Rethink Shs2 trillion vaccines bailout plan
Mr Mathias Magoola (right) speaks to the minister for Science and Innovation, Dr Monica Musenero (2nd right), and other officials at Dei Biopharma manufacturing facility in Matugga on March 22, 2023. PHOTOS/SYLIVIA KATUSHAB
What you need to know:
The issue:
Vaccines bailout.
Our view:
Some bailouts come with fundamental problems. They create long-run moral hazard incentives for some investors to take thoughtless and unnecessary risks.
A Ugandan entrepreneur who told the President that he had discovered a Covid vaccine at the onset of the pandemic, is now seeking for $600m (more than Shs2.2 trillion) government bailout.
Mathias Magoola, the founder and director of Dei Group, needs taxpayers’ money to complete construction of his private pharmaceutical company in Matugga, pay back borrowed funds and use the balance to boost the business.
Cabinet has already granted Magoola’s wish and even sent a team of ministers to his facility in Matugga to assess the situation. Luckily, Parliament has not approved Magoola’s bailout which, in our view, seems absurd and bears hallmarks of a mission in futility and “a recipe for disaster”.
Since 2011, the government, through a team of well-funded scientists from Uganda Virus Research Institute (UVRI) has been making empty promises. Their leader, Dr Monica Musenero, talks of “advanced stages” but without clinical trials. For more than a year, she has been promising “data analysis” and “purification” of a ghost product. The minister is now struggling with accountability queries relating to billions of shillings her team received for the development of a Covid vaccine.
The icing on the controversial bailout began in the time of Covid-19 pandemic and the desperation for miracle cures. Keen to solve the deadly conundrum of Covid-19, President Museveni met Magoola through former Speaker Rebecca Kadaga in March 2020 and revealed how he had teamed up with an American professor, Safarz K Niaz, to produce a vaccine that kills coronavirus. The facility has only managed to produce a hand sanitiser he named CovaVil.
What about Lubowa Hospital? Another striking example of private projects. After choreographing a rosy portrait of a modern hospital in Uganda, in June 2019, the government handed over Lubowa land and issued a promissory note for $397m (about Shs1.4 trillion) given to the Italian firm FINASI. The proposed 264-bed specialised hospital was expected to be completed by June 2021. The project criticised as a bottomless pit, has since stalled at the foundation without clear explanation.
This project and many others involving public funds/ investments, have either stalled or making back to back losses. The vaccine development idea is fancy on paper but its realisation and prospects of recovering the trillions of shillings injected in the venture, remains ambiguous if not non-existent.
Our view is that we rethink the proposed bailout and re-examine the prospects of this deal before it’s too late. The intentions are good but we can’t afford to make the same mistakes.
