Why big Cabinet threatens Museveni’s middle-income dream

Sunday June 19 2016

Mr Museveni

Mr Museveni 

By Yasiin Mugerwa

Citing the need to broaden consensus and step up political mobilisation, Parliament on Tuesday authorised President Museveni to expand his fifth-term Cabinet from 42 ministers provided for in the 1995 Constitution to now more than 80. President Museveni’s new Cabinet is one of the largest in the world.

Uganda, a Least Developed Country desperately seeking to join the league of middle-income countries such as Ghana and others on the continent, however, has more ministers than high-income nations – the big brothers like US, Japan and Germany. Even with higher per-capita incomes and far higher tax bases, developed nations have less than 20 cabinet ministers each.

The resolution in Parliament was passed amid widespread concerns, particularly from development experts and independent-minded politicians, who warned that “a distended government” would aggravate the cost of public administration in the country, eat into the budgeted funds for social development and wedge the road to a middle-income status.
However, private secretary/political affairs to President Museveni, Mr David Mafabi, insists that “a meaningful transformation requires political integration” and that an expanded Cabinet seeks to achieve that goal.
“People may talk about increased cost of public administration but we are talking about the diversity of widening the political base that supports the changes that we envisage,” Mr Mafabi said. “There was need to expand the political base for national consensus and you cannot cost that in terms of the cost of public administration because the economy has the potential to grow in double digits.”

However, political economists such as Dr Kisekka Ntale and other analysts dismissed Mr Mafabi’s arguments as ‘phony’ and, warned that “we cannot eat our cake and have it at the same time”, adding that the expenditure on a bloated Cabinet will have far-reaching implications on the economy.
“President is grappling with a delicate balance between politics and economics, but if we must talk about middle-income status, production must be principal,” Dr Ntale, an independent researcher, said.

“A big Cabinet is going to have a big impact on the wage bill and the public administration bill. It’s going to negatively impact on the planned investments and quality of service delivery in the country.”

The resolution to expand Cabinet was mooted in the NRM parliamentary caucus last week, where the President reportedly requested MPs to increase his post-election Cabinet to 88. Pockets of resistance from a minute Opposition did not stop the NRM majority from passing the resolution. The President, according to sources, was however responding to pressure from NRM MPs who were demanding for ministerial positions.

“The President is trying to make citizens happy and he is doing this in the realm of stability, consensus building in total disregard of the dangers to the economy. These are just political settlements responding to some pressure but they are not adding anything on the economy. It’s a dilemma because production is going to be affected,” Dr Ntale warmed.

What went wrong?
In trying to identify the root cause of the problem, in his research “Trends in Public Administration Expenditure in Uganda: The Cost of the Executive and its Implications on Poverty Eradication and Governance,” Mr Godber Tumushabe, the associate director of Great Lakes Institute for Strategic Studies, however, blames those who amended the 1995 Constitution to increase the number of people that could be appointed to the Cabinet.
In effect, Mr Tumushabe, in a view shared by some senior legislators who talked to Sunday Monitor, argued that the freehand given to the President to appoint any number of ministers opened a pandora’s box as similar appointments are made for presidential advisers, presidential assistants and Resident District Commissioners (RDCs), without the oversight of Parliament or the Public Service Commission.

To begin with, Mr Tumushabe says, “This political bureaucracy has led to significant diversion of public funds and resources from critical social and economic sectors. Its bloated nature has blurred the lines of accountability and responsibility hence breeding unprecedented corruption and mismanagement.”

The central argument of Mr Tumushabe’s paper is that an oversize Cabinet and a growing Executive bureaucracy built around the Office of the President and State House, is the single most important threat to governance and efforts to eradicate poverty and achieve economic transformation in Uganda today.

Since the President appoints ministers mainly from Parliament, an institution charged with the oversight responsibility, MP Mathias Mpuuga (Masaka Municipality) says the institution has “become part of the problem”, citing conflict of interest and lack of clout even when they would want to call the President to order. He, therefore, recommends the Kenyan model where no minister/ cabinet secretary is appointed from parliament to ensure efficiency in government.

