As the clock ticks away towards the country ‘deadline for achieving a middle income status, some key ministries, departments and government agencies have failed to spend more than Shs175 billion meant for planned activities in the budget, highlighting what development analysts have called the “shame of low absorption capacity” in government.
A review of at least 18 entities by the Office of the Auditor General has revealed that a total of Shs174.9 billion remained unspent at the end of the financial year yet critical vacancies in government are not filled for lack of funds.
For instance, the scrutiny of the approved staffing structures of various entities revealed a total of 1,416 vacancies in 20 entities. This gap in staffing in the various government ministries and departments affects the timely implementation of entity activities and may adversely impact on attainment of their strategic objectives, according to Mr John Muwanga, the Auditor General.
Although Section 17 of the Public Finance Management Act, 2015, provides that every appropriation by Parliament shall expire and cease to have effect at the close of the financial year for which it is made and that unspent money at the close of the financial year shall be returned to the Consolidated Fund, some entities retained the unspent money without authority.
For instance, Uganda Investment Authority had a bank and cash balance of more than Shs15 billion that remained unspent and was not returned to the Consolidated Fund.
The authority and other ministries, department and agencies did not comply with the provisions of the Act. The AG said there is risk that the funds may be retained and spent without authority. Some agencies claimed they had undisclosed commitments at the end of the financial year.
Some of the entities listed in the AG’s report include Kampala Institutional Infrastructure Development Programme II (Shs86.2b), Community Infrastructure Agriculture Improvement Programme (Shs53b), Agricultural Technology Agribusiness Advisory Services (Shs15.6b) and Vegetable Oil Development Programme (Shs10b), among others.
“Failure to realise the budgeted funds by entities constrains implementation of planned activities which affects the achievement of their mandates,” Mr Muwanga said. “As a result of the unspent balances, service delivery is hampered and the appropriating authority’s objectives are not met.”
The problem of low absorption capacity should be checked if the country is to meet the targeted economic growth rate envisioned in President Museveni’s Kisanja hakuna mchezo promise of a middle income country by 2020.
According to the World Bank, middle-income economies are countries with a Gross National Income (GNI) per capita of more than $1,045 (Shs3.5m) but less than $12,736 (Shs42m). This is where Mr Museveni wants to take Uganda in barely three years’ time. Currently, Uganda is categorised as low-income country.
For his flagship project of achieving a middle-income status to succeed, President Museveni used his New Year message to the country to highlight the achievements so far and once again reminded the country about a raft of his fifth-term priority areas such as reviving the Uganda Airlines, lifting the 68 per cent of Ugandans out of subsistence farming, fighting corruption, lowering power prices and reducing poverty levels in the country.
Some MPs and civil society activists who have read the latest AG findings cast doubt whether the country will achieve the middle income status by 2020 without addressing the problem of low absorption capacity and mismanagement of public funds.
Finance ministry reacts
Asked what ministry of Finance is doing to stop the low absorption problem, Mr Jim Mugunga, the ministry spokesperson, said: “The ministry is pushing forward with performance contracts, monitoring and evaluation as tools to ensure adherence.”
Mr Mugunga added: “The Secretary to the Treasury, Mr Keith Muhakanizi, has clearly committed to ensuring that the Finance ministry follows up on outcomes in addition to outputs as a way of ensuring better performance and valuable absorption.”
He added: “Our philosophy is that it’s good to absorb funds but important to gain measurable value or improvements as well in line with the objectives of any such expenditures. Our position is very clear, we want to see service delivery and as a ministry we have notified the accounting officers that this is Kisanja hakuna mchezo and that those with outstanding queries will not be eligible for reappointment.”
However, the accounting officers partly blamed the procurement red-tape and staffing gaps.
Asked why his ministry failed to spend more than Shs28million, the ICT accounting officer, Mr Vincent Waiswa Bagiire said the money was for “Unspent salaries of vacancies that were not filled in the year under review”.
But even as some government agencies failed to utilise funds, the latest audit revealed that in the Financial Year 2015/16, at least 21 entities budgeted for Shs3.2 trillion but only received Shs2.9 billion from government translating into 92 per cent out-turn for that financial year. This, according to Mr Muwanga, left a funding gap of Shs26.5 billion.
Again on account of lack of funds, the Auditor General noted case backlogs across several entities in government. These include 395,962 cases under prosecution by the Directorate of Public Prosecutions (DPP), 856 disciplinary cases under the Judicial Service Commission, 181,121 court cases for hearing in courts of law under the Judiciary and 4,326 pending cases for analysis under government Analytical Laboratories.
On account of the backlogs, the auditors blamed on insufficient funding to the Judiciary among other things, Mr Muwanga found that more than 30,000 suspects are on remand in prisons for a long time and under investigations in five Police stations. Delays in settling cases impair the timely administration of justice.
Article 120 of the 1995 Constitution created the office of the Directorate of Public Prosecutions. The constitutional mandate of the DPP is to prosecute criminal cases in any court in Uganda, except the Court Martial.
However, the AG analysis of the cases performance report at the Directorate for the financial years 20142015 and 2015-2016 indicated that there are 34 types of criminal cases being handled by the DPP. Outstanding cases in the financial year ended June 30, 2015 were 400,377.
During the year 2015/2016, a number of newly recorded cases were highlighted as 130,472 and number of cases completed (in form of convicted, acquitted, withdrawn, dismissed or closed files) totalled 134,887 with a closing balance at 395,962.
The Auditor General put outstanding amounts in court awards, compensations and other liabilities at Shs684b as at June 30, 2016. The outstanding amount in court awards and compensations has been accumulating over the last five financial years raising from Shs54 billion to now Shs684 billion.
Former and current Parliament’s Public Accounts Committee members have blamed the low absorption capacity on lengthy procurement procedures, low staffing levels in the various ministries stringent donor conditions, nonadherence to commitment control systems, poor monitoring of government projects and absence of sanctions.
“We are not going to spare any accounting officer with unspent funds,” Mr General Karuhanga, the Vice Chairperson of PAC, said. “Every year we are confronted with this problems yet they are the same culprits. How can an accounting officer return money to the Treasury when our people don’t have drugs in hospitals and they are using bad roads? This is unacceptable.”
However, Mr Julius Kapwepwe Mishambi, a director at Uganda Debt Network (UDN), an NGO working in the country, poor absorption of funds is initially based on poor planning and staffing. For instance, in Katakwi District, of 18 positions designated under the Natural Resources Sector, only three were filled in FY 2015/16 and some in acting capacities.
“This limits how much service they can deliver, which is itself an accountability issue to taxpayers,” Mr Kapwepwe said, adding: “Ugandans also lose funds on borrowed resources, especially from the African Development Bank, Japan or Korea that have not translated into actual services on the ground through government institutions and individuals who still earn their full pay.”