DONORS TO GOV’T; EXPECT BIG CUTS IN OUR FUNDING
By Mulengera Reporters
The donors have used the ongoing NPA/UNDP breakfast consultative series on the National Development Plan (NDP) III to repeatedly remind the GoU of the need to prepare to proceed funding service delivery 100% without them especially in the fields of education and health.
But during the Thursday 15th breakfast discussion at Serena Hotel, UNDP Economic Advisor Yemesrach Workie sounded this reminder more emphatically than anybody else had done before. Contributing under the theme: “Towards integrated Financing of National Development Plan III” as part of the panel discussion on which Budgeting Director Kenneth Mugambe was a member, Workie said time had come for the government of Uganda to prepare for a day, coming very soon, when aid financing won’t be available anymore.
Workie, whose UNDP coordinates and speaks for more than 18 UN agencies operating in Uganda, said that day had finally come adding that it’s not only Uganda that is going to lose out but all countries of the world that have been thriving on Overseas Development Assistance (or ODA as she repeatedly called it).
“In cases where it will remain available, ODA isn’t only going to decline but it will also change its nature; more loans and less grants,” explained the fast-talking Ethiopian. In especially education and health, the impending donor exit will greatly hurt service delivery in the face of inadequate funding by GoU.
And UNAIDS Uganda boss Karusa Kiragu Gikonyo has previously called on government to become serious about funding especially anti-HIV initiatives because currently the HIV sub sector is 90% funded by donors. During the Thursday discussion Workie corroborated on this while calling on Ugandans to brace for hard times ahead.
She advised that since education and health are low return sectors or areas, the GoU should consider sourcing for concessional funding implying money that comes with longer repayment period and low interest rates. She said in absence of donors, the options for the Museveni government will strictly be two namely treasury funding or sourcing for concessional funding.
Concessional funding could take the form of going for Social Impact Bonds whose only challenge she said is being complex and therefore requiring exceptional institutional capabilities among concerned employees in government institutions charged with delivery of health and educational services. She enumerated a number of Asian countries that have delivered excellent education and health services using Social Impact Bonds.
She implored the NPA bosses to ensure they use the ongoing consultative processes for NDP III to advocate that government policies begin to evolve in a manner that aligns to this new funding reality resulting from the impending mass donor exit.
The fast-talking diplomat referenced on the UNDP report covering the ODA impact in the period 1988-2018 while calling on the GoU to devise ways on how to make off-budget funding work better for service delivery as an opportunity rather than a challenge. She said the decline in ODA would be experienced globally and not just in Uganda.
Health Minister Janet Ruth Aceng separately told Mulengera News that this impending mass cuts in donor or development partner funding is something over which her Ministry/GoU has had numerous exchanges of correspondences with donors for several months now.
Dr. Aceng says Ugandans shouldn’t worry because contingent ways have been devised to ensure service delivery continues unhampered even after the exit of donors whose support continues to account for over 70% of the monies expended under the health sector as a whole annually.
For unknown reasons, Kenneth Mugambe (who was part of the same panel discussion) didn’t seem comfortable responding to the revelations the Ethiopian economist made on behalf of the 18 UN agencies coalescing under the same network which until recently UNDP coordinated under the leadership of Rosa Malango.
Advising on alternative sources of revenue mobilization, Senior Specialist Ivan Mwondha who represented the WB at the NPA meeting demanded that factors frightening would-be serious private sector participation under the framework provided under the PPP Act be urgently addressed. And these include currency volatility, lukewarm commitment to the rule of law, political succession certainty and good governance. These are often dismissed by the GoU as amounting to imperialistic interference but Mwondha maintained they constitute widespread fears many would-be serious private sector actors have repeatedly expressed concern about.
Capital Markets Authority CEO Keith Kalyegira suggested issuance of Diaspora Bonds as one avenue through which GoU can boost revenue mobilization. He said this would ensure trillions of shillings coming in as remittances from abroad is kept in the formal economy sector space. Besides referencing on the survey report UNDP facilitated highlighting the potential resident in Diaspora Bonds, Mwondha also argued that the low interest rates payable on such financing should make issuance of Diaspora Bonds more attractive to the GoU than the Sovereign Bond which some Finance Ministry technocrats are pushing for.
Mwondha maintained that nervousness around the political uncertainty partly explains why not much progress has been accomplished under the PPP Act notwithstanding the fact that the enactment came in force in 2015 yet the PPP approach is one area that can be harnessed to boost the mobilization of revenue required to finance service delivery. (For comments, call, text or whatsapp us on 0703164756 or email us at email@example.com).