Govt loses 31 billion as NEC operates under losses for 30 years
What you need to know:
- The Farm whose primary objective was to supply the army with meat requirements and the bi-products (hides and skins) to the shoe factory that was to be established has not come near to achieving any, for the last 20 years.
- The Auditor General notes that by the end of 2016, “a review of the available documents established that the initial objective of supplying meat to the army had not been achieved [and that] the shoe factory had never been established.”
KAMPALA: Thirty years since its establishment, the National Enterprise Corporation a production unit of the army has failed to meet its obligation, and only operates at losses.
Findings by the 2016 report of the Auditor General indicate that the corporation is nursing a loss of shs 31.4 billion despite a capitalization grant of shs 44.5 billion.
The corporation runs several subsidiaries such as the NEC Farm-Katonga Ltd, the NEC tractor hire scheme and the NEC Tractor Project, but the auditor General notes that the objectives for which these companies were established have not been achieved.
“There is need for government to review the operations of these companies with a view to establishing whether the initial objectives are still relevant and design strategies to overcome challenges currently faced by the companies,” reads part of the report.
This according to the report was majorly attributed to inadequate structures and resources to support the activities of these companies.
The NEC Farm Katonga Ltd, for instance which was acquired from Kisozi Ranchers located on Gomba District in 1990 measuring 17 square miles was reported to be operating in declining performance.
By the time of its acquisition, the farm had 500 heads of cattle, mainly Borans and Brahman, Boran Cross breeds but the number has kept falling to 351 in 2015 and further down to 337 by December 31, 2016.
The Farm whose primary objective was to supply the army with meat requirements and the bi-products (hides and skins) to the shoe factory that was to be established has not come near to achieving any, for the last 20 years.
The Auditor General notes that by the end of 2016, “a review of the available documents established that the initial objective of supplying meat to the army had not been achieved [and that] the shoe factory had never been established.”
The NEC Tractor hire scheme and the NEC Tractor Project were also reported to be operating at losses and risking another loss of shs 3.50 billion.
“The company does not have construction equipments to favourably compete in the construction industry,” the report reads, adding that, “this was evidenced by the fact that the Non-Current Assets of the company as at the close of the year [2016] was valued at shs 16 Million.”
The projects were meant to provide quality construction services in the atmosphere of mutual trust with an aim of boosting agricultural production by the Uganda People’s Defence Forces.
By December 31 2016, the Auditor General noted that the company no longer employed serving men and officers and that the “objectives of impacting technical, managerial and service-skills to personnel of the armed forces in order to improve their welfare has been overtaken by time.”
Maj Gen James Mugira (MD), the accounting officer is quoted to have acknowledged the poor performance which he blamed on inadequate cash flows thus affecting “working capital, machinery and equipment resulting in poor performance and that the matter had been forwarded to the ministry of defence.
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