“The middle-income promise is a pipe dream, you cannot mix greed and development, even repressive regimes that attained it in the last century such as Singapore first solved graft,” Mr Mpuuga said. “We can’t do much when the appetite of the leaders is competing with the needs of the ordinary people.”

And on increased cost of public administration, Mr Mpuuga explained that economical public administration only occurs where institutions are run on merit and that a top-heavy public administration is common place where cadres are deployed to lay legitimate claim on the public purse unlike the channelling approach to patronage.

The President’s generosity and desire to appease his colleagues and supporters, he says, has slowly overwhelmed his interest in efficiency and that this problem explains why ministers have been increased to 81 and now the President wants to increase the number to 88. With huge perks, support staff, furnished offices and a fleet of vehicles, the wage bill could hit Shs3 trillion a year.

President’s explanation
President Museveni, however, insists that he needs many ministers to ably supervise government programmes. The Government Chief Whip, Ms Ruth Nankabirwa, rehearsed the same point in Parliament when she argued that an expanded Cabinet will increase efficiency through political supervision.
Whether political supervision, more than technical oversight in a leaner government translates into increased production, analysts were of the view that this is another “smoky argument” envisioned to disguise the emotive dangers of a bloated administration on a Least Developed economy.
President Museveni, who was responding to his competitors (Amama Mbabazi and Dr Kizza Besigye) who had promised a leaner Cabinet in their campaign manifestos, called the duo “insincere”. However, the President acknowledged that a bloated government comes with a high wage bill, which during the reading of the 2015/16 Budget in June 2015 stood at Shs3 trillion. The cost of public administration in the country stands at about Shs800 billion per year, up from Shs554 billion two years ago.

Dr Besigye and Mr Mbabazi, like five others who challenged Mr Museveni for Uganda’s presidency during the disputed February polls, promised to trim the Cabinet so that the money saved is directed to priority areas such as education, health and agriculture or invested in the improvement of the welfare of public servants.

Available figures show that a Cabinet minister who is also a Member of Parliament earns about Shs25 million monthly and the one who is an ex-officio earns about Shs18 million.

President Museveni also has about 100 advisers who are collectively paid Shs230 million every month, excluding allowances. The number of MPs also increased from 386 to now 428 MPs in the 10th Parliament as a result of the creation of new districts, counties and municipalities.

What can be done?
Economists have argued that the President, to show that he is serious about the middle-income dream, should have at least cut the wage bill by Shs1 trillion and sent the money to the agricultural sector which employs close to 80 people and is a key player in the country’s quest for a middle-income status.
Dr Besigye had promised to reduce on the number of presidential advisers, abolish the RDCs and their deputies and reallocate the billions of shillings the government spends on salaries annually and office running to critical sectors of the economy such as health, education and agriculture in his quest for a leaner government.

The total wage bill of the Office of the President, which also covers 112 RDCs and their deputies, stands at Shs702.2 million a month, adding up to more than Shs8 billion annually. This is in addition to nearly 300 presidential advisers, presidential assistants and presidential secretaries.

Although Opposition legislators dismissed a bloated Cabinet as “politics of lunch, supper and patronage gone into the survival rang,” Mr Mafabi insists that the creation of new counties will help deliver services closer to the people and foil tribal conflicts in fickle areas and that those criticising President Museveni’s big Cabinet were looking at “the tiny economy” and not “the bright future”.

“The political dividends arising out of political supervision of government departments and improved service delivery in the country will certainly offset the temporary cost of public administration,” he said, adding that “In any case, in real terms, the cost of public administration is not significant.”

There are many things to fix in President Museveni’s new term though, but the NRM party has picked on one major target: transforming Uganda from a low-income country to a middle-income economy by 2020, while Opposition doubts whether this mission can be accomplished with less than four years left.
Although the recent 2016/17 Budget laid out the key strategies for achieving the epic task ahead, regime apologists insist that the new ministers will give policy directions, monitor the implementation of government programmes and ensure that the middle-income status fight is not lost.

However, civil society watchdogs and economists hold the view that unless a miracle happens, the government is likely to miss the middle-income target on account of “misplaced priorities”.

At approximately $750 (Shs2.5m) as GDP per capita currently, Mr Julius Kapwepwe Mishambi of Uganda Debt Network said Uganda needs at least $500 (Shs1.7m) to GDP to make it to lower middle-income status. His analysis shows that it’s unattainable in just five years because “we should have been registering annual economic growth of at least 8 per cent over the last five years and next five years.”

