People & Power

‘Finance Bill needed urgently’

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Mr Julius Mukunda during the interview in Kampala last week. PHOTO BY RACHEL MABALA.

Mr Julius Mukunda during the interview in Kampala last week. PHOTO BY RACHEL MABALA. 

By Ismail Musa Ladu

Posted  Sunday, August 10  2014 at  01:00

In Summary

The Public Finance Bill 2012, is a legislation that aims to strengthen financial management and restore discipline in the way government manages public resources, something government seems to be grappling with. Ismail Musa Ladu caught up with the Civil Society Budget Advocacy Group (CSBAG) Coordinator, Mr Julius Mukunda, about what the civil society organisations think about the Bill currently in Parliament. Excerpts

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As Civil Society Organisations, what is your take on the Public Finance Bill, 2012?
In 2012, the Government of Uganda tabled the Public Finance Bill, 2012, which seeks to repeal the Budget Act 2001 and the Public Finance and Accountability Act, 2003. While significant achievements have been registered with the enactment of the current laws, a number of challenges remain necessitating review of the laws to address the concerns on the existing laws and regulations. Whereas the proposed Bill offers a great benchmark for remarkable public financial management, a number of concerns have arisen that, civil society organisations under the Civil Society Budget Advocacy Group (CSBAG) have taken keen interest in advocating for prudent, pro-poor and gender responsive public finance and management principles of the country embedded in the Public Finance Bill 2012to ensure the bill once passed into law strives to improve public finance management, guard against misuse of public resources and ultimately improved service delivery.

What is it that you are not contended with in the Bill? And what is its impact if it passes the way it is.
The current proposal is that the Certificate of Gender Equity will be issued by the Attorney General and not the Equal Opportunities Commission (EOC). CSBAG feels that these powers are best exercised by the EOC given its mandate
Another issue that we are not contented with is that the Bill spells out a number of offences and penalties. If one considers the offences in the bill and the level of punishment, it’s not even worthy to prosecute a case under this Act. At the highest level of penalty, a person will be charged Shs5 million and yet the offence ranges from opening and maintaining a government bank account without authority of the accountant general.

Clause 21 (3) on the supplementary budgets; allows the minister to authorise up to 10 per cent of a sector budget as supplementary expenditure for any given financial year. We feel this will heavily and negatively impact the work plans of the sectors and thus disrupt service delivery. For example, the agriculture sector budget of Shs440 billion for the FY 2014/15 can be disorganised by up to Shs44 million without Parliament’s approval. This undermines the budgeting process and it is for this reason that we suggest the percentage be lowered to 3 per cent as is provided for in the Budget Act, 2001.

Clause 55 (3) states that oil revenues should not be used for recurrent expenditure such as human resource constraining in health, education and agriculture which are considered recurrent. We are of the proposal that since Uganda doesn’t, for instance, have a universal health or social security system, some oil revenue on recurrent government expenditure including on social services like health and education. So it is on this basis that we urge government to amend this clause and allow 3 per cent of the oil revenues be spent on the social- economic sector recurrent budgets.

In the recent past, ‘Classified Expenditure’ has been used as basis to misuse public funds. The current provision on the bill is not strong enough to deter misuse of public funds through ‘Classified Expenditure’. These are a few of the issues we have so far highlighted; a deeper analysis has been made and issued to MPs to use as a reference when debating the bill.

Is the Bill the only tool that can solve financial management? If yes how? And if no why the fuss about the Bill?
Such a Bill that intends to strengthen the financial regulations and management systems in the country is very important. Over the last decade, the government of Uganda has implemented a number of public financial reforms aimed at strengthening the public financial systems, accountability and value for money. Although a number of laws and regulations exist such as the Budget Act, 2001 and the Public Finance and Accountability Act, 2003 and the recently revised Public Procurement and Disposable Act 2003, there are a number of shortcomings that need to be addressed. According to CSOs and Parliament recommendations, the need to strengthen the Parliament oversight on resource allocation was one of the critical areas that needed to be addressed. According to the government, the management of oil and gas revenues, and the East African Community (EAC) integration rules were among the critical issues that were not addressed by the current legislation.

