DGF-govt talks hit deadlock, hold up billions of cash

European Union ambassadors in Kampala recently. Activities of DGF are financed by Denmark, Ireland, Austria, UK, Sweden, Norway, and the EU. PHOTO/ ABUBAKER LUBOWA

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"We are in the final stages of concluding another agreement. In principle, we have agreed with the donors. What remains is signing onto certain documents, which I think will not take a long time,’’ Foreign Affairs permanent secretary, Mr Patrick Mugoya.

Billions of shillings in donor funds to support both government agencies and NGOs focusing on democracy, good governance and accountability are being held up following an impasse in talks between government and donors.

The deadlock centres on mode of operation of the Democratic Governance Facility (DGF), a basket fund supported by eight European development partners since July 2011. DGF works with 86 partner organisations with 74 per cent of DGF’s total financial commitments directed to Ugandan civil society organisations, eight per cent to international NGOs and 12 per cent to government institutions.

Financial statements posted on the DGF website show the facility extended to the said organisations financial support worth Shs113.8 billion between July 2016 and December 2017; Shs64.8 billion in 2018, and Shs88.5 billion in 2019. 

That gives an average of Shs76.3 billion, indicative of the amount of money that has not been released to DGF partner organisations implementing the projects.
The DGF-supported State institutions that have lost funding include Parliament, the ministries of Internal Affairs, Lands, Housing and Urban Development; the Law Development Centre (LDC), Makerere University, and the Inspectorate of Government (IGG).

The IGG, which ironically, is one of the institutions Mr Museveni directed to investigate the operations of DGF, had been lined up to receive Shs1.4 billion to run a capacity building programme for civil society and public awareness campaign to fight corruption.
Sources within the Foreign Affairs ministry say three months after political heads and bureaucrats in the ministry first engaged the funders of the DGF, no agreement has been reached because of government’s demands for equal representation on the DGF board.

The Foreign Affairs permanent secretary, Mr Patrick Mugoya, declined to be drawn into discussing some of the donors’ concerns, but insists that government and the donor have struck a compromise.
“We are in the final stages of concluding another agreement. In principle, we have agreed with the donors. What remains is signing onto certain documents, which I think will not take a long time,” Mr Mugoya told Sunday Monitor.

Genesis
Activities of DGF, which is financed by Denmark, Ireland, Austria, UK, Sweden, Norway, and the European Union to facilitate equitable growth, poverty eradication, rule of law and long-term stability in Uganda, were suspended in January on the orders of President Museveni.

Mr Museveni argued that DGF funds were being “used to finance activities and organisations designed to subvert (the) government under the guise of improving governance.”
In his January 2 letter to Finance minister Matia Kasaija, Mr Museveni accused the Finance permanent secretary, who also doubles as the Secretary to the Treasury, Mr Keith Muhakanizi, of having “irregularly and unilaterally” licensed DGF to be operated with very limited involvement of Ugandans.

“How is it possible that the Ugandans whose affairs are being dealt with here can only be spectators in the management of their own affairs? This is not the financing of a private business but the funding of State and non-State actors to achieve the political objective of the funders,” Mr Museveni wrote.
Mr Museveni was reportedly angry that DGF had been allowed to operate without the involvement of Cabinet or the approval of the Attorney General.

“How and why did the minister of Finance unilaterally make such a major decision with far-reaching consequences, let alone one whose effect is to surrender the sovereignty of the people of Uganda to foreigners? Was this a reason of subversion, corruption, or criminal negligence, or all of these? Why wasn’t Cabinet and I consulted?” Mr Museveni wrote.
After a February 18 meeting that he held with EU diplomats at State House Entebbe, Mr Museveni formed an ad hoc committee headed by former Prime Minister Ruhakana Rugunda to spearhead negotiations with the donors to ensure a new governance structure with adequate local representation is put in place.

Foreign Affairs permanent secretary, Mr Patrick Mugoya

That responsibility was later entrusted to the Foreign Affairs ministry.
During the first meeting that Foreign Affairs officials held with the donors on March 5, government demanded representation on the board and day-to-day management so as to be able to monitor the basket funds’ activities and how it facilitates beneficiary organisations.

Fight to sit on DGF board
Government sources revealed that Mr Museveni and other government officials had gotten frustrated over what was perceived as the DGF funder’s resolve not to involve Ugandans at decision-making level. Sources within the Finance ministry told Sunday Monitor that government had been trying to get representation on the board of DGF since its set up in July 2011.

On 24, April, 2019, Mr Kasaija, in a letter to the Netherlands’ ambassador to Uganda, nominated then junior Finance minister Gabriel Ajedra and the director of Debt and Cash Policy Directorate of the Ministry of Finance, Ms Maris Wanyera, to represent the ministry on the DGF board, but the two were not accepted. 
In an October 7, 2019 letter, the ambassador of the Embassy of Ireland, Mr William Carlos, informed Mr Kasaija that the DGF board statutes provide that the board may draw upon any support from their Uganda resource persons, one from government and two from civil society and State institutions.

“It is on the basis of these provisions that we will move forward by adding your two nominees as resource persons for DGF who we will contact for ad hoc engagements with DGF,” Mr Carlos wrote.
If Mr Museveni’s January 2, letter in which he directed Mr Kasaija to suspend DGF’s activities is anything to go by, the correspondences between Mr Kasaija and Mr Carlos did not go down well with the President.

“I have also established that last year, the ministry of Finance made a belated and feeble attempt to get a government representative on the board of this fund, which would have been of little consequence anyway. However, you were quickly and arrogantly rebuffed by the foreign mission because apparently as you were reminded by that foreign mission, the exclusive management of the fund lies with them and oversight is by the foreign co-founders, exclusively,” Mr Museveni wrote.

Donor reluctance
Three months after the first meeting at which government tabled its demands, no consensus has been reached. The Danish ambassador to Uganda, Mr Nicolaj Hejberg Petersen, decline to be drawn into the discussion.
“The DGF board and Government of Uganda are in very constructive dialogue on the DGF,” Mr Petersen told Sunday Monitor.

But sources say that besides being uncomfortable with the demand for equal representation on the board, the donors have serious reservations about the issue of corruption on the part of some of the government officials likely to end up on the board and their working culture.
“Most of the donors are not sure that people who have been previously accused of corruption will not end up on the board of DGF. They also have concerns about the working culture of Ugandans,” the source revealed.
But Mr Mugoya insists it has been because of other development that a formal signing of a new agreement has not yet been concluded.

“We are almost done, had it not been for some of these activities (meetings of the Central Executive Committee of the NRM, dissolution of Cabinet, elections for Speaker and Deputy Speaker,  and the naming and swearing in of the Cabinet), we would have been done,” Mr Mugoya said. Part of the activities cited were concluded by June 21, but to date, the DGF-govt impasse has not been resolved.