Africa-Press – Uganda. The United States and the European Union (EU) are demanding detailed explanation from government in regard to a directive that all donor funds be channelled through the Treasury instead of having funds remitted directly to agencies implementing projects in the communities.
Overall, project funding worth nearly Shs4 trillion is what could be frozen by government orders to streamline operations of donor funds as both US, and EU demand clarity over the directive on aid grants to Uganda.
Uganda’s 76.7 percent of the Shs44.7 trillion budget for the 2021/2022 financial year is expected to be financed using domestic revenue and the other 23.3 percent with donor funds.
The spokesperson of the United States Embassy in Kampala, Ms Amy Petersen, told Saturday Monitor in a statement on Thursday that the US has been engaging government and other donors over a September 6 directive by the Minister for Finance, Mr Matia Kasaija, that all development assistance will be managed off a single account in the Treasury and shall be the subject to appropriation by Parliament.
“We are engaging in ongoing discussions with the government of Uganda and other development partners to get more clarity on what the directive entails,” Ms Peterson said in an email to Saturday Monitor.
The Finance ministry spokesperson, Mr Jim Mugunga, however, said the donors have not yet made a formal communication to the minister’s letter, but added that no written response had been expected.
“You well know the minister’s letter was guidance. It did not solicit a letter in response. If any (development) partners wrote back in reaction, then it is a matter they are best placed to comment upon. Our work method with development partners is through diplomatic engagements and other established channels,” Mr Mugunga said.
The letter titled, ‘Management of development assistance’, was copied to key European and other donors and development agencies.
Mr Kasaija also directed that all donor-funded projects and programmes shall, for budgeting purposes, be reported to the government through the aid management platform which his ministry and the donors have developed over the years.
The platform, he said, must be used to enable the government have a bird’s eye view of all development cooperation efforts.
According to the directive, all donor programmes have to be signed off by his ministry to ensure that there is no duplication of efforts.
“All projects and programmes shall be implemented together with and in consultation with the relevant MDA [government ministry, department, and agency] to ensure sustainability of the investments carried out.”
The letter also directs that donors have to work with government to prepare country strategies to ensure that donor support is aligned to Uganda’s aspirations as enshrined in Vision 2040 and the National Development Plan III.
The European Union (EU) is one of the biggest donors to Uganda providing close to Euros 100 million (about Shs418.3b) per year, but has remained tightlipped about the directive.
EU mute
The press adviser to the Delegation of the European Union in Uganda, Mr Emmanuel Gyezaho, declined to comment about the government’s directive or the implications it might have on relations between the EU and Uganda or the ramifications it might have on projects funded by the EU.
“We have no comment on any of that,” Mr Gyezaho said.
However, Ms Peterson raised questions about the relevance of the government’s directives, saying government has always been aware of the operations of civil society organisations that receive funding from the US.
“We strive to ensure our assistance is shared with the Ministry of Finance, or appropriate line ministry of the government of Uganda, and that it is transparently implemented by partners in a politically neutral way,” she wrote.
It is not clear whether the donors will acquiesce to the latest directives, but Uganda will stand to lose billions of shillings if they choose not to.
According to Ms Peterson, the US annually pumps close to $1b (about Shs3.6 trillion) into projects aimed at improving health and education and strengthening democracy and security. It also helps to promote economic growth and provide employment. All those would be at risk. The EU on its part injects about Euros 100m (Shs418.3 billion).
Overall, project funding worth nearly Shs4 trillion is what Uganda stands to lose if the donors refuse to cooperate.
The situation arises at a time when the economy is reeling from being hit hard by more than a year of lockdown forced by the Covid-19 pandemic. This has in turn affected tax collections.
On Thursday, the Commissioner General of the Uganda Revenue Authority (URA), Mr John Musinguzi Rujoki, announced that the tax body has collected only Shs4.4 trillion in the first quarter of this financial year, making it Shs499b short of the targeted Shs4.9 trillion.
At least Shs2.6 trillion of the Shs4.4 trillion that was collected was domestic taxes, but fell short of the Shs3 trillion domestic taxes that had been targeted for collection in the first quarter.
Mr Musinguzi Rujoki attributed URA’s failure to meeting the target to the effects of the Covid-19 pandemic.
On Wednesday, the Finance Permanent Secretary, Mr Ramathan Ggoobi, expressed optimism that the economy is on its way back to recovery.
But the executive director of the National Planning Authority, Dr Joseph Muvawala, who was addressing Parliament’s budget committee, did not share the same optimism.
Dr Muvawala urged stakeholders to focus on revenue mobilisation strategies to help reduce the huge deficit between government revenue and expenditure. The implication is that the economy is stretched.
“We aren’t saying reallocate resources from infrastructure, but we are saying we don’t have enough resources, therefore, implementing those projects that we started and completing them makes simple logic,” Dr Muwavala said.
The executive director of the National NGO Forum, Mr Moses Isooba, earlier said the livelihoods of thousands of Ugandans have suffered because of the suspension of activities of the Democracy Governance Facility (DGF).
The operations of DGF, a basket fund that was formed by Denmark, Ireland, Austria, UK, Sweden, Norway, and the European Union (EU), to among others, facilitate poverty eradication and the rule of law were suspended in January on the orders of President Museveni.
Mr Museveni said then its funds were being “used to finance activities and organisations designed to subvert (the) government under the guise of improving governance”.
Financial statements posted on the DGF website shows that facility gave civil society Shs113.8 billion between July 2016 and December 2017; Shs64.8 billion in 2018 and Shs88.5 billion in 2019.
That means an average of Shs76.3b has not been pumped into the economy on account of the suspension.
“Communities that were benefitting from the activities of the NGOs are now not serviced and you cannot put a monetary value to that. And DGF was also supporting government agencies like Parliament. The fact that they are not getting money means there are services that Ugandan are not accessing,” Mr Isooba said.
Taxes in the form of VAT, PAYE and withholding tax have also not been paid,” Mr Isooba said.
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