GOV’T THINK TANK TELLS WHY MUSEVENI FAILED TO DELIVER MIDDLE INCOME PROMISE
By Mulengera Reporters
In a stinging dossier, National Planning Authority (which is a government think tank on development planning matters) has explained blunders and goofs that are preventing Uganda from achieving the lower middle-income status to the total embarrassment of President Museveni’s government that raised public expectations around this promise.
Riding on the development planning goals enshrined in NDP II (which is one of the 6 five-year development plans comprising Vision 2040), Museveni a few years ago had personally been promising to deliver middle income status in this current term of his NRM government.
The implication was by 2020, the per capital income of Ugandans would be $1,039; meaning every year, every adult Ugandan would be earning an average of slightly more than Shs4m. You simply get the total income of the country and divide it by its total population. The NPA dossier (technically called Certificate of Compliance; measuring the extent to which MDAs budget & spend in a manner that seeks to achieve targeted outcomes under Vision 2040) shows that at the current per capita income of $825, the middle-income status dream is clearly not going to be achieved in 2020.
The authors then reflect on factors accounting for failure to realize the middle-income dream which was a major political promise by President Museveni in 2016 and shortly after. Reflecting on the FY2017/18, NPA observes compliance of the budget implementation by MDAs to NDP II has improved from the previous FY’s 54 to 60%. One of the major failures is reflected in the GDP growth averaging at 6.1% against the NDP II growth target of 6.8%.
Museveni was confident that by the time NDP II (running from 2015/16 to 2020/21) comes to an end, the middle-income status would be achieved and thereby boosting PR for his 2021 reelection. NDP II priority sectors were energy, works/transport, tourism and health.
These are sectors, whose large budget allocation would lead to transformation, GDP growth and ultimately middle-income status. This never happened and the NPA CoC shows there was unexpectedly over spending on sectors like legislature, accountability, defense & security, social development and JLOS-exceeding NDP II anticipated expenditure levels.
Agricultural sector spent up to 86% of the NDP II targets but much of this went into primary production activities (like provision of inputs) as opposed to NDP II-prioritized value addition areas like storage facilities, market access and post-harvest handling.
On average, value addition has been getting merely 4.3% of the sector spending. That this departure from NDP II priorities partly explains 2018’s collapse of maize prices when there was a bumper harvest. Failure to operationalize Uganda Commodities’ Exchange (to streamline and formalize market access for agric. products) and interfacing it with Warehouse Receipts System only escalated the problem.
The NPA experts also reflect on the debt situation which they say is still okay and manageable-clearly within NDP II range but caution against pre-financing as a method of revenue mobilization. Pre-financing is when the contractor sources funding for mega projects especially in Works/UNRA and Energy sectors. It’s not one of the methods envisaged in NDP II and it’s also expensive (because of the surcharge) further escalating our debt stock.
Each time a contractor sources funding, he levies a fee onto the GoU which has to pay back both the money itself, the interest and the surcharge (and contingent liability) for the contractor’s effort to source the funding. NPA observes the cost for such projects ends up being 30-40% higher/more expensive than projects funded using revenue mobilization methods recommended under NDP II.
This is something MPs and PPDA have previously complained about because procurement of contractors on such projects always doesn’t comply with PPDA Act and thereby diminishing transparency and value for money. Examples of the UNRA road projects that became very expensive because of pre-financing include 100kms Soroti-Katakwi-Akisim costing Shs399bn and 50km Asikim-Moroto costing Shs248bn.
The Treasury practice of remaining silent about unspent balances that MDAs and LGs are compelled to return to the consolidated fund at the end of the FY is another factor distorting budgeting and constraining realization of development planning goals. That this practice “leads to underestimation of the available resource envelope.” That in the FY2017/18, 31 MDAs and 10 LG votes failed to spend some of the resources allocated and returned a total of Shs289.4bn to the consolidated fund. Of this, Shs277.6bn (96%) belonged to central government (MDAs) votes and Shs11.77bn (4%) to LG votes.