Mr Mishambi reiterates that “with decimal financing to the agricultural sector with no focus on value chain but simply soldiers rotating in villages with seedlings,” attaining a middle-income status without cutting the cost of public administration, propping up investments in productive sectors and cutting wasteful expenditures, “will be a faraway cry”.
Amid these misgivings, in the coming months or weeks, the new Cabinet ridiculed by the likes of Prof Venansius Baryamureeba as “tired”, is however, expected to take on the task of ensuring that Uganda graduates from the league of poor nations to middle-income class in less than four years’ time.

Whether this is feasible or not, the President has made it clear that the new Cabinet has no choice but to deliver the 2020 chalice.

But for President Museveni’s government to succeed where it failed in the previous terms, Prof Baryamureeba, a former presidential aspirant, is of the view that the technical team should also be reshuffled and the ministers empowered to monitor government programmes and ensure accountability.

“Some ministries should be restructured and the work of state ministers can be done by directors to reduce on the cost of public administration,” Prof Baryamureeba said. “Why should we have a ministry for ICT and another ministry for Science and Innovation? What is the work of the minister for Regional Corporation and the minister for East Africa? Disjointed efforts is the reason why things are not working.”

The task ahead
Top on the Cabinet agenda will be the key Bills that seek to, among other things, improve the country’s competitiveness, boost agricultural productivity and growth as the country’s export earnings improve.

But without addressing the structural constraints to economic growth, particularly unemployment and poverty in the country, economists like Mr Oduman Okello have argued that it will more or less be a continuation of the status quo.

About 30 Bills have been lined up for consideration. Some of the Bills include; Agriculture Extension Bill, Naads (Amendments) Bill, Fisheries (Amendments) Bill, National Coffee Bill and NEMA (Amendment) Bill. After Cabinet has cleared the Bill, they will be forwarded to Parliament for consideration.

A combination of high import bill and low export receipts has worsened the country’s trade deficit. For instance, in the 2014/15 fiscal year, Ministry of Finance, Planning and Economic Development reported a trade deficit of $4.7 billion, up from $3.5 billion in the previous year.

The gap, however, continuous to widen amid revenue shortfalls because the country imports more than it exports. This is one of the major challenges the Cabinet will be grappling with in trying to save the 2020 mission.
The consequence of a worsening trade deficit, according to economists like Mr Oduman, explains the recent depreciation of the Shilling against the US dollar and missed targets in the 2015/16 financial year. In 2015/16 financial year, the economy only grew by 4.6 per cent, down from the projected growth of 5 per cent, as evidence builds of a constrained fiscal space.

“When a country’s imports increase in price, while the value of its exports stays the same, the economy begins to wobble as the terms of trade deteriorate,” Mr Oduman explained, adding that “this is the elephant in the room”.

When a country experiences deteriorating terms of trade, he said, the economy finds itself moving towards a deficit in its current account.

This means expenditures on imports begin to grow more than income from exports, turning the country into what Mr Museveni called “a supermarket of foreign products”. “Growth will be constrained and service delivery will get affected. The cure is to invest in agriculture and reduce wastage,” he added.

At a recent Cabinet retreat in Kampala, the NRM leader complained about inefficiencies in government departments, noting that the red tape, which he said unlike in the neighbouring Rwanda, has delayed major projects, frustrated job creation and scared away potential investors.

To speed up things in this area, the President combined Investment and Privatisation into a single docket and appointed a new minister to the docket, Ms Evelyn Anite, the architect of his sole candidature project.

The former Privatisation minister (Aston Kajara) was dropped and the Investment minister, Gabriel Ajedra, posted to Finance (General Duties).

However, the challenge for the new minister is to ensure that investment projects are approved within two days as directed by the President.

During his State-of-the-Nation address, Mr Museveni said: “Do not delay any project. A request for investment should not take more than two days. Why should it? The investor has already made his or her calculation. It is his or her money. Why the delay? The excuses about the environment are also not valid. Many of the manufacturing processes are well known. Their best practices are known… I will simply not tolerate any delay of more than two days.”