President Museveni inspects an oil palm plantation owned by Ms Tabitha Akirapa (left), a model farmer in Kalangala District on May 26, 2023. PHOTO | PPU
A follow-up on the value-for-money audit report points out that the Ministry of Agriculture, Animal Industry, and Fisheries failed to effectively implement the vegetable oil project in Kalangala District, leaving several farmers uncompensated for 60 months.
The Auditor General first issued its audit report to Parliament in March 2014, on the implementation of the Vegetable Oil Development Project (VODP), by the Ministry of Agriculture, Animal Industry and Fisheries (MAAIF).
The report highlights key issues and provides recommendations relating to delays in project implementation, delays in disbursement of funds for project activities, weaknesses in the management of the Kalangala Oil Palm Growers Trust loan portfolio, provision of production inputs, provision of extension services, market linkages, and adaptive research.
Mr Edward Akol, the auditor general, in his report says out of the 17 recommendations made in the AG’s report of 2014, four out of the 17 representing 23 percent were fully implemented; eight representing 47 percent were partially implemented; two representing 12 percent were not implemented; and three representing 18 percent were no longer applicable.
“Specifically, it was noted that following the 2014 audit, MAAIF through VODP and its successor projects had managed to fully implement only four of the seventeen audit recommendations made.
Major challenges remain in the timely implementation of project activities, disbursement and utilisation of project funds, and provision of farm inputs to farmers. The Local Seeds Business model under VODP 2, only focused on large farmers leaving out the majority of smallholder farmers.
These continue to hinder production and value addition in the vegetable oil industry,” the report says. The Auditor General in his report says the recommendations aimed at addressing the identified performance gaps to enhance the project’s performance and similar future projects implemented by MAAIF. The government rolled out the VODP in the 1998/1999 Financial Year, running up to 2011/2012.
However, in 2014, when the audit report came out, a total of 17 anomalies were pointed out, which the audit report asked the MAAIF to rectify. However, we were unable to get response from the officials from the MAAIF on how they failed to compensate people whose lands were valued in 1999 up to 2024 as stated by the audit report. Frank Tumwebaze, the minister of agriculture and his deputy Kyakulaga Fred Bwino were not available because their known mobile numbers were switched off.
Major General David Kasura Kyomukama, the permanent secretary of the ministry did not respond to our repeated calls to respond to the issues raised in the audit report. However, in their response to the audit questions at the time of auditing, the ministry had reported progress in implementation though by 2024 when the follow-up audit was carried out, several anomalies were still glaring while others had been corrected and progress made.
The ministry in its earlier project achievement report said in Kalangala District, the total area planted with oil palm at the time was 10,924 hectares comprised of 6,500 hectares by the private sector partner on the nucleus estate and 4,424 hectares by smallholder farmers According to the report, the oil palm smallholder farmers benefitting from the project extension and marketing services in Kalangala in 2018 stood at 1,810 with 652 females (36 percent).
“The annual production of crude palm oil has increased from 0 metric tonne in 2010 to 141,367 metric tonnes in 2017; the 1,810 registered smallholder farmers in Kalangala have received Shs34.5b for garden preparation, maintenance, and inputs; and the project has recovered Shs15.3b from the smallholder oil palm farmers in Kalangala,” the success report says.
“The smallholder farmers in Kalangala have harvested 86838 metric tonnes of oil palm fresh fruit bunches valued at Shs39b. Annual fresh fruit bunches harvests are now estimated at 26,889 metric tonnes valued at Shs15.7b; the number of farmers harvesting is now 1,074 on 3,021 hectares of oil palm; the project has constructed 358kms of farm roads on Bugala Island which have improved movement of goods, services, people, inputs and produce,” it says.
Why the audit
Among the issues to be tackled through the audit, the government sought to find out whether adequate research was carried out into high-yielding crop varieties, extension services were provided to farmers, the project adequately provided the farmers with production inputs, market linkages were developed for all oil crops and project funds were utilised for the intended purpose.
In its report, the audit identified key issues and provided recommendations relating to, delayed implementation of the project; delays in disbursement of funds for project activities; management of the Kalangala Oil Palm Growers Trust, Loan portfolio, and provision of production inputs including seed multiplication, distribution channels for ground nuts and sesame and fertilisers, commercial pilot production of essential oils.
“There were also problems with the provision of extension services including essential oil crops, traditional oil seeds, market linkages; and adaptive research on oil palm, transfer of knowledge, discontinued research,” the report says.
