By Our Reporters
Godfrey Semugoma, a top official in the Finance Ministry, has explained why government has previously been guilty for cripplingly delaying to pay private business entities (especially local ones) that supply goods and services to its Ministries Departments and Agencies (MDAS). This has previously caused the bill associated to domestic arrears against the GoU to grow to over Shs1trn.
Responding to hundreds of local bidders that converged at Golf Course Hotel for a consultative meeting convened by PPDA on Thursday, Semugoma gave a number of reasons and justifications to show this wasn’t deliberate.
Some participants had claimed this was deliberately being done by mafias in government to advantage generously bribe-paying foreign firms at the expense of local ones. The participants cried out saying even commercial banks these days don’t want to lend especially contractors trying to build capacity to execute contracts or projects awarded by the GoU because the banks consider it unreliable when it comes to paying such service providers. This has generally led the banking community to rank such borrowers highly risky.
Semugoma, who is also the Deputy Accountant General, explained the delay is because some PDEs (procuring govt entities) engage some service providers without money for that item being provided anywhere in the budget. He said whereas this isn’t exactly a bad thing, as there can sometimes be justification for MDAs undertaking such commitments, it’s one of the major reasons why service providers end up not being paid.
In the other cases, he explained, it’s because the due process that has to be followed is naturally prolonged and actually longer than some contractors are willing to wait. Reflecting on two suppliers, one supplying stationary and another doing road construction, Semugoma said the two suppliers can’t be paid in the same length of time.
The road project is heavier and involves much more cash meaning there are many levels of approval (including the solicitor general) and due diligence has to be taken before money is actually paid. He explained that to supply stationary in most cases, all you need is an LPO from the procuring entity (he said this is as good as money itself) yet for the road project it requires a comprehensive contract having to be scrutinized at many levels before being signed and money eventually paid upon delivery as per contract terms.
He also said in some cases, it’s just a matter of some MDAs staff acting maliciously against certain contractors or service providers. He said such unscrupulous actors (he admitted this is wide spread) can go as far as criminally cancelling one’s LPO from the IFMIS system replacing the bidder’s details with those of another for whom that cash wasn’t ring fenced in the first place. The original beneficiary will in the end not have his claim cashed, leaving such businesses very frustrated prompting even commercial banks to shun them as risky borrowers.
Encouraging service providers to report such malicious cases of one’s LPO being deleted and fraudulently replaced with another on the IFMIS system, Semugoma disclosed that a desk had been created in the treasury to receive and expeditiously address such complaints. The number being used to get such feedback (as read out by Semugoma) is 0414707305. “We have realized sometimes it’s an individual officer maliciously causing such delays in payment and not even an MDA. You transfer that person from say MAAIF to Local Government and the payment system that has been efficient all of a sudden becomes inefficient and vice versa. People begin reporting how their money isn’t being paid yet they supplied and everybody else has approved them for payment,” he said adding there is in place a sanctions mechanism to reprimand such sabotuers.
Drawing from his experience working in the treasury for a while, Semugoma added it’s also true some commercial banks get the money and curiously delay to upload their client’s accounts long after the relevant government MDAs have authorized and passed on payment. He said many meetings have lately been held between the Finance Ministry and commercial banks (under UBA) and this is one of the many complaints government has been raising against the banks. He said this ongoing engagement will also help banks to understand and once again become enthusiastic extending credit facilities to service providers desiring to satisfy their contract obligations towards government in case one has been contracted to deliver on a certain project.
At the meeting, there had been complaints of URA causing the blocking of some bidders claiming pending tax obligations whereas none exists. This has often prevented some bidders from securing their tax clearance certificates on time for bidding purposes. Semugoma arrayed fears about this saying URA had been engaged and urgent solution was being improvised to deescalate such anomalies.
Urging bidders to enthusiastically embrace the new e-procurement and bidding system (eGP), Semugoma admitted “this without a doubt is a major disruption in the way we have been used to transacting tendering business” but all will be well. He said there will be massive sensitization besides the training manuals that are going to be dispatched throughout the country to deepen awareness and demystify fears bidders are having about the new online procurement system.
Semugoma said the Finance Ministry, which he represented at the very interactive meeting, would ensure no bidder becomes less competitive simply because of inability to adequately understand and use the new online system of submitting bidding documents and generally participating in the procurement processes.
Responding to a gentleman who asked whether the new online procurement system (eGP) won’t jeopardize entities like the army when it comes to classified expenditures and classified procurements, Semugoma said similar fears were raised when IFMIS began but endless engagement gradually demystified all the fears and the Defense Ministry continues to be subject to the IFMIS public finance management system yet the Finance Ministry has never breached any of the sensitivies associated with the doctrine of classified procurements and expenditures for the country’s continued stability. So the eGP will apply to the security forces and bidders specializing in being service providers in that area shouldn’t worry, Semugoma emphasized. (For comments, call, text or whatsapp us on 0703164755 or email us at mulengera2040@gmail.com).
