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Is Uganda broke, or its just poor prioritization?


Is Uganda broke, or its just poor prioritization?

Finance Miister Matia Kasaija

Finance Minister Matia Kasaija

There is a generalised sense of economic strain in the homes across the country. Men and women are experiencing hard times.
The apparent economic difficulties are borne by the growing list of business failures if Bank of Uganda data on the rise of bad loans in commercial banks to about 7 percent in March 2016, is anything to go by.

Indeed, many suppliers of goods as well as services such as teachers and doctors are reporting increasing irregularities such as delays in payments. Reports of delayed payment among pockets of civil servants is a possible illustration of the crisis that has hit those considered to have a guaranteed income.

The Bank of Uganda has reported weak economic indicators in recent months such as weak aggregate demand or purchasing power, reduced credit to the private sector which further confirms that the economy is in dire straits.

The government’s own finances do not appear to be in good shape either. For example, Uganda Revenue Authority (URA) has recorded poor performance in tax revenue collection in recent quarters, but more worryingly, the tax collectors have warned they will not be able to meet this years target of Ushs13 trillion of the Ushs26 trillion budget.

And President Museveni has repeatedly vowed not to raise the salaries of civil servants despite the erosion of the shilling’s purchasing power due to inflation. Reports have also emerged about intentions by the government to reduce the size of public servants.

But other spheres of Uganda’s public administration suggest an abundance of cash. The Parliament of Uganda for example has agreed to splash out some Ushs200m for each MP to acquire a vehicle. At the same time, Parliament is allocating some Ushs50m towards funeral arrangements in case an MP passes on.

The questions that have been going on in the minds of some people is why there are no standing orders to control excess spending on such instances as the case is in other middle-income countries we hope to emulate. Others have been asking how could the government stop ministries and other departments from spending on funerals of deceased co-workers.

And just before the public would get angry enough, Parliament released another costly venture where Ushs600m on awarding medals to over 1,200 living former MPs who served in Uganda’s Parliament between 1962 to 2012.

The obvious cause of this apparent haemorrhage of tax payers money is the absence of checks and balances or an oversight body that regulates the spending of the Parliamentary Commission and other organs of the state such as the Presidency, Police and the Army.

Apart from the lack of accountability on the side of government, Uganda’s tax money continues to get wasted through inefficient allocations that are not based on feasibility studies, outright robbery of government funds and poor planning.

President Yoweri Museveni has been described as maddened by recent reports of Uganda’s mounting debt by ministries that have brought the country on the brink of bankruptcy.

With Uganda’s total debt nearing nine billion dollars, critics are putting blame squarely on the shoulders of the President and his trusted finance ministry officials particularly the Secretary to the Treasury who signs on every loan obtained by the government.

The past decade has seen Uganda invest heavily in huge infrastructure projects for power, roads and healthcare. While the absence of these infrastructure projects were considered key binding constraints to Uganda’s progress, many now admit they were executed without careful thought on their rate of return.

As retired Bishop Dr. Zac Niringiye observed in a recent Facebook post, some roads like the Mbale-Tirinyi road have become drying places for cassava rather than acting as gateways for agricultural produce, all at the expense of paying basic salaries for healthcare workers.

Other economists have blamed the collapse of the manufacturing sector in Uganda to poor economic policies of the government that have resulted into diminishing tax revenues.

Finance minister Matia Kasaija recently outlined some factors as bottlenecks to Uganda’s ambition of attaining middle-income status. He cited poor planning, poor monitoring as some of the bottlenecks. Uganda government has been riding on a wave of goodwill from donors and other international funders.

But much of the billions that have been obtained through loans and grants to build roads and markets, have been stolen or mismanaged such as in the Katosi-Nyenga fiasco.

The above scenarios and many other widely debated white elephant projects such as the construction of flyovers in Kampala illustrate the point that Uganda is exactly not broke but rather mismanaging her scarce resources.



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