Allen Kagina’s UNRA accounted for Shs153.1bn (52%) of the unspent cash returning to the consolidated fund. This simply means projects for which this cash had been allocated remained unaccomplished slowing down realization of the middle-income status indicators. The NPA report shows that the Shs153.1bn Kagina failed to spend (largely because of slow project implementation resulting from complex compensation claims) deprived Ugandans of 38kms of paved roads at the rate of Shs4bn per km and thereby slowing down realization of NDP II targets.
REA boss Eng Godfrey Turyahikayo is once again indicted for failing to deliver NDP II-related projects on time. The NPA report shows that majority of the Grid Rural Electrification projects under REA absorbed only 21% of the funds released to the sub sector and thereby frustrating President Museveni’s dream to realize the middle-income status by 2020. More worryingly is the fact that these are projects remaining with less than 2 years to come to an end and its doubtable at just 21%, Turyahikayo can make miracles and deliver within the NDP II stipulated time.
In Vincent Sempijja’s agric. Sector, poor project implementation is rampant letting down the President. Examples include the Shs117.19bn Agriculture Cluster Development Project of which only 24.9% has been absorbed with only less than 2 years remaining to project end. There is also Enhancing National Food Security project aimed at increasing rice production in select Eastern Uganda districts. It was allocated Shs21.17bn of which only 1.4% has been spent with less than 2 years remaining to end the project life! The 1.4% is what the floppy MAAIF officials have spent in the last 3 years of the project! NPA Board Chairperson Prof Pamela Kasabiiti Mbabazi says time has come for such saboteurs to face severe sanctions for letting down the President.
It’s even more frustrating when you look at the status of NDP II core projects over all. 19% of those core projects haven’t started with less than 2 years to go; 16% are at feasibility study stage; 9% are ready to begin implementation and 53% are under implementation. But ironically, of these only 3% is on schedule! To improve results, the NPA experts advise that government does something extra ordinary about the land acquisition challenge which is delaying many projects the most notorious being the 21km Kampala Northern Bypass phase II project.
Commenced on 14th July 2014, the project was meant to last 3 years ending July 2017. Reflecting badly on Kagina’s UNRA leadership, the project was extended to May 2019 but still wasn’t delivered. At the time the NPA report was authored, only 50% had been completed and the road could last another 4 or 5 years unless GoU comes in to help Kagina resolve outstanding compensation disputes. Such delays have already skyrocketed the cost of the project from the original Euros 67m to Euros 175m.
NPA also questions the practice of allocating funds for projects which aren’t ready to commence which deprives some NDP II ready projects of cash for implementation. That in Works/UNRA, its common for cash to be allocated for projects which are still at preparation stage leading to low absorption at the end of the FY. That in FY2017/18, Shs179.6bn was allocated for Busega-Mpigi road project when procurement was just starting; Shs79.66bn for Muyembe-Nakapiripirit when the draft contract was yet to be approved by the funder; Shs549bn for Rwenkunye-Lira-Kitgum when the bidding process was just beginning and Shs44.83bn for Luwero-Butalangu when the procurement process hadn’t even commenced.
Some accounting officers like Gender’s Pius Bigirimana are criticized for implementing projects outside NDP II priorities and thereby diverting financial and human resources away from the realization of Vision 2040 objectives. These include Integrated Community Learning for Wealth Creation project; Strengthening Sound Risk Management & Gender-based Violence prevention and Response project. The other is the Chemical Safety & Security (CHESASE) project. NPA experts are saying the same of local government ministry’s MATIP2 and Urban Markets & Marketing Development of Agricultural Products (UMMDAP).
That all these projects aren’t part of NDP II and aren’t captured anywhere under Public Investment Plans (PIPs). That some projects continue to be active in PIPs yet they reached expiry date long time ago; examples include Ishaka-Kagamba; Mbarara-Katuna and the Shs18.6bn construction of selected bridges. That whereas these remain active on PIPs system, they all reached expiry date in June 2018. That the Shs100bn upgrade of Atiak remains active on PIPs system yet the project expired in September 2018. Prof Tikodri’s Kiira EV Car project is also listened among projects that remained ongoing and active on PIPs system yet reached expiry date.
