Uganda’s foreign aid: poor countrymen hardly benefit

These barefoot children in Patong are among the millions that strive to attain a basic education. But some of their dreams are shuttered when the funds meant to help them are misappropriated. Photo by Edgar Batte

Even as Uganda grapples with massive corruption across different sectors of her economy, foreign aid continues to flow in to supplement the country’s budget deficit.

The 2011/2012 financial year (FY) budget as read out by the finance, planning and economic development minister Ms Miria Kiwanuka indicated that Uganda required up to Shs10 trillion to meet her 2011/12 financial year needs. On this, domestic revenue would contribute up to 63.2 percent (6.32 Trillion), donor aid 29 percent (2.9 Trillion) while the remaining eight percent (0.8 Trillion) was to come from other forms of financing.
These statistical figures presented by the country’s Treasury show that Uganda undertakes deficit budgeting which justifies the need for outside funds to close some gaps in the annual budget.

However, while it is true that Uganda still needs aid to top up its locally collected monies, the way foreign aid in form of either grants or loans is spent puts its significance to question.

Most of it is directed to some of the crucial sectors of the economy such as education, health, and transport sectors. However, reports from watchdog bodies like the Public Accounts Committee (PAC) and Inspect General of Government’s office coupled with recent happenings such as the Global Fund and Chogm accountability scandals have provided evidence that corruption thrives at a large scale in government. The implication is that a considerable percentage of the money which comes in to the economy as aid is the same money that is embezzled.

According to the World Bank, Uganda loses at least Shs700 billion (USD 300 million) in corruption each year. It is because of this that Uganda is currently ranked as the 40th most corrupt country in the world according to Transparency International Perception Index.

In a telephone interview, Mr Lawrence Bategeka, an economist with the Economic Policy Research Centre (EPRC) Makerere University said: “Corruption continues to be a big problem to developing economies such as Uganda. You find that the same way developing countries seek for donor assistance; they are equally challenged with economic mismanagement at home. This means that when the donor money comes in, some of it is wrongly used,” Bategeka said.

This argument is shared by other people. In a telephone interview, Mr Gerald Karuhanga, a member on PAC had this to say: “This is what I always talk about. Uganda continues to ask for foreign funding but when the money comes, it goes in the wrong hands. In fact, very little foreign assistance would be required today if all of our leaders were clean and ready to serve. Unfortunately, many are not.”

Conversely, Ms Maria Kiwanuka, the finance minister, told Prosper magazine that Uganda cannot do away with foreign funding but that keen emphasis should be put on sweeping out corruption in order to attain more economic development with the help of both internal and external funds.

“It is wrong to conclude that Uganda no longer needs donor aid or we need less. We are not yet there. Today, more than 60 per cent of the budget is locally funded. But we still need donor aid to cater for the deficit. However, all this money received either donor aid or locally raised funds must be properly managed and spent on the right projects,” Ms Kiwanuka said.

She added; “The argument here should be about clearing out corruption not doing away with foreign aid. The NRM government is emphasizing maximum accountability in all sectors of the economy. We want people to have value for their money.”

One fact for sure is that Uganda’s economy is yet to attain that strong economic muscle that can put an end to foreign aid reliance. Still, if the present scale of abuse of government funds carries on, achieving economic independence is likely to take much longer than expected.