the company of BIDCO got off cheap.

Payment of the fourth instalment under ADB Subscription:
“It was noted that the payment of Uganda’s 4th instalment of UDS.1,293,299 which became due on 16th March, 2015 had not been made. As a result, the callable shares related to the missed instalment had been suspended in line with the Board of Governors resolution on the sixth general capital increase of the bank meeting” (P: 95). Comment: This here proof that they don’t take the place in the Pan-African Bank institution, only take the loans from African Development Bank, but not taking charge in paying dues to it.

Presidential Initiative on Banana Industrial Development (PIBID):
“It was noted that the PIBID project has been operating without an approved strategic plan. The strategic plan is supposed to guide the budgeting process by creating integrated link with the annual work plans which feed into the budget to ensure effective service delivery and achievement of set project objectives” (…)”During the financial year 2014/2015, the PIBID project had a budget provision of UGX.9bn out of which only UGX.2.7bn was released as vote on account and as a result, activities worth UGX.6,682,145,000 were not under taken. (P: 100- 103). Comment: 6,3bn was not released so that is under the double, but not triple of the ones that has procured to the PIBID.

Department of Ethics and Integrity:
“Directorate’s approved structure/establishment indicated that whereas 60 posts were approved, only 46 had been filled by the year-end leaving 14 vacant” (…)”that withholding tax amounting to UGX.4,662,524 due to URA was not withheld from seven (7) service providers and as such, funds were not remitted. Failure to withhold tax exposes the entity to a risk of penalties and interest charges by URA which may lead to nugatory expenditure” (P: 111-113). Comments: This here proves the defaults on the hiring of people in the department and also mismanage off tax.

This here must been seen as interesting; the report is big, so there is more to come. This here will be series with many pieces as the actions of government is to interesting to NOT be put on blast. Peace.

Reference:
Office of the Auditor General – The Annual Report for the Year Ended 30th June 2015 – Central Government and Statutory Corporations 30th June 2015.

Value for Money Volum 5 – End of Year 2015: On rising debt, rice development, mineral industry development and other economical issues

I have now written down quotes from the 11th Value for Money reports from the Auditor General in Uganda of 2015, and we are in campaign season, so let’s see what the government can say about their own accountability and such. Beginning with this:

“Annual Report of the Auditor General to Parliament prepared under the Directorate of Value for Money and Specialized Audits. This Volume contains summary reports of the 11 Value for Money (VFM) audits undertaken during the Audit Year ending 31st December 2015”.

Let me begin with the MoWE:
“Water sources constructed were generally functional except for instances in Mbale, Rakai and the non-functional tap heads in Bundibugyo” (P: 23). Quick comment: So the ones they we’re building we’re from the get-go not functioning; what the need to use money to taps is and pipes that don’t work. Good work from the Government of Uganda.

Procurement in Ministry of Water and Environment (MoWE):
“Some districts i.e. Bundibugyo and Kamwenge executed works using “Force account” method of procurement without first obtaining a waiver from PPDA contrary to the procurement rules and regulations. While using this method of procurement the districts also irregularly deposited public resources on personal accounts of district employees without any justification which exposes grant funds to misuse” (P: 23). Comment: So the ones buying can by without showing the need or getting rights to use government funds to use them, so he can buy toothpaste for his kids without showing any report of where the money went? Good to know.

Last quote from MoWE:
“Delays in the payment for goods and services to Suppliers / Consultants / Contractors were observed. In some cases such delays exceeded 100 days with some noted for exceeding 180 days” (P: 25). Comment: There is 360 days in a year, 180 is half, 100 days is over three months; That is the shortest for waiting to be paid for delivered service to the ministry; If your unlucky than it can be up to 6 months. Half a year! Can’t you just tell directly that you weren’t sure you had the money to pay for the service in the first place? Since you expect that certain business who you work with has to wait that long for payment!

Utilization of the District Water and Sanitation Conditional Grant (DWSCG):
“A total of UGX 161 Billion was released by MoFPED to the 111 districts as the grant funds over the 3 years period under review. Out of this, UGX 30.8 Billion was received by the 20 districts that comprised the sample of this study” (P: 60). Here is one of the tests that the OAG did and found: “Audit established that Bundibugyo and Kamwenge executed procurements and works amounting to UGX 192,761,460 and UGX 64,571,498 respectively using force account method of procurement without seeking approval from PPDA as required. Force account is a method where the Procuring and Disposing Entity (PDE) procures materials and undertakes the works with the supervision of a technically qualified staff – in this case, the District Engineer and the District Water Officer” (P: 64). Comment: Here it’s more buying of the DWSCG or a department locally without checking procedure, just buying blindly what they need, though doing it and without supervision so the quality control for much of the bought equipment is done unsupervised.