NPA also questions why billions available through off budget activities aren’t mainstreamed and consolidated into the main budget. That CSOs have a lot of cash in their hands (off budget) spending it on interventions which may not be consistent with NDP II priorities. That off budget activities divert MDAs personnel resources from focusing on NDP II priority interventions and thereby affecting the credibility of the budget.
The other bad area is the scattering of skills & human capital development efforts into 12 projects and 5 training institutions housed in Ministries of Gender, Trade, Tourism, Energy and Education. NPA observes this is why the desired impact hasn’t been achieved yet “enormous government expenditure has gone into” skills development. Way forward is putting all these efforts under one program with the clear objective to increase employability of Ugandan workers. That the much-delayed National Service Program should take off to impart work ethics, skills and values.
That failure to adequately capitalize Uganda Development Bank and Uganda Development Corporation (UDC) has limited access to development finance besides preventing government investments into strategically important areas which don’t attract the private sector. UDB currently lends at 14% for Uganda shillings and 8% for those borrowing in dollars. NPA says this still is higher than what NDP II envisaged to sustainably reduce the cost of development finance. Without UDB being adequately recapitalized, areas like agro-processing and manufacturing will remain starved of access to affordable development finance and government is advised to expeditiously consider having its own commercial bank (similar to what UCB was) to generally force interest rates down. The NPA proposal is to have a merger of HFB, PBU and Pride.
NPA also calls for sanction against MDAs that continue to collect NTRs and spend it on source and doing the same with billions realized under Appropriation in Aid (AiA). That to maximize returns, URA should be allowed to collect all NTR and AiA passing it on to the consolidated fund for proper utilization. NDP II envisages URA collecting all AiAs and NTRs and NPA demands sanction against accounting officers for UCC, CAA, NEMA, NFA, UWA, ERA and UEDCL. That as a result of URA’s increased involvement, resulting from strong recommendations made in previous CoCs, the NTR collections have grown from FY2016/17’s Shs362bn to FY2017/18’s Shs430bn.
In annually preparing the all-important Certificate of Compliance (CoC), NPA derives its authority from Sections 13(6) &(7) of the Public Finance Management Act (PFMA) which enacts the CoC as a tool necessary to ensure that budget implementation focusses on realization of the GoU development planning objectives enshrined under Vision 2040 and the constituent 6 National Development Plans (NDPs) each lasting 5 years. Consequently, the CoC is issued to guide Parliament (when appropriating money MDAs require for the subsequent FY) to ensure the Annual Budget and the National Budget Framework Paper (NBFP) are prepared in a way that aligns to the NDP.
That is the only way the country can achieve the economic transformation President Museveni preaches everywhere he goes including during his ongoing wealth creation mobilization tours. Gratefully compliance to this requirement has been growing steadily over the last 4 FYs since NPA began issuing the COC. In the FY2017/18, annual budget was 651.5% compliant to the requirement to align with NDP II compared to 54% of the previous FY.
LGs were most compliant at 66.4%. Through naming and shaming, NPA has used the CoC to enforce growing compliance. NPA wants Parliament to do something to ensure the unspent balances returnable to the consolidated fund are declared as revenue available for integration into the budget of the subsequent FY. That such should be captured in annual budget, NBFP and Government Financial Statistics (GFS) as unspent balances.
Government should also do more to adequately fund cooperatives: 18,570 are already registered with an average of 250 being registered annually. They need support to become strong enough to participate in regional and global trade.
The water sub sector leadership is also indicted for the failure of WASH facilities to take route as envisaged in NDP II. That much of the money allocated goes to recurrent as opposed to development expenditure.
Consequently, projects can’t be operationalized to achieve NDP II targets regarding access to water and sanitation. Laxity of the sector leadership has also led to decline in forest cover (now at 9.5% as opposed to NDP II target of 18%) and wetland coverage largely because of poor enforcement.
The health sector leadership must ensure more funding goes into preventive interventions and health programming to diminish the prevalence of especially of non-communicable diseases. That expenditure into curative approaches must be redirected to prevention for the NDP II envisaged outcomes
to be realized. (For comments, call, text or whatsapp us on 0703164755 or email us at firstname.lastname@example.org).