Govt losing billions in debt mismanagement, wasteful spending

Kampala, (UG):- The latest report from the Office of the Auditor General (OAG) has unearthed alarming figures lost by government in excess of billions as a result of financial mismanagement, revenue losses, and inefficiencies, which has sparked widespread concerns among civil society organizations over the fate of the Uganda’s economy.

Under their umbrella body; the Civil Society Budget Advocacy Group (CSBAG), the CSOs have expressed deep concern over the findings, which reveal critical failures in debt management, public investment, and accountability.

Speaking to the media at a press conference held at their offices in Kampala, CSBAG’s Executive Director, Mr Julius Mukunda, noted that the undisbursed loans in the previous financial year increased by UGX 1.890 trillion, leading to UGX 73.904 billion in commitment fees paid by the government. Over the past six years, Uganda has lost UGX 469.778 billion in such fees.

Additionally, debt servicing now consumes 20.99% of Uganda’s domestic revenue, surpassing the 12.5% threshold set by the Charter for Fiscal Responsibility. This trend, according to him, threatens the country’s fiscal stability. “We are witnessing an alarming rise in interest payments, from UGX 3.917 billion in FY 2021/22 to UGX 5.835 billion in FY 2023/24,” Mr Mukunda noted.

“Uganda is grappling with substantial losses due to inefficient loan management and underutilization of borrowed funds,” he added.

Project Failures and Public Investment Woes

Mr Mukunda further noted that the OAG report also exposed the high cost of unprepared government projects. Of the UGX 11.837 trillion allocated to 49 loan-funded projects, only 62% was disbursed, leaving UGX 282.34 billion in government counterpart funds unused. He said of these, 184 planned activities worth UGX 6.49 trillion were not implemented.

“Fifteen out of 49 projects lacked feasibility studies, resulting in delays, cost overruns, and inefficiencies,” he said, highlighting some facilities, such as the National Oil Seed Project, which was intended to support farmers in 81 districts, only disbursed UGX 18.32 billion out of the projected UGX 111.98 billion.

The CSBAG boss also decried significant revenue losses incurred by the government, including UGX 68.842 billion in uncollected taxes on gold exports worth over UGX 11 trillion. This is an addition to the UGX 439 billion in mineral rent fees that remained unpaid by June 2024, while incorrect tax classification resulted in further revenue losses.

These failures, Mukunda warns, “undermine the government’s ability to raise enough revenue to fund national development.”

Additionally, the OAG report showed that money lost by the government through wasteful spending amounted to UGX 2.9 trillion, or 5.5% of the approved resource envelope. This included UGX 316.7 billion worth of expired medical supplies, UGX 2.7 trillion in overpaid project funds for uncompleted works, and UGX 1.025 billion misallocated under the Emyooga and Parish Development Model (PDM) programs.

Kenneth Asiimwe, an economist at CSBAG, noted that these investments highlight Uganda’s weak public financial management, where large sums of money are funneled into private companies without adequate oversight.

The OAG report also sheds light on the mistreatment of pensioners, with 5,649 retirees excluded from the payroll in FY 2023/24, while another 4,948 pensioners have been waiting for 1 to 20 years to be added to the payroll despite submitting the required documentation.

Pascal Muhangi, another economist at CSBAG, emphasized that the government’s failure to process pensions in a timely manner has left thousands of retirees struggling financially, despite their years of service to the country.

Furthermore, Uganda’s enhanced salaries for science teachers have created an unsustainable pension burden. “With the new pay grade, each science teacher pensioner is entitled to UGX 172.8 million in gratuity, compared to UGX 46.5 million for an arts teacher,” the report states, warning that the pension system is at risk of collapse.

Mr Mukunda therefore urged government agencies to take immediate corrective action. “Every shilling wasted affects service delivery and the livelihoods of Ugandans. There must be stringent accountability measures in place to prevent further financial hemorrhage,” he emphasized.