Issues pointed out
The Auditor General in his report says despite the efforts to prioritise land acquisition prior to the commencement of projects, key risks were not fully addressed resulting in delays in the implementation of activities under the subsequent projects similar to what was identified under the phase one project.
The audit report says from a review of various project reports, the audit established that the project experienced significant delays in the implementation of its major activities, mainly affecting the oil palm component whose commencement date was delayed by five years (60 months). “This meant that the other components such as Institutional support had to be extended by a period of six years to support the implementation of the project.
The delayed implementation of the project impacted the timely achievement of the project outputs. For example, the production of vegetable oil which was meant to save the government substantial amounts in oil importation delayed by five years. It was not until late 2009 that the first harvest was made,” the report says.
However, the management in its response said while initially the project was delayed because there programmes also witnessed delays particularly in the release of funds despite the improvement from the 60 months delay experienced under VODP 1 to a range of 10 to 29 months, “The delays were mainly in the release of funds and recruitment of project staff, which impacted on implementation of project activities such as provision of farm inputs, land surveys for oil palm growing in Buvuma, and loan processing for farmers which resulted in delays in production of palm oils and oil seeds,” Akol says in the report.
“The ministry still did not fully address key project risks, before project commencement in the VODP1 successor projects. While the ministry put in place measures like prior land acquisition before project commencement, these were not adhered to. This delayed implementation of project activities such as the establishment of the nucleus estate and oil palm mill under the Buvuma Oil Palm Project,” the report says.
The report also says by the time the project closed in 2012, the government had only remitted Shs13b of the expected 23.3b, representing a disbursement of 56 percent, after the first audit in 2014, the disbursements improved and exceeded the set targets.
The report however says shortfalls were observed in the disbursement of donor funds and government contributions under the National Oil Seeds Project (NOSP). The latest audited financial statements (June 2023) showed that the National Oil Palm Project (NOPP) had only received Shs65.9b out of the expected Shs133.7b from International Fund for Agricultural Development funds (IFAD) over a four-year reporting period, resulting in a shortfall of Shs67.6b. “Similarly, for NOSP, only Shs10.7b was disbursed by IFAD out of the expected Shs97.4b, resulting in a funding gap of Shs86.7b,” the report says.
According to the report, the slow disbursements of the IFAD funds are linked to the delayed commencement of project activities because IFAD funds are disbursed on the basis of successful implementation of preliminary activities financed by the government.
The report also faulted the implementation team over the distilleries from the essential oils for analysis. The report says while two distilleries were supposed to be procured for Tororo and Pallisa, none was functional at the closure of the oil project. The report says the distillery in Tororo had not been in use since 2007 while the one in Pallisa was delivered in 2008 at the closure of the project.
The report concluded that while the follow-up revealed that the project had made progress in addressing the audit recommendations issued in the 2014 Value for Money audit report, where of the 17 recommendations made, four were fully implemented, eight were partially implemented, two were not implemented and three were deemed no longer applicable.
Several challenges were identified in the 2014 audit, such as delays in implementation of project activities, delayed disbursement and utilisation of project funds, gaps in the provision of quality farm inputs to farmers, and limited access to extension services, persist in VODP’s successor projects.
2014
AG’s report. Out of the 17 recommendations made in the AG’s report of 2014, four out of the 17 representing 23 percent were fully implemented; eight representing 47 percent were partially implemented; two representing 12 percent were not implemented; and three representing 18 percent were no longer applicable.
About the project
The project was designed to alleviate Uganda’s dependence on imported vegetable oils by supporting the domestic production and processing of palm oil.
It was the first example of a PPP in Uganda. According to the International Fund for Agricultural Development, the entity that funded the project, In its first phase the project negotiated a tripartite collaboration between the government, a private company, and smallholder farmers, to establish a plantation and processing units for the domestic production of vegetable oil on Bugala Island.
The partnership was reinforced through mutual dependence: the palm oil mill provides a secure market for smallholder producers who guarantee a supply of raw materials for processing. In the second phase of the project, the same collaborative business model was repeated in a new location, and also extended to oil seed production, in order to show how similar tripartite partnerships can be forged with other value chains.
Annual production
The smallholder farmers in Kalangala have harvested 86838 metric tonnes of oil palm fresh fruit bunches valued at Shs39b. Annual fresh fruit bunches harvests are now estimated at 26,889 metric tonnes valued at Shs15.7b; the number of farmers harvesting is now 1,074 on 3,021 hectares of oil palm; the project has constructed 358kms of farm roads on Bugala Island which have improved movement of goods, services, people, inputs and produce,– The value-for-money audit report.