Ministry of Finance, Planning and Economic Development (MoFPED) on Gender and Quality:
“47 government officers from the selected sectors were sponsored for a two-week training in gender and equity budgeting. However the training was mostly funded by donors, which was not sustainable” (P: 31-32). Comment: So the government can’t allocate money for training of their own and has to get the cash to educate their own staff from abroad, sounds not like development or steady progress, but a misuse of money, since you can’t cough up money to educate your own bureaucrats.

On Rice Development: 

“The Promotion of Rice Development (PRiDe) project is a successor to three projects by the Ministry of Agriculture, Animal Industry and Fisheries (MAAIF) projects: Agriculture Improved Rice and NERICA dissemination and Sustainable irrigated rice project (SIAD)” (P: 39). Quotes on the PRiDe: “PRiDe project has not established a system for collection, recording analysis and reporting of rice data and hence it was difficult to establish with certainty the progress the project was making towards the achievement of the set production targets” (…)”MAAIF should work out modalities that enable rice millers to access funding to acquire the required equipment like the mills, destoners and graders that will be used in improving the quality of rice produced” (P: 39-40). Comment: There isn’t any way to monitor the project or the progress, so they can build a stairway to heaven with the cash for what we know and not initially do any research on how to make rice better or yield better in Uganda.

More on the Rice Project:
“noted that although UGX 2,500,000 was paid to the database developer as part payment of the contract amount of UGX 5,000,000, the database was not yet in operation by the time of the Audit (January 2015) and the rice web page had not been developed.. Furthermore, Audit notes that UGX 21,232,912 was paid out to various staff to collect data from farmers and millers to update the non-operational database. Failure by MAAIF to operationalize a rice website and database denies the rice stakeholders access to vital rice information” (P: 217). Comment: There been paid out money to collect data, but not organize it, so it is lost at some office of the Ministry. Instead of being able for people looking at the experience of yielding rice or making rice better.

Performance of Ministry of Agriculture, Animal Industry and Fisheries (MAAIF):
“According to the project proposal document, GoU was expected to contribute about UGX Four (4) Billion for the five years (FY 2012/13 to FY 2016/17) as counterpart funding. However, the review of MAAIF PRiDe project expenditure documents indicates that only UGX 1,482,409,718 has been released to the project. The released funds represent only 37% of the amount anticipated for three financial years (2012/2013, 2013/2014, 2014/2015) and yet the project has less than two years to close. The failure of government to honour its obligation of providing the budgeted counterpart funding may affect the MAAIFs ability to sustain rice activities beyond the PRiDe project” (P: 223). Comment: Here it has been just dropped 37% of the funds in three financial years, while having two years left. That means that 31,5% of the funds have to be released in each year that are left; so the accounted money will go to the rice activities. Instead they have in three years used 37% of the total, and have to use close to the same each year. That doesn’t seem to happen unless they are starting to waste without waiver and procurement as the MoWE in Bundibugyo?

On External Debt:

Utilization of the Public Debt from the MoFPED (Ministry of Finance, Planning and Economic Development):
“In Uganda, public debt is managed by the Ministry of Finance, Planning and Economic Development (MoFPED) in liaison with Bank of Uganda (BoU). Government of Uganda (GoU) external borrowing has risen over the years from (United States Dollars) USD 3.71 billion in Financial Year (FY) 2012/13 to USD 9 billion FY 2014/15” (P: 40). Comment: In two years going up USD 4 Billion from 2012/13 to 2014/15. That should be worrying for the economy getting this bigger debt burdens that gives the economy more interests rates to pay back to donors and banks who lent them, instead of development.

External debt overview:
“The Auditor General in his annual report further noted that commitment fees paid during the year 2012/2013 had increased by 40% from UGX9.023 billion in 2011/2012 to UGX12.7billion in 2012/2013” (P: 226). Comment: Following up the first comment on the debt, as the more loans you have, them more interest rates you pay to the lenders and banks. This here is expected things. Though this leave less money to be allocated to what the government needs and let more percentage of the budget go back to paying on debt, instead of investing or allocating to something sustainable, but then you need donors to training your own bureaucrats.

