Should government borrowing of loans for non-essential activities cease?

Expensive. The 600MW Karuma Hydropower that is under construction. Government has acquired several loans from financial institutions such as World Bank to fund construction of infrastructural projects. FILE PHOTO

What you need to know:

Foreign debt. Much as the debt owed to the International Development Association (IDA) of the World Bank has declined from 61.9 per cent of the total stock in 2010/11 financial year to 45.2 per cent, debt owed to China has increased from 3.3 per cent to 20.3 per cent over the same period.

In its report for the financial year 2016/17, the Parliament’s Committee on National Economy said it will take 94 years for Uganda to repay the existing stock of debt.
The Members of Parliament warned that Uganda’s risk of rolling over the external debt to different generations was increasing as long as the country continues to source for more loans.

The report puts the stock of external debt for both the public and private sector at 41.4 per cent of gross domestic product (GDP), up from 40.2 per cent in the preceding financial year.
Almost all major infrastructural projects being undertaken by the government are finance by loans.
The World Bank, the African Development Bank and the Exim Bank of China are some of the major creditors of Uganda.
Much as the debt owed to the International Development Association (IDA) of the World Bank has declined from 61.9 per cent of the total stock in 2010/11 financial year to 45.2 per cent, debt owed to China has increased from 3.3 per cent to 20.3 per cent over the same period.

On Monday, April 22, Cabinet approved another loan of Shs114b from the African Development Bank to be spent on the fight against gender-based violence in the country.
The justification given by the government was that the issue of gender-based violence has increasingly become a matter of public concern.
While presiding over the International Women’s Day celebrations in Mityana District on March 8, President Museveni condemned the act of men beating their wives, describing such men as “cowards”.

Is this the reason the loan is being sought?
Barely two months after the President passionately spoke about domestic violence, Finance Minister Matia Kasaija tabled the request for a multi-billion loan to Cabinet.
“We have cases of rape, but because of the lengthy processes of courts, victims lose hope. Others negotiate out of court…but this does not take away the fact that a crime has been committed,” said Ms Peace Mutuuzo the State minister for Gender, two weeks ago.

What priorities should government borrow for?
According to Mr Julius Kapwepwe Mishambi, the director of programmes at Uganda Debt Network, there would not be any reasons to worry if government borrows to implement key development areas prioritised in the National Development Plan.
He said much as the country is putting a lot of burden on the Oil and Gas prospected proceeds to repay the loans, spending that money on fixing infrastructure would be a good decision.
“Even when we have so many needs as a country, it is imperative that we prioritise our borrowing and focus on areas mapped out or indicated in the National Development Plan,” Mr Kapwepwe said.

What is the best alternative to the loans?
Mr Jack Wamanga Wamai, the MP for Mbale Municipality, who sits on the National Economy Committee, said there is no need to borrow money to fight a social and moral decadence.
The MP, who revealed that he is quitting the National Economy Committee because of unnecessary borrowing by government, said he believes that gender-based violence can be fought and defeated by sensitising the communities to change their mindset.
“I have decided to leave the committee on national economy because it has become a rubberstamp of Cabinet by always approving loans. It is so sad that we are borrowing almost for every other project the government wants to implement,” Mr Wamai said.
Mr Kapwepwe advised government to use locally generated resources to solve social problems like gender-based violence. Mr Wamai is also reading from the same script as Mr Kapwepwe.

The two believe that government has been introducing new taxes and also increasing the already set taxes, something that indicates there more money is being collected from the tax payer every other year.
“Reduce the wastage of our own domestic resources and channel them towards these said priorities so that the loans can be spent on huge fund demanding projects that are tangible to every Ugandan,” Mr Kapwepwe said.
On the other hand, MP Wamai said: “What happened to the money we collect from the tax payers here in Uganda. Is Uganda Revenue Authority not collecting enough money? Where does the money the President spends on buying political capital come from? Why can’t this money be used for such non-essential projects?” Mr Wamai asked.

Recently, when the National Planning Authority complained that the country is failing to meet the Low Middle Income Status by the year 2020, Finance minister Matia Kasaija said the delay in financing the planned for projects is because URA was not collecting enough money from taxes.
Col Shaban Bantariza, the deputy director of the Uganda Media Centre, while delivering a Cabinet resolution during a press conference two weeks ago, said the fight against gender-based violence was taken by Cabinet as a national priority.
Then, the unanswered question remains: is the fight against gender-based violence a major national priority than the persistent nodding disease syndrome in northern Uganda? Is the fight against gender-based violence fight a major priority than the undelivered promise of procuring CCTV cameras to be installed on streets of Kampala and major towns to fight crimes such as kidnappings, murder and robbery that has plagued the country.

Economist Kapwepwe views such borrowing as misplaced as long as the tax payer’s money continues to land into the pockets of corrupt government officials.
He said unless government stops the stealing of fund for such “prioritised” projects, the loans will not cause any impact in the social-economic development of the country.
“There is need to recover the already stolen resources of financial and non-financial nature. Money has been stolen in billions and less has been recovered by the government. So there is no need to borrow,” he said.

Is government short of manpower to fight against gender-based violence?
The government has been boasting of having a system that can take Ugandans towards achieving Vision 2040 where development will have to be accelerated.
At every sub-county, there is a community development officer who is supposed to handle and mitigate domestic violence- related issues at community level.
At the district level, there is a probation officer in addition to the community development officer--all charged with the welfare of the population at the family level.
The police also has the Child and Family Protection Unit with officers trained to handle domestic issues. And there are is the judiciary that discharges justice in case issues go beyond the above levels.