What will be your next cause of action if your recommendations are not taken on board and the Bill passes it in its current form?

CSBAG has been engaging the Public Finance Bill, 2012, ever since it was brought to Parliament, to ensure that it promotes prudent public finance management and accountability practices and we are confident that our proposals will be taken care of. In a situation where the inevitable happens, we will mobilise and sensitise all Ugandans about the loopholes in this particular law to cause a revision of the law, we will petition the President not to assent to the Bill and short of that we will go to the Constitutional court and challenge a number of clauses in the law once passed in their current form.

How about the recently-read Budget. Is it pro-people? Is there anything else you need addressed?
The campaign on the Public Finance Bill is one of the critical activities of CSBAG to ensure prudent public finance management. On quite a number of occasions, Civil Society Organisations have come together. The most recent engagements are the CSBAG campaign against the tax proposals on agriculture where we are seeking 1,000,000 signatures to petition the Speaker of Parliament and have these proposals withdrawn.

We also push for a more people centered Budget in Uganda to benefit women and men more equitably. For example, under agriculture we lobby for increased investments in the agriculture sector to adequately address the sector rigidities that hamper service delivery especially to the small scale farmers. CSBAG has been keenly engaging on the need for well-tailored agricultural loans to invest in inputs and insurance cover to help especially small scale farmers when they experience adverse natural or business circumstances as well as mechanisation of agriculture.
We have keenly followed efforts to deal with this challenge and one of such efforts is the performance of the Government Agriculture Credit Facility increased access to credit.

Any other related information that you would like to highlight
I wish to call upon Ugandans and other well-wishers to get concerned about the way our government collects and spends national resources. It’s only then that we can have the information necessary to demand for accountability from our government. Citizens are urged to engage their MPs to support the CSO position in Public Finance Bill, to date, all MPs have these clauses and if they vividly push for them, then we are sure Uganda will have a fair and just public finance law.

About the bill

Parliament is considering the Public Finance Bill, 2012. Once passed into law, this Act will repeal the Public Finance and Accountability Act, 2003 and the Budget Act 2001. The Bill also provides for the management of Petroleum revenues.
The purpose of this Bill is to provide for public financial management in Uganda by establishing—
(a) the principles and procedures for a sound fiscal policy and macroeconomic management;
(b) the processes for the preparation, approval and management of a transparent, credible and predictable annual Budget;
(c) the mechanism for the operation of the Contingencies Fund;
(d) the mechanisms for cash, assets and liability management;
(e) reporting and accounting systems, and an internal audit framework; and
(f) the legal and regulatory framework for the collection, allocation and management of petroleum revenue.

On January 31, 2012, Ms Sarah Mitanda, on behalf of First Parliamentary Counsel, wrote a letter to the Cabinet in relation to the Certificate of Compliance by the First Parliamentary Counsel in respect of the drafting of the Public Finance Bill, 2012

When it was tabled in the House later that year, it came as a combination of three: the Budget Bill, the Public Finance Bill and it would cater for the Petroleum revenues. However, the MPs on the House Committee on Finance, civil society members, a cross section of MPs and even the Speaker of Parliament, expressed discontent about the Bill. The Speaker reasoned the Bill’s proposal to remove the Parliament Budget office will clip Parliament’s power in the budget process. Some MPs and CSOs opposed it saying it has clauses that could facilitate the pilfering of public funds by ruling NRM party members.

In short, there was a wide call for the Ministry of Finance to revise the Bill. Speaker Kadaga wanted it to be split into three Bills; the Budget Bill, the Public Finance Bill and a separate bill for oil revenue management. Later, a Finance ministry official tabled a document with 55 changes to the original Bill, including changing the title of the Bill from Public Finance Bill to Public Finance Management Bill.