Overview:
The CSOs, who include SEATINI, Uganda Debt Network, and Transparency International Uganda, say whereas the government has put in place debt management policies and frameworks such as Public Debt and Financial liabilities Framework for FY 2018/19 - FY 2022/23, annually, the reports about performance/ outcomes of debt-funded projects seem to be under “lock and key.”
Civil society organisations (CSOs) have blamed the rising public debt on government’s lack of transparency, poor accountability and corruption.
The CSOs, who include SEATINI, Uganda Debt Network, and Transparency International, say whereas the government has put in place debt management policies and frameworks such as Public Debt and Financial liabilities Framework for FY 2018/19 – FY 2022/23, annually, the reports about performance/ outcomes of debt-funded projects seem to be under “lock and key.”
As a result, they said it’s difficult to know how the borrowed funds are spent and whether they are spent on projects that have value for money.
Speaking at a press conference in Kampala on Sunday, August 21, Peninah Mbabazi from SEATINI said while Parliament has an oversight role in the approval and acquisition process as well as scrutinizing projects, there’s high wasteful expenditure and high corruption rate, with low revenues collected to service the debt acquired.
On debt acquisition and approval, she said the approval process is always rushed and Parliament’s scrutiny into the loans has been limited.
“Lack of transparency in publicly guaranteed debt, debt arrears, contingent liabilities, etc. has raised significant concerns. Collateralized public debt exacerbates these fiscal concerns even further because it frequently goes unreported or is only partially disclosed as a result of vested interest capture, which keeps it hidden from the public and even from some government agencies,” she said.
She said loans for ongoing projects seeking additional financing are approved without scrutinizing their midterm or end of project evaluation reports. These circumstances arise mainly due to political influence and poor planning, Mbabazi added.
“Lack of transparency in publicly guaranteed debt, debt arrears, contingent liabilities, etc. has raised significant concerns. Collateralized public debt exacerbates these fiscal concerns even further because it frequently goes unreported or is only partially disclosed as a result of vested interest capture, which keeps it hidden from the public and even from some government agencies,”
penninah mbabazi from seatini u
As of October 2021, according to data from the Central Bank, Uganda’s public debt had risen to Shs73.8 trillion up from Shs69 trillion in June 2021.
The increase was mainly attributed to a Shs5.9 trillion debt that government had acquired from the domestic market.
“On debt accumulation and utilization, high commitment fees are generated from undisbursed loans due to low levels of absorption of borrowed funds which have resulted into the cost of debt rising,” she said.
“The Ugandan citizen has not yet appreciated the public debts that Government keeps getting because there are so many borrowed resources that can not be accounted for. There is a lot of opaqueness in how public debt is utilized in Uganda today,” she said.
Mr. Peter Wandera, the Executive Director of Transparency International Uganda, said government should minimize confidentiality clauses and where permissible, publish contracts that include exceptions to non-disclosure provisions.
“The clearance and purchase procedure is overseen by Parliament, and it also reviews projects “value for money“. At the same time, there has been a lot of wasted spending, a lot of ongoing corruption,” Wandera said.
According to Mbabazi, the Office of the Auditor General’s report (2021) revealed poor absorption and performance of the projects. Out of UGX9,515.3B that was appropriated by Parliament, only UGX4,516.5Bn (47%) was released.
Relatedly, absorption of externally funded projects further declined in the year under audit. Out of the UGX.4,516.5b disbursed for donor-funded projects, only UGX.2,937b was spent, representing 65.0% as compared to the 71% observed in the FY2019/20.
Mr Wandera said there’s need to eliminate opaqueness in tax expenditures and incentives by sharing information publicly, reducing tax holidays to ensure revenues are not spent highly in debt servicing costs but on service delivery.
“If can put in place a debt register, then citizens shall be able to know how much we’re borrowing, for what cause, nature of debt and payment period. This info is very relevant on shaping discussions on debt acquisition and public revenue mobilisation,” he said.
“We need to see more transparency in Debt acquisition and Approval processes, minimise confidentiality clauses to ease monitoring, publish collateralised debt in annual debt reports and centralize data on public debt,” he added.
Mbabazi added: “We need to open the conversation on debt beyond ‘those who know’ and take it to the everyday Ugandan; in academic institutions and all others other than the technical people.”
Mbabazi said the government must make sure that money is invested in ventures that will yield good returns, notably through providing loan mid-term review reports to prevent the accumulation of non-performing loans.