Covid-19 cash: Making the rich richer and poor poorer

April and May 2020 will be a time to remember for poor countries across the world. The inflow of Covid-19 grants (non-repayable) and loans (repayable with interest rate) has been running like a river.

The European Union (EU) committed to disbursing a grant of €30 million (about Shs120 billion) to the Government of Uganda through the Treasury. The grant is purposely meant to help Uganda address the Covid-19 pandemic in the short term, as well as the longer term socio-economic impact.

According to the EU Head of Delegation to Uganda, Ambassador Attilio Pacifici, €2 million (about Shs8 billion), for example, will be used to raise awareness on hygiene and to curb domestic violence.

The International Monetary Fund (IMF) soon followed by approving fast-financing cash (loans) to more than 50 countries and debt relief to 25 others. The IMF under the Rapid Credit Facility approved $491.5m for Uganda and $739m for Kenya, among others countries.

According to a May 6 statement by Mr Tao Zhang, the IMF deputy managing director, Uganda’s economy was severely affected by the Covid-19 pandemic, and the money was approved to cushion the impact on the most vulnerable, including sectors such as tourism, transport, construction, manufacturing and agriculture.

Furthermore, he said, they are committed to transparency in managing resources for accountability by reporting on the use of funds, publishing an independent audit and also publishing large procurement contracts.

There has been suspicion among some members of the public based on past corruption scandals, including the most recent controversial awarding of Shs20 million by MPs to themselves to fight the pandemic in their constituencies.

The fear now is that even the Covid-19 cash from the EU and IMF could be spent on the wrong priorities. Therefore, making the influential elite richer, and the vulnerable even poorer.

The ministry of Finance has already estimated that an additional 2.6 million Ugandans could slide into poverty under the weight of the Covid-19 pandemic. Given this possibility, the Budget Committee of Parliament approving an extra Shs900b on April 8 was shocking given the prevailing circumstances.

The lion’s share was taken by Security, which walked away with Shs400b in classified expenditure; Shs10b was given to MPs; Shs90b to State House; Shs6.98b to the Office of the Prime Minister (OPM), and Shs4.07b to the commission on land inquiry.

A minority report by some MPs questioned the role of security agencies in the Covid-19 fight.

A few days later, fuelling the already existing concerns of misuse of the money, Speaker of Parliament Rebecca Kadaga in defence of MPs getting Shs20m each to fight Covid-19 complained of unfair targeting of Parliament.

“Why concentrate on Shs10b allocated to Parliament and ignore Shs59b allocated to Ministry of Disaster Preparedness to supply food to vulnerable communities which they are using instead to buy rotten milk and beans,” she said.

The implications are, therefore, that key decision makers could already be diverting Covid-19 money for personal gain. And the EU and IMF money might not be spared either, with it ending up in the pockets of a few powerful and wealthy people and not the vulnerable it was intended for.

And whereas EU leaders are discussing the post-lockdown economic recovery plan, and financial assistance to workers and businesses, in Uganda we are not hearing anything concrete. For instance, we still don’t know how government will come out to support businesses that have been hit by this lockdown. The outlook of the post-Covid-19 lockdown looks grim.

Ms Victoria Nyeko is a media commentator.
[email protected]