Paying back the debt on time:
“Failure to absorb borrowed funds within the specified timeframe of the projects has led to an increase in the cost of debt to Government in form of commitment fees and fines. This is because creditors, such as African Development Bank, Exim Bank of China, and African Development Fund, among others, charge a fixed rateon the loan amount that is yet to be disbursed. Government paid a sum of USD 26.8m in form of commitment charges between FY 2007/8 and 2014/15. The commitment fees paid peaked in FY 2013/14 amounting to USD 5.1m” (…)”the contractors for Tororo-Lira power line and Mbarara – Nkenda charged Government fees for implementation delays to the tune of UGX 23,353,168,480 and UGX 18,221,868,081182, respectively, which further increased the cost of the projects to Government” (P: 232-233). Comments: While the worry has been for more and more stacked up loans. Then the more increase fees paid for the loans that the Government of Uganda has gotten over time. With this knowledge the government and ministry who control the use of money should be sure of paying back the lenders and banks that facilitated the loans. This lead to more debt and fines to the government because they are not doing the job or delivering as promised back to the banks.

Continues:
“Although funds release performance improved from 22.2% as reported in the 2010 audit report to 71%, MoFPED was still unable to ensure a 100% release performance as promised” (P: 41). Comment: That the ministry can’t ensure that the payments are being served and secured after they had no issues getting the loans for the projects and other development programs, then they should ensure and make funds ready to pay back the fees, interest rates and fines for not releasing over the debt.

Construction of Jinja Market under MATIP:
“Originally the preliminary designs for the market considered four floors at an estimated cost of USD 13.3 Million; however the cost estimate was found to be higher than the project ceiling of USD 10 million” (…)”The original contract sum for construction of the Jinja central market was UGX.28,679,485,336; this was revised to UGX.32,335,198,075 vide addendum no.1 of UGX.3,655,828,962 (VAT inclusive) of 11th September 2014 incorporating additional works related to preliminaries, demolitions, lower ground floor extension from grid 10-12, storm water drainage, stall improvement works, slabs over entry voids, roof improvements and additional security requirements” (P: 43). Comment: Here is just a one project that has gone over the estimated limited and set up of a modern market in Jinja, the Local Government didn’t check the quality of the works and also didn’t do enough monitoring of the project as well. So the basic construction and planning of it haven’t been done that well, when you look at the level of extra expenditure.

Regulation of Construction from by the Ministry of Works and Transport (MoWT):
“The enactment of the UCICO Bill had been planned to be effected by 30th June 2012 but to date (5 years down the road) not much progress has been achieved. The major objectives of the bill were to establish the Uganda Construction Industry Commission to regulate and coordinate the construction industry, register contractors, consultants and other service providers engaged in the national construction industry” (P: 49). And this: “Out of the budgeted amount of UGX 1.4bn, the Ministry received a sum of UGX 1.02bn to cater for the development of the legislation under the programme for public structures as detailed” (P: 51). Comment: That the monitoring unit doesn’t exist while more and more roads cost then estimated, also with little progress of securing the funds used through the UNRA, there should be questioned why the government doesn’t want this transparency unit under the ministry and also checking the builder who seeks private contractors through UNRA.

Regulation of the Ministry and Energy and Mining:
“In efforts to revitalize the mining sector in Uganda, the licensees in the mining business have not been able to get support from banks here in Uganda because the mining industry has just begun to pick up after acquisition of new geological data. This gap of lack of financial support has a negative implication on the licensing process and mining operations, inhibiting the mining sector from developing as any other sector in the country. However, the Ministry will improve by sensitizing the banks on mining business to enable licensees get access to financing of their mining investment projects. In addition, the ministry will take extra care in screening mining applications and plans” (P: 104). Comment: That the banks don’t help the bank-industry. The laws is not yet set in fruition so that the companies in the mining business have proper banking operation, that means the mining industry seems as wild-west if the banks can’t monitor it properly?

Picture of Companies without returns!
“The DGSM takes note of this observation. The MEMD has continued to lobby the Ministry of Finance, Planning and Economic Development and the Parliament of Uganda to make available adequate budget allocations for monitoring and inspections of mining and exploration operations to effectively manage enforcement of working obligations by licensees” (P: 107). Comment: Well, if you see how the banks are not build for the mining industry. This here is a follow-up and this is the second level of monitoring the mining industry and its exploration operations. Initially they have to wait for licensees and pay for them through the banks, to get sufficient structure through the banks to the ministry.

Affected persons of the late payment or compensations for work:
“This was the case with the Tororo-Lira power line project where 137 project affected persons since 2012 to date, claim UGX 3,084,420,624 in way leaves compensations and as a result 156 towers that had been established are not strung to date. Along the Mbarara- Nkenda power line since 2010, 60 project affected persons had unresolved way leaves compensation disputes to the tune of UGX 7,042,469,385 by the time of audit. Additionally, along the Mbarara- Mirama section of the NELSAP power line, 5 project affected persons claim UGX 1,143,401,900 in way leave compensations since 2013. This delayed the stringing phase of the projects because relay towers had not been erected in these areas of disputes” (P: 241). Comment: This is the same as the late payments earlier where business had to wait until 180 days. This here is another ministry, but the same kind of business structures and projects get disputes that leaves the levels of compensations to higher levels. That is shown the doubling of values in the audit as shown by the OAG this time. From UGX 3 Billion to UGX 7 Billion; that is a massive growth and added expenses on the set projects that the General Auditor has shown in the report.

I think the comments on each quotes is enough. Because they speak enough for themselves and the questions on how they used the governmental monies proves the validity on the matter and mismatches on the procurements. The scariest situation is with the rising debt and how the Ministry is dealing with the matter. Peace.

Press Release: AfDB approves US $76.7-million for Uganda’s agriculture programme (20.01.2016)

The African Development Bank (AfDB) has approved a US $76.7-million loan to finance phase two of the Uganda Farm Income Enhancement and Forestry Conservation Programme (FIEFOC-2).

The programme, which was commended by the AfDB Board on Wednesday, January 20 for its good design and high-impact development objectives, comprises agriculture infrastructure and agribusiness development activities as well as an integrated natural resources management scheme aimed to consolidate and expand key achievements of its predecessor (phase one), which was completed in December 2012.

Designed within the context of Uganda’s National Development Plan and long-term development strategy – the Vision 2040 – the Project focuses on improving farm incomes, rural livelihoods, food security and climate resilience. It will also support sustainable natural resources management and agricultural enterprise development.

In 2013, about 19.7% of the population, or 6.7 million people, were unable to meet their basic needs, according to a Uganda National Household Survey, which also disclosed that the incidence of poverty was highest among the food-crop growing category in the rural areas due to low income. Thus, the programme seeks to increase production and farmer incomes through improvements and expansion of irrigation schemes, development of agribusiness and adoption of sustainable land, forest, and water management practices and technologies to generate income from natural resources.

The programme will be implemented over a five-year period in five districts – Nebbi, Oyam, Butaleja, Kween, and Kasese – where irrigation schemes are located. The districts have an estimated 1.8 million population, 52% of them women. It will also benefit 300,000 households of which 20% are female-headed outside the irrigation command areas, by introducing or improving soil-conservation measures in the catchments feeding the irrigation schemes.

Furthermore, the project is expected to provide technical skills in conservation and other farming practices that promote environmental management and thereby increasing agricultural productivity in the project areas. It will also assist in the formulation and implementation of measures that reduce deforestation and promote agro-forestry which will lead to emission reduction and the protection of carbon reservoirs as part of the Reduction of Emissions from Deforestation and Degradation (REDD+) agenda. Carbon dioxide (CO2) to be sequestered in 20 years through tree-planting is estimated at 245,000. Training under the project will provide an opportunity for special attention to be given to intensification of climate-smart farming operations.

The project is anchored on the Bank’s Country Strategy for Uganda (2011-2016), which focuses on infrastructure development and increased agriculture productivity as well as human capacity improvement and skills development for poverty reduction. It is also in line with the Bank’s Ten-Year Strategy (2013-2022) and High 5s, which prioritize agriculture and food security as one of the key areas for the Bank’s future assistance.

The total cost of the project is estimated at US $91.43 million. In addition to the US $76.7-million AfDB loan, the Nordic Development Fund (NDF) will provide a US $5.6-million grant while the Government of Uganda will contribute US $9.13 million in counterpart funding.